INDV - NASDAQ

Good day and thank you for standing by. Welcome to the Indivior PLC Full Year Results 2024. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] 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 2 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 to our presentation that is now posted on our website a indivia.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 are Ryan Preblick, our Chief Financial Officer; Richard Simkin, 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 SUBLOCADE. After that, Ryan will detail the financials and our full year 2025 outlook, and Christian is 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, SUBLOCADE 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 SUBLOCADE in 2024 was impacted by transitory items, together with competition in the U.S. long-acting injectable category. Furthermore, we took the decision midyear to discontinue our schizophrenia treatment, PERSERIS 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 2 pipeline assets, while also delivering more than $50 million of savings to the bottom-line. Regarding the commercial investments we're making behind SUBLOCADE, 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 SUBLOCADE'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 SUBLOCADE and medically assisted treatment more broadly. On top of our initiatives to streamline and refocus our business another important development was the series of steps we took to further derisk 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 Indivior 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 5th generic entrant. As a reminder we do not promote SUBOXONE Film in the U.S. For SUBLOCADE, 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 adjust 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 SUBLOCADE 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 SUBLOCADE'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 SUBLOCADE in 2024, growing 20% year-over-year, despite the recent challenges. In terms of diversification, our efforts are focused on OPVEE in the US and on driving net revenue of our new products, SUBLOCADE and SUBOXONE film in the rest of world. We made good progress in both areas. Richard will provide more detail on OPVEE 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 has narrowed to our two assets for the treatment of opioid use disorder. The Phase 2 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 increased 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 focus is on reinvesting in SUBLOCADE, completing the two clinical Phase 2 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 adjust for two players and as we come from near-term treatment funding challenges in the justice channel. Our belief over the long-term remains that SUBLOCADE will continue to be the LAI choice in the US based on its differentiated profile, notably its efficacy across the entire monthly treatment interval. We have been executing on a multiyear 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 SUBLOCADE and to ultimately deliver overall category expansion, higher net revenue and increased market share. Regarding the new market entrants, 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 LAI treatment for OUD patients versus injection experience. With these ongoing learnings, our increased investments behind SUBLOCADE 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. Taken each in turn, with HCPs, we are focused on compliantly reinforcing SUBLOCADE's efficacy through HCP education and by health care 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 SUBLOCADE, including digital and television, covering a significant portion of SUBLOCADE's target patient and HCP base. Our market research shows that there is an approximate 80% pass-through rate when patients request SUBLOCADE. So the goal with our media investments is to generate patient activation and request. As you have heard, we expect to receive FDA approval for the proposed label changes. And if we receive a rapid induction on our label, HCPs will be able to treat patients with SUBLOCADE at the point when patients are most willing to be treated. With the only monthly LAI 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 OUD patients and having good access and distribution to fulfill increased SUBLOCADE requests. Lead indicators suggest our campaign is being impactful with SUBLOCADE website traffic up 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 channel 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 depth of prescribing. Think of this as the behind-the-wall opportunity that has generated lion's share of SUBLOCADE 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 renewed growth in 2026. Looking beyond the short-term dynamics, it is vital to keep our eye on the opportunity we have to help patients with SUBLOCADE. 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 OUD. 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 BMAT among patients and health care 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 category is also we believe still in the early days of market penetration. Our research suggest that up to 30% of OUD diagnosis patients would benefit from a long-acting injectable like SUBLOCADE. Yet today, long-acting injectables only command an approximate 8% share of patients seeking BMAT in the US. 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 230,000 patients and beyond and in so doing deliver on the commercial potential of SUBLOCADE of greater than $1.5 billion of net revenue. Now turning to OPVEE. At this point we're about 16 months into the launch program. In truth, we thought we would be further along the adoption curve based on OPVEE'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 precipitate withdrawal, and the lack of real-world evidence. This is slowing adoption at the State Department of Health level, which ultimately slow the ability for first-line users, like law enforcement to access OPVEE, 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 policymakers and medical key decision-makers around OPVEE's 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 100000-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 OPVEE 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 OPVEE within the public interest market. Next steps in these states include in some cases being including 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 narrowed 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 SUBLOCADE. Fourth quarter total SUBLOCADE 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 dispense 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 dispenses grew in the low single-digits on a sequential basis offsetting CGS contraction given the funding headwinds discussed. OPVEE 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 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 SUBLOCADE. PERSERIS 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 SUBLOCADE 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 PERSERIS. 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 SUBLOCADE. Total SUBLOCADE net revenue reached $756 million up 20% year-over-year putting us slightly above the range we discussed with our Q3 results. US Film net revenue declined full year 2024 as expected driven by continued share erosion. Net revenue outside the US decreased by 1% versus full year 2023 at actual FX rates and increased 1% at constant FX rates. We continue to see good growth from SUBLOCADE outside the US 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 the 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 PERSERIS. 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 full year 2024 grew by 16% to $312 million, reflecting increased top line growth and lower overall expenses. Adjusted net income was essentially flat versus 2023, 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 2024 was driven by the increase in the U.K.'s effective tax rate and the non-deductibility of certain expenses during the year due to our U.S. 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 and our capital position. We ended 2024 with gross cash and investments of $347 million versus $451 million at the end of 2023. 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 the discontinuation of PERSERIS accounting for 3 percentage points. Our full year 2025 net revenue expectation for SUBLOCADE 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 OPVEE. Our net revenue guidance of $10 million to $15 million assumes approximately $8 million for a single BARDA 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 entrant. 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 mix benefits from SUBLOCADE, partially offset by lower film 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 SUBLOCADE, coupled with manufacturing savings will support higher gross margins. Turning to operating expense. We expect 2025 SG&A in the range of $525 million to $535 million and 2025 R&D of $85 million to $90 million. Both guidance elements consider the annualization of PERSERIS 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 SUBLOCADE and our 2 Phase II assets discussed earlier in the call. Together with the large step down in SUBOXONE Film net revenue, we arrived 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 a unique confluence of circumstances in full year 2025. I also want to provide color on 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 the 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 falloff in SUBOXONE Film net revenue, stabilize SUBLOCADE sales ahead of an expected return to strong growth and gain traction with Opiant. I am energized by the opportunities ahead and look forward to updating investors on our financial progress. With that, I will 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 SUBLOCADE. The fundamentals of the opportunity we see to help patients remain fully intact. And as a leader with 2 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 $1.5 billion. With that, I'll go ahead and open up the call for Q&A.

Thank you. [Operator Instructions] We'll now take our first question. And this is from David Amsellem from Piper Sandler. Please go ahead.

Thanks. So I just have a few. First, I get your comments on the funding gaps in the CGS. But how much of the dynamics in CGS 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 Bricsadi. 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, a quick one on SUBOXONE. With the decline, what's your expectation, not just about this year, but longer term? Are you expecting a 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 the impact of CGS 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. PBMs are focused on full access of both products and pricing remains resilient. After a little bit of pricing impact in the CGS last year in Q3, we see stabilization at this point in criminal justice. So we see as we move forward, a good constructive pricing environment especially where the bulk of the business is with the PBMs were focused on open access for two products. Ryan, do 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 us, the demand within the facilities is still strong. The feedback that we are receiving on SUBLOCADE 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 the 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're familiar with the Medicaid 1115 Waivers. There's 16 states that now have those approved, yet they have to operationalize those, because right now they typically have a pharma budget 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 the cohorts versus the new patient share?

Yeah, 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 Matt 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.

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

Great. Thank you.

Thank you. We'll now take the next question. This is from Brandon Folkes from Rodman & Renshaw.

Maybe I'll just follow up on one first on the prior one. Is the 71% new starts, is that across both the monthly and the weekly? Or is that just a sort of monthly new starts?

What we do is we equalize the weekly. So it's across both weekly and monthly. It would 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 talked about efficacy being the number one prescribing decision. I'd imagine prescribers see SUBOXONE and Brixadi as efficacious, but granted the differentiation really comes on the monthly. So on that weekly, how should we think about when a prescriber is putting patients on weekly? Do they like it? Do they like 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 SUBLOCADE has on a month?

So I think maybe how I'd answer it is, first of all, I think coming back to 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 on to a monthly, I think, is going to be a real good competitive point that we'll have the only month able to do that. I think the other point that we need to accept is sometimes the weekly is used as induction initiation for Brixadi. 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 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 with the rapid initiation, if we get the label approved, I think that will be obviously a great competitive point for us.

Yes. And I think, Brandon, just one more thing on there 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 to coverage of Indivior. Thanks for picking us up.

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 just I thought I'd ask. Thank you.

Yes. 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 5th generic coming in having SUBLOCADE 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 dual – experienced dual LAI prescribers, where it's 65:35. So you'd expect that you're returning to growth in line with market growth in 2026 and beyond. So that's why we have such conviction in the profitable growth framework is once we get through the transition period it's all about a huge unmet need with over 9 million people abusing, 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 Cuddon from Deutsche Numis. Please go ahead.

Yes. Good morning, guys. Just firstly a question on SUBLOCADE on the basis of kind of your expectations for Q4 2024 saw a decline versus Q3 based on competitive pressures and sort of funding challenges in CGS that didn't ultimately materialize. So I'm just wondering if you could sort of comment on your initial guidance for SUBLOCADE 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?

Yes. 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 1% 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 in share is not tied to competition. It's primarily tied to the funding constraints at the facilities.

Super. And second for me on SUBOXONE dailies in the U.S. 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 5th 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, we've -- the category has been genericized for almost five to six years now. And we believe that we've managed the NASDAQ Glidepath appropriately using the cash to fuel SUBLOCADE's growth and also to return some capital to shareholders. What we've seen recently, just to provide you some more context, and I just want to remind you that since the 4th generic, Ingenus entered in the market in Q3 2023. They immediately contributed to price decay from their launch and we've seen it throughout 2024. And there was, for them to gain 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 -- 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 5th generic, listen, as of now, it has not come in but we have factored the appropriate level of response into our guide.

Yes. 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 5th 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-Hallum. 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, within guidance if we do see a 5th 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 kind of some of these current dynamics? Just kind of putting a finer point there?

I'm 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 5th entrant. So 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 Teva, 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?

Yes, we don't have any visibility with regards to Teva. Obviously, they've been held out because of 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 4th entrant is we've seen pricing pressure continue and then accelerate in December where we saw a 15% decline in the generic pricing.

Got it. Thanks. And then just on SUBLOCADE 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?

Yes Ryan could you please talk through what the overall LAI market growth assumptions are related to how you talked through the other assumptions on guidance?

Yes. 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 projected anywhere between 20% to 30% in the market. But keep in the mind, in our guidance range, we also factored in continued share impact as we revert closer to those analogs we've talked about.

So, my kind of rough back in the napkin math then is that kind of guidance for SUBLOCADE assumes that 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 CGS growth in kind of within those growth assumptions. Do you kind of expect CGS 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 CGS, CGS will be down year-over-year. And if you think about where the growth is in organized health systems and CGS is at about 20% in the systems 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 cameras or excuse me -- that the competitor is focusing on.

Thanks guys.

Of course. Thanks Chase.

Thank you. We'll now take the next question from Christian Glennie from Stifel. Please go ahead.

Hi guys. Thanks for taking the questions. Maybe on the guide for SUBLOCADE and then specifically around in the core market new OHS, you've talked there about 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/or 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 some -- you could get some significant things like direct-to-consumer and digital TV advertising to about high pass-through rate low general awareness today. So, could there be some more meaningful growth from the benefit of those activities. Also trying to get a better sense for what we should be getting from that $50 million investment into SUBLOCADE? 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, double – 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 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 to amp up the patient and HCP media?

Yeah. Thanks Mark. So I think if you look at the macro dynamics or the potential we spoke earlier about the under-use of BMAT the diagnosis rate. So if you look at the opportunity we have significant growth opportunity still exists in category penetration and also penetration of the LAI market. So I think number one. And then if you look while we dipped our toe back in 2019 and '20 clearly it was pre-COVID. We had a lot less prescribers. So I think 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 that CGS will be down about 30% to 35% in 2025, is that that's for the market in general but also specifically SUBLOCADE? 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 some -- at least some initial stabilization and maybe some improvement on that sort of funding part.

Thank you, Christian.

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

Yes. So, with the OPVEE cost, 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 SUBLOCADE sales force. It's a very small focused 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 2 OUD assets, some residual studies on SUBLOCADE and just the continuation of generating real-world 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 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 Indivior and we look forward to seeing everyone in the near future. Thank you.