Indivior Pharmaceuticals, Inc.

Good morning, good afternoon 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 two. We also may refer to non-GAAP measures, the reconciliations for which may be found in in the appendix to the presentation that is now posted on our website at Indivier.com. I'll now turn the call over to Mark Crossley, our Chief Executive Officer.

Thank you, Jason, and good morning, 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 the call with an overview of the results for Q1 and a progress report against our strategic priorities Ryan will then provide more detail on the first quarter results and updated fiscal year 2023 guidance. And then following that, we'll move to Q&A. Turning to the key messages, we delivered an excellent start to 2023, driven by strong execution against our profitable growth strategy, which is primarily focused on increasing Sublicate's prescriber depth within our organized health system. Our first quarter total net revenue grew 22% led by Sublocade. The strength of our top line allowed us to absorb incremental growth investments behind Sublocade in the US justice system channel while still delivering operating leverage. As a result, our adjusted operating profit grew 31% in the quarter. We also successfully completed the acquisition of Opium at the beginning of March. This important strategic step strengthens our addiction portfolio with the addition of Opium 003, which we expect to become the next generation agent for opioid overdose reversal, subject, of course, to regulatory approval by the FDA. I'm also pleased to report that we've fully integrated the opium commercial and R&D teams. And with our combined experiences, capabilities, and footprint, our teams have hit the ground running as we prepare for potential FDA approval and then launch. You'll also note that we've updated our fiscal year 2023 guidance for the opium acquisition, as well as our updated share assumptions for film. As a result, we've increased our fiscal year 2023 net revenue expectations. Ryan will share more detail on these and other fiscal year 2023 guidance items in a moment. Finally, a quick note on the legacy litigation, which I know is top of mind among our stakeholders. While I'm constrained in what I can say due to the ongoing nature of these matters before the court, I can confirm that discussions continue with the parties as we actively try to bring greater certainty for our shareholders at an appropriate value. Doing so will allow us to focus all of our efforts on meeting the important needs of patients suffering from substance use disorders and serious mental illness. Moving next to our report card for the first quarter, we continue to make excellent progress against our strategic priorities. First, sublocated net revenue of $132 million grew 12% versus the previous quarter and 55% versus Q1 last year. Sequential dispense growth was 16%. This strong double-digit performance was driven by our ongoing strategy to increase prescribing depth in the 500-plus organized health systems that we've accessed. Organized health systems now account for approximately 80% of Sublocade's growth. Additionally, we saw an increased contribution to Sublocade net revenue from the U.S. Justice System channel as more facilities were activated. You'll also note that sublocated patients at the end of the first quarter were approximately 95,000. This is just over one-third of the way toward the estimated 270,000 patients we're targeting to achieve our $1.5 billion plus net revenue goal for this important treatment. While we're pleased with our progress, it still only represents 3% of the 3.1 million people diagnosed with opioid use disorder. Moving next to diversification and starting with Braceras, we continue to see unit growth in volume in the number of new HCPs prescribing across our territories. Net revenue of $8 million reflects growth of 60% versus Q1 2022, but was negatively impacted by wholesaler destocking when looking at the quarter sequential comparisons. Overall, we're pleased with the KPIs, which remain strongly positive, including underlying dispense growth and sample demand across inpatient acute care psychiatric facilities and outpatient clinics. Taken together, we remain confident in our full-year net revenue outlook for Preceris. Turning to ex-US net revenue, strong growth from new products, which include both sublocate and suboxone film, drove the 5% increase in overall rest-of-world net revenue. Sublocade continued to make solid progress with net revenue contribution of 9 million. We continue to see strength in our ex-US markets, including the Nordics launch, where we launched the Sublocade in late 2022. We look forward to launching Sublocade in Germany in May and remain focused on returning our rest of world business to sustainable growth with Sublocade and Suboxone film. Lastly, On diversification, as I mentioned before, we successfully closed and integrated the opium transaction, and in a moment, I'll provide a bit more detail on our plan for Opium 003. Turning to our pipeline, we're pleased to have brought on board Opium's asset portfolio and team, which gives us significant addiction medicine development experience and expertise across a broad array of delivery platforms, including depot, oral, and now nasal delivery technologies. Under Christian's leadership, the R&D teams have come together nicely and are moving at pace to advance our key programs. By combining our portfolios, Indivior now has more robust pipeline to address patients' most urgent needs across the continuum of care for substance use disorders. Our fourth strategic pillar is optimizing our operating model and capital allocation. Here, our financial position remains strong despite cash outflows associated with the opioid acquisition and completion of our second share buyback program. Finally, with regards to the additional US listing of our shares, we look forward to completing the necessary regulatory requirements and expect to effect NASDAQ listing in June. Before concluding my remarks, let me provide a brief status update on Opium. We closed the acquisition on March 2nd and moved quickly to embrace Opium's teams. It's now nearly two months into our combination And I'm very pleased with how we've come together as one company focused on patient needs. Clearly, our most immediate and compelling opportunity is Opium 003, which has a PDUFA action date of May 22nd. At this point, I have to make the standard cautionary comment that this is entirely subject to FDA approval. Nevertheless, assuming this proceeds as we anticipate, we're in full planning mode for a Q4 launch. As such, our updated fiscal year 2023 guidance does reflect incremental investment for launching Opion 003 later this year. Given the recent interest, I'd like to just take a moment to address the recent OTC approvals for Naloxone. We certainly applaud efforts to increase access for all FDA-approved medications. To be clear, Opion 003 will not be an OTC product if approved. and therefore our primary launch efforts will be squarely focused on the public interest markets. This includes law enforcement, first responders, departments of health, schools and corrections, and so on. This approach reflects the unique profile of Opium 003, which was developed specifically to address the epidemic of overdose deaths arising from misuse of fentanyl and other synthetic opioids. Importantly, we believe we can cover all these key national public interest call points with a relatively small, focused, and efficient field force. Next, to preempt your questions on pricing, we're still in the process of finalizing our strategy, but we will certainly look to price responsibly while considering the innovative nature of the product. Lastly, while our fiscal year 2023 guidance does not assume material net revenue contribution from OPI and 003, given the anticipated launch timing late in the year. We continue to be confident in OO3's peak net revenue potential of $150 to $250 million and continue to expect it to be accretive to earnings after the second full year of launch. To conclude my formal remarks, the team has delivered an excellent start to the year with strong top-line growth on Sublocade and Bursaris and continued return to growth in our ex-US markets. We're looking forward to the launch of OPN003, subject to approval, and have raised our fiscal year 2023 net revenue guidance. And last but not least, we're working diligently to remove uncertainty for stakeholders as we seek to resolve legacy legal items so that we can exclusively focus on achieving our business goals. With that introduction, I'll turn it over to Ryan.

Thanks, Mark, and good morning and good afternoon to everyone. We had a very good start to full year 2023 and are pleased with our continued execution. During the quarter, overall double-digit top-line growth was once again driven by the strong performance of Sublocate. Our reported and adjusted operating profit also increased versus the prior year, reflecting our increased net revenue from the investments in sales and marketing we have made over the last year to accelerate the growth of our long-acting injectables. We also maintained our financial flexibility with approximately $803 million in cash and investments at the end of the quarter. Before discussing the financial results for Q1, I do want to spend a moment discussing the accounting of the OPN transaction now that the deal has closed. The final purchase price was $146 million, plus approximately $12 million in exceptional deal and transaction costs. Substantially, all the purchase price is reflected in intangibles on the balance sheet, and we expect to amortize this through COGS over the current 15-year patent life expectation of 003. The amortization expense will be treated as exceptional and as non-cash and non-taxable. The possible liability for the contingent value rights, CVRs, will be assessed quarterly and will be amortized in the same manner. I will now provide some more detail on the drivers of our performance in the quarter and discuss our revised guidance. Starting with the top line, total net revenue grew 22% versus the year-ago quarter and by 24% excluding the impact of FX. The increase was primarily due to sublocate, which grew 55% versus Q1 2022 to $132 million. By geography, total U.S. net revenue grew by 27% and currently represents 83% of total company net revenue. Net revenue in the rest of the world was up 5% year-over-year at actual FX rates and 13% if you exclude FX. As Mark mentioned, growth of sublocated net revenue outside of the U.S. was strong, up 50% versus the year-ago quarter to $9 million. Our progress with Sublocade and Suboxone film outside the U.S. continues to offset the decline in the legacy tablet business. Total Sublocade net revenue for the first quarter of $132 million was up 12% sequentially, reflecting stocking in Q4 that did not reoccur this quarter. Dispenses were up 16% sequentially, showing strong underlying growth. This performance is consistent with our full-year guidance of $550 to $600 million. Moving to Becerras, net revenue of $8 million was up 60% versus the first quarter of last year and was within our expectations. As Mark noted, there was some destocking dynamics in the quarter, which impacted the sequential comparison. Underlying prescription growth and other supporting KPIs continue to be strong and underpin our net revenue guidance for the year. Turning to Suboxone film, average share in the first quarter was approximately 19%, which is essentially flat sequentially. We continue to expect an accelerated rate of Suboxone film market share decline in full year 2023, reflecting underlying erosion at a similar rate to the last two years, approximately two share points. together with the assumed impact from an approved fourth generic entering the U.S. market in the second half of 2023. 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 85%, up from 82% in the prior quarter and prior year. This was driven by favorable manufacturing variances such as FX and a higher mix of sublocated net revenue. We continue to expect gross margins to be in the low to mid-80s range for the full year. Adjusted SG&A expenses were $117 million in the quarter, up 7% versus Q1 last year, primarily reflecting the overall cost inflation and commercial investments to accelerate sublocate access in the U.S. justice system. R&D expenses were $27 million in the quarter, reflecting phasing of sublocated studies, manufacturing capacity expansion, and other pipeline activities. In a moment, I will discuss our revised view of expenses for the year considering the addition of the opium business. Our adjusted operating profit of $71 million in Q1 was up 31% versus the prior year, primarily based on higher net revenue partially offset by the higher operating expenses I discussed before. Turning to our balance sheet and capital position, we maintained our solid liquidity position and ended the quarter with gross cash and investments of $803 million down from $991 million at year end. The reduction in cash and investments primarily reflects the net purchase price of $124 million for opiate and pharmaceuticals, including the transferred cash balance and $74 million primarily in annual schedule payments for the DOJ, RB, and DRL settlements. Cash generated from operations, including these settlement items, was $58 million. Turning to guidance for full year 2023, as we noted in our release, we have updated our full year 2023 guidance to reflect the increased expenses resulting from the acquisition of opium, as well as increased net revenue expectations primarily due to the continued delay of the expected U.S. launch of the fourth film generic. We now assume the latter will occur at some point from mid-2023 onwards, but as we have said previously, we do not have any visibility or market intelligence on timing. Guidance for Sublocade and Preceris net revenue is unchanged. as is the case for gross margin and our underlying OPEX expectations prior to adding opium. A revised guidance for OPEX assumes regulatory approval of 003 by the FDA on or before the PDUFA date of May 22nd and a launch in the fourth quarter of this year. Given the expected late 2023 launch date for 003, we assume the impact to net revenue will not be material for full year 2023. Taking these elements together, we are raising our overall net revenue range to $970 million to $1.4 billion, from $950 million to $1.2 billion. The new point of our guidance now suggests net revenue growth of 12% versus last year. Moving to our revised OpEx guidance, we now expect SG&A to be in the range of $530 million to $540 million. from 490 million to 500 million. The increase primarily reflects addition of opium commercial teams, including sales, access, and medical affairs personnel, as well as the planned launch and marketing expenses for 003 in Q4 2023. For R&D, we now expect a range of 90 million to 100 million, from 80 million to 90 million, reflecting the addition of opium's R&D personnel and assumption of their pipeline activities. Lastly, on adjusted operating profit, we now expect this to be slightly below full-year 2022's adjusted operating profit of $212 million as a result of the additional operating expenses associated with the OPA acquisition, partially offset by the increased net revenue expectations. In closing, 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 revised full year 2023 guidance and look forward to updating the market as the year progresses. I would now turn the call back over to Mark.