Indivior stares into the unknown

As part of a wider contingency plan, Indivior's bosses intend to maintain a $250m (£194m) cash ‘backstop’. But analysts at broker Numis warn that management’s own guidance for operating expenses (sales, general administrative and research & development) of between $440m and $460m this year is only $109m shy of the $569m reported in 2018. In the broker’s view, if the cash backstop is to be maintained, current guidance indicates “far higher revenue expectations” than current consensus, or less cash outflow in other areas, such as working capital, legal settlements and capital expenditure. 

Management’s own wording about the cash backstop is also concerning, particularly whether it will help the company remain compliant with debt covenants while net revenues from Suboxone Film decline and sales from new products Sublocade and Perseris accelerate. For now, bosses expect sales of Sublocade – a once-monthly injection that provides a sustained level of buprenorphine, Suboxone's active ingredient, in the bloodstream throughout the month – to be between $50m and $70m this year.

But just how defensive Indivior’s new products will prove against a rapid loss of market share on older products remains to be seen. Perseris – a monthly long-acting risperidone injection – only received the regulatory green light last July, while Sublocade – having been approved in the US in 2017 – only filed for regulatory approval in Australia last May, Israel in July, New Zealand in September and Europe in November. It was approved in Canada in November too, but sales are only generated in the US. Further clinical studies are under way, but it’s sensible to assume those will be a near-term drain on cash, too.