Indivior Pharmaceuticals, Inc.

Thanks, Sandra, and good morning, everyone, and welcome to our call to discuss our third quarter results. Before we begin, I need to remind you that today's comments include forward-looking statements and that actual results may differ materially. Those factors that may cause actual results to differ are detailed on slide two of our presentation, which is available on the investor relations portion of our website at www.indivier.com. Also, we will discuss adjusted financial measures. You can find a reconciliation of those measures to the reported amounts in the appendix of the presentation. With that, I'll now turn the call over to our CEO, Mark Crossley.

Thank you, Jason, and 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 Heidbreder, 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 2023 guidance, and then we'll move on to a question-and-answer period. Turning to slide four, it was another quarter of strong double-digit top-line performance. Led by Sublocade, third quarter net revenues grew 17% year-over-year to $271 million, adjusted operating profit of $60 million, which was up modestly versus the year-ago quarter, reflects the incremental operating expenses we've absorbed from adding the opium business, including launch costs for Opvi this quarter. Based on our third quarter and year-to-date performance, we are confident that our teams will deliver another strong year of results in 2023, consistent with the attractive medium-term profitable growth framework we set out last December. Importantly, we've narrowed our full year 2023 sublocate net revenue expectations to $610 to $630 million, which is the upper half of our previous range. At the midpoint, this would represent a 52% increase versus 2022. As you may have also seen in our updated guidance included in our announcement, we have evaluated and decided to make incremental investments behind sublocate to fuel its growth. Our updated adjusted SG&A expectations for the full year reflect this. I'll cover these investments in more detail in a moment. In addition to continuing to progress and invest behind sublocate toward our peak net revenue goal of greater than a billion and a half dollars, we took several actions aligned with our strategic priorities to strengthen Indivior's long-term outlook. First and foremost was the settlement with the final class of the antitrust multi-district litigants for $385 million on October 23rd. In doing so, we've created more certainty for all stakeholders and avoided potentially costly and protracted litigation. With this legacy matter now behind us, we've gained greater focus on serving patient needs and on realizing the tremendous prospects we see ahead for Indivior. Second, we launched Otvi at the beginning of October and subsequently secured a multi-year partnership with the U.S. Biomedical Advanced Research and Development Authority, BARDA, The contract includes funding for additional post-marketing and real-world evidence and shelf-life studies, as well as procurement agreement for finished and packaged op-v product. Turning to slide five, during the quarter we also executed on a number of strategic initiatives that we believe will strengthen our foundation for long-term profitable growth. First, we acquired an aseptic manufacturing facility in Raleigh, North Carolina, that will provide in Divior a secure, long-term source of supply for Sublocate and Preceris. Ryan will have more detail on this acquisition in a moment, but this wholly owned facility is a strong signal of our confidence in delivering on our long-term net revenue ambitions. Second, we acquired two important R&D assets to help address unmet patient needs for those suffering from opioid use disorder. We've taken full ownership of INDV-2000, an oral orexin-1, from our partner, C4X Discovery. And most recently, we secured the global rights to Alar Pharmaceutical's buprenorphine-based long-acting injectables portfolio. This includes Alar's lead asset, ALA-1000, which has the potential to be the first long-acting injectable for opioid use disorder delivered once every three months. In a disease space where adherence is one of the top challenges for patients, ALA 1000 has the potential to provide an option for patients seeking a less frequent maintenance therapy regimen. Turning to our strategic priorities report card, beginning with sublocate, the strong net revenue performance was driven by our momentum in the organized health systems channel, which is now generating approximately 80% of sublocate's growth. As we indicated in our last quarterly call, we've taken the opportunity to evaluate incremental commercial investments as we approach the fourth year of our successful ecosystem operating model. We believe that these investments will strengthen Sublocade's trajectory and generate positive long-term returns with the expansion of our traditional field force and our justice system teams. First, the expansion of our traditional field force by over 40 associates will enable broader reach and increased frequency across the organized health systems channel, as well as increased capacity to call on independent practices. Following elimination of the data 2000 waiver, we believe that these smaller office-based independent practices can now benefit from patient access to alternate sites of care, which eliminates the administrative burden associated with specialty products. Toward that end, our partnership with Albertsons, the large U.S. food and drug retailer, is delivering encouraging results and strengthens our belief in the opportunity to increase adoption among our legacy prescribing base, where previously the logistics and handling challenges with sublocate posed barriers to prescribing for these smaller practices. Along with our increased capacity to call on independent practices, we're also resourcing efforts to expand the alternate sites of care network to improve treatment access for providers and their patients. In addition, the justice system continues to be our fastest growing OHS subchannel. Approximately 300 unique justice entities were actively ordering Sublocade in the third quarter. As a result, the justice system subchannel is approaching 20% of Sublocade's net revenue. The focus of our incremental commercial investments will also be on continuing to grow Sublocade's access across all levels of the justice system. The additional cost of these commercial investments is reflected in the modest increase in our SG&A guidance for the full year. On an annualized basis, we expect these investments will amount to approximately $20 million. If I turn to revenue diversification, I'm pleased to report another quarter of net revenue growth for our business outside the U.S., driven by sublocate and suboxone film. Net revenue for sublocate in international markets was 30 million year-to-date, and we've successfully launched sublocate in Germany. For Preceris, we saw year-over-year growth of 38% in the quarter. On a sequential basis, net revenue was unchanged, reflecting intensified competition from a new launch from a competitor. Despite this short-term impact, we maintain our peak net revenue expectation for Preceris of $200 to $300 million. This reflects our strong belief in the growing opportunity for LAIs and schizophrenia, where penetration remains low, and we also believe in the attractive, differentiated therapeutic profile of our product, which continues to resonate well with physicians. Finally, turning to Otvi, we launched on October 2nd and continue to believe that Opvi has the ideal profile to address the epidemic of overdoses caused by fentanyl and other synthetic opioids, which are now the leading cause of death for people aged 18 to 45. Our Opvi commercial strategy includes an approved experience program for states that are allowed to trial Opvi within their population. We're also leveraging our government affairs team to ensure that state standing orders, grants, and emergency medical service protocols are updated to include Opvi as an overdose rescue treatment. And as I mentioned earlier, we're pleased to have secured the potentially valuable multi-year partnership with BARDA. Regarding our pipeline, Christian is here to answer any questions you may have. That said, I can report we continue to make good progress against all of our key assets and post-marketing studies. Last week, we held a positive end of phase one meeting with the FDA for INDV2000 for opioid use disorder. and we're still expecting phase two data on INDV 4002 for alcohol use disorder by the end of the year. Finally, on our operating model, we're maintaining our consistent approach to capital allocation in the near term. We continue to focus on prudent cash management that enables us to reinvest in the business while also continuing to meet our obligations to stakeholders. Lastly, we made tremendous progress in securing the capacity we need for delivering our long-term net revenue ambitions for Sublocade and Preceris. I've already mentioned the newly acquired plant in Raleigh, which combined with the validation of our second contract manufacturing site this quarter will provide sufficient capacity for Sublocade and Preceris. To summarize, this was a strong quarter of execution and delivery against our strategic priorities, highlighted by the strong momentum of Sublocade, the settlement of legacy litigation, and several important business development transactions that will help secure our future. With that, I'd like to now hand over to Ryan to take you through the results in more detail.

Thanks, Mark, and good morning and good afternoon to everyone. Overall, I'm pleased to report another good quarter of execution and business momentum. We delivered strong top-line growth driven by sublocate, and we grew our adjusted operating income versus the prior year, absorbing another quarter's worth of open expenses, including op fee launch expenses. Looking at the third quarter results in more detail, starting with the top line, total net revenue of $271 million reflected growth of 17% versus the year-ago quarter on a reported basis, and 16% excluding the impact of FX. By geography, total U.S. net revenue in the third quarter grew by 20% versus the year-ago quarter. The rest of the world was up 2% versus the prior year quarter, and unchanged, excluding the impact of FX. Positive contributions from new products continue to more than offset the ongoing competitive pressure on our legacy tablet products. Sublocated net revenue outside of the US in the third quarter grew 43% year over year to $10 million. Total sublocated net revenue of $167 million for the third quarter of 2023. was up 55% versus the prior year and 8% sequentially. U.S. dispenses were up 7% sequentially in the quarter and aligned with net revenue, adjusting for modest stocking impact in the quarter. Moving to Paceras, reported net revenue of $11 million was up 38% versus the prior year and flat sequentially. Quarterly results were impacted by the near-term competitive pressure that Mark mentioned. we remain confident in reaching our peak net revenue guidance of $200 million to $300 million. Turning to Suboxone film in the U.S., the average share of approximately 18% in the third quarter was down about one percentage point versus both the second quarter and the year-ago quarter. Net revenue in the quarter was impacted by normal quarterly rebate accrual evaluations, which in Q3 resulted in a true-up in the low double-digit range. As a reminder, we do not promote Suboxone film in the U.S. Moving down to P&L, our third quarter adjusted gross margin of 84% was up one percentage point versus the prior year quarter, reflecting improved product mix partially offset by cost inflation. Adjusted SG&A expenses were $150 million in the quarter, up 33% versus Q3 of last year. The increase reflects higher legal activity related to the settled antitrust MDL, the addition of the opium business, including launch expenses for OPFI and incremental sublocate commercial investments, and ongoing year-over-year inflationary impacts. R&D expenses were $18 million in the quarter, a decrease of 10% versus Q3 of last year, benefiting from a high single-digit credit previously expensed process validation activities related to the lai capacity expansion which will not repeat our strong nr performance helped to absorb the opium and opv launch expenses with adjusted operating income increasing to 60 million in the third quarter up three percent versus 58 million in the prior year on the same basis we continue to expect the opium transaction to be accretive to earnings after the second full year following OPFE's October launch this year. Lastly on the P&L, our adjusted net income of $49 million grew 14% in the third quarter versus last year, reflecting improvement in net finance income in addition to the dynamics I just highlighted. Quickly touching on the balance sheet and our capital position, we ended the third quarter with gross cash and investments of $774 million. before taking into account our term debt and other future payment obligations and liabilities as discussed in our results released earlier today. Considering the settlement payments related to the antitrust MDL, we still expect the end of the year with good flexibility. This will allow us to continue to execute on our disciplined capital allocation strategy, which in the near term remains focused on reinvesting to fuel our base business towards our net revenue goals and meeting our stakeholder obligations. If there is excess cash, we will look at it in partnership with the board for opportunities in business development and potential shareholder returns. Lastly, with a little less than two months remaining in the year, we are making some refinements to some of our full year guidance elements. We are maintaining total company full year 2023 net revenue guidance of $1.3 billion to $1.9 billion, which we increased from $970 million to $1.4 billion at the half year. However, for sublocate, based on current performance trends, we are narrowing our full year 2023 sublocate net revenue expectations to $610 to $630 million, which is the upper half of our previous range of $590 to $630 million. This represents a growth rate of 52% at this new midpoint compared to full year 2022. For Becerras, given the short-term competitive pressure with the new entrant in the space, we now expect full year net revenue to be at the lower end of the $45 to $55 million range. For US Film, our previous view assumed an accelerated rate of share loss in the fourth quarter with the entry of the fourth generic in the US. As this new generic has now entered the market, while the impact has been modest so far, we are expecting additional share loss in the remaining month or so of the fourth quarter. For SG&A, we are bringing up the full year 2023 range by $10 million to $540 to $550 million to reflect the targeted sublocated commercial investments that Mark detailed. Overall, our strong results continue to absorb opium and op feed launch expenses, and we are maintaining our view that adjusted operating income will be higher than last year's performance of $212 million. Finally, as Mark mentioned, we also took a further strategic step in establishing long-term supply security for Sublocade and Paceras and potentially other Indivior products with the purchase of an approximate 80,000 square foot multi-use sterile manufacturing site in Raleigh, North Carolina from Sagen Pharmaceuticals. Total upfront consideration for the site included a cash payment of $5.5 million plus assumed contractual obligations of approximately $30 million through 2025. This acquisition also brings on board approximately 60 experienced manufacturing associates to the Indivior team. Over the next few years, the facility will continue to manufacture a product for existing customers while tech transfer activities enabling the manufacturing of Sublocated and Paceras take place. Total capital investment is estimated to be approximately $45 million to $55 million with the majority occurring next year. We also expect to absorb modest annual adjusted operating losses beginning this year and through 2025 with expected savings beginning in 2027. Before turning to questions, let me close by saying we are pleased with our execution and our financial results for the quarter. We believe year-to-date performance puts us solidly on track to deliver strong results for four-year 2023. I will now turn the call back over to Mark.