Indivior shoots up after green light given for monthly opioid-addiction injection

Indivior has received approval from the US drug regulator to market its once-monthly injectable treatment for moderate to severe opioid use disorder, which analysts believe could lift company sales north of $1bn.

The US Food and Drug Administration overnight gave its approval for what Indivior has branded Sublocade, an extended-release form of buprenorphine, meaning it is expected to be available to patients in the US in the first quarter of 2018.

"Sublocade is a scientific innovation that represents a new treatment option to help patients attain more illicit opioid-free weeks during their treatment program," said the FTSE 250 company's chief executive officer, Shaun Thaxter.

"In the opioid blockade study, Sublocade achieved complete blockade of drug-liking effects for a full month in most patients. Sublocade is the first and only therapy that, at steady state, delivers buprenorphine at a sustained rate of at least 2 ng/mL over a one month period."

Donald Trump declared opioid misuse in the US a national public health emergency earlier this year, with statistics showing nearly 12m people currently impacted across the country and an average of four people dying from opioid overdose every hour of every day.

FDA approval was widely anticipated after the regulator's advisory committee last month made a strong recommendation for approval of what had been known as RBP-6000, with Indivior having worked closely with the FDA on the final stages of development of the treatment.

Sublocade will have a black box warning, the FDA said, with distribution limited to prevent patient self administration and patients must be initiated on conventional therapy for seven days before switching to Sublocade.

Approval was given to both proposed dosing regimens -- 100mg and 300mg -- with the higher dosing regimen only to be considered for those patients in which the benefits outweigh the risk.

The US has strong motivation to find treatments for opioid addiction, with an economic impact calculated by the White House Council of Economic Advisers of $504bn in 2015 alone, from prescription opioid overdose, abuse and dependence.

Invidior shares were sent shooting up to 420p in the first few minutes of trading on Friday, close to its all-time high of 421.5p reached earlier in the year, before settling around 403p by 1100 GMT, a rise of almost 9% on the day and regaining all ground lost over the past month.

Analysts at RBC Capital Markets said the FDA decision was a "material positive for the company", valuing Sublocade at 350p per share in its model, but adding that "given the asset will only launch in Q1-2018 we expect some caution until generic risks to the Film franchise have been resolved and until Sublocade revenues have started to ramp".

RBC foresees peak sales of at least $1.4bn possible for Sublocade by 2025, even after taking into consideration competition and an eventual generic Suboxone Film launch, having conducted a survey among 77 doctors, mostly psychiatrists, which indicated around 40% of patients would be switched over to the long acting monthly products.

RBC said risks for Indivior from generic competition continue to be an overhang, which analysts expect to have an impact on the success of Sublocade.

"Whilst Sublocade is now approved, management have not yet provided any firm guidance on 2018 and, whilst the best long term outcome is to push ahead with marketing Sublocade as quickly as possible, many will be looking to i) Suboxone Film franchise revenue expectations, ii) EU revenue risk from recent competitor launches and iii) cost guidance given the new product launch."

Broker Numis said it was important that both the 100mg and 300mg doses have been approved and said its 12-month target price of 640p assumes generic film competition for Suboxone in 2020, at least $1bn Sublocade sales by 2022 and a $300m settlement with the Department of Justice.

Analyst Paul Cuddon said he thinks the market "remains overly bearish on the ongoing patent dispute that becomes even less important to Indivior's mid/long term cash flow" and that he feels Indivior and former parent Reckitt Benckiser are "well placed to settle a DOJ fine, and that at this point settlement would be taken positively".

Thirty-five states have sued RB, with Indivior co-named, for allegedly running “an unlawful, multi-pronged scheme” using patent laws and false safety concerns to keep generic versions of Suboxone off the market and maintain an artificially high price for Suboxone.

In June, Indivior made a $242m provision to cover potential legal costs over a series of legal cases, with DoJ expected to levy a sizeable fine. Indivior has also set aside $25m for an antitrust settlement with Amneal Pharmaceuticals.

The company's cash balance at the end of Q3 2017 was $806m, with net cash of $322m.