Drugs and the law: Can Indivior recover again after 38% dive?

by Graeme Evans from interactive investor |

Another stock that’s staged a strong recovery only to disappoint shareholders again. 

Having lost two-thirds of its value in 2019, pharmaceuticals stock Indivior (LSE:INDV) remains gripped by legal and trading uncertainties after warning it expects to rack up a full-year loss in 2020.

Shares in the company, whose best-selling opioid addiction drug Suboxone Film is under pressure from recently-launched copycat versions, are now back where they were at the end of 2019 following today's slide of 25% to 36p in the wake of Q4 and full-year results.

Slough-based Indivior was London's seventh-worst performing mid-cap stock of 2019, with its 65% decline only “bettered” by the likes of Metro Bank (LSE:MTRO), Sirius Minerals (LSE:SXX) and Ted Baker (LSE:TED).

The stock fell to as low as 30p last April after the company was indicted in the United States over an "illicit nationwide scheme" to drive prescriptions of Suboxone.

Source: TradingView Past performance is not a guide to future performance

Indivior continues to fight the allegations, which stem from a federal investigation launched in 2013 and before the company was demerged from household goods giant Reckitt Benckiser in 2014. As the Department of Justice is seeking to recover US$3 billion, the case continues to be a major source of worry for the company and its shareholders.

CEO Shaun Thaxter said the business was proactively looking to manage these risks, adding: “Although we are optimistic about delivering on our strategic priorities in 2020, we of course recognise the legal uncertainties we face.”

He forecast a further drop in sales this year, with net revenues set to be in the range of $525 million and $585 million. They declined 22% to $785 million in today's full-year results following the loss of market share for Suboxone Film to generic competitors.

The figure was still more than $200 million higher than forecast earlier this year after a US court allowed Indian firm Dr Reddy's and Alvogen to launch rival versions from February 2019.

In 2018, Indivior boasted a Suboxone market share in the US of around 53%, representing some 80% of the $1 billion in revenues generated at the time. This eroded to 24% by the end of the 2019 financial year, although the rate of decline has been slower than expected.

The impact has been partly offset by the transition towards Indivior's newer injectable treatment Sublocade, which generated revenues of $72 million in 2019 and is expected to reach between $150 million and $200 million this year. Indivior believes Sublocade has the potential to become a “sustainable $1 billion franchise”.

Despite this growth, Indivior expects to post losses for this year of between $20 million and $50 million. The deficit for the fourth quarter of 2019 was $55 million, leading to a 51% decline in net income for the year to $134 million.

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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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