Indivior Pharmaceuticals, Inc.

Thank you, Sharon, and good morning and good afternoon, everyone. Thanks for joining our first quarter results call. Here with me today are Ryan Preblek, our Chief Financial Officer, and Christian Heidbreder, our Chief Scientific Officer. I'll start with an overview of the results for the first quarter and a progress report against our strategic priorities. Ryan will then discuss the results in more detail, and we'll follow up and move on to Q&A. Before I move on to my overview, I'll assume that you've read the forward-looking statements. On slide four, turning to the quarter, we delivered strong results, which put us on track to meet our full year 2022 guidance. This performance was driven by the team's successful execution against our strategy focused on growing sublocate in organized health systems. In summary, our first quarter net revenue grew 15% and operating profit improved modestly, even including the significant uplift in strategic growth investments we're making to grow Sublocade and Bursaris. Our financial position also remained extremely strong. I want to briefly call out a few highlights. First, Sublocade net revenue of $85 million grew 13% versus the previous quarter and about doubled versus Q1 a year ago, with year-over-year growth of 98%. With this performance, Sublocade has now surpassed Suboxone Film as our largest contributor to overall net revenue. Growth was driven by increased penetration of the organized health systems, which represented over 75% of Sublocade's growth, fueled by the platform investments we've made. The success of our Sublocade strategy means this important therapy is becoming available to an increasing number of patients at a time when combating the U.S. opioid epidemic has never been more urgent. The CDC now estimates that drug overdoses have caused more than 105,000 deaths, in the latest 12-month period, with almost 80,000 of those deaths related to opioids, which astonishingly translates to 219 deaths a day. Second, based on our strong first quarter results, we remain confident in our fiscal year 2022 guidance. Our confidence is bolstered by the strategic investments we made in the second half of 2021 to grow Sublocate and Preceris. Though no, we do continue to navigate some COVID restrictions and are monitoring the performance of Suboxone film share in light of some modest loss related to formulary changes with New York State plans. Third, based on our strong balance sheet and business momentum, as well as our continued focus on organic growth in 2022, we're today announcing a new 100 million share repurchase program. We continue to maintain a balanced capital allocation policy, seeking to both return cash to shareholders, if and when appropriate, and most importantly, to also reinvest in our strategic priorities, which we expect to broaden to the potential for business development. Moving to slide five, which is our report card, we've made excellent progress against our strategic priorities in the quarter. Our number one strategic focus continues to be delivering on the peak net revenue goal for sublocate of greater than $1 billion. As I mentioned, we delivered continued strong sequential and year-over-year net revenue growth for sublocate, and our growth was driven primarily by our organized health systems focus strategy. During the quarter, we saw an easing of Omicron restrictions across the U.S. healthcare system as the quarters progressed. Exiting Q1, we're back to achieving access to approximately 70% to 75% of our call platform, compared to 60% at the peak of Omicron in January. Turning specifically to organized health systems, I'm pleased to report we've achieved access to over 430 of our priority systems. This is just shy of our goal of accessing the 500 priority systems we set for ourselves two and a half years ago and is ahead of our expected timing owing to our investments in sublocated access in this channel. While we continue to activate new accounts, our focus is increasingly toward the depth of prescribing within those that we've already accessed. Our dedicated efforts focused on the criminal justice system are also starting to gain traction, and we are seeing sequential unit growth in this organized health system subchannel. Recall, this team was formed in the fourth quarter last year and while the upsurge in the Omicron subvariant of COVID had an impact on their early ability to access customers, this impediment is easing. Around two-thirds of patients with opioid use disorder will pass through the criminal justice system at some point during their patient journey, so this is a key element of our strategy to support patient access to Sublocade. Moving to diversification, were seeing encouraging progress from Preceris in the quarter across a number of metrics. Net revenue grew year over year, but was unchanged sequentially. While COVID restrictions were a factor in Q4 and first half of Q1, the period that primarily determines the revenue in the quarter, we're now experiencing early signs of renewed growth as those restrictions subside and the national sales force becomes firmly embedded in previously uncovered space. Specifically, we're seeing growth in both unit volume and in the number of HCPs prescribing in previously uncovered territories. In addition, sample demand from HCPs across both patient and acute care psychiatric facilities, as well as outpatient clinics, is strong. We expect this, combined with strong national coverage, to translate into growing net revenue as we progress through 2022. Looking at ex-US net revenue, It was a challenging quarter primarily due to our legacy tablet business, which is continuing to face pricing pressure from branded and generic competitors, as well as government austerity measures. Additionally, there's a mid-single-digit headwind associated with the disposal of our Temjizik business. While there have been COVID-related restrictions which have impacted our ability to make greater headway with Suboxone film in Europe, there are green shoots. and we're extremely pleased with Sublocade's steady progress outside the U.S., with net revenue growing to $6 million in the first quarter, representing an increase both sequentially and year-over-year. Overall, we remain focused on returning the rest of world business to growth and continue to believe this is achievable based on the prospects for Sublocade and Suboxone film. Turning to the two strategic pillars in terms of pipeline updates, I'll mainly focus my comments on AEF 0117, the promising asset for cannabis use disorder, on which we have a strategic collaboration and option license agreement with ALIS. We're expecting ALIS to begin the plan phase 2B study this quarter. The estimated study completion is November 2023, and the clinical study report is due to be delivered in second quarter 2024. We have option to in-license development and commercialization rights in return for a $100 million fee payment to ALIS, together with potential customary future milestones and royalties. We continue to be very excited about the potential to treat cannabis use disorder, which is increasing in prevalence with the availability and potency of current marijuana products, as well as the mechanism of action, which is the first signaling-specific inhibitor of the CB1 receptor. You will have also seen we're continuing to advance our early stage assets, INDV-1000 for alcohol use disorder and INDV-2000 for opioid use disorder. 1000 is progressing two lead molecules to dosage tolerance studies and 2000 clinical hold is expected to be resolved in the second half of 2022 as our data package submission to the FDA is expected in the current quarter. In terms of optimal... excuse me, in terms of optimizing our operating model and capital allocation, I've already highlighted we will commence a new 100 million share repurchase program. This is our second repurchase program within the last 12 months, and it underscores our disciplined approach to capital allocation that appropriately balances returning capital to shareholders with maintaining our ability to execute on our strategic priorities. Finally, on slide six, With regard to the potential additional US listing, we're currently engaged in formal consultation with shareholders and these conversations are progressing well. We expect to make a further announcement following the conclusion of the consultations at the time of our half year results in July. If shareholders are supportive, we would expect a formal shareholder vote in September and implementation in the spring of 2023. To conclude my formal remarks, the Indivior team has sustained the improved business momentum we delivered in 2021 and delivered a strong start to the year. We're confirming our fiscal year 2022 guidance and our capital allocation priorities continue to be relentlessly focused on increasing shareholder value via reinvestment in our strategic priorities with direct returns to shareholders when and if appropriate. And finally, With the expected continued momentum behind Sublocade, we have the potential for business development. With that overview, I'll turn over to Ryan to detail our first quarter performance.

Thanks, Mark, and good morning and good afternoon to everyone. We had a strong first quarter to start full year 2022. We are pleased with our execution, and we are on track to achieve the full year 2022 guidance that we communicated in mid-February. During the quarter, double-digit top-line growth was driven by the strong momentum behind Sublocade, while Suboxone's film share remained relatively resilient. Our adjusted operating income increased modestly versus the prior year, reflecting our increased net revenue and the significant investments in sales and marketing we have made over the last year to accelerate the growth of our LAIs. We also maintained our financial flexibility with more than a billion dollars in cash and investments. As Mark mentioned, this has enabled us to return value to shareholders through the announcement of a new $100 million share repurchase program. We expect this program to begin May 3rd. Now I will provide some more detail on the drivers of our performance in the quarter. Starting with the top line, total net revenue grew 15% versus the year-ago quarter. and by 17% at constant exchange rates. The increase in net revenue was mainly a function of the near doubling in sublocated net revenue. By geography, total U.S. net revenue grew by 26%. In contrast to this strong performance, net revenue in the rest of the world was down 10% year over year, excluding an unfavorable FX impact. This decline was driven by ongoing austerity measures, generic competition, and the divestiture of the Temjizik franchise, which contributed $2 million of net revenue in the year-ago period. On the positive side, sublocated net revenue outside of the U.S. doubled to $6 million, putting us on track to offset the decline in the legacy tablet business over time. Total sublocated net revenue for the first quarter of $85 million was within our expectations and consistent with our full-year view of $360 to $400 million. First quarter sublocated net revenue growth of 14% versus the previous quarter was in line with dispense growth on a like-for-like basis. Q1 sublocated net revenue included a mid-single-digit trade-spend benefit, while the fourth quarter included a stocking benefit of approximately the same amount. Moving to PSERIS, net revenue of just over $5 million was also within our expectations for the quarter. We expect the ramp for PSERIS net revenue to accelerate into the year with our now fully embedded national sales team and ability to promote the unique benefits of this important schizophrenia medicine on a more frequent in-person basis with COVID restrictions continuing to ease. For Suboxone Film, the average share of 22% in the quarter was elevated by our sole preferred status on New York State Medicaid plans going into 2022. We have, however, now seen a reduction in share at the end of the quarter to approximately 20%. In late March, New York Medicaid added generics to their preferred formulary alongside Suboxone film. This market share development, a decline of one to one and a half points of share, is embedded in our full year 2022 guidance. To date, we have not been notified of any other material formulary changes. As a reminder, we do not promote Suboxone film in the U.S. Moving down to P&L, our first quarter adjusted gross margin was 82%, down modestly from the prior quarter, but steady versus the prior year reflecting a higher mix of government business for Suboxone. We continue to expect gross margins in the low to mid-80s range for the full year, as Sublocade, which carries a more beneficial margin, continues to grow as our largest product. Our overall operating expenses were $117 million in the quarter, which are up $20 million versus Q1 of last year, reflecting the strategic investments we made in the business to accelerate growth and diversify revenue. We continue to expect operating expenses to increase in the coming quarters due to the phasing of R&D spend and to increasing sales and marketing activity. Our adjusted operating income of $54 million was up modestly versus the prior year as higher net revenue more than offset the strategic investments mentioned. For the full year, we expect this general dynamic to continue and full year 2022 adjusted operating income to be similar to the prior year. Quickly touching on the balance sheet and our capital position. During the quarter, we maintained a strong liquidity position and ended the quarter with growth cash and investments of $1.24 billion and net cash and investments of $776 million. Positive operating cash flow was offset by timing differences on cash receipts and payables on government rebates. During the quarter, we also took the opportunity to invest $139 million of our cash in investment grade income generating debt securities. This will allow us to generate some income on a large cash balance we carry. Overall, we are pleased with our execution and our financial results for the quarter. We believe our Q1 performance puts us solidly on track to deliver our full year 2022 guidance, and we look forward to updating the market as the year progresses. With that, I would now turn the call back over to Mark. Thank you, Ryan.

So in summary, a strong start to the fiscal year by the entire Indivior team. Progress against our strategic priorities and strong financial results. Additionally, we've announced a return of capital to shareholders. and continue to progress with shareholder consultation on a potential U.S. listing. With that, I'll go ahead and open up to questions and answers.