Indivior Announces H1 2018 Results Period to June 30th Q2 2018 $m Q2 2017 $m % ∆ Actual FX % ∆ Constant FX H1 2018 $m H1 2017 $m % ∆ Actual FX % ∆ Constant FX Net Revenue 268 288 -7 -8 ...

SLOUGH, England , July 25, 2018 /PRNewswire/ --

H1 2018 Financial Results

H1 2018 Operating Highlights

FY 2018 Financial Guidance withdrawn July 11th

Shaun Thaxter , CEO of Indivior, Comment

"While our base U.S. business has recently been impacted by known risks that have materialized, we remain committed to our vision to ensure that patients around the world have access to evidence-based treatment for their addiction and its co-occurring disorders. Our primary focus is to ensure the successful progression of SUBLOCADE™ as it begins its transformation of the treatment of opioid use disorder. Despite the reality that initial revenues were below our financial plan as patients and healthcare providers (HCPs) continue to adjust to a new and unfamiliar specialty distribution and reimbursement model, we are encouraged by the early success of the fundamental drivers of long term product success: anecdotal reports of patient experience and satisfaction, quantity and quality of payor coverage, number of prescription journeys initiated per physician, patient adherence to treatment, ease and efficiency of refill process, and safety profile of reported events being consistent with transmucosal buprenorphine and Phase 3 study outcomes. We remain confident in our SUBLOCADE™ $1 billion+ annual net revenue goal."

Half Year Operating Review

U.S. Market Update

The market for buprenorphine products continued to grow strongly in Q2 2018 versus the comparable quarter in 2017, showing volume growth of low double-digit percentage levels, in-line with expectations. Market growth continues to benefit from legislation that has expanded federal funding and increased OUD treatment capacity. Additionally, overall public awareness of the opioid epidemic continues to grow. As a result, growth in both the number of healthcare providers waivered to administer medication-assisted treatment and those able to treat to the new permitted level of 275 patients (from 100 patients) continued in Q2 2018. The number of waivered nurse practitioners and physician assistants also continued to grow in Q2 2018.

Overall commercial formulary access remains solid for SUBOXONE ® Film. The list price of SUBOXONE ® Film in the U.S. increased modestly in January 2018 , but this continues to be more than offset by tactical rebating in connection with maintaining formulary access and by the adverse channel mix impact arising from the accelerating number of U.S. Medicaid patients seeking treatment.

The Company has focused on the following areas as key for improving the rate of net revenue growth for SUBLOCADE™:

Key performance indicators (KPIs) show a foundation for future growth with: 79% prompted awareness among 'DATA 2000 waivered' healthcare practitioners, over 1,300 HCPs initiated prescription journeys, 384 HCPs administered SUBLOCADE™ and 30 HCPs administered SUBLOCADE™ to more than 5 patients. The Company forecasts an acceleration of net revenues in the second half, resulting in FY 2018 net revenues in the range of $25m to $50m weighted towards the fourth quarter.

Financial Performance in Half Year 2018

Total net revenue in H1 2018 decreased by 5% to $524m (H1 2017: $553m ) at actual exchange rates and by 7% at constant exchange rates. Volume gains from continued strong market conditions in the U.S., initial sales of SUBLOCADE™ and growth in Rest of World markets was more than offset by a decline in SUBOXONE ® Film market share and unfavorable mix from the increase in Medicaid business. Price improvement was more than offset by tactical rebating activity in the U.S. in connection with formulary access. In Q2 2018, total net revenue decreased 7% at actual exchange rates (8% at constant exchange rates) to $268m (Q2 2017: $288m ). Total net revenue drivers in the quarter were substantially the same as those for H1 2018.

U.S. net revenue decreased by 9% in H1 2018 to $411m (H1 2017: $452m ) and by 10% in Q2 2018 to $214m (Q2 2017: $237m ). During the H1 2018 period, market growth was ahead of last year reflecting benefits from legislation that has increased government funding and treatment capacity. In addition, overall awareness of the opioid epidemic continued to grow. As a result, the number of HCPs qualified to prescribe buprenorphine-based treatments continued to increase. Volume benefits from strong underlying market growth was more than offset by a decline in SUBOXONE ® Film market share in price sensitive payors and unfavorable mix from increased Medicaid business. Improved pricing was more than offset by tactical rebating activity in connection with formulary access. Total net revenue drivers in the quarter were substantially the same as those for H1 2018.

In H1 2018, Rest of World net revenue increased by 12% at actual exchange rates (2% at constant exchange rates) to $113m (H1 2017: $101m ). In Q2 2018, Rest of World net revenue increased 7% at actual exchange rates (1% at constant exchange rates) to $54m (Q2 2017: $51m ). Volume growth in Australasia and Canada from market share gains drove the overall net revenue improvement.

Gross margin in H1 2018 was 89% (H1 2017: 92%) and 87% in Q2 2018 (Q2 2017: 91%) respectively. The decrease in both periods versus the prior year primarily reflected lower net revenue and the impact of contingency planning for an "at-risk" launch by DRL.

SG&A expenses as reported were $231m in H1 2018 (H1 2017: $220m ) and $131m in Q2 2018 (Q2 2017: $127m ). H1 2018 SG&A included a $17m gain from the out-licensing of the intranasal naloxone opioid overdose patents (recorded in Q1 2018). In the year-ago period, H1 2017 results included exceptional items of $25m (recorded in Q2 2017) reflecting settlement of the Amneal antitrust matter.

On an adjusted basis (ex.-exceptionals), H1 2018 SG&A expenses increased 27% to $248m (Adj. H1 2017: $195m ) and in Q2 2018 SG&A expenses increased by 28% to $131m (Adj. Q2 2017: $102m ). The underlying increase in both recent periods mainly reflects planned investments for launching and supporting the growth of SUBLOCADE™ and the ongoing development of the new Behavioral Health unit to launch RBP-7000 (if approved).

H1 2018 and Q2 2018 R&D expenses decreased by 23% to $34m and by 5% to $18m , respectively (H1 2017: $44m ; Q2 2017: $19m ). The decreases in both periods reflect lower clinical activity as key late-stage pipeline assets, SUBLOCADE™ and RBP-7000, completed Phase 3 registrational studies and capitalization of RBP-7000 development costs began in Q2 2018.

H1 2018 operating profit was $200m (H1 2017: $244m ) and Q2 2018 operating profit was $84m (Q2 2017: $117m ). An exceptional gain of $17m and exceptional costs of $25m are included in the current and year-ago period results, respectively. On an adjusted basis (excluding exceptionals), H1 2018 operating profit was $183m (35% margin), a 32% decrease versus $269m (49% margin) in the year-ago period on the same basis. On an adjusted basis, Q2 2018 operating profit was $84m (31% margin), a 41% decrease versus $142m (49% margin) in the year-ago quarter on the same basis. The decrease in both periods on an adjusted basis primarily reflects lower net revenue, costs for launching SUBLOCADE™ and RBP-7000 (if approved). These factors were partially offset by lower R&D expenses.

H1 2018 EBITDA (operating profit plus depreciation and amortization) as reported decreased 17% to $207m (H1 2017: $248m ). Excluding ( $17m ) and $25m of exceptional items in the current and year-ago period results, respectively, H1 2018 EBITDA decreased 31% to $189m (H1 2017: $273m ).

H1 2018 net finance expense was $11m (H1 2017: $25m ), representing the interest and amortization of financing costs on the Group's term loan borrowing facility, which was partially offset by interest income. Q2 2018 finance expense was $6m (Q2 2017: $14m ). The decreased finance expense in both periods reflected the lower interest coupon and amortization of financing costs associated with the replacement of the term loan facilities in December 2017 .

H1 2018 tax charge was $27m , or a rate of 14% (H1 2017 tax charge: $66m ; 30% rate). Excluding the $2m tax charge on exceptional items in H1 2018, the effective tax rate was 15% (H1 2017 adj. tax charge: $75m ; 31% rate). Q2 2018 tax charge was $8m , or a rate of 10% (Q2 2017 tax charge: $30m ; 29% rate; Q2 2017 adj. tax charge: $39m ; 30% rate). The decrease in the effective tax rate was primarily driven by the relative contribution to pre-tax income by taxing jurisdiction in the quarter, along with the impacts of U.S. Tax Reform rate reduction and UK reduced rate due to patent box benefit.

H1 2018 net income was $162m (H1 2017: $153m ) as reported. The current and year-ago periods include $15m gain and $16m costs of exceptionals, respectively, net of tax. Excluding exceptional items, H1 2018 net income decreased 13% to $147m (H1 2017 adj.: $169m ). In Q2 2018, net income was $70m (Q2 2017 net income: $73m ; or $89m excluding exceptional items).

H1 2018 basic EPS were 22 cents (H1 2017: 21 cents ) and 22 cents on a diluted basis (H1 2017: 20 cents ). Q2 2018 basic EPS were 10 cents (Q2 2017: 10 cents ) and 9 cents on a diluted basis (Q2 2017: 10 cents ). On an adjusted basis, excluding the effect of exceptional items, H1 2018 basic EPS were 20 cents (H1 2017: 23 cents ) and diluted EPS were 20 cents (H1 2017: 23 cents ). On an adjusted basis, Q2 2018 basic EPS were 10 cents (Q2 2017: 12 cents ) and diluted EPS were 9 cents (Q2 2017: 12 cents ).

Balance Sheet & Cash Flow

Cash and cash equivalents at the end of H1 2018 were $951m , reflecting an increase of $88m in 2018 year to date (FY 2017: $863m ). Borrowings, net of issuance costs, were $477m at the end of H1 2018 (FY 2017: $482m ). Consequently, net cash stood at $469m at the end of H1 2018 (FY 2017: $376 ).

Net working capital (inventory plus trade and other receivables, less trade and other payables) was negative $287m at the end of H1 2018, an increase of $48m from negative $335m since the end of FY 2017 primarily driven by a gain on the disposal of the nasal naloxone intangible asset, an increase in inventory due in part to the launch of SUBLOCADE™ and lower accruals due to wholesaler destocking earlier in the half year offset by higher Medicaid payments.

Cash generated from operations in H1 2018 was $119m (H1 2017: $205m ), a decrease of $86m . The reduction in cash generated versus the year-ago period was primarily due to lower operating profits in the period, increased inventory and a reduction in payables compared to FY 2017.

H1 2018 net cash inflow from operating activities was $100m (H1 2017: $185m ), reflecting the lower cash from operations and higher net tax payments of $15m compared to $4m in the prior period.

H1 2018 cash outflow from investing activities was $12m (H1 2017: $16m ), reflecting the proceeds received from the disposal of the nasal naloxone intangible asset offset by upfront payments for the licensing arrangements with Addex and C4X, capitalized development costs, and ongoing investments in facilities.

H1 2018 cash outflow from financing activities reduced to $1m , vs. $71m in H1 2017, primarily reflecting the terms of the replacement of the term loan facilities in December 2017 .

R&D / Pipeline Update

Treatment of Opioid Use Disorder (OUD)

Treatment of Schizophrenia

Treatment of Alcohol Use Disorder (AUD)

Early Stage Asset Development (ESAD)

Other Key Events

Key Scientific Congresses

Litigation Update

The Group carries a provision for investigative and antitrust litigation matters of $438m . Substantially all of the provision relates to the U.S. Department of Justice investigation. The Group is in advanced discussions with the Department of Justice about a possible resolution to its investigations, although it cannot predict with any certainty whether, when, or at what cost it will reach an ultimate resolution.

The Group reduced other elements of the provision that relate to other litigation matters reflecting the Group's belief that it has strong defences in the antitrust and other litigations and is now actively litigating these matters. Indivior cannot predict with any certainty whether, when, or at what cost it will reach ultimate resolution of the antitrust and other litigation matters.

The final aggregate cost of these matters may be materially higher than the amount provided.

Department of Justice Investigation

State Subpoenas

FTC investigation and Antitrust Litigation

ANDA Litigation

Rhodes Pharmaceuticals

Estate of John Bradley Allen

In the event the final settlement amount of the DOJ matter is materially higher than the provision, and the Group is further adversely impacted should revenues decline (including possible declines from one or more of the generic companies successfully launching generic buprenorphine/naloxone sublingual film product or from further uncertainty in the U.S. buprenorphine/naloxone sublingual film market), or new products fail to meet expectations, the Group would not continue in business without taking necessary measures to reduce its cost base and improve its cash flow. In these circumstances the Directors believe they would be able to take the required steps to reduce the cost base, however, this would result in a significant change to the structure of the business.

The Directors have reviewed the principal risks and uncertainties for the remainder of the 2018 financial year. The principal risks and uncertainties affecting the business activities of the Group are much in line with those detailed on pages 48 to 56 of the Indivior plc Annual Report 2017. The Group utilizes a formal process to identify, evaluate and manage significant risks . During the period, changes to the market environment have occurred, specifically impacting the Principal Risks of Business Operations and Business Continuity as well as Product Liability, Regulation and Litigation .

Due to the changes in market environment, the Group cannot reliably provide updated FY 2018 net revenue and adjusted net income guidance until the impact of DRL's "at risk" launch of its FDA-approved generic buprenorphine/naloxone sublingual film product in the United States prior to the granting of the temporary restraining order and subsequent preliminary injunction is better understood. As of July 13, 2018 , DRL has been enjoined by the U.S. District Court for the District of New Jersey from using, importing, selling, or offering to sell its FDA-approved generic buprenorphine/naloxone sublingual film product in the United States , pending the outcome of patent infringement litigation brought by Indivior against DRL related to U.S. Patent No. 9,931,305 (the "'305 Patent"). A trial date for this litigation has not yet been set, but analogs indicate a ruling could be expected sometime between H2 2019 and H2 2020. DRL has appealed the grant of the preliminary injunction and the bond amount to the CAFC and asked for expedited briefing. DRL has also asked the CAFC to stay the preliminary injunction pending the appeal. On July 24th , Indivior filed its opposition to the motions to expedite the PI and stay the PI pending appeal. If the Group is unsuccessful in enforcing the validity and establishing infringement of the '305 Patent, the Group would be liable for damages for DRL's lost profits during the period of the injunction, which in the worst-case scenarios could adversely impact the Group's ability to operate, require significant change to the structure of the business, and recapitalization.

Therefore, other than in respect to the guidance for the full year 2018 and the updates listed below, the Directors consider the principal risks and uncertainties which could have a material impact on the Group's performance for the rest of the year remain the same as described on pages 48 to 56 of the 2017 Annual Report. These include:

Business operations and business continuity

Product liability, regulation and litigation

Product development

Commercial and governmental payor account, pricing and reimbursement pressure

Compliance with laws and ethical behavior

Acquisitions and business development

The average and period end exchange rates used for the translation of currencies into U.S. dollars that have most significant impact on the Group's results were:

Webcast Details

There will be a presentation at 11:30 am UK time ( 6:30 am Eastern in the USA ) hosted by Shaun Thaxter , CEO. This presentation will also be webcast live. The details are below and are available on the Company's website at www.indivior.com .

Webcast link: https://edge.media-server.com/m6/p/9qqtethv

Corporate Website www.indivior.com

This announcement does not constitute an offer to sell, or the solicitation of an offer to subscribe for or otherwise acquire or dispose of shares in the Company to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation.

Indivior is a global specialty pharmaceutical company with a 20-year legacy of leadership in patient advocacy and health policy while providing education on evidence-based treatment models that have revolutionized modern addiction treatment. The name is the fusion of the words individual and endeavor, and the tagline "Focus on you" makes the Company's commitment clear. Indivior is dedicated to transforming addiction from a global human crisis to a recognized and treated chronic disease. Building on its global portfolio of opioid dependence treatments, Indivior has a strong pipeline of product candidates designed to both expand on its heritage in this category and address other chronic conditions and co-occurring disorders of addiction, including alcohol use disorder and schizophrenia. Headquartered in the United States in Richmond, VA , Indivior employs more than 1000 individuals globally and its portfolio of products is available in over 40 countries worldwide. Visit www.indivior.com to learn more.

Forward-Looking Statements This announcement contains certain statements that are forward-looking and which should be considered, amongst other statutory provisions, in light of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements involve risk and uncertainty as they relate to events or circumstances that may or may not occur in the future. Actual results may differ materially from those expressed or implied in such statements because they relate to future events. Forward-looking statements include, among other things, statements regarding the Indivior Group's financial guidance for 2018 and its medium- and long-term growth outlook, its operational goals, its product development pipeline and statements regarding ongoing litigation.

SUBOXONE (BUPRENORPHINE AND NALOXONE) SUBLINGUAL FILM (CIII) INDICATION AND HIGHLIGHTED SAFETY INFORMATION

INDICATION SUBOXONE Film is indicated for the treatment of opioid dependence.

SUBOXONE Film should be used as part of a complete treatment plan that includes counseling and psychosocial support.

HIGHLIGHTED SAFETY INFORMATION Prescription use of this product is limited under the Drug Addiction Treatment Act.

CONTRAINDICATIONS SUBOXONE Film should not be used by patients who have been shown to be hypersensitive to buprenorphine or naloxone.

WARNINGS AND PRECAUTIONS Addiction, Abuse, and Misuse: SUBOXONE Film contains buprenorphine, a Schedule III controlled substance that can be abused in a manner similar to other opioids. Monitor patients for conditions indicative of diversion or progression of opioid dependence and addictive behaviors. Multiple refills should not be prescribed early in treatment or without appropriate patient follow‐up visits.

Respiratory Depression: Life threatening respiratory depression and death have occurred in association with buprenorphine use. Warn patients of the potential danger of self-administration of benzodiazepines or other CNS depressants while under treatment with SUBOXONE Film.

Unintentional Pediatric Exposure: Store SUBOXONE Film safely out of the sight and reach of children. Buprenorphine can cause severe, possibly fatal, respiratory depression in children.

Neonatal Opioid Withdrawal Syndrome: Neonatal opioid withdrawal syndrome is an expected and treatable outcome of prolonged use of opioids during pregnancy.