Indivior PLC

Good day and thank you for standing by. Welcome to the Indivio plc full year results 2024. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you'll need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your host for today's call, Jason Thompson, Head of Investor Relations. Please go ahead.

Thanks, Sarah. 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 our presentation. These statements are based on current information and beliefs, and we disclaim any obligation to update them except where required by law. We also may refer to non-GAAP measures, the reconciliations for which may also be found in the appendix of our presentation that is now posted on our website at endivier.com. I'll now turn the call over to Mark Crossley, our CEO.

Thank you, Jason, and good morning and good afternoon, everyone. Thanks for joining us. Joining me today on the call are Ryan Preblek, our Chief Financial Officer, Richard Simkin, our Chief Commercial Officer, and Dr. Christian Heidbreder, our Chief Scientific Officer. I'll quickly highlight our results, touch on guidance, and review our progress against strategic priorities. Then Richard will provide updates on the commercial strategies for our major products, focusing on our efforts behind Sublocate. After that, Ryan will detail the financials and our full year 2025 outlook, and Christian's available if we have any pipeline related questions. Looking at our results, I'm pleased we finished 2024 with positive momentum. We delivered a fourth quarter performance that put our full year results above our latest guidance and our primary growth engine sublocate ended the year with 20% net revenue growth overall. We recognize that 2024 was a difficult period for the company and our investors. As we previously highlighted, the performance of Sublocate in 2024 was impacted by transitory items, together with competition in the U.S. long-acting injectable category. Furthermore, we took the decision mid-year to discontinue our schizophrenia treatment, Purseris, on profitability grounds. The result was that we were unable to deliver against our original expectations for 2024. Faced with this challenging backdrop, we took decisive actions in the back half of the year to fortify our position and support our long-term profitable growth ambitions. We narrowed our commercial and R&D pipeline focus to growing our long-standing leadership role in opioid use disorder. In addition, we implemented cost reductions of over $100 million on an annual basis. Together, these actions will provide us with the fuel to both reinvest behind Sublocade and our two opioid use disorder phase two pipeline assets, while also delivering more than $50 million of savings to the bottom line. Regarding the commercial investments we're making behind Sublicate, we believe this is the right time to accelerate awareness of this important treatment among patients and HCPs, especially given the pending label updates that we expect will improve Sublicate's competitive positioning through enhanced HCP and patient experience. Let me touch briefly on these proposed label changes, which, as a reminder, covered rapid induction and alternate sites of injection on the body. We are confident in the strength of the data we provided, and the FDA informed us that there were no outstanding items for us to address. Consequently, we're optimistic the FDA will approve the label changes for Sublocade in the coming weeks. In a moment, Richard will share some details on our commercial strategy to increase awareness of sublocate and medically assisted treatment more broadly. On top of our initiatives to streamline and refocus our business, another important development was a series of steps we took to further de-risk Indivior through ongoing resolution of certain legacy litigation. We understand that these matters have created volatility in the past, but through our legal strategy, I believe we have put Indivior on much sounder footing. Overall, I'm confident the actions that I've highlighted have placed Indivier in a stronger position to drive long-term profitable growth and shareholder value. In the near term, however, we expect a transition year for Suboxone Film and Sublocade in 2025. Notably, after five years of exceeding generic erosion analogs, net revenue from Suboxone Film is expected to decline sharply in 2025 due to intensified competitive generic pricing activity in the U.S., along with the potential for a fifth GINAC entrant. As a reminder, we do not promote suboxone film in the U.S. For sublocate, we anticipate relatively unchanged net revenue at the midpoint of our guidance as competitive dynamics and near-term justice system funding challenges are expected to largely offset strong underlying long-acting injectable category growth and good growth in our organized health systems accounts. In view of the expected reduction in film net revenue and profit, our 2025 guidance assumes a decline in total net revenue and adjusted operating profit versus 2024. Drilling down a little deeper into our outlook for Sublocade, we see two counteracting vectors in 2025. Our traditional base OHS business is expected to grow in the high single to low double-digit range. This reflects a few factors, including overall LAI category growth, benefits from our past and current commercial investments to drive increased awareness, and improvement in our competitive position, assuming the pending label updates. It also assumes that the market adjusts to two LAI competitors towards a steady state share split that is continuing to track with our cohort intelligence, indicating an approximately 65-35 share split, favoring sublocate amongst experienced dual LAI prescribers. We expect that this outlook in the base business to be largely offset by challenges in the justice channel due to funding gaps that are persisting into 2025, as well as difficult choices a few larger justice system accounts are having to make to treat more patients with constrained funding in the near term, resulting in long-acting injectables losing position. Richard will have more detail on our justice strategy, but I would simply emphasize that this near-term justice system dynamic in no way diminishes the long-term upside we see, and we expect growth again in 2026. We will not, however, allow this near-term imperative transition to take our attention away from the main driver of our business and shareholder value. By focusing our efforts on opioid use disorder and growing the LAI category and emphasizing Sublicate's differentiated profile, we continue to expect to achieve Sublocade's peak net revenue goal of greater than $1.5 billion. Turning quickly to our report card on strategic priorities, which are now set against our narrowed focus, particularly as regards to R&D. Beginning with Sublocade, we continue to see solid growth in the number of patients we're able to help in the past year. At the end of 2024, we had approximately 171,000 patients. a 25% increase compared to the end of 2023. Recall, reaching our peak net revenue goal contemplates treating approximately 270,000 patients, so continued good growth in 2024. And, as I previously mentioned, our progress in helping patients delivered another overall solid net revenue performance for Sublicate in 2024, growing 20% year over year, despite the recent challenges. In terms of diversification, our efforts are focused on Otvi in the U.S. and on driving net revenue of our new products, Sublocate and Suboxone Film, in the rest of the world. We made good progress in both areas. Richard will provide more detail on Otvi in a moment, but we exited 2024 with 170 experience programs up and running with continued positive anecdotal feedback and growing potential for adoption. Meanwhile, new products increased to more than 50% of the rest of world net revenue, mainly driven by Sublocade. In terms of pipeline and R&D, our focus is narrowed to our two assets for the treatment of opioid use disorder. The phase two studies for both have been committed to and funded, and development activities are on track with last patient, last visits for both studies expected in the fourth quarter this year. On our last strategic priority, I'm pleased that we again made great strides in creating greater certainty for all our stakeholders. The two major items in 2024 were continuing to reduce enterprise risk with the settlements of certain legacy litigation and increase financial flexibility with a new debt facility totaling $400 million. More specifically on the completed legal settlements, we have now fully resolved the antitrust matters with the agreement we reached with the remaining parties in this legacy matter. I'm also pleased to confirm that in 2024, we continued our unwavering commitment and strong record of meeting our mandated integrity and compliance commitments. We're well on track to complete our obligations under the CIA this year. Finally, I want to highlight our capital allocation priorities during this transition period. In 2025, we expect to generate positive underlying cash flows from operations and to maintain a strong cash position. We do, however, need to be mindful of potential significant unwind of payables related to Suboxone film if share erodes at a rapid pace. As such, our near-term capital allocation focuses on reinvesting in Sublocade, completing the two clinical Phase II studies, and maintaining our overall financial flexibility. As we move through this in the near-term period, the Board, in partnership with management, will continue to actively review capital allocation But at this time, we are neither considering business development nor a return of capital to shareholders. With that, I'll now hand it over to Richard to provide a commercial overview.

Thanks, Mark, and good morning and good afternoon, everyone. Just stepping back for a moment, I am pleased with the pioneering work we have done with Sublocade to create the long-acting injectable category for OUD. We've delivered strong growth across all the key metrics we track to assess our commercial effectiveness. Most importantly, we are treating more patients and reaching more providers than ever before. And while our efforts are delivering consistent progress towards our peak net revenue goal of greater than $1.5 billion, we see an opportunity to accelerate this progress and fully unlock our potential through the additional investments we're announcing today. As Mark mentioned, 2025 will be a transition year for Sublocade as the market fully adjusts to two players and as we confront near-term treatment funding challenges in the justice channel. Our belief over the long term remains that Sublocade will continue to be the LER choice in the US based on its differentiated profile, notably its efficacy across the entire monthly treatment interval. We have been executing on a multi-year plan focused on infrastructure, access, communicating the strength of our evidence base, and more recently, tactically adjusting to the competition. We believe now is the time to fully leverage what we have built and learned through broadening the scope of our marketing to patients and HCPs. The overriding goal of the investments we are making is to increase awareness of medication, assisted treatment, specifically sublocate, and to ultimately deliver overall category expansion, higher net revenue, and increased market share. Regarding the new market entrance, our co-prescriber cohort analysis continues to indicate that their share amongst experienced dual prescribers is stabilizing out at approximately 35%. Further, independent market research we conducted continues to indicate that efficacy is the most important consideration by prescribers when recommending an LEI treatment for OUD patients versus injection experience. With these ongoing learnings, our increased investments behind Sublocate are focused on compliantly accelerating HCP and patient awareness and activation, while at the same time, building on our leadership positions in both organized health systems and the justice system. Taking each in turn, with HCPs, we have focused on compliantly reinforcing Sublocate's efficacy through HCP education and by healthcare provider-focused media. We also expect to improve our competitive position with the label changes Mark described earlier. Regarding patients, our strategy here is to invest in media behind Sublocate, including digital and television, covering a significant portion of Sublocate's target patient and HCP base. Our market research shows that there is an approximate 80% pass-through rate when patients request Sublocate. So the goal with our media investments is to generate patient activation and requests. As you have heard, we expect to receive FDA approval for the proposed label changes, and if we receive a rapid induction on a label, HGPs will be able to treat patients with sublocate at the point when patients are most willing to be treated. With the only monthly LEI for rapid initiation, assuming FDA approval, we believe this label change will offer a real benefit for patients and treatment providers. We are currently advertising in the highest priority territories that were chosen for having many OED patients, and having good access and distribution to fulfill increased Sublocade requests. Lead indicators suggest our campaign has been impactful with Sublocade website traffic significantly since launching the campaign. Moving to the justice system. While short-term factors are impacting our near-term net revenue expectations from this important channel, the long-term opportunity here remains very attractive. Our challenge in the justice system is not the treatment itself, The HCP and patient experience is universally positive based on anecdotal feedback. Rather, the challenge we face is the volatility in funding, which in turn means our growth in this challenge is unlikely to be linear in the near term. Our strategy to unlock the CGS opportunity is twofold. First, we will continue to activate new accounts and drive debt for prescribing. Think of this as the behind-the-wall opportunity that has generated a lion's share of Sublocade's justice system net revenue thus far. The second key element of our strategy is to unlock the opportunity for justice patients outside the walls, where there are no funding issues as patients can maintain their medical coverage. In short, while the base business is expected to be the driver of Sublocade in 2025, we continue to expect the justice system will be a tremendously important long-term growth opportunity for Sublocade, as it is estimated over 60% of OUD patients touch the justice system at some point during their recovery. However, in the first half of this year, We expect the justice system to rebase and then to generate reneed growth in 2026. Looking beyond the short-term dynamics, it is vital to keep our eye on the opportunities we have to help patients with sublocase. The long-term fundamentals remain compelling. First, in the US, there are approximately 9 million people misusing opioids and only 3 million patients diagnosed with OED. Despite the tremendous need, there are still only 1.2 people in BMAT treatment at any time, or 1.8 million in a year. This reflects the fact that many patients are not aware of treatment. We have a significant opportunity to build awareness of any form of FEMA among patients and healthcare providers, as it is estimated that less than 15% of patients are aware of any brand-name treatment. Through our investments, we aim to help with patient awareness to close this treatment gap. The long-acting injectable catering is also, we believe, still in the early days of market penetration. Our research suggests that up to 30% of OUD diagnosis patients would benefit from a long-acting injectable like Sublocate. Yet today, long-acting injectables only command an approximate 8% share of patients seeking VMAT in the U.S. As such, a tremendous long-term upside remains. Taken together, we continue to expect that we can meet our target of transforming the lives of 220,000 patients and beyond, and in so doing, deliver on the commercial potential of sublocated of greater than $1.5 billion of net revenue. Now, turning to Opvi. At this point, we're about 16 months into launch program. In truth, we thought we'd be further along the adoption curve based on Opvi's profile and differentiation, specifically recognizing its label for effectiveness against synthetic opioids like fentanyl, which continue to be the responsible for the vast majority of opioid-related overdoses. At the last count, over 90% of opioid overdoses were caused by synthetic opioids like fentanyl. What's happening is that the harm reduction voice we are encountering is much louder and more influential than we expected, citing concerns about potential for precipitative withdrawal and the lack of real-world evidence. This is slowing adoption at the State Department of Health level, which ultimately slows the ability for first-line users like law enforcement to access opfits. which we believe is needed as part of the treatment armamentarium. We are actively countering this unsubstantiated pushback with a combination of strategies. First, we are gathering real world evidence with our experience programs, which are generating positive feedback and testimonials from users. Second, we continue to engage state and local policy makers and medical key decision makers around obvious value. And third, we have a robust evidence generation plan including real-world and head-to-head studies versus naloxone, which we believe in time will provide the data to substantiate what we're hearing anecdotally from users. We are pleased to have fulfilled two 100,000-unit deliveries in 2024 as part of our 10-year contract with over $100 million with BARDA. In 2025, we are planning for fulfillment of another BARDA order and, importantly, progressive delivery of more meaningful commercial net revenue versus 2024. As you see on the slide, we currently have 170 experience programs in place versus 10 at this time last year. We are expecting a number of these recipients to adopt OPV as their primary reversal agent and convert to customers with consistent order flow. Our confidence in turning current experience program users into paying customers is based on the consistently positive feedback from those using the product in real-world settings. Finally, In addition, we now have 32 states where standing orders have been updated to allow access to all overdose reversal agents, a key step to enabling purchase and distribution of Opvi within the public interest market. Next steps in these states include, in some cases, being included in protocols and being added to state protocols. So we recognize more work to be done, and that is the focus of the team. Now let me now hand over to Ryan.

Thanks, Richard, and good morning and good afternoon to everyone. As Mark discussed, despite a challenging year, we grew the top and bottom line in 2024 and significantly improved our financial flexibility. We also recalibrated our cost base to match our narrow strategic focus. Looking at our financial performance in Q4 in more detail, starting with the top line. Overall, Q4 net revenue of $298 million was up 2% from last year, driven by sublocate. Fourth quarter total sublocate net revenue of 194 million increased 10% versus the prior year, and 2% versus the prior quarter. In the US, sequential growth in the quarter was aligned with suspense growth. The quarter included a modest benefit from the combined impact of stocking and trade spend releases in the mid single digit million dollar range, similar to the previous quarter. By channel, base dispensers grew in the low single digits on a sequential basis, offsetting CJS contraction given the funding henwoods discussed. Off-v-net revenue for the fourth quarter was immaterial following the two BARDA orders in Q3. For Suboxone film, the average share of BMAT in the fourth quarter was approximately 15%, down approximately three percentage points from the fourth quarter average in 2023. We exited 2024 slightly below 15% with increased competition, as Mark alluded to. For the rest of the world, Q4 2024 net revenue was up 7% versus last year at actual exchange rates and 9% at constant exchange rates, driven by sublocating. The service net revenue for the quarter was $9 million, the bulk of the net revenue since we discontinued sales and marketing of the product, has been supply orders to minimize patient disruption and trade spend releases. Q4 adjusted gross margin was similar to the prior year, period at 83%, with a higher sublocating mix offset by cost inflation. For operating expenses in Q4, adjusted SG&A was up slightly versus the prior year, reflecting increased commercial investments and new financial reporting requirements, partially offset by the discontinuation of CACERAS. Adjusted R&D was down 10% versus the prior year, reflecting reprioritization of pipeline activities to OUD. Overall adjusted operating profit was flat in Q4 2024 versus the prior year. Moving to full year results for 2024, overall net revenue increased 9% driven by sublocate. Total sublocate net revenue reached $756 million, up 20% year-over-year, putting us slightly above the range we discussed with our Q3 results. U.S. film net revenue declined full year 2024, as expected, driven by continued share erosion. Net revenue outside the U.S. decreased by a percent versus full year 2023 at actual FX rates and increased a percent at constant FX rates. We continue to see good growth from Sublocate outside the U.S., with net revenue up 27% to $52 million. while Suboxone film also grew. These benefits were offset by erosion in the legacy tablet business. Moving down to P&L, our full year 2024 adjusted gross margin was 83%, down slightly from 84% in the prior year, with an improved product mix offset by cost inflation and less favorable manufacturing variances. Adjusted SG&A expenses were $576 million in full year 2024, up 6% versus full year 2023. The increases in 2024 primarily reflect sales and marketing investments and new financial reporting requirements. These items were partially offset by lower sales and marketing expenses from the discontinuation of the SARIS. For R&D, full year 2024 adjusted expenses decreased 3% to $103 million. The decrease reflects the prioritization of pipeline activities to OUD and related cost savings. Adjusted operating profit for four-year 2024 grew by 16% to $312 million, reflecting increased top-line growth and lower overall expenses. Adjusted net income was essentially flat versus 23, with higher net finance expenses and a higher effective tax rate impacting results. Net finance expenses in full-year 2024 primarily reflected decreased interest income on lower cash and investment balances. The higher effective tax rate in 24 was driven by the increase in the UK's effective tax rate and the non-deductibility of certain expenses during the year due to our US listing. On a diluted per share basis, adjusted net income improved by 6% to $1.66 per share, benefiting from a decline in weighted average share count. Moving to the balance sheet in our capital position, we ended 2024 with gross cash investments of 347 million versus 451 million at the end of 23. Strong cash flow from operations for the year and our upsized debt refinance were more than offset by settlements of our legacy legal items and share buybacks. During 2024, we bought back approximately 13.1 million shares for a total of 168 million and funded an additional $5 million to facilitate completion of the latest buyback. This $100 million buyback, the fourth since 2021, concluded at the end of January 2025. The debt refinance executed in November last year improved our financial flexibility, netting approximately $86 million of cash. We extended the maturity to 2030 and added a $50 million revolver that remains unused. Now turning to guidance for 2025, which we are providing in U.S. GAAP. Net revenue is equivalent in U.S. GAAP and IFRS and there are very minor differences in adjusted gross margin, expenses and operating income between IFRS and U.S. GAAP in full year 2024. We will be reporting in U.S. GAAP going forward. For guidance and starting with total net revenue, we expect to deliver total net revenue in 2025 of $955 million to $1.25 billion. At the midpoint, this guidance represents a decline of 17% versus the prior year, with film net revenue erosion accounting for 11 percentage points of the total, and a discontinuation of PSERIS accounting for 3 percentage points. Our full year 2025 net revenue expectation for sublocate is $725 million to $765 million. The midpoint of this range suggests a modest year-on-year decline of 1% for the reasons Mark and Richard provided. Turning to OPFI, our net revenue guidance of $10 to $15 million assumes approximately $8 million for a single barter order. With regards to U.S. Suboxone film net revenue in 2005, we are taking a prudent stance on our net revenue expectations given the changing market dynamics. Our base assumption for the year reflects the recent intensification of competitive pricing dynamics by the generic providers, which is requiring greater rebating levels to maintain formulary access, as well as the impact of a potential fifth generic entry. Given these dynamics, we expect U.S. suboxone film net revenue to decline by approximately 55% versus 2024. To round out total net revenue for the rest of the world, we anticipate generally flat 2025 net revenue based on new product contributions offset by legacy tablet competition and pricing actions. Looking at gross margin, we plan to deliver in the low to mid 80% range in 2025. This reflects expected mixed benefits from sublocate, partially offset by lower fill margins. The Raleigh manufacturing site acquired in late full year 2023 is on track for commercial production in full year 2026 and savings once fully ramped up in full year 2027. We remain confident in the medium term that a higher mix of sublocate coupled with manufacturing savings will support higher gross margins. Turning to operating expense, we expect 2025 SG&A in a range of 525 to 535 million and 2025 R&D of 85 million to 90. Both guidance elements consider the annualization of Pacella savings largely offset with inflation and the significant cost actions we took late last year and early this year as well. These additional actions exceeded $100 million and were primarily focused on G&A and our pipeline reprioritization efforts in R&D. Overall, our total operating expenses are expected to be down more than $50 million year-over-year in 2025. including the significant allocation of funding towards Sublocate and our two Phase II assets discussed earlier in the call. Together with the large step down in Suboxone film net revenue, we arrive at an adjusted operating profit in the range of $185 million to $225 million. While the midpoint reflects lower operating margins, we expect this profile to improve in the years ahead given our scalable business and the unique confluence of circumstances in full year 2025. I also want to provide color and a couple of other line items which will impact net income. Our expected adjusted tax range for 2025 will be between 22% and 25% before normalizing in low 20s the following year. Also, with our upsized debt facility to $400 million and expectations for lower cash investment income, we would expect our net finance expenses to be higher than 2024. In closing, 2025 represents a transitional year as we absorb the impact of the expected fall off into box on film net revenue, stabilize to sublocate sales ahead of an expected return to strong growth and gain traction without fee. I'm energized by the opportunities ahead and look forward to updating investors on our financial progress. With that, I would now turn the call over to Mark.

Thank you, Ryan. Let me close by affirming that while 2025 looks set to be a year of transition. We will not allow this to take our attention away from the main driver of our business and shareholder value, namely sublocate. The fundamentals of the opportunity we see to help patients remain fully intact. And as a leader with two decades of experience in developing and commercializing treatments that help OUD patients, we believe Indivior is well positioned to capture the leading share of the opportunity before us. By redoubling our efforts in opioid use disorder and with an improved competitive position, we continue to expect to achieve Sublocade's peak net revenue goal of greater than a billion and a half dollars. With that, I'll go ahead and open up the call for Q&A.

Thank you. If you would like to ask a question, you'll need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, you can press star 1 and 1 again. Thank you. We'll now take our first question. And this is from David Amsalem from Piper Sandler. Please go ahead.

Thanks. So I just have a few. First, I get your comments on the funding gaps in the CJS, but, you know, how much of the dynamics in CJS are related to the competitor? I didn't really hear you talk much about that, so can you talk about competition and the extent to which that's a headwind in that channel. So that's number one. Then number two, I think you cited 35% in terms of share stabilization regarding BrickZotty, but I'm wondering out loud, can you talk about where you think your share of new starts is right now and where you think that's going to be in the context of a two-player market as we get towards the latter part of the year. I'm just trying to get a better sense of how you're doing with new starts and what is embedded in your guidance regarding share of new starts. And then lastly, on a quick one on Suboxone, with the decline, what's your expectation, not just about this year, but longer term? Are you expecting a sort of more commoditized outlook in terms of pricing of the product where you're going to see declines beyond this year? How do you think about that? Thank you.

So maybe what I'll do, David, and thanks for these questions, is I'll take the last question first, and then I'll ask Ryan to talk about, you know, the impact of CJS and where we see the competitor factored in versus the actual funding gaps. And then I'll ask Richard to talk about the share stabilization where we see the cohorts and where we see the current new starts and that dynamic. So when we think about the pricing dynamic overall in this market, the pricing remains very constructive. PDMs are focused on full access with both products and pricing remains resilient. After a little bit of pricing impact in the CGS last year in Q3, we see stabilization you know, at this point, you know, in criminal justice. So, you know, we see, you know, as we move forward, a good constructive sort of pricing environment, you know, especially where the bulk of the businesses with the PVMs were focused on open access for two products. Ryan, you want to talk about CGS and how we thought about the funding and the near-term impacts of that at the start of the year versus the competitor?

Yes, certainly, Mark. So, Hi, David. Good morning. So the first thing I would say is when we look at CGS, and I think Richard alluded to this, the demand within the facilities is still strong. The feedback that we are receiving on sublocate has been positive and strong. The treatment demand is there. But what we're seeing this year is the facilities are having to make decisions based on budgets. They have a fixed budget to treat a certain amount of patients. And so at this point, when we're looking at the difference between budget impact versus competition, it is primarily tied to these facilities having to make decisions on a budget versus any access impact we're having from competition. And what we're also seeing in terms of some phasing is we saw some of this occurring in the back half of 2024. And in our guide, we did factor the continuation of this impact primarily in the first half. with the projection of some growth return in the second half.

Thanks for that, Ryan. And maybe just one additional bit of color on that, David, is listen, while we see these funding constraints, we expect these to alleviate a bit through time. You know, you're familiar with the Medicaid 1115 waivers. There's 16 states that now have those approved, you know, yet they have to operationalize those because right now they typically have a pharma budget. you know, that they're able to just buy product from and now they'll have to bill out on a by-patient basis. We expect that operationalization of that to start occurring in 2026 and the further operationalization of abatement funds to help with those funding challenges. Richard, can you talk about, you know, the cohorts versus the new patient share?

Yes, certainly. So, thanks for the question. So, I think you're right. On the cohorts, what we see at the moment is that they remain around 35%. As you know, it's a differentiated concept. So, we're pleased that we continue to see 65% for us. I think the other perspective just to put out there is Mark mentioned about the label and the initiatives that we're expecting. We think that will also help in terms of competitiveness, specifically things like rapid initiation on the monthly and the alternative sites of injection. So we're pleased about that. With regard to new starts, we see that around about that we have about 71% of new starts at the moment.

Yeah, and just for further color, David, if we look back to Q3, You know, new patient starts, we're at about 72. So they're about in the same spot as where they were Q3. You know, you're starting to see the market kind of level out. And what we've built into our guidance is continued share, you know, continued trial of the competitor products where we get to share in line with the cohorts.

Thank you.

Thank you. We'll now take the next question. This is from random folks from . Please go ahead.

Hi, thanks for taking my questions. Maybe I'll just follow up on one first on the prior one. Is the 71% new start, is that across both the monthly and the weekly, or is that just a sort of monthly new start?

What we do is we equalize the weekly, so it's across both weekly and monthly. It'd be a total LEI look.

Okay. And then just kind of staying on the weekly, how much of an advantage is the weekly dosing in practice when you're speaking to prescribers? You know, we talked about efficacy being the number one prescribing decision. You know, I'd imagine prescribers see Suboxone and Brixadi as efficacious, but granted, you know, the differentiation really comes on the monthly. So on that weekly, you know, how should we think about when a prescriber is putting patients on weekly? Do they like it? Do they like, you know, the higher touch point initially? And then following on from that, do you think you can gain those weekly patients back when they, if or when they decide to go into a monthly given the sort of better coverage that Sublicate has on a month?

So I think maybe how I'd answer that is first of all, I think coming back to, you know, the need. So what we see is efficacy is, the key need in the marketplace over flexibility or dosing. So I think number one thing when you're looking to treat patients is do you have the right product for that patient that will cover them for the entire dosing period? So I think those are the key things that HCPs are looking for. With regard to things like Matt mentioned, the label claims, again, if you think about it, the ability to be able to move someone directly onto a monthly, I think, is going to be a real good competitive point that we'll have. The only month that's able to do that. I think the other point that we need to accept is sometimes the weekly is used as induction initiation for BRICSRD. Actually, if you look at the numbers, that's been considerably coming down in terms of their split of weekly to monthly over since their launch. So, you know, we remain committed and convinced that the monthly is the right optimum dosing frequency, as you see with take-home doses on the orals. And I think, you know, with a rapid initiation, if we get the label approved, I think that will be, you know, obviously a great competitive point for us.

Yeah, and I think, Brandon, just one more thing on there is, is the competitor only has induction on their weekly, so we will be the only monthly product with a rapid induction, which is a differentiator as it comes through. And, listen, I'd be remiss without welcoming you to coverage of Intivior. Thanks for picking us up.

No, thanks very much. One more, if I may. Just sort of we talked about 2025 being a transition year, and I appreciate all the color you gave. How do you think about a return to top-line growth on a company basis in 2026? I understand you may not want to go there just yet, but I thought I'd ask. Thank you.

Listen, I think given the transition year where after five to six years of enjoying film exceeding every analog and having that pricing pressure and the generic coming in, having sublocate with new competition where the market is adjusting and we're dealing with the annualization of last year as well as new trial. When you start to look to 2026, you start to look to a market that's stabilized out. We're expecting share to stabilize out in line with the experienced dual LAI prescribers where it's 65-35. So you'd expect that you're returning to growth in line with market growth. you know, in 26 and beyond. So that's why we have such conviction, you know, in the profitable growth framework is, you know, once we get through the transition period, it's all about, you know, a huge unmet need with over 9 million people abusing, you know, only 3 million diagnosed, and at any point in time, only 1.2 million in treatment with LAIs only at 8%. So there's a tremendous opportunity. where we have research that indicates about 30% of patients should be on LAI. So there's a tremendous opportunity for growth and a tremendous opportunity for two competitors in the market, even though we see our product as the clear leader.

Great. Thank you very much.

Thank you, Brandon.

Thank you. The next question is from Paul Cudden from Deutsche Neumis. Please go ahead.

Yeah, good morning, guys. Just firstly, a question on sublocate on the basis of kind of your expectations for Q4 2024 were for a decline versus Q3 based on competitive pressures and sort of funding challenges in CJS that didn't ultimately materialise. So I'm just wondering if you could sort of comment on your initial guidance for sublocate on the basis of the funding pressures proved not to be quite as high as you thought in Q4 or even the exit rate for Q4 was a little bit stronger.

Ryan, could you talk through both the Q4, which was flattered, as well as into the Q1 dynamics?

Good morning, Paul. Certainly, it's a good question because the last time we spoke was in October, and the Q4 results did play out stronger than expected. As we had mentioned, we had factored in some continued share erosion in the fourth quarter. That did not happen. If you look at our business on a clean underlying basis, it grew one to 2% versus Q3. So that's our new starting point as we progress into 2025. And as we're looking at the quarterly ramp, I'm going to stay away from the details of exact phasing. But what I would say and break this down into two components for you. First, if you look at the base OHS business, that's expected to show consistent growth from year end to the high single, low double digits with the benefits of the increased HCP and patient media investments that Mark mentioned starting to ramp up more in the second half. And then if you look at the justice channel, as we just mentioned earlier, we started feeling that at the end of last year, the funding gaps and the impact is being felt at the start of this year as well. And so we have that still materializing in the first half, but we do see some step up in the second half as the year progresses. But again, I do want to reemphasize the point I made earlier that this loss of volume of share is not tied to competition. It's primarily tied to the funding constraints at the facilities.

Okay, superb. And second for me on Suboxone dailies in the US. Just wonder if you could elaborate on kind of where the pricing pressure is coming from. Is that sort of tablets or is that from the film competition? I mean, is there an opportunity for film to take share from tablets? And what visibility do you actually have on the fifth generic potential launch and how much is that kind of tied to your anticipated halving of sales? So,

On the film situation, as we just mentioned, the category has been genericized for almost five to six years now. And we believe that we've managed that glide path appropriately, using the cash to fuel sublocates growth and also to return some capital to shareholders. But what we've seen recently, just to provide you some more context, and I just want to remind you that since the fourth generic ingenious entered, in the market in Q3 23, they immediately contributed to a price decay from their launch. And we've seen it throughout 2024. And there was for them to gain the volume and then they accelerated their pricing at the end of 2004 with the generic price dropping close to 15%. So what we did, moving into 2025 was we formulated a sensible competitive response and adjusted our pricing in Medicaid to maintain the very important formulary position. And so that's what's in the base of our film guidance. On top of that, we always, you know, most of the time factor in some underlying share erosion that we've seen over the last couple of years as well. And then in regards to the fifth generic, listen, as of now, it has not come in, but we have factored, you know, the appropriate level of response into our guide.

And, Paul, just for the absence of doubt, we've factored in that pricing we took, but continued erosion throughout 2025. And we expect that trend to continue, whether driven by the current competitive environment of the four players or a fifth generic entering should Teva come along.

Super, thank you.

Thanks for the questions, Paul.

Thank you. The next question is from Chase Knickerbocker from Craig Hallam. Please go ahead.

Good morning, guys. Thanks for taking the questions. Just to start from me, staying on Suboxone, I mean, I guess just to be clear, you know, within guidance, if we do see a fifth generic launch, do you feel like you've largely accounted for that, fully accounted for it, or would you say that the majority of kind of the impact that you're pricing in is kind of some of these current dynamics? Just kind of putting a finer point there.

Yeah, and Perfectly fine with the clarification, Chase. What we've factored in is continued price erosion throughout the year, whether driven from the current competitors or a fifth entrance. So, you know, we think we've encapsulated that within our current guidance.

So if Teva was to launch, you believe that you've accounted for that impact in this guidance?

Correct.

And then just on the visibility to TAVA, I mean, should we kind of take some of this conservatism as a level of visibility from you guys to that launch or just kind of any additional color there?

Yeah, we don't have any visibility with regards to Teva. You know, obviously they've been held out because of, you know, the court system and are free to launch at any point in what we know is a very profitable generic market. So we would expect them to come in at some point, but we don't have any visibility with that. But either way, what we saw through 2024 because of since the fourth entry is we've seen pricing pressure continue. and then accelerate in December where we saw, you know, a 15% decline, you know, in the generic pricing.

Got it. Thanks. And then just on sublocate, can you kind of walk us through your assumptions on a little bit of a finer level as far as overall buprenorphine LAI market growth in 2025 that's inherent in the guidance in the U.S. at least?

Yeah, Brian, could you please talk him through what the overall – LAI market growth assumptions are with related to how you talk through the other assumptions on guidance.

Yeah, so at this point, though, we haven't really gotten into the exact market growth, but you can assume that last year we saw over 35, 40% as the market continues to materialize. This year, we predicted anywhere between 20 to 30% in the market. But keep in mind, in our guidance range, we also factored in continued share impact as we revert, you know, closer to those analogs we've talked about.

So, my kind of rough back in the napkin math then is that, you know, kind of guidance for sublocate assumes that, you know, on a full year basis, you're basically kind of at that 65% share level. Is that about fair?

I would say that's a fair assumption, reasonable.

And then just lastly, on kind of overall kind of CJS growth and, you know, kind of within those growth assumptions, do you kind of expect CJS as a whole, that portion of the market to be flat in 2025? Or is there some growth there that your competitor is taking?

So the way we're thinking about CJS, CJS will be down. You know, year over year, you know, and if you think about where the growth is in organized health systems and CGS, is it about 20% in the system? It's going to be down about 30, 35%. And it's going to be because of these funding constraints and some systems being forced to shift back to orals to ensure that every patient can receive treatment because of where we are. So that starts right at the beginning of the year with regards to those impacts. Those are not competitive pressures in criminal justice. Those are funding pressures. We have built into our guidance a bit of competitive pressure in the market because we know this is an area that the competitor is focusing on.

Thanks, Jason.

Of course. Thanks, Jason.

Thank you. And I'll take the next question. This is from Christian Glennie from Stifel. Please go ahead.

Hi, guys. Thanks for taking the question. Maybe on the guide for Sublocade and then specifically around, you know, in the core market in your OHS, you've talked there about, you know, high single digit to double digit. To what extent is that already reflecting the potential benefit you'll get from things like the label change and all the extra investment, the marketing commercial support you're giving for it. Just trying to get a sense for how much that is already factored in the guidance or whether that could be potential upside. It does sound like you could get some significant things like direct-to-consumer and digital TV advertising. We've got high pass-through rate, low general awareness today. So could there be some more meaningful – you know, growth from the benefit of those activities. Also, we're trying to get a better sense for, you know, what we should be getting from that $50 million investment into Sublicate. Thanks.

So thanks, Christian. A couple of things there. So in the guide, though, certainly does factor in the market dynamics that we know today, some possible valuation of some of these key drivers that we discussed this morning. and then also some level of appropriate protection on the downside. And as we just mentioned, the high single-digit, low double-digit growth is a combination of the market growth of 20% to 30% and then continued share impact as we progress through the year. And then we did factor in a return on our investment. We're excited about these investments of HCP and patient awareness. Unfortunately, you know, we start them in Q1 and in Q2, and we have those returns starting to roll out as we get into Q3 and Q4 at that point. And that also includes the assumption that we will have that label update approved by that point.

Thanks for that, Ryan. And maybe just a quick comment from Richard on why now, you know, to amp up the patient and ACP media?

Yeah, thanks, Max. I think, you know, if you look at the macro dynamics or the potential, we spoke earlier about, you know, the underuse of BMAT, the diagnosis rate. So if you look at the opportunity we have, significant growth opportunities still exist in category penetration and also penetration of the LEI market. So I think you know, number one. And then if you look while we dipped our toe back in 2019 and 20, you know, clearly it was pre-COVID. We had a lot less prescribers. So I think, you know, now we feel we've got a strong base for acceleration with regard to more above the line sort of like TV and digital. Thank you, Richard.

Thanks. And then maybe on CGS, just to clarify, you said the CGS will be down about 30% to 35%. in 25, is that that's for the market in general, but also specifically sublocate? And then the second part on CGS is, I mean, you talked to a few things maybe getting better, but is there any specific things that might help to stabilize or improve the funding dynamic within that part of the market? Because clearly that's sort of where people are sort of grappling a bit with is How do I get comfortable? We'll see at least some initial stabilization and maybe some improvement on that sort of funding part.

Yeah, so let me maybe take both of those. You know, I think the first one with regards to CGS, that 30%, that is sublocated, and it's the funding pressures, a couple of major accounts shifting over to oral to ensure they can treat all patients, and a bit of expected competitive pressure in the market because we know that focus is there. What we are still seeing is we still have a funnel of new accounts that are looking to come on. They see LAIs as a solution. And even in the accounts that switched over to oral, the feedback was we love the LAIs. We think it's the right solution. We just need to treat these patients. And so as additional funding opportunities become available, there is an opportunity to switch it back as we return to growth in criminal justice system moving ahead. So those funding vehicles I think the first one that's right there front and center are the Medicaid 1115 waivers. We know there have been 16 states that have been approved for these. We know that there's going to be a gap from approval to when those become operationalized because prison systems work off of budgets. And oddly, they don't have fungibility between their healthcare budgets and their staffing and other budgets, which is why there's so much constraints you know, with regards to wanting to use LAIs, but they can't reallocate where they have the benefits, which is on the staffing levels, you know, where they have the orals. So that puts the pressure on in the short term. And so with 1115 waivers getting operationalized, with the potential to potentially influence in next budget year cycles, you know, with regards to shifting from people over to healthcare, as well as with abatement funds continuing to increase and be And the operationalized, you know, we think that funding in 26 and beyond will start, the gaps will start to close or the funding will start to increase, whichever way you care to look at it.

Thanks. And then maybe last one on, just to clarify, I think on your comments on capital allocation, did you say not currently considering shareholder returns and M&A stroke BD? I was just wanting to clarify that.

Yeah, that's correct. What we're really focused on is fueling sublocate and the phase two assets through completion, you know, meeting our financial obligations and ensuring financial flexibility through the transition period. And listen, clearly, you know, capital allocation is a board decision in partnership with management, and they will continue to assess this actively moving forward.

Okay, thanks.

Thank you, Christian.

Thank you. We have one more question. Last question today is from Brian Balchin from Jefferies. Please go ahead.

Hey, thanks for speaking. I'm just asking on behalf of James Lane Tempest. His questions are, if Oxy is 10 to 15 million revenues and the changes in the cost structure, is this profitable or at what point will the product be profitable as it's understood that Oxy's costs were higher than this when last laid out? And then secondly, if you go back three to four years, R&D was around $40 to $50 million, and you're guiding $85 to $90 despite cutting some programs. So I guess why isn't R&D lower? Thank you.

Ryan, do you want to cover both the OPV sort of costs as well as the R&D profile?

Yeah, so with the OPV costs, they are directly aligned with the programs that Richard mentioned in terms of the awareness, getting more traction on the standing orders in some of these trial programs. So they're directly tied to the strategy of the business. They've been relatively flat year over year, and we believe as we get into next year, the business will be accretive at that point.

And could I just maybe just highlight, this is a very small team due to the very narrow call point in public interest. So this is not like the sublocated sales force. It's a very small focus team because of the very unique call point that's there.

Sorry, Ryan. And then on your question about R&D, so what the current guide represents, It's primarily now the progression of our two Phase II OUD assets, some residual studies on sublocate, and just a continuation of generating railroad evidence that is a key asset for us as we share that with our teams to help educate the market on our product.

Thank you, Ryan. Thank you very much.

Thank you for the questions, Brian.

Thank you. And there are no further questions. I'll now hand back to Mark Crossley, CEO, for any closing comments.

Thank you, Sarah. And that officially closes out our fiscal year 2024 results call. We appreciate the continued interest and support in Indivia, and we look forward to seeing everyone in the near future. Thank you.

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect.