Indivior - Q3 2023

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the Indivior PLC Q3 Results 2023 conference call. 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 will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Jason Thompson. Please go ahead.

Jason Thompson (VP of Investor Relations)

Thanks, Sandra, and good morning, everyone, and welcome to our call to discuss our third quarter results. Before we begin, I need to remind you that today's comments include forward-looking statements and that actual results may differ materially. Those factors that may cause actual results to differ are detailed on slide two of our presentation, which is available on the investor relations portion of our website at www.indivior.com. Also, we will discuss adjusted financial measures. You can find a reconciliation of those measures to the reported amounts in the appendix of the presentation. With that, I'll now turn the call over to our CEO, Mark Crossley.

Mark Crossley (CEO)

Thank you, Jason, and good morning and good afternoon, everyone, and thanks for joining us. With me today to discuss our third quarter results are Ryan Preblick, our Chief Financial Officer, and Dr. Christian Heidbreder, our Chief Scientific Officer. For today's call, I'll provide an overview of the strategic progress, after which Ryan will detail our financial performance and our 2023 guidance, and then we'll move on to a question-and-answer period. Turning to slide four, it was another quarter of strong double-digit top-line performance. Led by SUBLOCADE, third quarter net revenues grew 17% year-over-year to $271 million. Adjusted operating profit of $60 million, which was modestly up modestly versus the year ago quarter, reflects the incremental operating expenses we've absorbed from adding the Opiant business, including launch costs for OPVEE this quarter.

Based on our third quarter and year-to-date performance, we are confident that our teams will deliver another strong year of results in 2023, consistent with the attractive medium-term, profitable growth framework we set out last December. Importantly, we've narrowed our full year 2023 SUBLOCADE net revenue expectations to $610 million-$630 million, which is the upper half of our previous range. At the midpoint, this would represent a 52% increase versus 2022. As you may have also seen in our updated guidance, included in our announcement, we have evaluated and decided to make incremental investments behind SUBLOCADE to fuel its growth. Our updated, adjusted SG&A expectations for the full year reflect this. I'll cover these investments in more detail in a moment.

In addition to continuing to progress and invest behind SUBLOCADE toward our peak net revenue goal of greater than $1.5 billion, we took several actions aligned with our strategic priorities to strengthen Indivior's long-term outlook. First and foremost, was the settlement with the final class of the antitrust multi-district litigants for $385 million on October 23. In doing so, we've created more certainty for all stakeholders and avoided potentially costly and protracted litigation. With this legacy matter now behind us, we've gained greater focus on serving patient needs and on realizing the tremendous prospects we see ahead for Indivior. Second, we launched OPVEE at the beginning of October and subsequently secured a multi-year partnership with the Biomedical Advanced Research and Development Authority, BARDA.

The contract includes funding for additional post-marketing and real-world evidence and shelf life studies, as well as procurement agreement for finished and packaged OPVEE product. Turning to slide 5, during the quarter, we also executed on a number of strategic initiatives that we believe will strengthen our foundation for long-term profitable growth. First, we acquired an aseptic manufacturing facility in Raleigh, North Carolina, that will provide Indivior a secure, long-term source of supply for SUBLOCADE and PERSERIS. Ryan will have more detail on this acquisition in a moment, but this wholly owned facility is a strong signal of our confidence in delivering on our long-term net revenue ambitions. Second, we acquired two important R&D assets to help address unmet patient needs for those suffering from opioid use disorder. We've taken full ownership of INDV-2000, an oral orexin-1 from our partner, C4X Discovery.

Most recently, we secured the global rights to Alar Pharmaceuticals' buprenorphine-based long-acting injectables portfolio. This includes Alar's lead asset, ALA-1000, which has the potential to be the first long-acting injectable for opioid use disorder, delivered once every three months. In a disease space where adherence is one of the top challenges for patients, ALA-1000 has the potential to provide an option for patients seeking a less frequent maintenance therapy regimen. Turning to our strategic priorities report card, beginning with SUBLOCADE, the strong net revenue performance was driven by our momentum in the organized health systems channel, which is now generating approximately 80% of SUBLOCADE's growth. As we indicated in our last quarterly call, we've taken the opportunity to evaluate incremental commercial investments as we approach the fourth year of our successful ecosystem operating model....

We believe that these investments will strengthen SUBLOCADE's trajectory and generate positive long-term returns with the expansion of our traditional field force and our justice system teams. First, the expansion of our traditional field force by over 40 associates will enable broader reach and increased frequency across the organized health systems channel, as well as increased capacity to call on independent practices. Following elimination of the DATA 2000 Waiver, we believe that these smaller office-based independent practices can now benefit from patient access to alternate sites of care, which eliminates the administrative burden associated with specialty products. Toward that end, our partnership with Albertsons, the large US food and drug retailer, is delivering encouraging results and strengthens our belief in the opportunity to increase adoption among our legacy prescribing base, where previously the logistics and handling challenges with SUBLOCADE posed barriers to prescribing for these smaller practices.

Along with our increased capacity to call on independent practices, we're also resourcing efforts to expand the alternate sites of care network to improve treatment access for providers and their patients. In addition, the justice system continues to be our fastest growing OHS subchannel. Approximately 300 unique justice entities were actively ordering SUBLOCADE in the third quarter. As a result, the justice system subchannel is approaching 20% of SUBLOCADE's net revenue. The focus of our incremental commercial investments will also be on continuing to grow SUBLOCADE's access across all levels of the justice system. The additional cost of these commercial investments is reflected in the modest increase in our SG&A guidance for the full year. On an annualized basis, we expect these investments will amount to approximately $20 million.

If I turn to revenue diversification, I'm pleased to report another quarter of net revenue growth for our business outside the US, driven by SUBLOCADE and SUBOXONE Film. Net revenue for SUBLOCADE in international markets was $30 million year to date, and we've successfully launched SUBLOCADE in Germany. For PERSERIS, we saw year-over-year growth of 38% in the quarter. On a sequential basis, net revenue was unchanged, reflecting intensified competition from a new launch from a competitor. Despite this short-term impact, we maintain our peak net revenue expectation for PERSERIS of $200 million-$300 million. This reflects our strong belief in the growing opportunity for LAIs in schizophrenia, where penetration remains low, and we also believe in the attractive, differentiated therapeutic profile of our product, which continues to resonate well with physicians.

Finally, turning to OPVEE, we launched on October 2 and continue to believe that OPVEE has the ideal profile to address the epidemic of overdoses caused by fentanyl and other synthetic opioids, which are now the leading cause of death for people aged 18 to 45. Our OPVEE commercial strategy includes an approved experience program for states that are allowed to trial OPVEE within their populations. We're also leveraging our government affairs team to ensure that state standing orders, grants, and emergency medical service protocols are updated to include OPVEE as an overdose rescue treatment. And as I mentioned earlier, we're pleased to have secured the potentially valuable multiyear partnership with BARDA. Regarding our pipeline, Christian is here to answer any questions you may have. That said, I can report we continue to make good progress against all of our key assets and post-marketing studies.

Last week, we held a positive end of phase I meeting with the FDA for INDV-2000 for opioid use disorder, and we're still expecting phase II data on INDV-4002 for alcohol use disorder by the end of the year. Finally, on our operating model, we're maintaining our consistent approach to capital allocation in the near term. We continue to focus on prudent cash management that enables us to reinvest in the business while also continuing to meet our obligations to stakeholders. Lastly, we made tremendous progress in securing the capacity we need for delivering our long-term net revenue ambitions for SUBLOCADE and PERSERIS. I've already mentioned the newly acquired plant in Raleigh, which, combined with the validation of our second contract manufacturing site this quarter, will provide sufficient capacity for SUBLOCADE and PERSERIS.

To summarize, this was a strong quarter of execution and delivery against our strategic priorities, highlighted by the strong momentum of SUBLOCADE, the settlement of legacy litigation, and several important business development transactions that will help secure our future. With that, I'd like to now hand over to Ryan to take you through the results in more detail.

Ryan Preblick (CFO)

Thanks, Mark, and good morning, and good afternoon to everyone. Overall, I'm pleased to report another good quarter of execution and business momentum. We delivered strong top-line growth driven by SUBLOCADE, and we grew our adjusted operating income versus the prior year, absorbing another quarter's worth of Opiant expenses, including OPVEE launch expenses. Looking at the third quarter results in more detail, starting with the top line, total net revenue of $271 million reflected growth of 17% versus the year ago quarter on a reported basis, and 16% excluding the impact of FX. By geography, total U.S. net revenue in the third quarter grew by 20% versus the year ago quarter. Rest of the world was up 2% versus the prior year quarter and unchanged, excluding the impact of FX.

Positive contributions from new products continue to more than offset the ongoing competitive pressure on our legacy tablet products. SUBLOCADE net revenue outside of the U.S. in the third quarter grew 43% year-over-year to $10 million. Total SUBLOCADE net revenue of $167 million for the third quarter of 2023 was up 55% versus the prior year and 8% sequentially. U.S. dispenses were up 7% sequentially in the quarter and aligned with net revenue, adjusting for modest stocking impact in the quarter. Moving to PERSERIS, reported net revenue of $11 million was up 38% versus the prior year and flat sequentially. Quarterly results were impacted by the near-term competitive pressure that Mark mentioned. We remain confident in reaching our peak net revenue guidance of $200 million-$300 million.

Turning to SUBOXONE Film in the U.S., the average share of approximately 18% in the third quarter was down about one percentage point versus both the second quarter and the year ago quarter. Net revenue in the quarter was impacted by normal quarterly rebate accrual evaluations, which in Q3 resulted in a true-up in the low double-digit range. As a reminder, we do not promote SUBOXONE Film in the U.S. Moving down to P&L, our third quarter adjusted gross margin of 84% was up one percentage point versus the prior year quarter, reflecting improved product mix, partially offset by cost inflation. Adjusted SG&A expenses were $150 million in the quarter, up 33% versus Q3 of last year.OPVEEOPVEEOPVEEOPVEE

The increase reflects higher legal activity related to the settled antitrust MDL, the addition of the Opiant business, including launch expenses for OPVEE and incremental SUBLOCADE commercial investments, and ongoing year-over-year inflationary impacts. R&D expenses were $18 million in the quarter, a decrease of 10% versus Q3 of last year, benefiting from a high single digit credit from previously expensed process validation activities related to the LAI capacity expansion, which will not repeat. Our strong NR performance helped to absorb the Opiant and OPVEE launch expenses, with adjusted operating income increasing to $60 million in the third quarter, up 3% versus $58 million in the prior year on the same basis. We continue to expect the Opiant transaction to be accretive to earnings after the second full year, following OPVEE's October launch this year.

Lastly, on the P&L, our adjusted net income of $49 million grew 14% in the third quarter versus last year, reflecting improvement in net finance income, in addition to the dynamics I just highlighted. Quickly touching on the balance sheet and our capital position. We ended the third quarter with gross cash and investments of $774 million, before taking into account our term debt and other future payment obligations and liabilities, as discussed in our results released earlier today. Considering the settlement payments related to the antitrust MDL, we still expect to end the year with good flexibility. This will allow us to continue to execute on our disciplined capital allocation strategy, which in the near term, remains focused on reinvesting to fuel our base business towards our net revenue goals and meeting our stakeholder obligations.

If there is excess cash, we will look at it in partnership with the board for opportunities in business development and potential shareholder returns. Lastly, with a little less than two months remaining in the year, we are making some refinements to some of our full year guidance elements. We are maintaining total company full year 2023 net revenue guidance of $1.03 billion-$1.09 billion, which we increased from $970 million to $1.04 billion at the half year. However, for SUBLOCADE, based on current performance trends, we are narrowing our full year 2023 SUBLOCADE net revenue expectations to $610 million-$630 million, which is the upper half of our previous range of $590 million-$630 million.

This represents a growth rate of 52% at this new midpoint compared to full year 2022. For PERSERIS, given the short term competitive pressure with the new entrant in the space, we now expect full year net revenue to be at the lower end of the $45 million-$55 million range. For US Film, our previous view assumed an accelerated rate of share loss in the fourth quarter, with the entry of the fourth generic in the US. As this new generic has now entered the market, and while the impact has been modest so far, we are expecting additional share loss in the remaining month or so of the fourth quarter.

For SG&A, we are bringing up the full year 2023 range by $10 million to $540 million-$550 million to reflect the targeted SUBLOCADE commercial investments that Mark detailed. Overall, our strong results continue to absorb Opiant and OPVEE launch expenses, and we are maintaining our view that adjusted operating income will be higher than last year's performance of $212 million. Finally, as Mark mentioned, we also took a further strategic step in establishing long-term supply security for SUBLOCADE and PERSERIS, and potentially other Indivior products, with the purchase of an approximate 80,000 sq ft multi-use sterile manufacturing site in Raleigh, North Carolina, from Sagent Pharmaceuticals.

Total upfront consideration for the site included a cash payment of $5.5 million, plus assumed contractual obligations of approximately $30 million through 2025. This acquisition also brings on board approximately 60 experienced manufacturing associates to the Indivior team. Over the next few years, the facility will continue to manufacture a product for existing customers, while tech transfer activities, enabling the manufacturing of SUBLOCADE and PERSERIS take place. Total capital investment is estimated to be approximately $45 million-$55 million, with the majority occurring next year. We also expect to absorb modest annual adjusted operating losses beginning this year and through 2025, with expected savings beginning in 2027. Before turning to questions, let me close by saying we are pleased with our execution and our financial results for the quarter.

We believe year-to-date performance puts us solidly on track to deliver strong results for full year 2023. I will now turn the call back over to Mark.

Mark Crossley (CEO)

Thank you, Ryan. Just to summarize one more time, this is a strong quarter of execution by the team against our strategic priorities, highlighted by the upgrading guidance for SUBLOCADE, the settlement of the legacy litigation, and several important business development transactions that will help secure our future. With that, I'll hand over to Sandra to help facilitate the Q&A session. Sandra?

Operator (participant)

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by, we'll compile a Q&A roster. We will now take the first question. From the line of James Vane-Tempest from Jefferies International Limited. Please go ahead.

James Vane-Tempest (Managing Director and Senior Equity Analyst)

Yes, hi, thanks for taking my questions. A few, if I may, please. Firstly, just wondering, are you seeing any pricing pressure with Brixadi? And also, how much of the incremental SG&A investments you're making in Q4 reflect to this new entrant? Second question, also on SG&A. Just wondering if you could perhaps have a little bit more detail, particularly around the legal expenses. Just wondering whether they've been front and loaded into nine months of this year, and how we should think about those going into next year, you know, especially if the trial was canceled, and what that might have meant for this year as well. And then thirdly, just on the manufacturing side, you've given a little bit more detail, I think, in terms of what it's going to cost.

But I guess just to take a step back, you mainly use contract manufacturers before. I'm just kind of curious of the decision to sort of establish a facility. And you talk about mild operating losses until there can be expected savings by 2027. But just wondering whether you can triangulate this a little bit more quantitatively. Thank you.

Mark Crossley (CEO)

Thanks, James. Appreciate the questions. Let me, let me go ahead and start, if I could, with the, with the pricing. Listen, I think we're in the market. We're not experiencing out of the ordinary pricing pressure. We believe on a net prices and, and a usage basis, that it's quite competitive versus LA, other LAIs in the, in the segment. Our access remains extremely strong, with 90% of lives covered, and as, as everyone knows, we have a co-pay program that brings out-of-pocket patient costs to zero. A few reminders with regards to this category. In relation to other specialty pharmacy sort of products, this category is at the very low end of pricing that enables a unique supply chain that includes a closed distribution system for a controlled substance, that is, that is these long-acting buprenorphine products.

We've focused on maintaining responsible pricing with annual sort of gross increases of about 5%, net of about 2%-3%, which have either offset or recently partially offset the inflation, and we intend to continue this responsible approach in 2024 and beyond. Additionally, from a pricing standpoint, in this disease system, it's been marked by stigma, significant barriers to treatment that result in less than two in 10 patients actually receiving treatment. Our position on the category is that it should provide access to all medications. That gives the HCP and the patient choices for their best therapy for their individual journey. For this reason, when we work with formularies, we work on open access formulary versus restrictive one of one formularies, you know, that impact choice for patients.

That's the approach we've always taken and will continue to take moving forward from a pricing standpoint. I'm gonna handle the manufacturing site, and then we'll move to the SG&A, if you're okay with that, James. I think from a new site standpoint, you know, we continue to actively manage the risks on behalf of shareholders, and the Raleigh site is about securing supply capacity for greater than $1.5 billion sales of SUBLOCADE as well as PERSERIS, you know, in partnership with the partners and CMO sites that you've talked about. Over recent years, we've seen numerous parties have disruption in supply due to production and/or site issues associated with sterile manufacturing. For us, adding this site, it provides redundancy and flexibility to address potential issues.

For me, the acquisition provides a very unique opportunity to acquire an FDA-approved site designed specifically for sterile manufacturing, as well as a team with experience that currently produces sterile manufacturing products. So you know, it's the fastest and lowest risk pathway to having an incremental site up and running. And while it is for BCP purposes and continuity of supply, the modest losses in the short term are more than offset by cost savings once we have commercial supply, it is an attractive and-... So that's the supply. For the SG&A side, maybe I'll talk about the new entrant as it deals with the expansion, and then I'll let Ryan talk about legal expenses and your—the second half of your question. The expansion of the sales team has nothing to do with competitive entrants.

This is an opportunity for us where we're entering year 4, and we have expanded into further organized health systems. And now with the elimination of DATA 2000, we have the opportunity to call on these independent physicians where SUBLOCADE hasn't been an option due to the administrative burden. So this is about expanding SUBLOCADE's reach so that it's open for more patients and continuing the strong growth trajectory. So we're really excited about adding, you know, approximately 40 incremental field-facing people in the traditional sales channel and about another 8 or so on the criminal justice side to continue that access and that growth and having SUBLOCADE available to more patients. Ryan, do you want to handle the little bit broader SG&A question?

Ryan Preblick (CFO)

Yep. Morning, James. So on the first part of your question about SG&A and how it's impacting this year and the balance of the year, certainly to Mark's point, there will be a slight step up due to this expansion as we begin the hiring of the resources in Q4 to really ensure that we have a strong start to 2024, as well as some of these pipeline assets that Mark discussed as well, and hence the reason why we did have to adjust our guidance a little bit. And just to give you a little more color, on a full year basis, we're projecting roughly a $20 million full year impact of this entire field sales force optimization, which includes field salesforce, CJS, and also some additional heads to MSLs.

In regards to legal expense, yes, the bolus of the legal for the antitrust was incurred during the first nine months of the year. Please keep in mind, though, that we still have some work to do in Q4. There are some other cases that we're in, so we will still have some legal spend recurring for the balance of the year. Without getting into guidance for next year, there will certainly be some savings in the low double digits, I would say, going into next year due to some of these cases going away, but that will have to be factored into next year's cost projections and to see what type of legal situation we have to handle next year as well. But overall, we are excited about these investments.

They are point on with our strategic priorities, and we continue to reinforce our objective to have margin expansion over the medium term as we committed at Capital Markets Day.

James Vane-Tempest (Managing Director and Senior Equity Analyst)

Thanks very much, all.

Ryan Preblick (CFO)

Thanks, James.

Operator (participant)

Thank you. We will now take the next question. One moment, please. From the line of Thibault Boutherin from Morgan Stanley. Please go ahead.

Thibault Boutherin (Equity Research and Executive Director)

Yes, thank you. So my first question is on the assumptions for generic SUBOXONE in the Q4. You exited the third quarter with 19% share. It's flat year-on-year. It looks like the new generic is not having a lot of impact so far, and we are today well into November. So I just wanted to know if this guidance is for the acceleration of decline in market share, is based on something you are seeing on the market, or if it's mostly being conservative? So one question on the criminal justice system. I mean, you mentioned the 300 units that you have ordered already. What is in terms of penetration of the total CJS system? How far are you in terms of penetrating this channel?

And then, the third question on your cost base. So you have integrated Opiant, you are investing behind SUBLOCADE and OPVEE. Can you give us a sense of how mature your sales and marketing infrastructure is, for your current portfolio? And how much more you feel like you have to invest? So this is not a number, but just an indication of on where you are in building the commercial infrastructure. Thank you.

Mark Crossley (CEO)

Thanks, Thibault. Maybe what I'll do is I'll handle the CJS and cost question and then hand to Ryan to talk about the generic SUBOXONE entrant. With regards to CJS, again, really excited about the trajectory of this sub-channel within Organized Health Systems. You know, it's approaching 20% of the overall net revenue profile, and as I mentioned in my comments, we're in 300 unique facilities that are actively prescribing, and that's across, you know, across over 30 states across the United States. There's over 5,000 justice facilities across the U.S., and in the short term, we're targeting the top 1,000.

It doesn't preclude us from going to the 5,000, but that's what we're targeting with the sales team, and we think the addition of these eight incremental folks will help accelerate that journey of making SUBLOCADE an option for these folks who have had a major event and often are ready to enter recovery as they enter, you know, the justice system. So we're excited about that continued opportunity. With regards to the maturity of the go-to-market platform, listen, I think this expansion and the nature of it, I think, really sets us up, you know, for continued margin expansion as we move forward. This leverageable platform, it resets so that we can have greater reach and frequency within organized health systems.

It allows us to reach these independent physicians' offices, where SUBLOCADE hasn't been an option, and gives us a nice, stable platform moving forward in our go-to-market model, entering year four of the ecosystem model.... So with that, I'm going to hand over to Ryan to talk through the guide for the rest of the year on generics. Yep.

Ryan Preblick (CFO)

Thanks for the question. Yes, the film share has remained relatively flat at the 18%. With the fourth generic in the market now, we have not seen any material impact just yet, either on volume nor price. We still are projecting that there will be share erosion to our business this quarter. That is factored in to the guidance that we shared this morning, and it's been a consistent approach that we've taken over the last couple of years.

Just want to remind everyone that we do not promote the film product, but I would say that the cash that it does generate is certainly a great benefit that we do value for the business.

Thibault Boutherin (Equity Research and Executive Director)

Thank you.

Mark Crossley (CEO)

Thank you.

Operator (participant)

Thank you. We will now take the next question. From the line of Max Herrmann from Stifel. Please go ahead.

Max Herrmann (Managing Director)

Great, thanks, gentlemen, congratulations on resolving the litigation on the antitrust. A number of questions, if I may. I'm trying to understand the sort of distribution channels for SUBLOCADE. Obviously, you have the criminal justice system, and you have the organized health system. We're seeing a slowdown in the prescription trends, at least in the organized health system. I know you reported around 7% prescription growth quarter-on-quarter in the third quarter just now. So the question is really, how big a opportunity is the, if you want to call it, the community channel, the outside the organized health system and criminal justice system channel, which was the bedrock of SUBOXONE in the past.

I wonder if you know kind of how much of, SUBOXONE prescriptions, currently SUBOXONE Film and SUBOXONE generics, are going through that channel, what proportion versus the organized health system? That'll be my first question.

Mark Crossley (CEO)

Thanks for that, Max. Listen, I think, I think when it comes to SUBLOCADE, again, I can't emphasize enough how pleased I am with the tremendous progress the team's made executing against the OHS strategy. You know, the ecosystem go-to-market model, you know, is perfect for that strategy, and, and the focus is on increasing the number of facilities actively dispensing, adding new physicians, and increasing the number of patients per HCP. You know, OHS represents 80% of the growth and the revenue, and, and while I do, I do notice, you know, the quarter-over-quarter deceleration of growth, on a year-over-year basis, we're still at over 50% growth in the quarter versus 2022 a year ago. So still extremely strong growth year-over-year and great momentum, as we look to close out the year.

And it's that momentum, you know, that has really given us the confidence to go to increase our guidance to the upper half of the range, $610 million-$630 million. And I think, you know, more importantly, if we look at it from a patient lens, we're now helping over 120,000 patients, which is well on our way to the 270,000 patients required to hit the $1.5 billion, you know, net revenue waypoint with regards to that we shared at the Capital Markets Day.

As I think about how large the potential will be, you know, for the alternate sites of care in the independent physicians, Max, I think first I'd like to start by applauding Albertsons, you know, for taking this step in their role to help the opioid epidemic. They are on the front, on the leading foot of this, really, really making this happen. And then I just want to remind everyone, we're in the very early stages of this journey. You know, Albertsons is the first one, you know, to set up this alternate sites of care. They started with 700 sites and now have expanded to 1,000, which can allow these physicians, you know, to now open up SUBLOCADE. But that's an early days of creating a national network, which we'll focus on.

And then you also have to have, you know, people in the field to pull through those, to pull through those and engage with the HCPs with regards to SUBLOCADE, and those incremental salespeople will only be in the field starting in Q1 2024. So this is a, this is the early stages of a very important sort of build. We think the predominant amount of volume and revenue opportunity is in organized health systems, but this independent physicians, you know, is, we expect to be a high return on investment.

Max Herrmann (Managing Director)

Great, thank you. Second question is just a bit more color on, I mean, obviously, you got the BARDA grant for further R&D with OPVEE, but obviously you're now just over a month into its launch. How's contracting going with the first responders?

Mark Crossley (CEO)

Yeah, it's a good question, Max. And listen, we're excited. We had the product, you know, on time at the very start of Q4, and we said Q4. You know, a reminder as you're leading to 90% of the volume does flow through the public interest markets, the first responders, community action groups. As we've talked since we've acquired Opiant and gotten approval, the first year of launch is about building, you know, strong access via enabling the choices of stakeholders. And that requires standing orders at the state level, funding approval, you know, for use of FDA-approved funds for all rescue medications, and then updating of EMS protocols for OPVEE. So we're, you know, working on that foundational element to open up the markets.

We're also adding in an experience program to help drive adoption of OPVEE's real-world patient outcomes as they're witnessed firsthand by the public interest markets. And as that foundation is in place, we can drive larger scale demand. So still early days on contracting with the EMSs, having only been available for about a month, but that foundation is the pure focus right now.

Max Herrmann (Managing Director)

Then, a couple more questions. One on SUBUTEX ex-US. You've obviously mentioned your launch in Germany. We've seen obviously with Camurus having upgrades on their performance ex-US with Buvidal. I wondered what your kind of experience has been ex-US, I guess, Canada, which is the market that you have alone as well as with the U.S., but just kind of how you're performing in other markets, Germany, the Nordics, and I think places like Australia.

Mark Crossley (CEO)

Yeah, Max. Listen, we continue to be pleased with the progress we're making $30 million of revenue year to date. Obviously, you know, we're second to market in these markets, ex-US and ex-Canada, you know, but making very good progress. Obviously in Australia, you know, outside of the one province where we have limited access, we have strong, strong share and growth, equal to a follower in the market, somewhere between 30%-45%. And in Finland, we're making good, good inroads in the early days of launch, which just started this year. In Germany, of course, you know, we've just launched within the quarter, so, you know, we'll be reporting out on that as in the quarters to come.

Max Herrmann (Managing Director)

All right. And then final, kind of more financial question, maybe for Ryan. It's just, can you give us a bit more color on the scale of the SUBOXONE Film rebate true-up, if I understood it correctly?

Ryan Preblick (CFO)

Sure. Yes, I would. So first of all, I just want to remind everyone that this is a normal process that we do every quarter to take a look at our balance sheet accruals, and we have to evaluate, you know, do we have the right liability on there for all the accruals and rebates for past quarters. And for this quarter, there was an adjustment that needed to be made. I would say, it was in the low double digits in regards to the true-up, but it is something that, you know, when you take a look at the business itself, you know, we expect in our guidance that film would begin to erode again in Q4 in regards to share.

But this is nothing that is abnormal in regards to the process, but still, it's the right thing to do for us.

Max Herrmann (Managing Director)

I guess I'm trying to understand quantitatively. I think you reported, working it back, calculating it, sort of $59 million of SUBOXONE Film sales in the U.S., which was down quite significantly from the second quarter, despite, you know, kind of not seeing much difference in terms of prescription volumes. So, that seemed to be masked by the rebating change. And I wondered whether, you know, you're able to give us an idea of what the back adjustment was for the rebating. Is it we're talking $ high single-digit millions or any ability to give us any kind of steer on that?

Ryan Preblick (CFO)

Yeah, and I think to, to your point just now, the film share has remained relatively flat in Q1 and Q2, and you saw what we booked in those quarters. So I think if you take what was our base underlying performance at that share and see what we booked in Q3, that kind of gives you the difference of what I just mentioned-

Max Herrmann (Managing Director)

Okay.

Ryan Preblick (CFO)

both double digits in regards to the impact.

Max Herrmann (Managing Director)

Great. That's very helpful. Thank you.

Ryan Preblick (CFO)

Yep. Thank you, Max.

Operator (participant)

Thank you. As a reminder, if you wish to ask a question, please press star one one on your telephone. That's star one one, if you wish to ask a question. There are no further questions at this time. I would like to hand back over the conference... Sorry, there is one more question. That's okay? One moment, please. The question is from Thibault Boutherin, from Morgan Stanley. Please go ahead.

Thibault Boutherin (Equity Research and Executive Director)

Yes, thanks for the follow-up. Maybe the first one, coming back to the dynamics in the injectable market. The kind of early dynamics in terms of competition, do you see your competitor more kind of trying to grow their own prescriber base? Or are they going after your business and trying to go after your own prescriber base? First question. Second question, just want to maybe talk about a little bit about the carve-out litigation with the payers that exited the MDL. I think you mentioned a trial in July next year. Just wanted to know if you could give us an idea of the next steps in terms of proceeding here, and is a settlement something you would explore?

And maybe just a third question on the OPVEE contract. If you could give us a bit more details on the economics and the meaning of the $32 million value. So you try to understand that this is mostly a commitment of basically funding R&D plus some initial orders. So basically, in terms of P&L impact, it's a bit of sales and then an offset to R&D next year. Thank you.

Mark Crossley (CEO)

Thanks, Thibault, for the follow-ups. When it comes to Brixadi, I think, you know-

I think we should ask their management team about their launch plans. But, you know, when you're talking about long-acting, you know, typically those are new patients into treatment, you know, that people are trying to get on versus trying to encourage switching between stable patients. So I think that's key. I think for me, I think there's such a huge unmet need in this category. I just wanna, you know, less than two in ten patients in treatment and adherence, such an unmet need. I think there's plenty of room for two players here, and we continue to focus, you know, both management and the sales team, on the differentiated profile that SUBLOCADE provides. And I think, you know, it's especially well suited for the US, where the illicit supply chain has been overtaken by synthetic opioids.

SUBLOCADE is backed by five years of HCP and patient experience and a, and a wealth of real-world evidence. You know, just to remind you, Thibault, I know you know, but I mean, listen, SUBLOCADE has a very differentiated product profile. It has an immediate boost of therapeutic levels within 4-8 hours. Therapeutic levels are maintained the entire month, no on top or booster dosing in the label. You know, very important when you're talking about adherence, and especially in the face of synthetic opioids, our maintenance dosing, it provides blockade effect of euphoric effects. You know, whether it's the 2 nanogram per ml, 100 milligram maintenance, or whether it's the 5-6 nanogram per ml, 300 milligram maintenance. So essentially, it protects patients in their moments of weakness because the medication's there at the therapeutic level.

So, you know, we're focused on that differentiated profile that we don't see from other long-actings with regards to our approach to the market. Let's go to the BARDA contract, and then I'll come back to the end payers. And listen, the BARDA contract, you know, first, I wanna just start. There's been a long history of support for OPVEE and the nalmefene molecule as a next generation product to help with stronger, faster-acting synthetic opioids such as fentanyl. And reminder, both NIDA, BARDA, supported OPVEE product development. And now that we're post-approval, we're excited to partner with BARDA even further. And the way I think about the, you know, the current partnership is there's about $23 million or so that's in support of post-marketing commitments. These are pediatric clinicals, real-world evidence, as well as, you know, stability studies.

And then there's about $9 million of commitment for about 100,000 units, as well as inventory management of those 100 units. And then, then there's a, you know, that, that accounts for the $32 million commitment, and then there's option value up to $110 million, with the options of those 100,000 units for years two through 10. So that's, that's the summary of the BARDA contract, and we're excited about that, and, and that they see this as, you know, the next standard of care to help with these synthetic opioids. Lastly, on the end payer opt-outs, really, the next steps is trial is set for about the half year.

And because the early focus has been on the proceeding that just happened with regards to statute of limitations, you know, there'll be a number of sort of procedural things and learnings on the merits of the case between now and then, but it's still relatively early stage, you know, on those opt-outs.

Thibault Boutherin (Equity Research and Executive Director)

Thank you, Mark. Thank you very much.

Mark Crossley (CEO)

Thank you, Thibault.

Operator (participant)

Thank you. I would now like to turn the conference back to Mark Crossley, CEO, for closing remarks.

Mark Crossley (CEO)

Yeah, I'd like to thank everyone for their continued interest in Indivior, and in closing, I do wanna thank the entire Indivior team for their continued hard work and dedication to our patients. Another strong quarter of growth in the business, along with a number of strategic actions that set the business up for sustained and long-term value creation. We look forward to closing out the year, with momentum, as we enter 2024. Thank you very much for your continued support.

Operator (participant)

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