Indivior Pharmaceuticals, Inc.

Good morning and good afternoon, everyone, and thanks for joining us. With me today to discuss our third quarter results are Ryan Preblek, our Chief Financial Officer, and Dr. Christian Heidrieder, our Chief Scientific Officer. For today's call, I'll provide an overview of the strategic progress, after which Ryan will detail our financial performance and our 2022 guidance, and then we'll move on to Q&A. Turning to slide three, I'm going to assume that everyone has read the forward-looking statements. Turning to slide four, in the third quarter, we continue to see strong year-over-year and sequential growth in Sublocade. This important treatment reached a new milestone in the quarter, crossing the $100 million mark for the first time in the third quarter to deliver $108 million in net revenue. Sublocade's strong performance was the main driver of our top and bottom line growth in the period. As in the past several quarters, This performance was driven by the growing presence in the organized health systems channel. We're very pleased with the progress of Preceris in the quarter, with net revenue up 14% sequentially and 60% versus last year. Importantly, we saw an encouraging uptick in unit volume and net revenue contribution from the new sales territories where we've expanded our presence. Based on our performance year to date, together with the progress we're making against our strategic priorities, We're confident we will deliver a strong finish to the year. We've now narrowed our fiscal year 2022 guidance for sublocate to the higher end of our previously communicated range, and we've increased our expectations for total net revenue and adjusted operating profit for the group. Ryan will provide a little more detail in a moment. Clearly, the macro environment remains challenging with the geopolitical climate, as well as decelerating economic growth and inflation across our markets. In this regard, our strong financial position with over a billion in cash and investments continues to provide us flexibility. Finally, on this slide, we're pleased to have received overwhelming shareholder support for the additional listing on a major U.S. exchange. We believe this important initiative will be beneficial in raising the group's profile in its highest value market and potentially attracting a broader group of biopharma-focused investors and analysts. In preparation, we executed a five-for-one share consolidation earlier in the month, and we're working at pace to affect the additional listings spring of 2023. Turning to our strategic priorities report card on slide five, our go-to-market strategy has now driven nine consecutive quarters of double-digit increases in Sublocade net revenue and patient dispenses. The organized health system channel continues to be the predominant driver for Sublocade, generating approximately 75% of the growth. As we highlighted on our last quarterly call, we've reached our goal of activating the top 500 key organized health system accounts earlier this year, and the primary focus of our strategy now is to increase prescribing depth within our activated organized health systems. Where we have clear line of sight, we're tracking our progress against a number of metrics, including the number of new prescribing physicians and those prescribing more than five patients, which in our experience signals treatment adoption. I'm pleased to report that both KPIs grew solidly versus the prior quarter, indicating we're making real inroads into prescribing depth. As you're aware, we've carefully targeted investment where we see the biggest opportunities to extend Sublocade's leadership position as a long-acting injectable for treating opioid use disorder. For example, we formed a dedicated team to access the criminal justice system. We bolstered our medical science team to educate physicians on the science of medically assisted treatment broadly and sublocate science more specifically. And we remain on schedule for a second manufacturing site to increase capacity for sublocate and perceris. If I turn to revenue diversification, I'm pleased to report continued progress for sublocate and suboxone film outside the U.S., Net revenues for Sublocate in international markets was $7 million in the quarter. And we're pleased with the initial Sublocate Suboxone film net revenue in Europe. The combined impact of these launches is helping us to largely offset the declines we see in the legacy tablet business. Over time, we continue to expect this dynamic to return us to net revenue growth outside of the US. For Preceris, as I alluded to earlier, we're seeing sequential pickup in performance driven by our investment in national sales coverage and strong quarter-over-quarter and year-over-year growth. We did see a short-term disruption in sample supply leading to allocation of samples in the third quarter, which will be alleviated in November. However, based on the significant patient need, the differentiated product profile that Preceris offers, we remain convinced of its net revenue potential of $200 to $300 million. Regarding the pipeline, Here, our focus is on strengthening the evidence base for sublocate and progressing our innovative early stage approaches to a range of substance use disorders. On the latter, we continue to be very excited by the potential of AEF-0117 to transform the lives of people with cannabis use disorder. As you're aware, the Phase 2B clinical trial of this important asset is now underway, and we are very much looking forward to the full result readout in 2024. Finally, on our operating model, we've maintained our focus on prudent cash management and asset optimization so that we're able to both fully invest in our number one strategic priority, sublocate, as well as continue to execute on our second 100 million share buyback, which is about two-thirds of the way complete. On that, during the quarter, we bought back over 10.2 million shares on a pre-consolidation basis as part of our second 100 million share repurchase program. This brings the total on the second buyback program to 66 million at the end of September. Even after this outflow, we ended the quarter with a healthy gross cash and investment position of over a billion dollars and net cash and investments of close to 800 million. To summarize, this was another strong quarter of execution and delivery against our strategic priorities. As we look to the remainder of 2022 and beyond, we're confident we have the right strategy, the right products, and the right team to deliver on our mission and our long-term growth objectives. We look forward to sharing more detail on our long-term shareholder value creation plans as part of our upcoming investor day on December 7th in New York City. With that, I'd like to hand over to Ryan to take you through the financials for the quarter in more detail.

Thanks, Mark, and good morning and good afternoon to everyone. I'm pleased to report another good quarter of financial execution and business momentum. We delivered excellent top-line growth driven by the strong performance of Sublocade. Our adjusted operating profit also increased versus the prior year, reflecting results from the growth investments we made to support the success of Sublocade and Paceras. We also maintained our disciplined approach to capital allocation, balancing reinvestment in the business with shareholder returns as we progressed with the share buyback program we announced in April. We once again exited the quarter with over a billion dollars in gross cash and investments, providing us tremendous flexibility. I'll now provide some more detail on the performance drivers in the quarter and discuss our outlook for the remainder of the year. Starting with top line, total net revenue growth was up 24% versus the year-ago quarter and by 27% at constant exchange rates. For year-to-date results, total net revenue grew 16% versus the same period last year, and by 18% at constant exchange rate. The increase in total net revenue throughout 2022 was mainly a function of strong sublocated growth in the U.S., but we also continue to see growing contributions from Becerras and from sublocated markets outside the U.S. By geography, total U.S. net revenue grew by 32%. versus the prior year quarter. Net revenue for the rest of the world returned to growth this quarter and was up 9% year-over-year, excluding unfavorable FX impact. Sublocated net revenue outside of the US grew 75% year-over-year to $7 million, continuing to help offset the ongoing pressure from generic competition in the legacy tablet business. While the rest of the world net revenue results continues to be impacted by the strong U.S. dollar relative to other currencies, the overall bottom line income impact is mostly mitigated by corresponding expenses which carry a similar negative FX adjustment. Total sublocated net revenue of $108 million and $290 million for the third quarter and year-to-date Q3 2022 respectively. puts us on track to be at the upper half of our previously revised guidance, or $405 to $420 million, as we noted in our press release. Sequential net revenue growth for Sublocade was 10% and generally aligned with dispenses when you exclude the impact of FX. Moving to Paceras, net revenue of $8 million was up 60% versus Q3 of last year, largely driven by the rollout of our new national sales team earlier this year. Sequential net revenue was up 14% and was impacted by some sample limitations Mark had mentioned earlier. We recognize that Perseverance net revenue continues to be off a small base, but nonetheless are encouraged by the growth in Perseverance on a number of internal demand metrics and positive prescriber feedback. Turning to Suboxone film, the average share of approximately 19% in the third quarter was essentially flat from the prior quarter's average share of 19. As a reminder, we do not promote Suboxone film in the US. I will discuss film share guidance for the remainder of the year in a moment. Moving down to P&L, our third quarter adjusted gross margin was 83%, flat from the prior quarter and down from 86% in Q3 of last year, reflecting a higher mix of less profitable government channels for Suboxone film in the US and some cost impacts from inflation. Like other companies in this environment, we have seen elevated costs for labor, logistics, and services in our COGS as well as our OPEX. However, the overall impact for us has been manageable this year and has not required a change in guidance in these impacted areas. We are, however, closely monitoring these inflationary impacts and are actively making offsets where possible without disrupting the business. Our adjusted overall operating expenses were $133 million in the quarter, an increase of 8% versus Q3 of last year, reflecting the growth investments behind the LAIs and the phasing of our R&D initiatives to the back half of the year. As you all have noted, Q3 R&D increased 42% versus Q2 as expected. Moving to adjusted operating profit, we saw solid results versus the prior year, with operating profit of 58 million in the third quarter, up 53% versus Q3 of last year. For year-to-date through Q3 2022, adjusted operating profit of 172 million was up 11% versus the same period in the prior year. Lastly on the P&L, our adjusted net income of 43 million increased 59% in the third quarter versus Q3 of last year. For year-to-date through Q3 2022, our adjusted net income of $130 million increased 14% versus last year, reflecting the dynamics I just highlighted. Quickly touching on the balance sheet and our capital position. As I mentioned, we ended the third quarter with gross cash and investments of $1.35 billion. Included in that balance is $64 million of collateral returned to us from the settlement we reached with Dr. Reddy's last quarter. Year-to-date cash generation from operations excluding the $64 million return of collateral in Q3 and the $108 million in litigation settlement payments in first half was at $107 million. I will now discuss the adjustments we are making to guidance for full year 2022. For Subacade, we are narrowing the net revenue range to $405 to $420 million. This represents the upper half of our previous net revenue range of 390 to 420 and is based on a strong year-to-date momentum and our continued strong progress in the OHS channel expected in fourth quarter. On Suboxone film, as you are aware, the FDA approved a fourth generic film competitor in June, which increased the level of uncertainty in what has been a relatively stable market over the last 18 to 24 months. At this point in the quarter, a fourth generic has not launched. As a consequence, we now assume that any potential launch impact is considered in our upwardly revised total net revenue guidance for the current year. We will continue to assess the competitive environment and will update the market accordingly. Turning to the total operating expenses, we are maintaining our guidance of $520 to $540 million. We have, however, chosen to reallocate some new anticipated underspend in R&D towards incremental marketing behind Sublicate. As a result, we are raising our SG&A guidance range by $5 million to $445 million to $460 million. These incremental commercial efforts will continue to support and expand Sublicate's leadership and position us for further growth as we move into 2023. to $80 million still anticipates a sequential uplift in expense in fourth quarter for sublocate, post-marketing requirement and lifecycle management studies, sublocate manufacturing capacity expansion, and early stage asset advancement. However, some components of these important studies will now phase into 2023. Taking these factors together and considering continued FX pressure we are narrowing and increasing our overall net revenue guidance range to 890 to 915 million. We also now expect adjusted operating profit to be modestly higher than our prior guidance given the resultant impacts on our P&L. Let me close by saying we are pleased with our execution and our financial results for the quarter. We believe our year-to-date performance puts us solidly on track to deliver strong full-year 2022 results. We are confident that we can deliver our full-year revised guidance and look forward to seeing investors at our Capital Markets Day on December 7th in New York City. I will now turn the call back over to Mark for some closing comments.

Thank you, Ryan. Once again, I'm extremely pleased with the team's execution against our strategic priorities. Our go-to market strategy on Sublocate is working and 75% of our growth is coming from that channel, and our current midpoint of fiscal year guidance is marking just over 40% progress towards the billion dollars in sales. We continue towards adding an additional U.S. listing next year and are extremely excited for our Capital Markets Day in New York in December, where we'll provide more detail on our roadmap to delivering sustainable shareholder value. With that, I'll turn the call over to Sarah to manage questions and answers.