Good day, and thank you for standing by. Welcome to the Indivior PLC Q1 2024 Financial Results Conference Call. 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 be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jason Thompson. Please go ahead.

Thanks, Evan, 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 at indivior.com. I'll now turn the call over to Mark Crossley, our CEO.

Thank you, Jason, and good morning and good afternoon, everyone. And thanks for joining us at our first quarter results call today. Here with me are Ryan Preblick, our Chief Financial Officer, and Christian Heidbreder, our Chief Scientific Officer. I'll start the day with an overview of the Q1 results and a progress report against our strategic priorities, and then Ryan will then discuss the Q1 results and our fiscal year 2024 guidance. Following that, we'll provide an update on our primary listing initiative and conclude with questions and answers. Turning to the key messages, led by SUBLOCADE, we delivered another quarter of solid double-digit top-line growth in the first quarter. Total net revenue grew 12% versus year-ago quarter to $284 million. First quarter adjusted operating profit of $70 million declined modestly versus last year, due to commercial investments behind SUBLOCADE and the acquisition of Opiant, which closed in March last year. We expect to generate positive operating leverage on these investments as we move through the current year. Turning to SUBLOCADE, we delivered year-over-year net revenue growth of 36% in the first quarter, which is in line with our full-year growth expectations. SUBLOCADE's sequential net revenue growth of 2% was lower than we planned. We believe growth in dispenses were negatively impacted by two external forces, including a higher-than-expected rate of Medicaid patient disenrollments and the cyberattack at Change Healthcare. Let me provide more color on how each of these impacted SUBLOCADE's growth in the quarter and why we remain confident in our full-year 2024 net revenue guidance. First, the most recent data on Medicaid renewals indicates a higher-than-expected number of patient disenrollments of over 20 million. Recall at the peak during COVID, over 90 million patients were enrolled in Medicaid. This is particularly relevant in opioid use disorder…

Thanks, Mark, and good morning and good afternoon to everyone. Overall, I'm pleased to report a solid quarter of execution considering the unexpected headwinds in the quarter that Mark referenced. Looking at the first quarter results in more detail, starting with the top line, total net revenue of $284 million through 12% versus the year-ago quarter on a reported, and on a constant currency basis. By geography, total U.S. net revenue in the first quarter grew by 15%, versus the year-ago quarter driven by SUBLOCADE. The rest of the world was down 2% on a reported and on a constant currency basis. In the rest of the world, Q1 was slightly impacted by shipment timing. We did see good growth from SUBLOCADE outside the U.S. with net revenue up 33% to $12 million. And overall, we continue to expect the rest of the world to grow in full year 2024. For total SUBLOCADE, we delivered year-over-year net revenue growth of 36% in the first quarter. Although this was in line with the midpoint of our full year guidance expectations, SUBLOCADE sequential net revenue growth of 2% and U.S. dispense growth of 4%, were both lower than expected. Both metrics were affected by the items Mark discussed, which I will expand on. First, as we just detailed, Medicaid disenrollment dynamics had a disproportionate impact on our company as more than two-thirds of SUBLOCADE patients are covered by Medicaid. This impact accelerated in Q1, beyond the low single-digit headwind we had seen in prior quarters. Looking ahead, we expect this trend to begin subsiding in the second half of 2024, as Mark noted. Second, as a result of the Change cyberattack, many SUBLOCADE treatment providers were unable to process claims and verify patient eligibility. This impacted our SUBLOCADE net revenue performance in…

Thank you, Ryan. I want to close with some additional detail on our proposed transition to a primary U.S. listing, while maintaining our secondary listing in the U.K. As I highlighted earlier, we have received strong support from shareholders, and so it is our intention to move forward, to a shareholder vote on May 23. If approved, we are targeting an effective date in late June. Subject to shareholder approval and as part of this effort, we are planning a number of investor awareness roadshow meetings, as well as comprehensive analyst teach-in on May 23 in New York City, the same day as the shareholder vote, earlier that day. Some virtual details of the analyst teach-in will be provided on our website. Assuming the U.S. primary listing proceeds, we intend to transition to reporting in U.S. GAAP beginning in January 1, 2025 and thereafter. We plan to provide an update later in 2024 regarding this process, during which we will set out the key reconciling items, compared with our current IFRS reporting. With that, I will turn it over to Evan to facilitate Q&A.

Thank you. [Operator Instructions] Our first question comes from the line of James Vane-Tempest from Jefferies. Please go ahead. Your line is open.

Thanks very much for taking my questions. I have three if I can please. And firstly, just on the SUBLOCADE ex U.S., I think you mentioned six countries. I was just wondering where it is launched at ex U.S. The second question is, just when I look at the SUBLOCADE, and the performance and these versus consensus, it seems to be around $15 million or so. So, I guess when we look at the guidance given Q4, from memory is sort of seasonally weaker, is it fair to say you are more likely going to be at the lower end of your guidance? And then the third question is just around destocking you saw. Is that potentially related to the Change attack? I mean, can you give us a sense in terms of what the customer visibility you have is, please? Thank you.

Thanks for those questions, James. Just to start with the first one on the ex U.S. SUBLOCADE markets, we are in Finland, Germany, Sweden, Australia, Canada, and Israel. So, those are the markets that we are currently in. With regards to your question on, I am going to start with the destocking and then build to the consensus. What we saw was, we saw destocking in the period and we have reached out to our partners, because we saw the weeks of stocking drop from 2.1 to 1.7, equating to the 5 to 7 that we talked about. And as we talked to the partners, they indicated broadly there were no plans to reduce their stocking. What we believe is with the, disconnect and the data they use for their algorithms on inventory that that caused the decrease in days. So, we believe there is a connection to the Change cyberattack. As relates to consensus in the lower end, we have done a significant amount of work in this place. I will start with first, there is such a tremendous unmet need in the space, less than two in 10 people in treatment. SUBLOCADE is still early in growth with just under a 6% share. Strategically, our structure, the excellence of execution by the team and the differentiated product profile that we have, we have looked at the building blocks in the balance to go as we regain and pass through the transitory items. Strong CGS growth, which is over 20% quarter-on-quarter, as well as the sales force expansion, which increases our reach and frequency and have comfort, with the entire range of $820 million to $880 million for SUBLOCADE.

Thank you.

Thank you, James.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Max Herrmann of Stifel. Please go ahead. Your line is open.

Great. Thanks very much for taking my questions. I have got a few. I'll limit it to three at the moment, maybe come back later. Just trying to first of all just touch on SUBOXONE Film and the volatility kind of month-on-month and what's quarter-on-quarter was driving that, because obviously you have this odd quarter where the rebating impacts the reported number, when you change the rebate provision. I wonder whether, there was anything within the first quarter that led to that, decline from the fourth quarter. That is kind of first question. Secondly just in terms of the litigation on the tooth decay, I noticed there is now 325 cases? I am interested to know, if you have a view on how many of those are single tooth, because I believe the judges commenting that those, will never get to a significant claim - the kind of now the plaintiff lawyers are trying to exclude those from future cases. So, I just wanted to understand that. And then in terms of Albertsons, you talked a little bit about the growth in terms of the sales force that is now effective. I'd be interested to know - the timing of that and whether we are really just like the start of the growth potential there. So, I'll leave it with that for now? Thank you.

Thank you for those, Max. Maybe what I will do is I will cover those in reverse order. I will cover the Albertsons growth, the litigation, and then I will hand over to Ryan to talk through the SUBOXONE film sort of dynamics. So let's start with Albertsons. I think you have kind of indicated where we are. This is the very early stages of reopening independent physicians' ability to prescribe SUBLOCADE, because of the administrative nature. These alternate sites of care alleviate that burden, by being able to go there. Very pleased to be partnering with Albertsons, have some good coverage, but it is certainly not a seamless nationwide network that, we are looking to create through time. So, we are in very early days of this. We spoke to an increased sales force, to increase the reach and frequency in both our organized health systems, but have the capacity to start to call, on these independent physicians. That sales force was just put in place in the first quarter, so they are just out there. In addition, the team in the home office, as you can imagine, is working a portfolio of partners, to broaden that network so that it is nationwide coverage, and as close to the retail network as we can get. We will never get there, but that is our aspiration is to have these as close to the patients as we can be. So very early days on that, and this will be quarters before we start to build out that nationwide network. On the litigation, absolutely right. We highlighted the 325 cases. I think for me, the disclosure has been updated, but the key here is it is the very early stages of the case. This has only recently become an NDL. There have only been a few status conferences with the judge. Most of those are procedural in nature. Given the statute of limitation, expecting to expire in June, we are expecting to have more cases here. And throughout time, we will understand, one, the number, and then we will start to work through, what the cases look like as discovery begins. But again, it is very early stages and unable to comment with regards to the quality of the individual cases. I will note one more thing with regards to that, and we have included an update in the disclosure. Is we have alerted our insurers, our product liability insurers, with regards to the case. They have agreed to pay defense costs, but have filed a notice of reservation with regards to coverage on the product liability side, which our lawyers have indicated is customary for these sorts of matters. So Ryan, do you want to talk to the SUBOXONE dynamics?

Good morning, Max. So on SUBOXONE film, really there are two things at play here. One, knowing that there are now four generics in the marketplace since last year, and the point that we do not promote this product, it was not unexpected that we would lose some share points. At the end of fourth quarter, going into Q1, we did lose about a percentage. So that is one of the reasons, why you saw the drop from Q4 to Q1. And then, in addition to that, we just run our normal balance sheet reviews every quarter to take a look at our accrual provisions. These assumptions and adjustments are reviewed by PWC. At the end of Q4, 2023, we did have a positive trade spend update. When you looked at Q1, there was no adjustment at that point. So, those are the two main reasons, of why you are seeing the step down in net revenue on film.

Great. Thank you.

Thank you, Max.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Chase Knickerbocker from Craig-Hallum. Please go ahead. Your line is open.

Good morning, guys. Thanks for taking the questions. So first, I just want to make sure I understand kind of, the cumulative effect of these headwinds on SUBLOCADE. Mid to high single-digit sequential growth headwinds from change in Medicaid. And then, the $5 million to $7 million kind of destocking is on top of that. And then, when kind of think of that distributor destocking, should we think of that being a tailwind to Q2? And have kind of seen that ordering already fill that shortfall so far in April?

So absolutely right on your interpretation on that, Chase, those are additive. The stocking is in addition to the underlying dispensed impact that we are seeing for both new patients, but also retention in treatment, where we did see a disconnect from our historical retention slant refill rates that, we believe in the quarter impacted us, by about 6,000 units, so a significant impact where we saw a disconnect and associated with the two transitory items. On the stocking, we do expect that stocking to return as the data clarity cleans up associated with the Change cyberattack, and would expect that whether that is Q2, or into Q3, but over the next coming months. Absolutely, we expect that to come back.

Got it. Maybe just putting a finer point on kind of the midpoint of SUBLOCADE guidance, would indicate kind of stronger than seasonal sequential growth in the last three quarters of the year here. So, just to kind of put a fine point on maybe, how these headwinds abate and then some of these patients come back, and get dosed this quarter and next. So basically kind of mid-delayed March, there were patients that were not able to get verified, for redosing kind of at that three-month renewal time point. And then, there were also patients not able to clear the prior off that, were kind of new to therapy. So kind of both those patient groups, would likely come on the drug in the April and May time frame, as systems are kind of back to normal, and things are able to get adjudicated. Is that kind of how we should think about it - as kind of a bolster to growth in the midway, midpoint of the year here?

I think that's what I would call one factor to the growth. I think, we have a continuing headwind of the managed - of the Medicaid renewal continuing, through to the half year where then we'll annualize that, and that headwind will go away in the back half. But I think the other elements with regards to the cyberattack and things like that, you're thinking of it correctly. The patients should return to treatment either, by re-adjudicating with the insurance they're in, or if it's Medicaid reentry, they'll go somewhere else to get the insurance coverage. So that will be a tailwind. But also I can't understate, our belief in the proven strategy, structure and operational excellence of the team that's, just been proven over the last three years, as we've worked towards penetrating organized health systems. The differentiated asset that we have with unprecedented evidence and real world evidence, especially in a space with synthetic opioids. And when you look to those, CGS which was not impacted by either change, or the Medicaid reentry grew it, over 20% quarter-over-quarter. And we have a sales force expansion, which increases our capacity over 50%. So, we've got a few additional tailwinds, to the ones you highlighted with just patient reentry, or re-adjudication.

Got it. And then just last from me and I'll hop back in queue. Just on CGS, it's fair to say that, that beat your expectations in the quarter, correct? And then, maybe speak to in that channel, if you're hearing about any customers in the criminal justice system, doing any sort of competitive sampling, or is that a space where, you'd kind of still have that to yourself?

Yes, I would say in line with expectations. I think we've, this is earlier on in its journey. We just two years ago put in a dedicated sales force for CGS and have done that. So activation, is still early days here. I think when it comes to competition, we expect them to turn to criminal justice. But I think, with our unique profile of a product in, which you get to therapeutic levels in four to eight hours, that therapeutic level is two to three nanograms for the 100 milligram dose. It's five to six nanograms per mil, on the 300 milligram dose that lasts the entire month long, we think we have a unique offering in the criminal justice system channel versus competition.

Great. Thanks, guys.

Thank you, Chase.

Thank you. We'll now take our next question. Please stand by. Our next question comes from the line of Thibault Boutherin from Morgan Stanley. Please go ahead. Your line is open.

Thank you very much. First question on the [indiscernible] and the timeline. If you could give us a little bit more details, when did the disruption started exactly? When was it resolved? And just confirming that there is no lingering disruption today. Second question on SUBLOCADE product improvement. You recently, I think, had an approval for a longer shelf life at room temperature. So, how much of an impact do you expect this to make? And are you working through any other, new improvement or feature for SUBLOCADE, or level enhancement that could continue to improve the product profile? And just a last question on the pipeline. The timeline for the three-month formulation licensed from Alar Pharmaceuticals. Just wondering if you are thinking about traditional development timeline for a new innovative product, which would suggest that it would probably not hit the market before end of this decade, or could this actually go earlier, and could there be a way to accelerate development here, given its reformulation? Thank you.

Thanks for the question, Thibault. I'll handle the first two and then I'll hand off to Christian who's with us to talk about, that very attractive asset. So, with regards to Change, listen, I think as you look at the timeline, they were impacted by the cyberattacks starting on February 21. We became aware of it with various press releases that started to hit the wire March 5. With regards to that and have been tracking that quite diligently, hearing, subjectively from the field, seeing some of the impacts on data, which is on a, one and a half to two-week delay. Everything that we're hearing and seeing is that they have put in place the necessary interventions to free that up. I think some of that is indicated by us in the early days of April returning to, the dispense growth that we were seeing in the early days of Q1. So, I think that's a positive sign that that headwind is being resolved, and the market has adjusted to it, albeit after, about a five-week disruption. With regards to the SUBLOCADE product improvements, I'll provide some color and we'll invite Christian to add anything he has on those as well as talk to the three-monthly. You're absolutely right, Thibault. We have received improvement for a 12-week out-of-fridge indication. We're currently in the process of trading out that stock and once we are solely in, the 12-week, that will be something we can talk to doctors about. I think that's exciting at the doctor level, because for them, they can only hold product if the patient doesn't show up, for a period of 10 weeks or less. So, this covers that entire period. And so, a physician, wouldn't have to have a fridge when working with a specialty pharmacy. So, that should help that, albeit we haven't seen a fridge as a barrier, in the launch to-date and there's fridges out there. So, this is probably more of a new physician sort of dynamic. We are also working on another, a bolus of other sort of items, some for the label and some real-world evidence. I'll speak to the label items. We're working on, as part of our 401 study, alternate injection sites, so that we can move away from the abdomen to back of the arm and the buttocks. And we're also working on rapid induction on our monthly product and that would be the, from what we can see for competitors, the only monthly product with rapid induction. We expect those submissions to go to the FDA in Q3. If we get an accelerated review, we could hear back in Q1. If it's a normal review, it looks like Q3, 2025. So, with that, I'll hand over to Christian for any additional color on those, but also to talk about the Alar asset that we inbounded last year.

Thank you, Mark. No addition to the label updates. Clearly, in addition to the more formal label update studies, we continue to perform real-world evidence studies, especially to support SUBLOCADE in different subpopulations, including those suffering from psychiatric comorbidities, but also additional evidence in the criminal justice system. With respect to INDV-6001, the partnership with Alar Pharmaceuticals, we are going to launch a series of multiple pharmacokinetics studies in the third quarter of this year. We are going through a pretty heavy technical transfer from Alar to Indivior as we speak, and preparing everything that is going to be required to launch these multiple dose PK studies. That should give us a pretty good understanding on the pharmacokinetics profile, of this product by the end of 2025, at which point we will certainly organize an end-of-Phase 2 meeting with the FDA in order to determine the next steps, whether, or not we can accelerate the pivotal Phase 3 trials. That is something that we will discuss with the agency at that time.

Thank you.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Karl Burns of Northland Capital Markets, Incorporated. Please go ahead. Your line is open.

Thanks for the question. Most of my questions have been answered, but I'm wondering what you can comment in terms of what you are seeing from competition, specifically from Bricsadi, and do you see Bricsadi's entry as broadening the demand for long-acting B-met therapies? Thanks.

Thanks for the question, Karl. Listen, when it comes to launch plans and dynamics, I think I will leave those to the competition and their partners to speak to those. I think from my standpoint, nothing has changed based on what we are seeing, based on our perception of the market. There is such a huge unmet need in addiction with less than 2 in 10 patients in treatment. Adherence is such an unmet need that there certainly is room for two players in an LAI segment. And I think, we see in schizophrenia another space, with even less patients diagnosed that, there are multiple players and there is a $4 billion market there with people playing. That said, we remain, based on the dynamics we are seeing, based on where the market is, we still believe in our differentiated profile that SUBLOCADE provides. It is well-suited in this U.S. market where the illicit supply chain has been overtaken by synthetic opioids, backed by five years of HCP patient experience, and it has that differentiated profile that I spoke to later that we think is especially important given where the supply chain is. So we have - even with competition, we have conviction behind our guidance for 2024, our peak revenue guidance of greater than $1.5 billion, and then, of course, our interim guidance where we expect to exit 2025, at a $1 billion run rate.

Great. Thanks guys.

Thank you, Karl.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Max Herrmann of Stifel. Please go ahead. Your line is open.

Great. Thanks for taking my supplemental questions. Three if I may, two on R&D. I just wanted to understand the next steps, obviously, with AEF-117 for cannabis use disorder. Obviously, going to get the data in the third quarter, and then, I guess, end of Phase 2 meeting with the FDA, before the end of the year. Assuming it is positive, are you able at this point to have a view on what the Phase 3 would look like and what the timing would be? That is the first question. Secondly, just on a bit more detail in terms of the proof-of-concept study for INDV-2000, the Orexin-1 antagonist, what is the Phase 2 trial design? And then, finally, just trying to understand, it sounds like your underlying business, if I get it correctly, with stocking and the headwinds from the Change Healthcare, as well as the Medicaid disenrollment, that you are around 10% sort of growth quarter-on-quarter, which is in line with what your new patient, or patient start data suggested quarter-on-quarter growth in terms of patients on treatment. Is that what that is an indicator of as well, trying to understand the difference between dispensed units and new patients? Thank you.

Maybe I will start with the third question, and then I will hand over to Christian, who is here to handle those two R&D. I think what we have tried to indicate is we do believe the one-off sort of impacts associated, with these transitory items is mid to high single-digits. When you look at the dispenses, we are at 4%, and we talked to the fact that historical planning and our planning had us in double-digit sort of growth in the first quarter. So, I think your interpretation is accurate, Max, that the underlying business we would expect, to be double-digit quarter-over-quarter growth. So, thank you for that question. Christian, do you want to talk through AEF-117 and the Ox1 [ph]?

Absolutely, Mark. So AEF0117, as you mentioned, we are currently waiting to see the results of the Phase 2b trial. This is going to happen in the third quarter this year, after which clearly we will request an end of Phase 2 meeting with the FDA. We hope that the agency will grant us the meeting in the fourth quarter of this year. This meeting, as you know, is going to be really critical for us to understand. First, the FDA's perspective on the Phase 2b data, because this is going to determine the type of Phase 3 trial that we may want to propose to the agency, but also clearly a major discussion, as to the clinical endpoints for that pivotal Phase 3 trial, not only the primary endpoints but also the secondary endpoints. So really I cannot comment on the design of a Phase 3 trial at this stage, especially since I haven't seen the data. But again, a critical meeting with the FDA, hopefully before the end of the year. And then we will have to make a decision, as a corporation as to whether, or not we exercise the option and then move forward, to the remaining part of the clinical development plan. The INDV-2000 clinical proof-of-concept design, I will not comment on the design per se. We submitted a protocol, to the agency in the first quarter this year. We had a couple of back and forth, with the agency to finalize the protocol. In a nutshell, basically for a proof-of-concept, we are going to try to understand how we can transition patients from a buprenorphine initiation of treatment, onto this completely new mechanism of action that, as you know, is a non-opioid-based medication for the maintenance of treatment of opioid use disorder. So more on this one as we initiate the trial the second quarter of 2024.

Great. Thank you. I mean, how many, are you able to say how many patients will be in the study?

We really have about 330 patients in that clinical proof-of-concept.

Great. Thank you.

Thanks, Max.

Thank you. There are no further questions at this time. Speakers, please continue.

Thanks, Evan. With no more questions, this will conclude our Q1 results presentation. I'd like to thank everyone for their continued interest in Indivior. And we look forward to seeing everyone, at the upcoming healthcare conferences. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.