Indivior : Announces H1 and Q2 2021 Financial Results

July 29, 2021

Indivior Announces H1 and Q2 2021 Results;

Reiterates Upgraded FY 2021 Guidance;

Initiating $100m Share Repurchase Program

Period to June 30th	Q2	Q2		H1	H1
	2021	2020		2021	2020
	$m	$m		$m	$m
Net Revenue	201	150		381	303
Operating Profit/(Loss)	73	25		130	(165)
Net Income/(Loss)	62	18		142	(145)
EPS/(LPS) (cents per share)	8	2		19	(20)
Adj. Operating Profit*	66	24		117	26
Adj. Net Income*	49	17		87	14
Adj. EPS*	7	2		12	2

*Adjusted (Adj.) basis excludes the impact of exceptional items as referenced in Note 4.

This Release Contains Inside Information.

Comment by Mark Crossley, CEO of Indivior PLC

"The second quarter saw Indivior make good progress against our Strategic Priorities and deliver strong performance, including our fourth consecutive quarter of double-digit growth from SUBLOCADE® (buprenorphine extended-release) injection. Based on the momentum in the business, we raised our FY 2021 guidance at the end of the quarter.

Looking forward, our number one priority continues to be capturing the full transformational value of SUBLOCADE, and it is gratifying to see further uptake of this key asset in targeted Organized Health Systems (OHS), including a $7 million order from a criminal justice system that we believe is pioneering treatment of incarcerated individuals suffering from opioid use disorder (OUD). Additionally, we are seeking to strengthen our leadership position in substance use disorder by securing an exclusive agreement with Aelis Farma for their leading mid-stage asset (P2b) targeting cannabis-related disorders.

In light of Indivior's business outlook in 2021 and beyond, and supported by our strong balance sheet, we will be initiating a $100m share buyback program. This program underscores our disciplined approach to capital allocation and appropriately balances returning capital to shareholders with maintaining our ability to execute our patient- focused strategy."

H1 / Q2 2021 Financial Highlights

• H1 2021 total net revenue (NR) of $381m increased 26% (H1 2020: $303m); Q2 2021 total NR of $201m increased
  34% (Q2 2020: $150m). The increase in both periods was primarily driven by higher NR from SUBLOCADE (+79% vs. H1 2020, +110% vs. Q2 2020), continued growth in the buprenorphine medication-assisted treatment (BMAT) market, and by relative market share stability for SUBOXONE® (buprenorphine and naloxone) Film in the US.
• H1 2021 reported operating profit was $130m (H1 2020 operating loss: $165m); Q2 2021 reported operating
  profit of $73m increased 192% (Q2 2020: $25m). On an adjusted basis, H1 2021 operating profit was $117m (Adj.
  H1 2020: $26m). Adj. Q2 2021 operating profit of $66m increased 175% (Adj. Q2 2020: $24m). The substantial improvement in adjusted operating profit in both periods was driven by strong net revenue growth and lower operating expenses.
• H1 2021 reported net income was $142m (H1 2020 net loss: $145m); Q2 2021 reported net income was $62m
  (Q2 2020 net income: $18m). On an adjusted basis, H1 2021 net income was $87m (Adj. H1 2020 net income:
  $14m). Adj. Q2 2021 net income was $49m (Adj. Q2 2020: $17m). The significant increases in adjusted net income in both periods were primarily driven by higher operating profit, partially offset by increased net finance expense.

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• Cash at the end of H1 2021 was $1,000m (FY 2020: $858m). Net cash was $750m (FY 2020: $623m). The higher cash balance is a result of higher operating profit and relatively stable government rebate payables. See cash flow statement for cash movements related to other significant transactions.

H1 / Q2 2021 Operating Highlights

• H1 2021 SUBLOCADE NR of $104m (+79% vs. H1 2020); Q2 SUBLOCADE NR of $61m (+110% vs. Q2 2020 and +42% vs. Q1 2021) reflects strong growth in the OHS channel and increased new US patient enrolments. Q2 2021 NR also benefited from approximately $7m from a large order from a new criminal justice system customer. Q2 2021 US dispenses were approx. 43,000* units (+70% vs. Q2 2020 and +20% vs. Q1 2021).
• H1 2021 PERSERIS® (risperidone) extended-release injection NR of $8m (+14% vs. H1 2020); Q2 2021 PERSERIS NR of $4m (+33% vs. Q2 2020 and Q1 2021) reflects improved commercial access to US healthcare practitioners (HCPs) from reopenings.
• SUBOXONE Film share in Q2 2021 averaged 20% (Q2 2020: 22%) and exited the quarter at 20% (Q1 2020: 21%).
• Outside the US, SUBLOCADE / SUBUTEX® prolonged release solution for injection was recently approved in Germany and Italy (currently available in Australia, Canada, and Israel; approved in Sweden, Finland, Denmark and New Zealand).
• SUBOXONE Film now available in Canada, Germany, Italy, the Nordics and the UK.
• Indivior expanded its pipeline of potential innovative substance use disorder treatments by entering into an exclusive option and license agreement with Aelis Farma to develop its leading compound (AEF0117) targeting cannabis use disorders for $30m.
• The legacy TEMGESIC®/ BUPREX® / BUPREXX® (buprenorphine) analgesic franchise outside of North America was divested for approximately $21m (closed in July 2021). See Note 14 for further discussion.
• The Group raised $250m of new term loans (due June 2026), proceeds of which were used to replace $235m of existing term loans with the remaining $15m to be used for general corporate purposes.

Share Repurchase Program

The share repurchase program of up to $100m will begin shortly. This program falls within the authorization to purchase ordinary shares under the general authority granted by shareholders at the Company's Annual General Meeting held on May 6, 2021. The program is expected to end no later than December 31, 2022. In order to effect the program, Indivior will enter into a non-discretionary, irrevocable agreement to carry out on-market purchases of its ordinary shares. Further details and disclosures about the share repurchase program will be announced upon commencement.

FY 2021 Guidance

The Group reiterates its upgraded FY 2021 guidance as announced on June 30, 2021:

• Total FY 2021 NR range of $705m to $740m (previously: up to $625m), reflecting stronger SUBLOCADE performance, a continued more modest rate of SUBOXONE Film market share erosion for the remainder of 2021 and benefits from more favorable FX translation of approximately $10m ($USD vs. GBP and EURO at the end of Q2 2021). Product specific guidance is as follows:
• • SUBLOCADE FY 2021 NR range of $210m to $230m (previously: $185m to $210m), based on stronger demand and a large order from a new criminal justice system customer (NR contribution of approximately $7m in Q2 2021)
  • PERSERIS® (risperidone) extended-release injection FY 2021 NR range of $17m to $20m (unchanged)
• Adjusted gross margin in the low-80% range, modestly above previous expectations due to expected relative stability in the commercial channel for SUBOXONE Film.

* Excludes criminal justice system order

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• Adjusted operating expense (SG&A+R&D) range of $470m to $480m (previously: $420m to $440m), reflecting incremental performance-based expenses and updated FX translational impacts, as well as incremental discretionary long-acting injectable (LAI) growth investments of up to $25m.
• A significantly higher level of positive adjusted pre-tax income than previously expected.

U.S. Opioid Use Disorder (OUD) Market Update

In Q2 2021, the U.S. BMAT market grew mid-single digits. The moderation in the growth rate versus 2020 reflects the high base period for comparison in the year-ago quarter, when the BMAT market grew in the low- to mid-teens as a result of COVID-19-related demand and the implementation of new federal and state government actions to facilitate access to medication-assisted treatment (MAT) for OUD patients.

The Group continues to expect long-term U.S. market growth to be sustained in the high single-digit to low double-digit percentage range due to increased severity and overall public awareness of the opioid epidemic and approved treatments, together with regulatory and legislative actions that have expanded OUD treatment funding and treatment capacity. The number of physicians, nurse practitioners and physician assistants who have received a waiver to administer MAT and those able to treat up to the permitted level of 275 patients continued to grow in Q2 2021. As a result, there is increasing patient access to BMAT. Indivior supports efforts to encourage more eligible healthcare practitioners (HCPs) to provide BMAT, and the Group continues to resource its compliance capabilities for the growing number of BMAT prescribers and patients.

The Group's focus is to continue to expand access to SUBLOCADE amongst OHS and core HCPs to ensure availability of this potentially important treatment option to the estimated 1 million+ patients per month who are prescribed BMAT by HCPs.

Financial Performance in H1 and Q2 2021

Total net revenue in H1 2021 increased 26% to $381m (H1 2020: $303m) at actual exchange rates (+22% at constant exchange rates). In Q2 2021, total net revenue increased 34% at actual exchange rates (+30% at constant exchange rates) to $201m (Q2 2020: $150m).

U.S. net revenue increased 35% in H1 2021 to $284m (H1 2020: $211m) and by 44% in Q2 2021 to $154m (Q2

2020: $107m). Underlying BMAT market growth, strong year-over-year SUBLOCADE net revenue growth along with the relative stability of SUBOXONE Film share were the principal drivers of the net revenue increase in both periods. Additionally, a final true-up relating to rebates on our former authorized generic film product was recorded with a favorable impact of $7m.

Rest of World (ROW) net revenue increased 5% at actual exchange rates in H1 2021 to $97m (H1 2020: $92m) (- 5% at constant exchange rates). In Q2 2021, ROW net revenue increased 9% at actual exchange rates to $47m (Q2 2020: $43m) (-2% at constant exchange rates). H1 2021 and Q2 2021 ROW SUBLOCADE net revenue were $7m and $4m (at actual exchange rates), respectively. Favorable foreign currency translation and contributions from new products (SUBLOCADE and SUBOXONE Film) were the principal drivers of the net revenue increase in both periods. These benefits were partially offset by austerity measures and ongoing competitive pressure in Western Europe and Canada.

Gross margin as reported in H1 2021 was 84% (H1 2020: 86%) and 85% in Q2 2021 (Q2 2020: 88%), respectively.

On an adjusted basis, H1 2021 gross margin was 84% (Adj. H1 2020: 88%) and H1 2020 excluded $6m of exceptional costs related to inventory provisions due to the adverse impact of COVID-19. On an adjusted basis, Q2 2021 gross margin was 85% (Adj. Q2 2020: 87%) and Q2 2020 excluded $1m of exceptional benefit related to the release of inventory provisions previously established in Q1 2020.The expected gross margin decline on a reported and adjusted basis reflects unfavorable product mix due to the continued market share resilience of SUBOXONE film in certain government channels, which are less profitable.

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SG&A expenses as reported in H1 2021 were $167m (H1 2020: $408m) and $85m as reported in Q2 2021 (Q2

2020: $99m). H1 2021 included $13m of exceptional benefits primarily due to a release of provisions related to DOJ matters. H1 2020 reported SG&A included exceptional costs of $185m, of which $183m were related to the DOJ matter and $2m related to lease impairments.

On an adjusted basis, H1 2021 SG&A expenses decreased 19% to $180m (Adj. H1 2020: $223m); Q2 2021

adjusted SG&A expense decreased 7% to $92m (Adj. Q2 2020: $99m). The H1 2021 decline largely reflects incremental costs in the prior period related to the US direct-to-consumer (DTC) advertising campaign for SUBLOCADE that did not repeat in H1 2021, as well as lower legal fees and expenses related to litigating the DOJ matter (settled in Q3 2020). Lower Q2 2021 SG&A expenses largely reflects lower legal expenses associated with the settled DOJ matter and cost savings from the Group's strategic realignment completed at the end of 2020.

H1 2021 and Q2 2021 R&D expenses were $22m and $13m, respectively (H1 2020: $19m; Q2 2020: $8m). The increases over the year-ago periods reflects higher R&D activity generally, as certain projects and post-market studies were suspended in 2020 due to the pandemic.

H1 2021 operating profit as reported was $130m (H1 2020 op. loss: $165m). Exceptional benefits of $13m are included in the current period. Net exceptional costs of $191m are included in H1 2020. On an adjusted basis, H1 2021 operating profit was $117m (H1 2020: $26m). The increase on an adjusted basis primarily reflects higher net revenue along with a decline in SG&A expenses as detailed above.

Q2 2021 operating profit as reported was $73m (Q2 2020: $25m). Exceptional benefits of $7m are included in the current period. An exceptional benefit of $1m is included in the Q2 2020 result. On an adjusted basis, Q2 2021 operating profit was $66m (Adj. Q2 2020: $24m). The increase on an adjusted basis primarily reflects higher net revenue and lower SG&A expenses as detailed above.

H1 2021 net finance expense as reported was $11m (H1 2020: $6m expense). The additional net expense primarily reflects lower interest income on the Group's cash balance due to lower short-term interest rates versus the year-ago period and higher interest expense primarily related to the Group's DOJ settlement amount. An exceptional expense of $1m is included in the current period which is due to the write-off of deferred financing costs on the previous term loan. On an adjusted basis, H1 2021 net finance expense was $10m (Adj. H1 2020: $6m expense).

H1 2021 reported tax benefit was $23m, or a rate of -19% (H1 2020 tax benefit: $26m, 15%). Excluding the $43m

tax benefit on exceptional items in H1 2021, the effective tax rate was 19% (H1 2020 adj. tax charge: $6m; 27%

rate). Q2 2021 reported tax charge was $4m, or a rate of 6% (Q2 2020: $2m, 10%). Excluding the exceptional tax expense of $7m the effective tax rate was 18% (Q2 2020 no tax exceptional).

H1 2021 reported net income was $142m (H1 2020 net loss: $145m). On an adjusted basis, H1 2021 net income

was $87m and excludes the $55m after-tax impact from exceptional items (Adj. H1 2020: $14m). The increase in net income on an adjusted basis primarily reflects higher net revenue and lower operating expenses mainly due to the SUBLOCADE DTC campaign in Q1 2020. Q2 2021 net income on a reported basis was $62m (Q2 2020: $18m), and $49m on an adjusted basis excluding the net after-tax impact from exceptional items (Adj. Q2 2020: $17m). Higher Q2 2021 net income on an adjusted basis was primarily due to the same factors described above.

Diluted earnings per share was 18 cents in H1 2021 and earnings per share of 11 cents on an adjusted diluted basis (H1 2020: 20 cents loss per share on a diluted basis and 2 cents earnings per share adjusted diluted basis). In Q2 2021, earnings per share on a diluted basis was 8 cents and 6 cents on an adjusted diluted basis (Q2 2020: 2 cents earnings per share on a diluted and adjusted diluted basis).

Balance Sheet & Cash Flow

Cash and cash equivalents at the end of H1 2021 were $1,000m, an increase of $142m versus the $858m position at FY 2020 reflects higher operating profit and relatively stable government rebate payables. Gross

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borrowings, before issuance costs, were $250m at the end of H1 2021 (FY 2020: $235m). As a result, net cash (as

defined in Note 8) stood at $750m at H1 2021 (FY 2020: $623m), a $127m increase over the half year.

Net working capital (inventory plus trade receivables, less trade and other payables) was negative $264m at the end of H1 2021 versus negative $252m at the end of FY 2020. The change in the period was primarily a result of collection of trade receivables and relatively stable government rebate payables.

Cash generated by operating activities in H1 2021 was $161m (H1 2020 cash used: $132m), representing a change of $293m primarily due to strong H1 2021 operating profit, timing of government rebates payable and surety bond refunded in Q1 2021. Net cash inflow from operating activities was $160m in the half year (H1 2020 net cash outflow: $148m) reflecting higher cash from operations and an exceptional tax refund from the IRS which were offset by taxes paid, interest paid, and transaction costs paid related to the Group's debt refinancing.

H1 2021 cash outflow from investing activities was $30m (H1 2020: nil) which reflects a payment made to Aelis Farma for an exclusive option and license agreement to develop its leading compound (AEF0117) targeting cannabis use disorders.

H1 2021 cash inflow from financing activities was $11m (H1 2020 cash outflow: $4m), reflecting the gross proceeds received upon refinancing of the Group's term loan facility offset by principal portion of lease payments. See Note 8 for further discussion related to the debt refinancing.

R&D / Pipeline Update

Indivior's quarterly R&D and pipeline update may be found at: http://www.indivior.com/research-and-development/.

Risk Factors

The Group utilizes a formal process to identify, evaluate and manage significant risks. The Directors have reviewed the principal risks and uncertainties for the remainder of the 2021 financial year. In addition to the principal risks and uncertainties affecting the Group's business activities, detailed on pages 39 to 45 of the Indivior PLC Annual Report 2020:

• Business Operations
• Product Pipeline, Regulatory & Safety
• Commercialization
• Economic & Financial
• Supply
• Legal & Intellectual Property
• Compliance

During the first half of 2021, the below change to the Group's environment has occurred which is impacting the Group's principal risks.

COVID-19 pandemic - Governments worldwide have started deploying vaccination programs and other health measures to lower virus infection and mortality rates and enable people and companies to start resuming normality. However, infections caused by the virus (including its variants) have resurged to various degrees in some countries the Group has operations in or is targeting for growth. In June 2021, the Group started to partially reopen its offices worldwide following local guidelines and regulations while also continuing to ensure the welfare of its employees. A full reopening is expected during the third quarter, which assumes the virus or its variants remain relatively contained and that local guidelines and regulations permit reopening. Reopenings have eased the challenging business environment in which the Group and companies across industries have been operating for over a year, and the Group has experienced some improvements (e.g., increased number of in-person engagements with healthcare professionals and members of Organized Health Systems and easing of certain travel restrictions). However, some new challenges associated with the reopening of the economy also

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