Citi cautious on Indivior until evidence of acceleration to product release

Pharmaceuticals business Indivior had its target price lowered from 350p to 240p by investment bank Citi due to concern that there is not “sufficient evidence” that the launch of Sublocade is accelerating.

Sublocade is a treatment designed to allow opioid addicts to avoid drug use during treatment programmes by mediating the subjective effects of opioids by contacting receptors in the brain that are activated during drug use.

Citi commented that near-term catalysts could be positive for the London-listed outfit, but argued that the company’s long-term value will be dictated largely by peak sales of the treatment, for which the investment bank reduced its estimates from $800m to $600m - versus the company's own projection for over $1.0bn

As well as lowering its target price, Citi opted to maintain its ‘neutral’ rating of Indivior’s shares.

On a positive note, Citi stated that Indivior’s “strong track record” of brand building, sales and marketing competence could be decisive in seeing-off upcoming competition with Camurus’ rival monthly depot injection technology, which is expected to receive approval on December.

Fellow competitor Dr Reddy’s Laboratories was prevented from re-launching its generic product in the United States in July until patent litigation with Indivior was concluded.

Citi was expecting a ruling on Dr Reddy's appeal in late October or early November.

Indivior was likely to win its arguments on validity and infringement, and there are other alternatives to the drug that can be sold while the patent dispute continues, US District Judge Kevin McNulty said in his ruling at the time, adding that allowing sales to continue would damage Indivior’s market share beyond repair.

On a more positive note, the analysts labelled the company's guidance of $200m to $300m for Perseris as "conservative", telling clients they saw potential upside prior to its launch.

Indivior’s shares were up 1.35% at 202.30p at 1626 BST.