Indivior Pharmaceuticals, Inc.

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 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 endivere.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 Preblek, 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 Opium, 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 cyber attack 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 treatment as the nature of the disease means that approximately 70% of our patients are covered by Medicaid. The impact of this disenrollment process will annualize at the end of June, and therefore this headwind should begin to subside as we move through the second half of the year. Although the impact on Sublicate's growth in the quarter was larger than expected, Medicaid disenrollment was a known dynamic. The cyber attack on Change Healthcare, by contrast, was a completely unexpected disruption. Change Healthcare is the largest claims processor in the US, responsible for one in three claims. Change is a crucial connection for healthcare systems, making clinical, administrative, and financial processes simpler and more efficient for payers, providers, and patients. The cyber attack on February 21st impacted new patient, and refill adjudication for Sublocade during the first quarter. Though difficult to isolate the financial impact of each of these items, we estimate that on a combined basis, they lowered Sublocade's sequential dispense growth in the U.S. by mid to high single-digit percentage rates. In addition, we saw abnormal destocking of $5 to $7 million during the same timeframe as this change cyber attack. we would expect stock levels to normalize in the coming months. With the cyber attack behind us and Medicaid renewal annualizing at the end of June, we look forward to subsiding impacts from these transitory items, which we believe are masking the strong underlying demand for sublocate. In fact, early dispense trends in April are tracking back to the growth levels we had expected in the first quarter. Additionally, we expect this strong underlying demand will be further bolstered over the remainder of the year by our expanded sales force, which is now fully deployed, and by our continued strong performance in the justice system channel. The justice system now accounts for approximately 25% of sublocated US net revenue, and in the first quarter we saw continued strong momentum in this channel with double digit dispense growth versus the prior quarter. For these reasons, we're confident the total net revenue and adjusted operating profit will accelerate through the year from the first quarter, particularly in the second half, and we reconfirm our fiscal year 2024 guidance. Finally, after receiving strong support from shareholders, we're confirming our intention to move forward with a shareholder vote to affect a primary U.S. listing. We and the board believe this is the right long-term move for shareholders and our business, and we appreciate the engagement and feedback we've received. Moving next to our report card for the first quarter, we continue to make good progress against our strategic priorities to drive value creation. I've described in detail the dynamics in the quarter related to Sublocade's growth. I'll briefly discuss some additional items here that highlight our continued strong year-over-year progress with Sublocade and that provide us with confidence in our future growth. First, The number of patients receiving Sublocade grew approximately 59% year over year to 150,000 at the quarter end. This is noteworthy as it is now more than halfway towards the estimated 270,000 patients we're targeting to achieve our 1.5 billion plus net revenue goal. While we're pleased with our progress, we're still only reaching a small portion of the 3.1 million diagnosed opioid use disorder patients in the U.S. and the over 10 million that report misusing opioids. Our strong underlying performance across key Sublocade metrics reflects continued successful penetration of organized health systems in the U.S. justice system. We're increasing Sublocade's prescribing depth across our existing OHS customers and gaining access to new ones. In total, Sublocade has access to over 1,000 distinct organized health systems We've also furthered Sublocade's access to an additional 50 justice system entities in the quarter. As a result, active healthcare practitioners prescribing Sublocade increased over 30% year over year to almost 7,000, and those prescribing to five or more patients, which we view as adopters, grew approximately 30% year over year to almost 3,000. As I previously mentioned, we expect to build on this momentum with the recent commercial investments behind Sublocade Our increased field force will allow more detailed frequency to organize health system-affiliated physicians, and we will also target non-OHS office-based practitioners as part of our alternate sites of care initiative. Our main partner in this effort today is Albertsons. We're still gaining experience here, but the signs continue to be promising. To share a couple of metrics, the number of Albertsons locations performing injections for patients has doubled since last quarter to almost 80%. and the number of patient injections at Albertsons grew by almost 50% sequentially. Based on this encouraging start, we're continuing to explore additional partnerships to help grow patient access with independent HCPs with a nationwide alternate site of care network. Moving next to diversification, starting with Sublocate outside the U.S., which is now in six markets, we again saw strong year-over-year growth of over 30%. In addition to solid progress in Canada, we saw an increase in uptake in the Nordics and Germany during the quarter. Our other new ex-US launch Suboxone film also showed growth from continued expansion across Canada and greater regional access across EU countries. Turning to Purseris, while competition has intensified in the risperidone LAI category, once monthly risperidone products are gaining share rapidly and the overall category is still growing. Against this backdrop, we continue to highlight Perceris' unique product profile, which continues to result in positive anecdotal prescriber feedback on product performance. Sequential dispense growth was 10%, not only underscoring the good underlying momentum we're seeing, but also representing an acceleration from previous quarters. We expect to augment our efforts with Perceris with the publication of real-world evidence studies in the second half of 2024. Taken together, we remain confident in our full-year net revenue guidance for Becerras and expect accelerating net revenue moving forward. Lastly, on diversification, OPV net revenue was modest, as expected. Our continued near-term focus is on laying the foundation for OPV's success by changing policy to enable the growth of Nalmophene Rescue and ensuring the availability of funding. To date, 31 states' standing orders include OPV. Furthermore, all SAMHSA grants have been updated to include all FDA-approved overdose rescue medications, and state and local abatement funds can also be used to purchase overdose rescue medications, including Otvi. This is important foundational work, which we expect to result in increased trial and adoption and accelerating net revenue growth as the year progresses. You should also note that we expect to fulfill the first $8 million requisition of Otvi from BARDA by the third quarter. As the only overdose rescue medication that is specifically indicated for synthetic opioids like fentanyl, the potential for Opvi to save lives is tremendous in light of the current wave of overdose deaths caused by powerful synthetic opioids. Turning to our pipeline, Christian is here to answer any specific questions. I would highlight that we expect the pace of development activity to pick up over the balance of the year. This quarter, we'll be initiating a phase two clinical proof of concept study for INDV2000 our Erexin-1-based non-opioid for opioid use disorder. In the third quarter, we expect to receive the top-line results of the clinical Phase IIb study for AEF0117, our partnered asset for cannabis use disorder. After analyzing the data and meeting with the FDA in the end of Phase II meeting, we will ultimately make a decision on whether to exercise our option for $100 million and to proceed to Phase III trials. Also in Q3, we expect to begin PK studies in support of future Phase III studies for INDV 6001, a potential three-month buprenorphine-based LAI targeting opioid use disorder. So a very busy year ahead for Christian and his team. Lastly, on our fourth strategic pillar, operating model and capital allocation, Ryan will walk you through the cash movements, but I'll quickly touch on a couple of items. The conversion of the Raleigh site for future production of Sublocade is proceeding well. Second, with regards to the potential primary U.S. listing of our shares, we're scheduling a shareholder vote on May 23rd. If approved by shareholders, we would expect to transition our primary listing in late June. Before concluding my remarks, I just wanted to remind you of the key elements of the medium-term profitable growth framework that we provided in December 2022 and how we are tracking toward this. As you've heard today, we delivered double digit net revenue growth in the first quarter and we expect the pace to accelerate over the balance of the year as we move beyond the transitory impacts on sublocated and see growing returns from our commercial investments. We expect this in turn to deliver positive operating leverage and accelerated growth in adjusted operating profit. Taken together, we remain confident that we're on track to meet both our fiscal year 2024 guidance and our medium term goals. With that, I'll hand it over to Ryan for review of the financials, and then we'll open it up to Q&A.

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 grew 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 sublocating. 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 sublocate 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 sublocate, 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, sublocate 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 sublocated 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 cyber attack, many sublocated treatment providers were unable to process claims and verify patient eligibility. This impacted our sublocated net revenue performance in the latter part of the quarter through two dynamics. First, we believe it resulted in a significant reduction in dispenses for new patients in March compared to the solid dispense rates we saw in the first two months of the year. Second, we believe it had an adverse impact on refill dispenses for existing patients where re-eligibility was required for treatment continuation. So a disconnect in our hysterical retention curves beginning with the onset of the late February cyber attack. Taking these two items together, we estimate the impact on U.S. sublocate dispense growth in the first quarter to have been in the mid to high single-digit percentage range. Turning to the difference between the sequential 4% dispense growth and the 2% net revenue growth, this primarily reflects unexpected destocking of sublocate in the U.S., which we estimate at between $5 and $7 million. This destock was atypical compared to historic inventory trends and occurred in the same time frame as the change attack. Moving to Becerras, reported net revenue of $11 million was up 38% versus the prior year and down 8% sequentially due to low single-digit million destocking in the quarter. Encouragingly, dispenses were up 10% sequentially, We remain confident in meeting our full-year net revenue guidance of $55 million to $65 million. OPFI net revenue was modest in the first quarter, as we continued to lay the foundational components for the launch, as Mark detailed. We continue to expect full-year net revenue of $15 million to $25 million, including an $8 million product order from BARDA. Turning to Suboxone film in the U.S., the average share of approximately 17% in the first quarter, was down about one percentage point versus the fourth quarter and two percentage points versus the year-ago quarter, all within expectations. As a reminder, we do not promote Suboxone film in the U.S. Moving down to P&L, our first quarter adjusted gross margin of 85% was flat versus the prior year quarter. The higher mix of Sublocate and favorable manufacturing variances, which also benefited Q1 last year, were largely offset by cost inflation. We continue to expect the full year gross margin to be within our guidance range of low to mid 80%. Adjusted SG&A expenses were $143 million in the quarter, up 22% versus Q1 of last year. This increase primarily reflects the incremental sublocated commercial investments which are now fully in place and the addition of the opium business, including launch expenses for OPFE. R&D expenses were $28 million in the quarter, an increase of 4% versus Q1 of last year. The increase primarily reflects work to advance early-stage assets and Phase IV studies for sublocating. Given the pace of development activity is expected to pick up, this will result in an uptick in R&D expense over the balance of 2024. Our adjusted operating profit of $70 million in Q1 was down 1% from Q1 of last year, due to a combination of the net revenue dynamics that I have highlighted and the commercial investments behind Sublocade and Opium. Lastly, on the P&L, our adjusted net income of $51 million decreased 9% versus Q1 of last year, reflecting the dynamics I just highlighted, in addition to modest net finance expenses. Quickly touching on the balance sheet and our capital position, we ended the first quarter with gross cash and investments of $356 million. Material cash outflows during the quarter included scheduled annual settlement payments of $70 million to the DOJ, RB, and DRL, and share repurchases of $36 million. Looking ahead, we expect to maintain good financial flexibility and to continue our disciplined capital allocation strategy. In the near term, this remains focused on reinvesting to fuel our base business towards our net revenue goals and meeting our stakeholder obligations. As always, if there is excess cash, we will examine opportunities for business development and potential shareholder returns. We have discussed a number of the external dynamics which impacted sublocated results in the quarter. Based on our expectations for a resolution of these transitory headwinds, and continued strong business execution, we remain comfortable with our guidance elements for full year 2024, including sublocated net revenue of $820 to $880 million and an expected increase in adjusted operating margin of around 300 basis points at the midpoint. I will now turn the call back over to Mark.