Shares in pharmaceuticals group Indivior plunged by a third last week after the drugmaker slashed its profit guidance and revealed it would discontinue sales of Perseris, its schizophrenia drug, says This is Money .
Indivior, based in the US, moved its primary listing to America last month, but continues to trade on the FTSE 250 . It also warned that sales of its opioid addiction treatment Sublocade continue to be weak, due primarily to changes in the extent to which the drug is covered by the US medical system.
The twin setbacks have created a “tornado” that has wrecked Indivior’s share price, says AJ Bell’s Russ Mould, especially since Perseris had been expected to achieve peak sales of $200 million to $300 million.
However, Indivior is “no stranger to setbacks since being spun out of Reckitt 10 years ago”. Settlements linked to criminal and civil investigations in recent years have already rattled the company and the stock. As a result, investors with a “nervous disposition” will have jumped ship a long time ago. Only the “thicker-skinned individuals” will have held on, in the hope that “they can see the longer-term prize”.
Indivior shares and revenue
Despite the recent problems, Indivior’s CEO Mark Crossley remains “upbeat” about the long-term outlook for Sublocade, especially given the scale of the US opioid epidemic, “which is now being driven by misuse of fentanyl and other synthetic opioids”, says Amber Murray in City AM .
Crossley reckons that robust underlying demand will mean that sales of Sublocade should still rise by a quarter from current levels, reaching $1 billion by the end of 2025, and should peak at more than $1.5 billion a year. In the very long run, opioid addiction might not be the only source of potential revenue for Indivior, as the company also sees “further opportunity” from the legalisation of cannabis for recreational use in more than 20 states, says Sabela Ojea in The Wall Street Journal .
This is because Indivior’s pipeline includes a treatment for cannabis-use disorder, which is in advanced clinical trials. At the same time, management thinks that moving the primary listing will improve scope for expansion as it will align the firm with its primary customers, the US government, as well as attracting more US investors and analysts.
But while the company should be an “easy sell” to US investors, there’s “little evidence” that it is benefiting from the transatlantic switch, says Aimee Donnellan on Breakingviews . Even before this week’s “shocker”, its forward price/earnings (p/e) multiple had slipped to seven. There also seems to be “minimal” interest among brokers, with the “low-single-digit number of analysts” attending earnings calls “outnumbered by Indivior participants” on occasion.
The group’s “patchy” record means there’s “a danger that investors continue to shun the business and it becomes an unloved US orphan stock”, proving a “cautionary” tale for “other companies looking to relocate across the pond”.
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