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Indivior PLC

Indivior PLC Court of Appeals for the Federal Circuit has denied motion for rehearing and rehearing en banc

Indivior PLC (LON: INDV)  today announced that the U.S. Court of Appeals for the Federal Circuit (“CAFC”) has denied Indivior’s motion for rehearing and rehearing en banc following the CAFC’s ruling vacating the preliminary injunction granted against Dr. Reddy’s Laboratories (“DRL”) based on U.S. Patent No. 9,931,305. The CAFC also stated its mandate is currently set to issue on February 11, 2019.

Indivior intends to file an emergency motion with the CAFC to stay issuance of the mandate pending resolution of Indivior’s appeal of the District of Delaware’s decision finding DRL does not infringe U.S. Patent No. 8,603,514 (“the ‘514 patent”), and pending Indivior’s forthcoming petition for a writ of certiorari to the Supreme Court of the United States in the PI matter. The mandate is a formal order by the CAFC that returns the case to the District Court for actions consistent with the CAFC’s ruling. After the mandate issues, DRL will no longer be prevented from selling, offering to sell, or importing its generic buprenorphine/naloxone sublingual film product in the U.S.

Indivior assumes that DRL will resume the launch of its generic buprenorphine/naloxone sublingual film product in the U.S. once the CAFC issues the mandate. Indivior also assumes that Alvogen Pine Brook LLC (“Alvogen”) will also launch its generic in the U.S. once the CAFC issues the mandate, pursuant to a January 31, 2019 agreement between Alvogen and Indivior. Industry analogs1 suggest that a launch in the U.S. of a generic product that can be directly substituted by a pharmacist for the branded product without consultation with the patient would result in the branded incumbent (in this case, SUBOXONE® Film) losing up to 80% of its market share within a matter of months.

Any generic product sales in the U.S. by DRL and/or Alvogen would be on an “at-risk” basis, subject to the outcome of the appeal of the non-infringement judgments related to the ‘514 patent (as well as U.S. Patent No. 8,017,150 in the case of DRL), and ongoing litigation against DRL and Alvogen in the District of New Jersey asserting other Orange Book-listed patents (including U.S. Patent No. 9,931,305).

Shaun Thaxter, CEO of Indivior, Commented:

“We are disappointed that the CAFC has denied Indivior’s motion for rehearing,” said Shaun Thaxter, CEO of Indivior. “While we ultimately believe in the strength of our patent portfolio, we acknowledge that the Company faces major disruption in the immediate future from a potential material and rapid loss of market share by our SUBOXONE® film product to generic buprenorphine/naloxone sublingual film competition. We have been taking prudent steps toward this eventuality with our contingency plan, including reducing debt and certain operating expenses, while preserving a strong cash balance. We will continue to vigorously pursue our infringement cases against DRL to protect our SUBOXONE® (buprenorphine and naloxone) Sublingual Film patent portfolio, including continuing to pursue the appeals of the District of Delaware’s non-infringement decisions related to the ‘514 and ‘150 Patents, as well as litigating our more recently listed Orange Book patents for SUBOXONE® Film.”

Contingency Plan Implementation:

Indivior has implemented initial elements of the contingency plan shared on December 18, 2018. As outlined, these plans were developed with the objective of providing for the commercial success of SUBLOCADE™ and PERSERIS™ and ensuring a minimum cash balance of $250m to remain in compliance with the Company’s debt covenants. Specifically, the initial actions taken to date are:

· Reducing outstanding principal on the Term Loan by $235m during FY 2018 to $243m;

· Cash conservation through FY 2018 leading to cash and equivalents of approximately $920m at the end of FY 2018; and,

· Headcount reductions as of this release and other previously committed savings.

In the event of a generic buprenorphine/naloxone sublingual film product launch in the U.S. by DRL and/or Alvogen, further parts of Indivior’s contingency plan would be triggered, including:

· Launching an Authorized Generic of SUBOXONE® Film to capture some share of the generic segment and to generate a modest amount of net revenue in the range of tens of $ millions; and,

· Further initiatives reducing structural costs, including delaying and/or cancelling R&D projects.

As a result of these cost initiatives, the FY 2019 operating expense base (SG&A and R&D) is expected to be reduced to $440m to $460m.

Indivior will announce its FY 2018 results on February 14 at 7:00 a.m. GMT (2:00 a.m. Eastern U.S.) on the RNS.

1. IMS Institute Report, January 2016: “Price Declines after Branded Medicines Lose Exclusivity in the U.S.”