Indivior Pharmaceuticals Inc Q3 FY2025 earnings call

Joe Ciaffoni started by providing an overview of the quarter's performance and progress against the Indivior Action Agenda. Patrick Barry discussed SUBLOCADE's commercial performance, noting solid dispense unit growth due to improved commercial execution and introduced the new direct-to-consumer campaign 'Move Forward in Recovery'. Ryan Preblick detailed the third quarter financial performance, including total net revenue of $314 million, and raised 2025 financial guidance. The company took several actions to simplify the organization, such as consolidating the operating footprint, restructuring R&D and medical affairs, discontinuing sales and marketing efforts for OPVEE, and optimizing the Rest of World business to focus on key regions like Australia, Canada, France, and Germany, aiming for annual operating expense reductions of at least $150 million starting in 2026 with a 2026 operating budget not exceeding $450 million.

In the third quarter, SUBLOCADE showed strong performance with total net revenue of $219 million, a 15% year-over-year increase. SUBLOCADE's net revenue growth was a key driver of the company's overall performance. SUBOXONE Film benefited from price stability in the U.S. Total net revenue grew 2% year-over-year, and adjusted EBITDA was up 14%. SUBLOCADE contributed significantly to the revenue, with its net revenue growth being a major factor in the company's financial results.

The company raised its 2025 total net revenue guidance to the range of $1.18 billion to $1.22 billion, driven by SUBLOCADE growth and stability in U.S. SUBOXONE Film pricing. For SUBLOCADE, full year 2025 net revenue guidance is raised to $825 million to $845 million, representing a 10% midpoint year-over-year growth. Adjusted EBITDA guidance for 2025 is raised to $400 million to $420 million, a 15% midpoint growth versus 2024. The 2026 operating budget will not exceed $450 million, with annual operating expense reductions of at least $150 million starting in 2026.

Q: Congrats on the quarter. The new $150 million OpEx cuts for 2026, can you please break down where this is coming from? How much of this was from the recent restructuring plans from your 8-K a few months ago, which I believe was all U.S. personnel? And how much of the OUS optimization is factored into this $150 million number? And then when I look at SG&A as a percentage of revenue, it's around $515 million this year or 43% of revenue. But when I look at industry peers, it's around 25%. So to get to the peer average, that implies at least $215 million cut in SG&A alone. Can you comment philosophically where do you eventually see yourself relative to peers on SG&A spend? And if your goal is to get to peer average or perhaps even better than peers?

A: Joseph Ciaffoni said Dennis, thanks for the questions and for the congratulations. I'm going to have Ryan answer the first question, and then I'll take your second question. Ryan Preblick said thanks for the question. Before I get to the $150 million, I just want to make it clear that the first priority we had was to make sure we put the right resourcing and investments behind [ Generate ] Momentum, behind SUBLOCADE. And then we went through the exercise of taking a look at the cost structure and the complexity in the business. And what you saw was the net result here of $150 million. And you can break it down into 4 categories. The largest category, almost half is tied to labor. We reduced our headcount by over 32%. The second component was the reduction of all the nonessential spend through the categories and the functions of the business. Then there was the discontinuation of the sales and marketing of OPVEE and then also the final decision to optimize the rest of the world. Joseph Ciaffoni said Dennis, with regards to your second question, we did not approach Phase 1 of the Action Agenda, Generate Momentum from a perspective of targets. What we were focused on is doing what is in the best interest of Indivior creating value for our shareholders. We believe that starts with maximizing the SUBLOCADE opportunity in the U.S. And then what we did from there is we removed what we believe are all nonessential costs from the organization. My commitment as we go forward is we will continue to ensure that we are only investing in activities that are essential to us maximizing SUBLOCADE in the U.S. and also maximizing the opportunity for our portfolio in Canada and Australia. So it's really not about targets. It's about what's right and in the best interest of Indivior and the value we can create for our shareholders.

Q: This is [ Alex ] on for David. First one for me is you've talked about gaining traction in commercial patients who, as we know, are more profitable. Can you speak about that opportunity and also how you are balancing that with the core Medicaid population that comprises the majority of the business currently? And then second question is, can you help us contextualize R&D spend going forward given all the organizational changes?

A: Joseph Ciaffoni said Sure. Thanks for the questions. I'll have Pat take the first one, and Ryan can take the second. Patrick Barry said Yes. No, I appreciate the question on the commercial channel. And to your point, we want all channels to grow. We want Medicaid and commercial to grow, and we're certainly taking on the big effort of driving commercial volume. And so it starts with improved commercial execution around messaging and making sure that our customers understand the broad coverage that we have and the fact that those commercial patients, in most cases, 95% of the time, will have a 0 out-of-pocket. And then it continues with the important work of our -- working with our specialty pharmacy channel to make that as an efficient channel as Medicaid. And so we're starting that work, and we do anticipate that, that -- while that will take some time, that we will see impact as we get into 2026. But the fact is that the commercial channel is growing. And certainly, Medicaid is going to be the predominant channel for us, but we think commercial is a strong opportunity for us as well. Joseph Ciaffoni said Ryan? Ryan Preblick said Yes. And on the R&D spend, what you're seeing there is the consolidation and streamlining of the R&D and the medical team cost consolidations and the complexity there. But as it stands right now, we are focused on the Phase II assets and progressing them through 2025 and looking forward to the readouts in 2026. But to be very clear, if they are ready to proceed into Phase III, we do have the capabilities to make that happen.

Q: Congrats on a great quarter here. Maybe just first on SUBLOCADE. Guidance implies a very strong Q4. Can you just speak to if we're starting to see a meaningful increase in willingness to prescribe from those label updates, kind of anything there? And then just second on that, on the LAI market generally, I mean, clearly back to substantial growth. Do you think we're now clearly kind of seeing the benefits of 2 voices out there driving market growth? Or just kind of give us an update on kind of your thoughts on the market there as it's apparent, it's very, very strong in the third quarter.

A: Joseph Ciaffoni said Chase, thanks for the questions. With regards to SUBLOCADE, what I believe we're seeing is the cumulative effect of improved commercial execution right now as we're getting better, we're doing better. We're also seeing the impact of the label changes as awareness rises playing through in the marketplace, along with significant investments we've made in commercial throughout the year. As it pertains to LAI penetration, what I would emphasize there is we believe and have learned we're the player that has the expertise and the resources to make the investment to create the awareness and drive the education around the category, and that's exactly what it is that we're committed to do. And I want to be clear, as we transition to 2026 with our broad DTC campaign, we are going to be investing beyond what it is that our models suggest that we should because we are committed to maximizing the potential of SUBLOCADE in the U.S.

Q: First one, maybe on some more around the sort of drivers here potentially on SUBLOCADE as it relates to some topics maybe we haven't touched a bit on for a while, particularly things like the -- whether there's any benefit you're seeing on average duration of use for patients, but then also the ultimate conversion of prescription into an actual dispense prescription. So anything to add there initially on that in terms of other drivers that could drive some growth?

A: Joseph Ciaffoni said Okay. Christian, thanks for the question. I'm going to ask Pat to take that one. Patrick Barry said Yes. No, on dispense growth, we're seeing really positive indicators. We saw an 8% dispense growth year-over-year and a sequential growth that was solid off of a strong quarter. We're also pleased by the fact that some of the drivers behind that is we're increasing our prescriber base as well as increasing those from -- that are committed to writing [ 5 ] plus, which is a good indicator of solid prescribing and adoption. And so those are the indicators that we're really, really focused on. And we do believe that enhanced label is a differentiator in the marketplace because we're the only long-acting injectable monthly that has that rapid induction, and that's resonating very well with customers. Joseph Ciaffoni said Yes. So Christian, with regards to -- and that comes through the work we'll be doing through our specialty distribution in terms of conversion of patients to starts, and how long they continue on treatment. That's a work stream we kicked off. We're digging deeply into, and we'll comment more on that in 2026, but we expect those efforts to start to have impact in 2026. And that's one of the areas of which we believe will help accelerate SUBLOCADE dispense unit growth as we move forward.

Q: Congratulations on a very good quarter. Maybe just following on from an earlier question. So as we look ahead to 2026 and the potential to move into Phase III, what do you need to see from the SUBLOCADE business to move into that phase? Are you expecting the enhanced commercial focus to be running at full speed at that stage? And alternatively, how do you see the sort of long-term path to peak sales in SUBLOCADE or peak penetration in the LAI market? And then along those lines, thinking again of Phase III, sort of what are you thinking about in terms of that breakout phase in terms of assets you would go after? Are these adjacencies that may not distract from the SUBLOCADE efforts? Just any color on that would be helpful.

A: Joseph Ciaffoni said Yes. So Brandon, thank you for the congratulations and certainly appreciate the questions. First off, I want to emphasize, we are head down in Phase I, generate momentum and looking to finish off the year and be positioned to start Phase II accelerate on January 1. The second thing I want to emphasize, we've been clear, we have to earn our way to Phase III. And that starts with internally the confidence that we have the capabilities to take on more. And then, of course, externally, that we have the credibility to do so. So we're not focused to Phase III at this point. We're focused around executing what we're setting out to do. I think to your question directly, when we transition to Phase II, the answer will be, one, the assessment of the internal capabilities, which will be aligned to the results that we're delivering relative to the guidance that we're giving. From a -- what we would be looking at, what I would be comfortable saying now if we earn our way to it, will be commercial stage assets that have the potential to enhance our growth profile and to diversify our revenue. And I'll let Pat comment on long-acting injectable penetration and what it is that we're doing to drive that. Patrick Barry said Yes. Thanks, Joe. Look, right now, we are the market leader, and we've more than stabilized share at 75%. But the fact is, is that the overall LAI category still sits at 8%. And so our focus is going to be on continuing to improve our commercial execution. As we get better, the business will get better. We do believe that our effectiveness will drive LAI category. And we also are placing a big bet on direct-to-consumer. As the category leader, we want to drive education of those OUD patients and drive traffic into our treaters' offices. And we're investing in that way in a sustained way to do just that. Certainly not going to call a peak penetration rate, but I might direct you to other analogs, whether it be the HIV market or the schizophrenia market, where the LAIs have achieved 20% to 25% peak penetration. We're a long way off from that, but that's what's encouraging for us. When we get better, we have a big opportunity to capitalize on. Joseph Ciaffoni said And Brandon, one other thing I would add, we've also -- Vanessa Procter has joined our organization, and we believe that it's important that the work that we do in advocating for these patients, inclusive of public policy will be key in ensuring access and ultimately increasing long-acting injectable penetration. So that along with the consumer are really where we're going to put our efforts to drive LAI penetration.

Q: Just maybe a quick question on SUBLOCADE in the quarter, and I apologize if it's been touched on and I missed it, but if you could give more details on the gross to net in the quarter for SUBLOCADE. Given the guidance for the year, I assume there is no risk of reversal, but could that be a sort of bigger base when you think about growth for next year? And then the second question, just on SUBOXONE. I know it's not the focus, but just if you could touch a bit on your visibility now that we've seen pricing being a bit stable for more time. The erosion seems to be stable as well. So just how you think about it in your building block when thinking about the outlook for the organization going forward?

A: Joseph Ciaffoni said Thank you for the questions, Thibault. I'll take SUBOXONE and then hand the SUBLOCADE gross to net question off to Ryan. So, look, what I'll comment on SUBOXONE is limited to 2025, which is we are at a point in the year where in our raised guidance, we are not assuming any additional price erosion. So that's different than what we've previously said. We're assuming price stability. We've also seen a relatively slow decline from a share perspective. In terms of 2026, I'm going to hold until we have a full picture of the evolution of the payer landscape and those dynamics. So we'll -- that certainly, from a revenue perspective, will be incorporated into the guidance that we give in 2026. And then Ryan on SUBLOCADE. Ryan Preblick said Yes. So in regards to the Q3 net revenue, to give you a little color, we booked the $219 million, which was up 15% versus last year, driven primarily by the dispense. Within that number, you saw the result of our normal quarterly balance sheet review of our accruals. There was a gross to net release of $10 million in there, and then there was also some stocking in terms of shipment phasing. So that's the $4 million. So a total of $14 million of benefit in the quarter.