Good day, and thank you for standing by. Welcome to the Indivior Business Update Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question- and- answer session. To ask a question during the session, you need to press star one one on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Jason Thompson. Please go ahead. Thank you, Nadia, and good morning, good afternoon, everyone, and thanks for joining us on short notice. Before we begin, allow me to remind you that our presentation includes forward-looking statements. Actual results may differ materially from those statements, and we list some of the factors that might cause results to differ at the end of the press release that we put out this morning. I'll now turn the call over to our CEO, Mark Crossley. Thank you, Jason, and thanks everyone for joining us on short notice. Before turning to my prepared remarks, today's obviously a disappointing day for Indivior and its shareholders. We're facing greater transitory headwinds to our business than anticipated, but I wanna highlight our conviction in the underlying value of the company. We remain highly confident that the underlying fundamentals of our business and our strategy remain intact, and that we're on a path to help patients in this largely undertreated market while generating substantial shareholder value. I know many of you will have questions about today's news, so I plan to make some brief opening remarks pertaining to the three business updates, in the release. After that, we'll open up the call to questions, but would ask that the questions are limited to these three topics. We're still early on in the close process, and we'll report complete Q2 and half-year results on July 25th. Turning to today's news, as you've no doubt read by now, we detailed three items in our announcement. First, we're revising our fiscal year 2024 guidance, primarily based on externalities that continue to impact SUBLOCADE net revenue in the second quarter, and that we now know will continue to be factors in the second half of the year. Second, we've made the decision to immediately discontinue the sales and marketing of PERSERIS based on anticipated changes in the market that crystallized in the second quarter and that will make it no longer financially viable. This decision will affect our people and our patients, and we're supporting them through this, through those impacted through the transition. Third, we've reached a settlement agreement with the end payer plaintiffs in the Roanoke antitrust case that was due to come to trial on July 15th. I will take each of these in turn to provide more context, starting with the dynamics around SUBLOCADE. First, as we flagged with our Q1 results, the impacts of Medicaid disenrollments have proven incredibly difficult to forecast, given the unprecedented removal of emergency measures after a four-year period in place. Despite positive signs early in the quarter, including SUBLOCADE enrollment and dispense trends that were in line with our expectations, we had another major wave of Medicaid disenrollments that were higher than our expectations as the quarter progressed. The dynamic was further exacerbated by the spillover impact from the loss of patients in Change Healthcare cyberattack in the prior quarter, who did not return to treatment as we had expected. The net impact was that we saw lower overall patient starts and refills in the quarter than we'd planned. As a reminder, our patient base is disproportionately impacted by these dynamics, given the large mix of Medicaid patients that are treated by SUBLOCADE. This concentration, combined with the chaotic nature of opioid use disorder, is resulting in an amplified short-term ill effect to our SUBLOCADE business. Based on CMS guidance, we noted on our Q1 call that we expected Medicaid disenrollments would be completed at the end of the second quarter. This was not the case, and the impact is now likely to persist through the third quarter, with some states being given extensions to complete the re-enrollment process. As of today, our best expectation, based on the data, is that the balance between Medicaid disenrollments and re-enrollments will stabilize during the fourth quarter so that this dynamic will cease to be a drag on our business as we look to 2025 and beyond. A second factor impacting our expectations for the second quarter was the channel inventory of SUBLOCADE remained at the historically low levels we saw at the end of the first quarter. Based on the latest market intelligence, we now believe we're seeing a permanent reduction in SUBLOCADE stocking levels in the channel. In short, the specialty pharmacies and specialty distributors have gotten comfortable with holding less inventory. We believe this is due to the maturity and efficiency of our supply network, coupled with the shortened lead times associated with our mostly institutional customer base, organized health systems and justice systems. As with the Medicaid dynamics I just discussed, this negatively impacts our fiscal year 2024 SUBLOCADE net revenue expectations, but should cease to be a drag on our reported financials as we look to 2025. An additional impact factor which impacted on our expectations for SUBLOCADE net revenue in the second quarter was slower than expected activation of new justice system accounts. Overall, net revenue in the channel remained extremely strong at +85% compared with the year-ago quarter, but was nevertheless below our planning. We believe this is a timing issue, as a number of these new accounts have less resources than the federal accounts and larger justice system entities that we activated in our first wave of efforts to penetrate the justice system. Importantly, we're confident that this timing issue does not undermine the potential for SUBLOCADE to address the large unmet need in this important and growing new channel for SUBLOCADE, which represents 25% of our revenue. It's also important to step back and recognize that despite the transitory impacts I've just highlighted, we're still expecting strong double-digit year-over-year growth for SUBLOCADE in fiscal year 2024 of 25% at the midpoint of our guidance. This speaks to the strong underlying demand for this paradigm-changing treatment, and based on this demand and the powerful fundamental drivers we see in the years ahead, we remain wholly confident in delivering our intermediate and peak net revenue expectations for SUBLOCADE. This means we expect to achieve a net revenue run rate of $1 billion as we exit 2025, and to ultimately meet our target of greater than $1.5 billion in peak net revenue guidance. This, together with delivering our peak net revenue target for OPVEE of $150 million-$250 million, will in turn underpin the successful delivery of our medium-term profitable growth framework. Turning to our decision to discontinue PERSERIS. This is not a decision we took lightly. We believe in the strong differentiation of PERSERIS and its attractive therapeutic profile. This is evidenced in the continued healthy year-over-year growth we saw in the second quarter, despite the increased competition. However, what we now face is a changed market landscape brought about by provisions in the Inflation Reduction Act that are expected to result in intensified category management, including both price reductions and volume impacts. This view was crystallized in the second quarter as we received details on the implementation of the IRA, including how this would affect Medicare Part D plan coverage and rebates. Having received the details, we consulted with third-party experts in the field, including health plan providers currently covering PERSERIS, and analyzed various scenarios. This analysis unfortunately resulted in the conclusion that there will be no financially viable means to move forward with PERSERIS in 2025. We're therefore making the incredibly difficult decision to immediately cease all promotion of PERSERIS. Unfortunately, this decision impacts approximately 130 of our team members. We'll do everything in our power to support these employees impacted by this decision and to help ensure a smooth transition for PERSERIS patients to another treatment. Finally, regarding today's news of a settlement with the above-discussed end payers, we've consistently stated that our guiding principle and strategy with legacy litigation matters is to create certainty for all stakeholders at the right value. We believe this settlement is in the best interest of shareholders, as it avoids the uncertainty of a jury trial and a potentially large damages award if we were to lose. This agreement will terminate the trial that was scheduled to begin on July 15th. We'll take a charge of $85 million in the second quarter, which we will exclude from adjusted results and fund from our existing cash balance. With that briefing, we'll now take your questions. Thank you, dear participants. As a reminder, if you wish to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. This will take a few moments. And now we're going to take our first question, and it comes from the line of Max Herrmann from Stifel. Your line is open. Please ask your question. Great. A couple of questions, if I may. Firstly, just in terms of the settlement, with the end payers, I believe you are settling with four of the insurers, but I know you've mentioned there were seven end payers remaining, and so those three others are still outstanding. Have you had settlement discussions with them? And, is there any clarity on what further settlement payments might be to resolve this issue? That's the first question. And then the second one, just is on SUBLOCADE. In terms of the expectations here, I guess my surprise here is that actually you were very aggressive at the start of this year on the outlook for SUBLOCADE, despite the fact, you know, there was dynamics in the market that were impacting a changing environment, should I say. And so I'm kind of surprised at that aggression and why that has now... I mean, I know the reasons you explained, but isn't this really the underlying issue is BRIXADI competition? And that is where new patients are actually being competed, whereas previously you didn't have any competition for new patients. Those are my questions. Thanks. Thanks for those questions, Max. I think the key here, let's first start with the settlement. You know, there are two groups. There's first, there's five counterparties that have been settled, you know, with this mediated settlement today. That leaves two groups remaining, Humana and its affiliates, and Centene and its affiliates. Neither of those cases have trial dates, and they're very early in the litigation process, and we'll evaluate those cases as more information becomes available and things move along. So, you know, we have a resolution with the five, and the other two remain outstanding. You know, as it relates to SUBLOCADE and expectations, when we set guidance at the beginning of the year, you know, we did it knowing there were a couple of known headwinds and a lot of tailwinds in the market. The known headwinds was we had, we had the Medicaid renewal, and we had competition in its early entry of the market, and we had significant tailwinds with a strategy, a structure that was working, increased sales force, increased funding in the market, and we put out our guidance based on reasonable building blocks that we thought were in place. What we've seen is that the transitory nature of the Medicaid reentry and Change Healthcare have disproportionately impacted us beyond our planning assumptions, both in the first quarter, but then in the second quarter, when it came to disruption, disenrollment and return of patients from that disruption. Our planning assumptions with regards to competition are in line with expectation, with regards to where we are. So what it really is that we're seeing is if we think about the current LAI market, SUBLOCADE is getting 77% of all new patient starts based on our data. So why isn't that playing out in the numbers as much, Max? I think the key here is, in this chronic relapsing disease, the average length of treatment is six months, there is a normal amount of having to replace patients that fall out of treatment on a normal basis. When you look at the disenrollment and the fact that the dynamic is exacerbated by these transitory patient disruptions, and the fact that SUBLOCADE had over 150,000 patients over the last 12 months, versus a competitor with a very small base at in patient HCP activation and initial patients, it disproportionately impacts the established player. That's what we're seeing is, with the Medicaid change, with the Medicaid impacts of impacting 25% of lives covered, we're seeing a disproportionate impact to our base business. Hope that's helpful. Yeah, just on the Centene and Humana remaining litigation, what are the sort of timelines then for those in terms of going for court cases? Are they going to be combined or is this two individual cases? And what are the timings of it going to court? Yeah, it's still very early with both. They're both in two separate jurisdictions, so they are separate, and we don't expect them to be combined. We do not have a current timeline when it comes to those reaching a courtroom, but it's very early stages of the litigation process. Great. I'll jump back on the queue. Thanks. Thank you, Max. Thank you. Now, we're going to take our next question. The next question comes to line of Thibault Boutherin from Morgan Stanley. Your line is open. Please ask your question. Hello. Thank you very much for taking my questions. My first one was on the Medicaid disenrollment dynamic. Just wanted to understand what visibility you have on the timing. If you could help us, how the complexity around the procedures to re-enroll patients, basically, what do they have to go through? How long does it take? You know, I guess, in a nutshell, how complicated it is for patients who dropped to get back on coverage on Medicaid. Related to this, I just had a question on do you have conversations with officials, legislators, politicians around this Medicaid disenrollment? Because as you mentioned, 25 person drop in patients is quite dramatic and must have, you know, quite big consequences in terms of public health in the U.S. I was just wondering if there is a political focus on this issue. Maybe just last question is on the dynamic you mentioned, SUBLOCADE 77% share of new patients. But the thing is, can you just remind us what is the speed of churn of the patient population? How, what basically the turnover on this population, because presumably, I think it was five, six months average treatment, which means that actually the new patient share for BRIXADI can translate into actual market share relatively quickly if the turnover of patients is quite high. Thank you. Certainly. So let me start with your first question, Thibault. I think what we see with regards to Medicaid re-enrollment, visibility on timing, I think the first part of this is, it is incredibly, incredibly difficult to forecast this with what we're seeing. What we're seeing is as the states finalize their renewals, you see patients holding out to the last date, almost in anticipation of losing it. You know, when people are falling out of coverage, you know, there's an estimate that 69% of those falling out of coverage are due to procedural reasons. And so, you know, the time and pace at which they're re-enrolling, it's just very complicated to forecast that. And then we've seen the extension, you know, of the renewal process, which is pushed into Q3 for eight of the eleven remaining states, with Alaska and D.C. in 2025 and New York not scheduled. So a lot of lack of precision, you know, and inability to forecast what is really a one-off item that is kind of unprecedented with no analog. So very tough to forecast this. When you look with regards to conversation of politics and enrollments, listen, I've read the headlines, and I know people are considering this, you know, at the government level. And so I'll leave those discussions, you know, to the government authorities that are dealing that and partnering with CMS. When it comes to SUBLOCADE and the churn of patients, you know, I think you're right. You know, if I think about churn when it comes to disruption and re-enrollment, you know, in this very unique patient base, you know, that's a bit more chaotic than an average Medicaid patient, the process of managing paperwork to re-enroll, you know, is not as normal a process as it would be for you or me. And so, you know, that process can be extended and take longer than we expect. And just in the disease base as a whole, as you talked, the average length of treatment is about six months now on SUBLOCADE. So when you look at the just the normal churn of patients out of treatment, you know, you already are having to replace a significant amount of patients as you grow with that 77% of new starts. And now with the base of patients impacted by losing about 25% of the Medicaid lives, you know, you're having to, having to offset even more of that to continue the growth. Thank you. Thank you. Thank you. Now we're going to take our next question, and it comes to the line of Paul Cuddon from Deutsche Numis. Your line is open. Please ask your question. Okay. Thank you very much. Can you hear me okay? We can, Paul. Thank you. Okay, super. I've just got one question, two questions, actually. Firstly, on the changes in the Inflation Reduction Act, I just wonder if you could provide a little bit more detail on why that is specifically affecting kind of PERSERIS, or is it a risperidone issue? And I suppose if it is a risperidone issue, to what extent could it sort of translate in the future to buprenorphine and buprenorphine-related compounds? And then I'll ask my other one after that. Thank you. Yes, Paul. So the Inflation Reduction Act, listen, I think this is a well-intended law change that's meant to increase, you know, competition with regards to price and pass some of that along to the payers. It's resulting in increased management of the category, which is impacting both price as well as volume, as the category is managed. With PERSERIS's, you know, lack of scale in the market, what we see is not getting to profitability, you know, for a long period of time that we believe, you know, makes the product not financially viable. So it's, you know, increased—there's competition in the market, there's the impacts of this increased payer management that combined, you know, are making this not financially viable. It's in the best interest of shareholders to make this decision, despite the tough impacts it has on our team members, as well as our patients. When it relates to buprenorphine- So just to be clear- When it relates to the, is there a carryover to buprenorphine? I think the uniqueness of schizophrenia is it has a higher base patient base in Medicare, which is impacted by this rule change. You know, SUBLOCADE has less than 5%, you know, of its volume that flows through that payer channel, so its impact is much less. Okay, super. Thank you. And then secondly, the slower than expected activation of criminal justice system, I mean, do you have any sense that this is a channel that competitive products might be going after for? Could they be sort of trialing or testing kind of your competitor's product, or do you think that SUBLOCADE will remain kind of the preferred treatment option, given the dose and the fentanyl-based kind of efficacy? Paul, I think, listen, I think logically, you know, competition will go to this channel and seek to bring their product in as they have in the large regional health centers. But what we're seeing in this activation is not related to competition. This is just moving from the very large federal and state-level jails into the next level down. And the sheer administrative sort of work that has to be done, where they have a smaller back office to work on it, is impacting the timelines. And we didn't see this dynamic when we were activating the regional health systems when we went to the smaller. And so it's a new dynamic, and when you have to comply with... They still have to comply with the federal, state laws. They have to put in place the REMS and the protocols and get funding, and set up this injection. It's just taking longer than expected. We have over 250, you know, of these new systems that are in sort of activation and planning mode that we're partnering with, and it's just that we're shifting those out the timeline a bit. It's not that we have any less conviction in bringing them into eventually prescribing the product. Okay, super. And just one kind of very quick one as well, just on the balance sheet, and current cash position. When I think about the $85 million settlement, the $20 million restructuring charges, the cash position at the start of the year, and the potential need to kind of take the option on the Aelis Farma asset and fund the phase III trial, I mean, how do you think of capital allocation priorities, versus R&D versus buybacks, over the next 12 months? Yeah, we continue as a board and a management team to actively manage this. And obviously, we are at the tail end of an ongoing buyback now, and given the current share price, we'll actively assess the merits of a buyback in partnership with the board moving forward. So thanks for that, Paul. Thank you. Thank you. Now we're going to take our next question. Just give us a moment. And the next question comes from the line of Chase Knickerbocker from Craig-Hallum. Your line is open. Please ask your question. Good morning, guys. Thanks for taking the questions. So just to kind of dig in a little bit on the lower inventory stocking levels, you know, this just happens to kind of be in the year where you're facing some competition on SUBLOCADE. Can you just kind of speak to if this is in any way related to stocking of, obviously, the competitive drug? And then, Mark, I hate to, you know, ask the same question again, but I think it's really important for investors to kind of understand the confidence in these disenrollments kind of evening out in Q4, and we kind of heard a lot about, you know, how it's kind of hard to forecast. Can you just, again, kind of, you know, kind of walk through your guys' thinking and what gives you confidence for, you know, this headwind not, you know, carrying over after, you know, Q3 of this year and, you know, abating as we kind of start the new year next year? Yeah. Thank you, Chase. Let me start with the second one, first, and then move on to the inventory question. I think what we're working off of is the planning associated that CMS has published out there with when states have their deadline for completing their renewals. And when we look at that, you know, what we see is of the remaining folks, you see, you know, eight of those coming off and ending their renewals, you know, by November 2024, leaving Alaska and D.C., which have been scheduled for 2025, according to CMS, and then New York, which is obviously a large account, but it's unlisted under development. And so, the predominant amount of states will be done, you know, by, you know, November of this year, and we expect, you know, that assuming they meet the timelines that CMS has forecasted, that then this becomes, you know, a thing of the past as we move into 2025 to normal sort of, normal sort of growth. With regards to the lower inventory, listen, I think the biggest thing we're hearing from our counterparties and our SPs and SDs is that there is a more efficient supply chain. They're very comfortable with more frequent orders and willing to take a reduction in working capital associated with that efficiency as they become comfortable in moving those up. You know, could there be, you know, an impact of competition and additional SKUs out there in the category? I think there could be, but what we're hearing is, it has to do with their comfort in shorter order times, and so they're reducing their overall stocking levels in line with what we saw at Q1. Can you just speak to kind of how you'd expect those, you know, the 25% of covered lives that have had coverage impacted, how would you expect them to kind of, I guess, come back to, you know, having coverage under Medicaid and obviously having SUBLOCADE once again available to them? Is there going to be a tail of an impact, kind of after these states complete these renewal processes? Or is this something where kind of when those deadlines are reached, you know, you would expect things to kind of return to normal? Yes, it's a great question, Chase. I think of the disenrollments that we've seen to date, Kaiser puts out, you know, the drivers on what has led to these. And what we've seen is 69% of the disenrollments that we've seen, you know, the 25% of lives that have fallen out of coverage, are due to procedural reasons, and this could be procedural reasons on paperwork is late, paperwork incomplete. It could be that they've lost contact information of some of the patients. So, you know, you'd expect a portion of those to phase and come back, you know, in the second half or into 2025. Got it. And then just last for me, kind of the remaining kind of 32% of those covered lives, you know, maybe are kind of lost to, you know, having Medicaid coverage. And then just lastly, when we look at, you know, kind of health systems versus criminal justice, can you just kind of benchmark us on what kind of 2024 full year expectations are for kind of each segment? Is criminal justice kind of driving, you know, the vast majority of growth with, with, you know, some of these Medicaid headwinds? Certainly. So I think when you think about the remaining lives, listen, we're expecting [audio distortion] to 74 million. That increased to 94 million through the emergency protocols. We're expecting that to kind of settle out somewhere around, and what we're seeing from experts is it should settle around, you know, the original pre-emergency levels. So we're looking at the experts on this, that specialize in this, and that's what we're hearing- that's what we're hearing from them. When we think about health systems versus CJS, you know, despite the impacts that we're seeing from the transitory natures, which are impacting, you know, the regional health systems disproportionately, we're still seeing growth in that channel. But obviously, CJS, which has grown 85% in the quarter, you know, we're seeing disproportionate growth in that, in that sub-channel because it's not impacted by those measures. So, so we will see more growth there. It's about 25% of our business, and we expect a higher rate of growth, but we expect growth across both that are delivering the, you know, 25% at the, at the midpoint of our guidance. Thanks, Mark. Of course. Thank you, Chase. Thank you. Now we're going to take our last question, and it comes from the line of Carl Byrnes from Northland Capital Markets. Your line is open. Please ask your question. Thanks for the question. Considering your comments regarding Medicare, Medicaid, excuse me, disenrollment abating toward the end of the year, third quarter, fourth quarter, and then normalizing going into 2025, are you comfortable with SUBLOCADE exhibiting or posting 25%+ growth in fiscal 2025, again, considering Medicare eligibles, you know, successfully re-enrolling, along with tying into exiting the year with a $1 billion run rate? Thanks. I think, Carl, when it comes to specific guidance for 2025, I think we'll wait and close out this year and give that guidance. But we have reinforced our conviction that we will exit 2025 at a billion-dollar run rate. That medium-term guidance that we've given in the past and, you know, still have conviction in the greater than $1.5 billion peak net revenue guidance. So still reaffirm those. Got it. Thanks. Thank you. Now we're going to take our next question. The question comes to the line of Max Herrmann from Stifel. Your line is open. Please ask the question. Thanks for taking just a follow-up. I just wanted a point of clarification. Are you saying that 25% of lives in total under coverage were lost from Medicaid, or is it 25% of Medicaid-covered lives? Just wanted a clarification on that. Well, the stat I was trying to give, Max, and apologize if it wasn't direct, was to date, we've lost 25% of, of Medicaid-covered lives. So not specific to OUD and trying to translate that to our patients, but of covered lives, we've lost 25% to date, with still a percentage, you know, a number to go in Q3. So that's just in general, not related specifically to Indivior? Correct. Correct. And we think it's a disproportionate impact to our patient base, given the chaotic nature of what they're dealing with, suffering from opioid use disorder. Thank you. Thank you, Max. Thank you. We show no more questions. Please go ahead, sir. All right. Thank you, Nadia, and, and thanks again everyone for joining on short notice. We'll plan on speaking with everyone again, in one-to-ones and then with the results on July 25th. Thanks again for joining. That does conclude our conference for today. Thank you for your participation. You may now all disconnect. Have a nice day.