- Full year profit guidance cut by 15%
- 130 jobs axed as schizophrenia drug dropped
- Peak Sublocade sales guidance reiterated
Shares in Indivior (INDV) sank more than 40% to 694.5p after the opioid addiction treatment company issued a full year profit warning and announced 130 job cuts related to the discontinuation of its schizophrenia drug Perseris.
The shares have been highly volatile in recent years. Over the last 12-months they are down around 60% but the shares remain roughly three times higher than where they traded before the onset of the pandemic.
Today’s (9 July) profit warning comes just days after the company moved its primary listing to the US.
HOW BIG IS THE DOWNGRADE?
As recently as 23 May, management reiterated full year revenue and profit guidance, so today’s downgrade reflects a swift turnaround of fortunes.
Adjusted operating profit is now expected to be between $285 million and $320 million, approximately 15% below prior guidance, representing a 1% improvement in operating margin versus 2023.
Net revenue is expected to be between $1.15 billion and $1.215 billion, up 8% compared with 2023 at the mid-point of the range, compared with a prior expectation of $1.24 billion to $1.33 billion.
TRANSITORY AND NON-TRANSITORY IMPACTS
The company said a combination of ‘transitory’ factors have impacted the sale of its opioid addiction treatment Sublocade, primarily the elimination of Covid-19 emergency measures related to automatic Medicaid coverage renewals.
The firm is sticking with its long-term guidance for peak Sublocade net revenue of more than $1.5 billion and exiting 2025 with a net revenue run rate of $1 billion.
Indivior said it will immediately discontinue selling schizophrenia drug Perseris due to a ‘highly competitive market’ and impending changes that are expected to intensify payor management.
Consequently, approximately 130 staff will be laid off at a cost of $65 million, of which $20 million is expected to be a cash charge for severance. Ongoing operating costs are anticipated to be reduced by around $50 million.
EXPERT VIEW
AJ Bell investment director Russ Mould commented: ‘While the share price reaction implies serious problems, Indivior is no stranger to setbacks since being spun out of Reckitt 10 years ago.
‘There have already been settlements linked to criminal and civil investigations in recent years which have caused turbulence to the business and its share price. Investors with a nervous disposition will have jumped ship a long time ago and it’s the thicker-skinned individuals who’ve held on as they can see the longer-term prize.
‘A growing opioid addiction problem in the US means there is still a big opportunity for the group, assuming it isn’t derailed by rivals taking market share. Indivior also has its eyes on treating alcohol and cannabis misuse, leaning on its skills to diversify the group revenue base.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (James Crux) own shares in AJ Bell.
