Indivior Pharmaceuticals Inc (INDV) Q4 2021 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. And welcome to Indivior PLC Full Year Results 2021. At this time, all participants are in listen-only mode. After presentation, we will have a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mark Crossley, Chief Executive Officer. Please go ahead, sir.

Thanks, Roberto. And good morning, good afternoon, everyone. Thanks for joining us. I'm Mark Crossley, CEO of Indivior. With me today to discuss our results and progress are Ryan Preblick, our Chief Financial Officer; and Dr. Christian Heidbreder, our Chief Scientific Officer. For today's call, I'll provide an overview of our strategic progress, after which Christian will provide a scientific update, and Ryan will conclude our formal remarks by detailing our financial performance and the full year 2022 guidance we published in our press release, we'll then move on to Q&A. Before I move on to my overview, I'll assume that everyone has read the forward-looking statements. I'm going to begin my formal remarks by first thanking our employees. The fact that Indivior has made such tremendous progress against the continuing backdrop of the pandemic speaks to the commitment of our people. Their passion for the focus on delivering for patients is truly humbling. Indeed, never has our purpose to deliver pioneering life-transforming treatments and our patient-centered vision, been more critical and relevant given that tragically, drug overdose deaths reached over 100,000 in the United States during the 12 month period for the first time ever. In short, the epidemic has gotten worse. And as you can see, the vast majority of these deaths are as a result of misuse of opioids, notably, synthetic opioids such as fentanyl. What makes these statistics even more tragic is the fact that 10 million people-plus self-report misusing opioids, and over 3 million people have been diagnosed, while only 1.2 million have received treatment. This phenomena, known as the treatment gap, is one which we must approve on. The treatment gap is one element that motivates the entire Indivior team to advance our vision that all patients around the world will have access to evidence-based treatment for the chronic conditions and co-occurring disorders of addiction. Turning to the results and our strategic progress. As you saw in the full year results released earlier, we finished 2021 strongly. SUBLOCADE delivered excellent growth of 88% for the year to reach $244 million in net revenue. And we continued to benefit from the resilience of SUBOXONE Film, which I'll remind you we no longer promote. This allowed us to maintain a year end gross cash balance of over $1 billion even after the completion of the $100 million share buyback. These excellent results reflect relentless execution against our strategic priorities, the most important of which is building SUBLOCADE towards our $1 billion-plus net revenue goal. And as you've seen from our 2022 guidance, we expect to make further progress in the coming year with SUBLOCADE net revenue growth of over 50% at the mid-point. Within our guidance, we're planning for adjusted operating profit to be at similar levels for 2021. This guidance reflects planned reinvestment of film over-delivery behind annualizations of decisions taken in 2021 to support our long-acting injectables. Additionally, we have incremental investment behind continued advancement of our R&D pipeline, evidence generation behind SUBLOCADE, as well as efforts to enable a second source of supply for SUBLOCADE. We believe we're making these investments from a position of strength, and we intend to leverage this for the benefit of all our patients and stakeholders. The last thing I want to highlight here is that we are exploring the possible benefits of an additional US listing of our equity, the initial costs of which are also included in our OpEx guidance. I'll touch on the rationale in a few minutes. But our preliminary view is that a US listing will likely better align with our strategy and structure over time. Slide six shows the strategic priorities report card that we've been measuring our achievements against and holding ourselves accountable. As before, we have four key pillars, namely to build SUBLOCADE to over $1 billion, to diversify our revenue, to build and progress our pipeline and to optimize our operating model. I won't go into a lot of detail here as I and my colleagues will expand on a number of the actions we are taking against these strategic priorities to further our leadership position and our ability to deliver sustainable value creation. But I will say, we're pleased with how we've delivered across all four pillars in 2021. Most importantly, we continued to deliver sequential double-digit quarterly growth in SUBLOCADE despite the pandemic backdrop as we continue to expand our access and presence in Organized Health Systems, including the criminal justice system. On slide seven, the team accomplished all of the Organized Health System-related goals we set for ourselves in 2021. The vast majority of net revenue growth for SUBLOCADE is now being generated in the Organized Health System channel, and we expect this to continue as we have now opened up access to over 400 of our 500 priority Organized Health System targets. Since the majority of HCPs in the US who actively treat patients with OUD are affiliated with an organized system, our growth strategy is squarely focused on both expanding our reach to more HCPs, as well as increasing depth of prescribing. The capabilities we've established within our ecosystem model to drive the awareness of SUBLOCADE among these complex customers and to get these accounts up and running are now becoming a clear driver of growth. We've established a dedicated team specifically designed for this channel, consisting of clinical specialists, access directors, field reimbursement specialists and a hub to help with the patient journey. This is further supplemented in the second half of 2021 when we made the strategic decision to invest in a dedicated team focused on the opportunity to help patients in the criminal justice system. We also continue to build the scientific evidence base and claims behind SUBLOCADE. We're investing in new clinical studies that we believe will extend our scientific leadership and provide further differentiation. This new breakthrough science generated for the disease space is why we chose to expand our team of medical science liaisons in 2021 with annualization carrying into 2022. Additionally, Christian will provide more detail in a few moments regarding our continued evolution of science in the disease space, which represents a portion of the planned increase in R&D in 2022. On slide eight, I want to spend a moment on PERSERIS. We tend to focus much of our attention on SUBLOCADE, which is natural given the scale of the patient and commercial opportunity. However, we remain convinced that PERSERIS is an important asset in schizophrenia with the potential to deliver peak net revenue of $200 million to $300 million, given the size of the established market and the differentiated dosing advantages of our product. Net revenue progress has been hampered directly by the pandemic but also by the inability to expand to a national launch, while our access to health care providers was restricted. Achieving our peak net revenue goal for PERSERIS was always predicated on national sales force coverage, and so we made the decision in the second half of 2021 to double our commercial force beyond this important asset. We expect to complete the sales force expansion in the first half of this year, so we will enter the second half of 2022 operating at full effectiveness. On slide nine, beyond PERSERIS, our key initiative to diversify near term revenues is to seek regulatory approval and launch of our new products outside the US. As you're aware, net revenue has been under pressure in Europe and elsewhere from our legacy tablet-based treatments and an aggressive pricing environment that favors generics. With the progressive rollout of SUBLOCADE under the brand name SUBUTEX prolonged release and the European launch of SUBOXONE Film, we have the opportunity to reverse the year-over-year declines in net revenue. On slide 10, I'd like to expand on our decision to explore a US listing. From time to time, we've considered a US listing for our shares. With greater certainty and the confidence we have in our prospects, we believe now is the time to commence the work and build the capabilities to enable this strategic initiative if supported by shareholders. An additional US listing makes a great deal of sense for Indivior in terms of our go-forward strategy and the group structure. It would provide increased visibility in the US, which is the market most impacted by the opioid epidemic. The US represents 80% of our current revenue and is the lead market driving the future value behind SUBLOCADE. Additionally, there's a deeper pool of capital for biopharma opportunities, and the management team are located in the US. In short, and as I said earlier, our preliminary view is that this initiative would likely bring us enhanced opportunities to create shareholder value. Our intention, as aligned with the Board, is to gather insights and perspective on this strategic initiative via consultation with our shareholders during spring 2022. I mentioned earlier that we believe we're now in a position of strength, and I want to expand a little in my closing comments on why we are so excited and confident about the future for Indivior. First, opioid use disorder remains significantly under-treated. As I said earlier, over 10 million people have used opioids, but patients receiving BMAT treatment stood at less than 20% of that number despite the growth in treatment access in recent years. In addition, the tragedy of the opioid epidemic has accelerated through the COVID pandemic, reaching unprecedented levels. With growing awareness of the epidemic, increasing treatment capacity and political will to address the issue, which disproportionately impacts the US, we expect to help close the treatment gap moving forward, which should lead to the BMAT market expansion at mid to high single digit percentage rate for the foreseeable future. Second, we are the number one treatment provider for opioid use disorder and have the deepest understanding of the patient journey based on over two decades of developing and pioneering novel treatments. We believe SUBLOCADE is on track to become a $1 billion-plus drug as the first and only long-acting injectable approved in the US. And we have leveraged the same ATRIGEL delivery technology to create a differentiated long-acting injectable for schizophrenia in PERSERIS. Third, we're investing in long-term growth. As I just described, we're leveraging our financial strength to extend our leadership position in addiction, to accelerate our diversification efforts and to bolster our science and our pipeline. We have significantly invested behind SUBLOCADE growth by expanding our commercial capabilities focused on the Organized Health System channels, as well as doubling our sales capability for PERSERIS. The new science we're undertaking focused on SUBLOCADE will further reinforce our leadership position in addiction treatment. Finally, we're a management team committed to value creation. We've demonstrated our ability to reinvest and return capital to shareholders, all while increasing our profitability. Our capital allocation priorities continue to be reinvesting in the business and examining additive business development opportunities. Additionally, we will regularly evaluate our capital needs, and we'll look to return value to shareholders, if appropriate. Lastly, we're assessing the optimal listing structure for Indivior in full consultation with our shareholders. With that as an introduction, I'd like to hand over to Christian for his scientific update.

Thank you, Mark. And good morning, good afternoon, everyone. Let me first go back to the unprecedented number of drug overdose deaths in the 12 months time frame ending in June 2021 with synthetic opioids, including fentanyl accounting for approximately 65% of fatal overdoses. There are a couple of points I would like to make. First, the overdose crisis disproportionately affect individuals with criminal justice system involvement. Most individuals with opioid use disorder experienced at least one episode of incarceration, typically in a county jail. Most jails, unfortunately, do not provide widely accepted medication for opioid use disorder, which contributes to high rates of overdoses after release. And for those facilities offering medication for opioid use disorder, treatment retention after release remains a significant challenge. Second, emergency departments are a cornerstone of care to close the treatment gap. Unfortunately again, few emergency departments are offering medications for opioid use disorder, and only a third of patients seen in the emergency department for non-fatal overdose received medication for opioid use disorder in the following year. Moving to the next slide. Our response to this crisis is to continue to generate new real-world evidence in support of opioid use disorder treatment in general, the use of SUBLOCADE in particular. Our approach is fourfold, three of which are summarized on this slide. First, we continue to update our US label with new data. For example, our buprenorphine-fentanyl interaction data showing that the treatment-relevant plasma concentrations of buprenorphine significantly decreased respiratory depression and apnea induced by escalating doses of fentanyl, was approved by the FDA in June last year. Furthermore, the data has now been published in the Journal, PLOS ONE, a few weeks ago and a third peer reviewed manuscript is underway. Second, we established a series of collaborations including, for example, the extension of our RECOVER study with Virginia Tech to provide, for the first time, a multidimensional understanding of recovery from opioid use disorder. Real-world experience with SUBLOCADE has been generated in Australia with the COLAB study in Canada, where we looked at the distribution of reported non-fatal overdose events following SUBLOCADE treatment versus standard of care, including sublingual buprenorphine and methadone; and in Europe, with the EXPO study, which is the first prospective randomized comparison of SUBLOCADE with standard of care. Third, new independent studies, some of which have already been published, looking at SUBLOCADE treatment in five different settings, the criminal justice system, veteran health administration, high-risk patient populations, especially those exposed to fentanyl and synthetic opioids, rapid initiation and comorbidities, including infectious diseases, and the co-use of opioids with psychostimulants. The fourth pillar is summarized on the next slide. And this is all about the evidence-generation strategy with our own SUBLOCADE life cycle management plan, looking at generating even further evidence regarding the use of SUBLOCADE and fentanyl in synthetic opioid users, on how to treat opioid use disorder subjects in the criminal justice system to potentially decrease the risk of overdose after release and improve linkage to care, and how to initiate treatment in the emergency department to potentially decrease the rates of relapse and overdose and facilitate transitions to community-based care. We are also aiming at further evolving the opioid use disorder treatment paradigm by demonstrating that longer treatment duration may ultimately lead to improved patient outcomes and the defined treatment cessation strategies. On the pipeline front on the next slide, our strategic collaboration with Aelis Farma for the development of AEF 0117 for cannabis use disorder is progressing as planned, with the Phase IIb study design and protocol finalized for a start by the end of the first quarter, beginning of the second quarter of this year. Other chemistry, manufacturing and controls, non-clinical toxicology and clinical work streams are also progressing in parallel as planned. Our selective orexin-1 receptor antagonist for opioid use disorder program completed its Phase I single ascending dose. The second Phase I multiple ascending dose has been put on clinical hold by the FDA back in September last year based on non-clinical findings from another similar development program not sponsored by Indivior. A clinical hold waiver is now contingent upon favorable outcome of an additional repeat-dose reproduction toxicology study, the final study report of which is tentatively due in the second quarter of this year. In parallel, major progress has been made on the formulation and chemical development fronts. Last but not least, our GABA-B-positive allosteric modulator program for alcohol use disorder has identified two lead molecules that are going through primary and secondary in vivo profiling studies for candidate selection and IND readiness. Thank you. And let me hand it over to Ryan for the financials update.

Thanks, Christian. Good morning, and good afternoon, everyone. I will quickly touch on some highlights for 2021, but will devote most of my remarks to our 2022 guidance and drivers. Looking at 2021, our financial performance was very solid, and our results for the year overall were within or above our stated guidance ranges across all of our key metrics. Highlights include total 2021 net revenue growth of 22% driven by an 88% increase in SUBLOCADE net revenue to $244 million, continued SUBOXONE Film resiliency and steady progression of PERSERIS, albeit from a low base. SUBLOCADE reached net revenue of $75 million in Q4, increasing 92% versus the prior year period. You should note that this included approximately $4 million of year-end stocking. However, even if we adjust for the stocking, we would still have seen strong double-digit increase in net revenue versus the prior quarter. Turning to SUBOXONE. The US film business grew 10% for the full year with particularly strong growth in the fourth quarter. The performance in Q4 reflected an increase in market share to 22% as a result of being put back on the New York State formulary, as well as trade stocking of just over $10 million. As we have continually stated, we do not actively promote this product in the United States. Our full year 2021 adjusted operating expense, which, as a reminder is SG&A and R&D combined, was in line with our expectations at $477 million. We had a step-up in sales and marketing investments beginning in the second half of 2021, and R&D expense increased during the year due to higher activity levels versus 2020 when pandemic restrictions impacted planned activities. These investments, which will annualize in 2022, are intended to further our leadership position in OUD treatment, provide us increased manufacturing capacity and to accelerate our diversification efforts with PERSERIS. I'll detail these and the other OpEx expense impacts to our full year 2022 outlook shortly. Continuing down the income statement. On an adjusted basis, we more than doubled operating income in 2021 versus 2020 to $187 million. This resulted in an adjusted operating margin for the year of 24%. Adjusted net income for the year almost more than doubled versus 2020 to $140 million. The strong operational performance helped drive our strong overall cash performance, which I'll turn to now. Taking a closer look at the balance sheet and our cash. We are in a strong position with considerable financial flexibility even after completing our $100 million share repurchase program. Our year-end gross and net cash positions were $1.1 billion and $853 million, respectively. In terms of capital allocation, our first choice remains to invest in the business, as Mark highlighted. As demonstrated in the recent past, to the extent we find ourselves with excess capital, we will consider all options, including further capital returns to shareholders, as well as assessing organic and inorganic growth avenues available to the business. Now turning to 2022. As you have seen in our guidance, we will fully annualize the second half 2021 investments we made to support the long-term growth of our LAI technologies, as well as extend our leading position in addiction science through [ph] the new studies Christian just outlined. By the time we exit 2022, we believe we will have put in place the scalable infrastructure needed to achieve our long-term net revenue goals for each of SUBLOCADE and PERSERIS. Even including the near-term impact to operating margins of these investments, we still expect adjusted operating income to be at a broadly similar level to last year based on the mid-points of our guidance elements, and we expect this performance to translate into positive cash flow from operations. I'll now provide more detail on the assumptions behind our guidance, starting with net revenue. We expect to deliver total net revenue of $840 million to $900 million. At the mid-point, this would represent growth of 10% over 2021. We are experiencing some near term constraints related to the resurgence of COVID with the Omicron strain that we expect will result in the second half of 2022 being stronger than the first half for SUBLOCADE and PERSERIS. These near term constraints include challenged access to parts of our OHS platform and general staffing shortages at large hospital systems. We are expecting improvement as the Omicron wave subsides. These variables are reflected in our range of net revenue expectations for both SUBLOCADE and PERSERIS of $360 million to $400 million and $27 million to $32 million, respectively. I would highlight that based on our 2022 net revenue guidance, SUBLOCADE will surpass film and become the group's largest net revenue component this year. The mid-point of SUBLOCADE's expected net revenue range would suggest 56% year-over-year growth. You should also note that first quarter net revenue for SUBLOCADE could be additionally impacted by the unwind of the year-end stocking I referenced earlier, but we would still expect sequential net revenue growth over Q4. For PERSERIS, first half 2022 will be a period of onboarding and training for the expanded sales team, with accelerated net revenue growth expected in the second half of 2022. With regards to the US film, we have historically modeled share erosion based on the performance of analogs. And as you are all aware, film share has continued to hold up significantly better than this implied, despite the fact that we are not promoting the product. For 2022, we are changing our modeling assumption to better reflect the demonstrated experience in the last two plus years. Specifically, despite the share uptick in the fourth quarter, our guidance for 2022 assumes a similar overall share erosion rate to what we experienced last year, about 1.5 share points, reflecting any potential formulary decisions. While we are confident in the outlook for US net revenue in 2022, we expect growth at the company level to be modestly impacted by a decline in Rest of World. Pricing in France, our largest EU market, has come down by double digits on a percentage basis due to generic pricing actions. And we are seeing ongoing competitive pressure in the legacy tablet business in Western Europe. The headline performance in the EU will also be impacted by the divestment of the Rest of World TEMGESIC business in 2021, which had annual net revenues of approximately $5 million. While we do expect positive growing net revenue contribution from our new products, SUBOXONE Film and SUBLOCADE, they will be more than offset by the expected declines in the legacy products. As Mark mentioned, however, we do see the shift in mix towards new products leading to a return to net revenue growth in rest of the world in the years ahead. Looking at gross margin. We are expecting to deliver in the low to mid-80s. This reflects the continued resiliency of film and expected cost inflation in 2022. In the medium to long-term, we remain confident that the shift in net revenue mix towards SUBLOCADE should support higher gross margins. Turning to operating expense. To provide greater transparency in our guidance, we are now breaking out R&D and SG&A separately. Our total operating expense for full year 2022 is expected to be in the range of $520 million to $540 million. Breaking down the components of that total OpEx range, we expect SG&A to be $440 million to $455 million and R&D to be between $80 million and $85 million. Our SG&A range at the mid-point reflects a 5% increase versus 2021. In the coming year, we will see the full annual impacts from the SUBLOCADE commercial investments Mark discussed, mainly headcount related and the doubling of the PERSERIS sales force with an additional 65 FTEs now in place to accelerate its net revenue progression. In addition, we are exploring the possibility of a US listing and would expect to incur additional expenses related to requirements to support this initiative. Turning to R&D. The mid-point of our full year 2022 guidance suggests an increase of 59% compared to 2021. The uptick includes investments to advance early-stage assets, increase our production capacity of SUBLOCADE, as well as to fund important life cycle management and post-marketing studies for SUBLOCADE. It is important to note that some of this investment is activity carryover from the COVID period, where population movement restrictions did not allow us to meaningfully progress studies in 2020 and 2021. Factoring the above, we would expect adjusted operating income to be broadly similar with 2021's level of $187 million and expect to generate cash from operations for the full year. With that, I'll turn it back over to Mark to kick off the Q&A portion of the call.

Thanks, Ryan. That concludes our formal remarks. And we'll open to Q&A at this time. I hand this over to Roberto.

[Operator Instructions] We have the first question from Christian Glennie from Stifel. Please go ahead.

Yeah, good morning, good afternoon, gentlemen. And congratulations on a very strong fourth quarter and full year results. I guess three questions and taking each one in turn. Just on SUBLOCADE and a couple of things here. One is I didn't catch the stocking contribution in the fourth quarter. And in terms of the scrip data we've seen so far, there's relatively modest growth in the first few weeks this quarter versus the prior quarter. Is that explained then really by what you're saying about a bit of Omicron impact and a bit of unwinding of that stocking?

Thanks for the question. I'll ask Ryan in a second to talk about the stocking. I think, listen, when it talks - when we start to get into Q1, we'll report out that data with our Q1 results. But listen, there is an impact, as we've said in our release and our comments, there is an impact from Omicron. It reduced our access a bit to physicians during the period, but we're starting to see that as we're seeing in the press starting to see that wane off. So Ryan, could you give a little bit more color on the stocking we saw at fiscal year end?

Yeah. On SUBLOCADE, we saw about - like I've mentioned in my release, about $4 million to $5 million of stocking. That's primarily what we would categorize as price increase speculation potentially or year end wholesale decisions. We did take a price increase at the beginning of 2022, so that may be the decision of the wholesalers. That's something that usually does unwind during the first month of the next quarter, but we'll see how that plays out.

Okay. Thank you. That's helpful. And then related to that, if I may, I mean, is it possible to break down a bit more where you're seeing the growth coming from, whether it's - is it new patient starts? Is it a longer duration of treatment with SUBLOCADE, price increases and the like? Just what's the mix there in terms of driving current growth then?

Yeah, it's a great question. And I think, listen, what we've really seen as we've pivoted our strategy and really aligned our organization behind the Organized Health Systems is recall, this is an area where physicians have support systems around them to support the nature of this product, the specialty pharmacy product has more complexity with getting prior authorizations, delivery of the product, handling a controlled product on the premises. And having the infrastructure around them in the Organized Health Systems allows them to take off their CEO hat of their practice and focus really on the best interest of the patients. And as we've continued to focus there, put in place the ecosystems, we've seen a disproportionate amount of our growth, you know, the majority of our growth coming there even though we're seeing continued growth in our heritage platforms. That growth, I would say, is multi-factorial, almost as you've mentioned it. We are driving both new HCPs in and depth of prescribing, which is getting us new patients. And we're seeing that patients are liking the medication and staying on treatment in line with our expectations. And as Ryan said, we took a gross kind of mid single digit 5% price increase on the product. So all of those things are going to be driving our progress moving forward. In addition, within Organized Health Systems is the criminal justice system. And we've talked a lot about this. It's a crucial area for meeting patients where they are. 60% of our patients at one point in time in their journey pass through the criminal justice system. And we think getting them treatment while incarcerated or upon release really will help them on their journey to recovery. So that's an area we invested quite significantly in, in the back half as we staffed up a dedicated sales force. I hope that's helpful.

Yeah. Thank you. That's helpful. Turning to deployment of capital, I guess, obviously, you did the buyback last year. You said you're still considering that, but obviously flagging potential inorganic or M&A opportunities. Just wonder if you could elaborate a little bit more, what more could you say around what sort of targets you might have in mind on the inorganic side, areas of - therapeutic areas and or stages of development, maybe something nearer market or on market today. Anything you could say around that?

Yeah. Capital allocation, obviously, we've got a very straightforward capital allocation strategy. It's fully aligned with our strategic priorities. The first thing - the first priority and top priority is that we invest behind SUBLOCADE to drive its growth to the $1 billion plus in net revenue. We invest behind diversification. We've seen that with PERSERIS as we've gone to the national sales force. And we're bringing products, the film and SUBLOCADE, to the Rest of World markets. Additionally, and you saw this last year, we're looking to both expand and progress our pipeline. We saw that with bringing inbound the Aelis cannabis use disorder asset and the work Christian and his team have done to advance the OX1 opioid use disorder asset, as well as the GABA-B asset, which is focused on alcohol use disorder. And after that, yes, you know, with $1 billion of cash, we're looking at other avenues to drive shareholder value, which could be inorganic options or potential returns of capital, and we saw that last year in 2021 as we did $100 million buyback. As we look towards inorganic opportunities, obviously, we are the global leaders in addiction, and so we look quite near to the core and then, of course, comorbidities in behavioral health and CNS areas.

Okay. Thank you. And finally, if I may, just on the US listing plans then, is there - obviously, you don't necessarily need the cash, but is there a prospect that it could be a straight lift or something around a capital raise given the perceived wisdom sometimes getting people involved in a raise could increase the levels of interest and uptake initially in the lift? And assuming that there's broad shareholder support, is this a potential 2022 event, I guess, as a follow-up?

Yeah. I think first and foremost, we don't want to get ahead of ourselves here. I think the key is we've had some inbound traffic from investors, both on the US and the UK side that have been asking for this, they think there's potential value. And what we need to do is continue with our consultation with all of our shareholders to gain their views and their insights on this potential strategic action. Once we've done that fulsome sort of engagement, only then can we make a decision with regards to the best way forward. So I don't want to put the cart before the horse here. I want to make certain that we gain our shareholders' views moving forward, and then we'll look to next steps.

Okay. Thank you. That's helpful.

Thank you for the questions. Appreciate it.

Thank you for your question. We have the next question from James Vane-Tempest from Jefferies. Please go ahead.

Yes, hi. Thanks for taking my questions. A few if I can, please. With the 49,000 patients of SUBLOCADE, just thinking about as we grow there, are there any states, regions or payer groups where we can see the most progress as we look through this year? The other question is just on SUBOXONE, as we saw last year, it seems as if the messaging was you didn't know whether there's going to be another competitor, we saw sort of raises sort of throughout the year. Whereas this year, it seems as if sort of the level of SUBOXONE you're expecting to continue to be stable this year. And I'm just wondering, what's changed on your outlook or assessment of that or is the risk profile of your guidance changed? And then the final question is just looking at the Brixadi second CRL in December, just wondering how we should think about your overall peak sales. I know you said more than $1 billion, but does that change anything directionally? Thank you.

Thanks, James, for the questions, and I'll just take them, I think, in order. I think you highlighted that 49,000 patients on SUBLOCADE, and that's well on our way to our $1 billion plus of revenue. And when it comes to where do we see concentrations of those, is there regional sort of preferences, a lot of that is based on where the epidemic is most pointed, and that tends to be in the coastal regions of the US. From a payer standpoint, really, it's almost agnostic. And really, the focus here for us is getting to the Organized Health Systems to really be able to pull through both HCPs and patients on this journey. And that includes the criminal justice system that I spoke to a little earlier in the question. So that will be the focus. Our strategy is proven, I think, now as we've seen the growth. And our capabilities are also proven 1.5 years into our restructuring behind the Organized Health Systems. As pertains to SUBOXONE, listen, I think this is an important one. When generics launched, this is a unique disease space. There are no analogs for opioid use disorder, and so you need to follow the data you have, which is the analogs across multiple disease spaces. And we use that to take our best estimate of what would happen in the market. There's nothing structurally different than we saw, and we didn't have experience in the market. As time has evolved, and now we're entering year three living in COVID and with generics, we do have a bit of data, right. The last 12 to 18 months has shown us that the current market forces in the sublingual market have stabilized out a bit. And with that, we think looking at the track record over the last 12 to 18 months, where we tend to lose about 1.5 share points over a 12 month period, is our best estimate of the future. Listen, there's still the analogs out there, but we think that's the best estimate for 2022. With regards to Brixadi and how does that impact our peak sales, listen, I think the key here is this disease space has a huge unmet need. We've talked about the opioid overdose deaths. We've talked about the treatment gap and only - the fact that only 20% of patients are in here, and long-actings have a natural role in an adherence-based disease space. You take that, reducing decisions from 365 to 12 choices a year, and you take the closed distribution benefits that all LAIs would have, and then on top of that you take the paradigm shifting profile that we all know about SUBLOCADE, the unique PK profile, 2 nanograms per ml in the blood system, which gives you the receptor occupancy that blocks on top usage - the reinforcement of on top usage. And we think we've got this paradigm shift that's going to drive at least $1 billion in sales. So we'll leave Brixadi and Braeburn to their side of the business. We're focused on helping patients on their journey to recovery.

That's great. Thank you.

Thank you, James.

Thank you for your question. We have the next question from Peter Testa. Please go ahead. Your line is open.

Hi. It's Peter Testa, One Investments. A couple of questions, please. Maybe just firstly, on SUBLOCADE. Can you give some sort of understanding about the OHS traction and criminal justice traction gained in the latter part of the year when you - on a channel basis, whether it's systems open, doctors access, criminal justice system related, just so I can kind of understand or follow the traction you're getting there?

Certainly, Peter. And thanks for the question. I think you saw a major step-up in the fourth quarter with regards to what we call access to our Organized Health Systems. And we've been targeting over the last few years the top 500 Organized Health Systems. And the team has access that's at least a script through those, in 400 of those. Now that's a huge strategic sort of evolution for the team to open those up to do all the hard work and heavy lifting to do that. And now that focus is on opening up the children of those parents. Those are Organized Health Systems. Now you have to go to the individual sites that many of these have, and you have to open up more HCPs and deeper penetration of treatment. So we're looking to continue that penetration within the HCPs and within the Organized Health Systems moving forward. As it relates to criminal justice systems, there is about 5,000 criminal justice systems across the US. We're focused on the top 1,000. And obviously, we made the decision to expand to a dedicated sales force in the back half of this year. And while we've made some good progress in the criminal justice, we had a large one-off order in the second quarter of about $7 million and we've seen continued uptick. We expect the primary strategic progress will be in the periods ahead. And that's - some of that is supported you know, by some of the legislation that we're seeing out in the market. I think a great example of that is New York, which passed the law in the first quarter - fourth quarter, excuse me, that said that you must treat patients suffering from substance use disorder while they're incarcerated. Now that goes into effect in February. Of course, the way these things work is those systems have to work through how that will work, work through the bureaucracy, work through that. So it's not something that instantaneously in February opens up the floodgates. But it certainly is a monumental sort of shift in how we think about treatment. I think we're also seeing some of that at the federal level, where the Medicaid Reentry Act is in Congress and being considered. And that would allow for people to get health care coverage 30 days before their release so that they can get opioid use disorder medications. And so if that were to pass, that's another significant hurdle in meeting patients where they're most able to start their recovery journey. Hope that helps.

Yes. No, indeed. And on the criminal justice, there's also been the DOJ money you set aside. Is that - when you think about in terms of a number of different programs to try to support the uptake of treatment, concepts of treatment through the justice system at that level as opposed to the incarceration level? Is that something which is you see as something you direct sales force towards helping and supporting or more just a background of contribution to you?

Now great question, Peter. I think, listen, there is more funding available in this space than ever before. And I think some of these settlements have been directed only towards treatment for addiction, whether that's evidence-based treatment, education, prevention, et cetera. And I think that's a critical element here. I think there are grants available in criminal justice systems to be able to get medications. And there are databases available for grant finders that folks are able to use and we're able to point them to with regards to gaining access to those. So we see that as a vital tool for folks to increase medically assisted treatment.

Okay. And then on the SUBOXONE side, you obviously have the Medicaid channel and you have the insurance channel. When you're assessing your - how that works out, have you seen any particular changes in the insurance channel in terms of payer position or co-pay or anything else which would be of relevance?

Peter, I'm going to hand that one over to Ryan to address.

Yeah, good morning. So no, not at this point. We have not heard of any significant formulary changes that would impact film. As we mentioned in the past, majority of our volume is on state Medicaid at this point. Those formulary meetings for the states happen between now and Q2, but we'll probably learn more during the next couple of months. And beyond that and since we don't promote the products, we leave the market dynamics aside at this point.

Okay. All right. And then just last question, on the R&D step-up when you think about the aspect supporting SUBLOCADE, can you give any sense as to what you would regard as the 2022 key, say, outcomes from some of those studies? Maybe detail which ones we should look for and maybe when you think you'll be able to get any further into the community on that? Or is it more going to be longer studies?

These will be longer studies. We expect to see the bulk of some of these studies in the period between 2023 to 2025.

Great. That’s super. Thanks very much for the answer.

Thanks, Peter.

Thank you for your question. There are no further questions. I will hand back the conference to Mr. Crossley.

Thanks, Roberto. And listen, that concludes our fiscal year end results. On behalf of the entire Indivior team, I'd like to thank all of you for your continued interest and support in the Indivior story. Hope everyone has a great day. Thank you.

That concludes the conference for today. Thank you for participating. You may all disconnect.