Addiction specialist Indivior (INDV) is enjoying a 9.9% rally to 407.4p following the approval of its Sublocade injectable drug, also known as RBP-6000, by the US Food and Drug Administration (FDA).
The share price jump suggests there was some scepticism over the drug being approved, although we are not surprised as we flagged the strong likelihood of approval last month.
On 31 October, the majority of the FDA’s Advisory Committee supported approval of the drug, which is positive as the federal agency tends to agree with committee decisions.
BLOCKBUSTER POTENTIAL
RBP-6000 is touted to be the largest revenue generating product at Indivior with peak sales potential of $1bn, according to broker Numis.
The drug can only be administered by healthcare professionals and delivers plasma levels of the opioid medicine buprenorphine. This helps to block the drug-liking effects of opioids says Indivior.
In the US, opioid addiction is a significant problem as over 33,000 people died through opioid abuse in 2015, according to Centers for Disease Control and Prevention.
Numis analyst Paul Cuddon believes RBP-6000 should help kick opioid abuse when used with counselling and psychosocial support and flags Indivior’s competitive advantage due to its existing product range.
‘This important extended-release drug addresses many of the deficiencies of current daily treatment, and depending on pricing has the potential to capture significant market share,’ comments Cuddon.
Jefferies analyst James Vane-Tempest is encouraged by the approval of both the higher and lower doses of Sublocade following some scepticism by the FDA committee.
He forecasts $1.3bn in adjusted peak sales, with pricing of both 100mg and 300mg doses priced at $18,960 per year. This is higher than his estimate of $8,000 per year after discounts.
LEGAL BATTLE CONTINUES
One of the remaining hurdles for Indivior is its legal battle with the US Department of Justice over marketing and promotion practices, paediatric safety concerns and overprescribing of medication by specific physicians.
Numis forecasts a settlement of approximately $300m. Resolution of this issue could act as a catalyst for the shares.
