Indivior: A rare share surge for this struggler
It's had a terrible 16 months, but some rare good news has put a rocket under the shares.
15th October 2019 14:41
by Graeme Evans from interactive investor
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It's had a terrible 16 months, but some rare good news has put a rocket under the shares.
Even though its troubles are far from over, Indivior (LSE:INDV) offered investors some cheer today with evidence that copycat drugs have not eaten into revenues as much as feared.
The improved guidance relating to its best-selling opioid addiction drug Suboxone Film means that revenues for 2019 will now be between US$750 million and $790 million.
That's significantly higher than the $525 million to $575 million forecast earlier this year after a US court allowed Indian firm Dr Reddy's and Alvogen to launch rival versions from February.
Last year, Indivior boasted a Suboxone market share in the US of around 59%, representing some 80% of the $1 billion in revenues generated by the Slough-based company. The erosion in its market position has been slower than expected, with today's upgrade the second since July.
This stronger branded performance is insufficient, however, to mask the company's current legal difficulties. As well as losing the court battle on generic competition, Indivior was also accused by the US Department of Justice in April of an "illicit nationwide scheme" to drive prescriptions of Suboxone Film.
Indivior denies these allegations, which stem from a federal investigation launched in 2013 and before the company was demerged from household goods giant Reckitt Benckiser in 2014. Amid uncertainty over the scale of any possible penalty, shares tumbled to as low as 30p in April.
They rebounded in value to more than 60p by September, only to fall back again in recent weeks. Shares were trading 7% higher at 52.7p after today's update, way off the 490p achieved as recently as June 2018.
Source: TradingView Past performance is not a guide to future performance
Despite raising 2019 guidance, Indivior CEO Shaun Thaxter sounded a note of caution today about the stronger-than-expected market performance of Suboxone Film.
As it was hard to know how long this current benefit will last, Thaxter said the company would prudently manage the resulting additional cash flows as it looks to transition towards its newer injectable treatment Sublocade.
Today's annual revenues guidance included a narrowing in the range for Sublocade to between $60 million and $70 million, from the $50 million to $70 million seen previously.
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