LONDON (Reuters) - Britain’s Indivior is launching a new weapon to fight the U.S. opioid crisis this month, but high hopes for its once-monthly injection were offset on Thursday by the need to set aside more cash for legal disputes.
The group increased provisions for investigative and antitrust litigation matters by $185 million to $438 million, sending the shares 7 percent lower by 1240 GMT. They have still more than tripled since December 2014’s initial public offering.
The U.S. Department of Justice is probing Indivior’s marketing practices and the company also faces claims it tried to delay entry of generic versions of some of its products.
Chief Executive Shaun Thaxter declined to say whether the increased provision signaled any settlement was near. However, he said he was “very, very confident” about the future.
Indivior believes its long-lasting Sublocade injection, which is being launched in the United States in the week of Feb. 26, will become a blockbuster medicine, despite the fact initial sales are likely to be slow.
“The net revenue potential of this product is well above $1 billion but we don’t want people to be unrealistic about what we will achieve in the first year,” Thaxter said in an interview.
Sublocade represents a new approach to treating addiction. Instead of going to the pharmacy to pick up tablets or Indivior’s existing under-the-tongue film, the new injections will be delivered direct to doctors’ offices for administration.
Thaxter said it would take time for the new distribution model to bed down, adding: “We would expect to see some very noticeable sales growth by the last quarter (of 2018).”
Overall, the company expects group sales of between $1.13 billion and $1.17 billion in 2018, up from $1.09 billion last year, helped also by the expected launch of a long-acting injection for schizophrenia towards the end of the year.
The rise of opioid addiction to epidemic proportions in the United States has spurred demand for Indivior’s products, and the market for treatments to suppress cravings has grown by 10 percent annually over the last five years.
U.S. deaths from overdoses jumped 21 percent to 63,000 in 2016 and the opioid crisis is now reducing overall life expectancy among Americans, according to official figures.
Indivior, which was spun off from Reckitt Benckiser in 2014, has been treating addiction for more than two decades, initially selling tablets to help wean addicts off opioids including heroin and prescription painkillers. Now its big seller is Suboxone Film, which patients place under their tongue or inside their cheek once a day to suppress cravings.
Sublocade, which could be launched in Canada, Australia and Europe from late 2019, is the latest iteration and is designed to eliminate any risk that treatment could be diverted and misused by putting the product exclusively in the doctor’s office.
Competition is growing but Indivior has had some lucky breaks against rivals in recent months, with regulatory delays to both a rival long-lasting injection from Camurus and a generic version of its film from Dr. Reddy.
Ultimately, Indivior’s opioid addiction business could be in jeopardy if the epidemic of drug misuse is brought under control, but Thaxter said his researchers were widening their focus to other addictions, such as cocaine and alcohol.
“As we continue to expand the scope of our business beyond the opioid crisis to other addictions, there will continue to be sustainable business growth for shareholders as well,” he said.
Graphic by Ritvik Carvalho; Editing by David Holmes and Alexandra Hudson