8th Nov 2024 09:55
(Alliance News) - Indivior PLC on Friday said it would continue to engage with a leading shareholder which slammed the firm's "lack of focus" and "failure" to recognise a competitive threat.
The Richmond, Virginia-based specialty pharmaceuticals business which makes opioid withdrawal drugs was responding to a letter from Oaktree Capital Management LP which also called on Indivior to refresh its board in the face of "value destruction".
Oaktree is a US global asset management firm, majority owned by Brookfield Asset Management.
In the letter, Oaktree, which holds a 7.5% stake in Indivior said it wanted the firm to appoint directors "committed to taking all steps necessary to improve shareholder value".
Oaktree expressed concern about the stock's underperformance and the 50% drop in the share price in the past year, calling it "unacceptable" and "value destruction".
In October, Indivior cut its full-year revenue forecast following a weaker-than-expected third-quarter performance from Sublocade.
At the time Indivior Chief Executive Mark Crossley warned: "We are seeing faster than expected initial adoption of the competitive product to Sublocade."
Oaktree highlighted strategic and communications problems at the company, including failures to address competition to its core product Sublocade and guidance reductions.
It called on Indivior to address these issues immediately and work with the investment fund on refreshing the board.
"It is unacceptable that Indivior's stock price has plummeted more than 50% in the past year. In the face of that value destruction, Oaktree has attempted to engage constructively with the company's board to address shareholder concerns and improve shareholder value," the letter continued.
"However, instead of coming to the table collaboratively and demonstrating that they are taking action, the board and management seem to be doubling down on a failing strategy, ignoring competitive threats and allowing costs to spiral."
Oaktree said that rather than focusing on its core product - Sublocade - Indivior spent valuable time and money on "unproductive acquisitions, a now-discontinued business line, and excessive R&D".
"All the while, the company essentially disregarded Brixadi’s entrance into the market by failing to take basic steps to protect Sublocade’s competitive position."
Brixadi is a prescription medicine used to treat moderate to severe opioid addiction to opioid drugs, similar to Sublocade.
Oaktree believes Indivior should not have waited for seven years after Sublocade's initial FDA approval, and more than a year after its competitor's entry into the market, before submitting its prior approval supplements to the FDA for Rapid Induction and Alternative Injection Sites.
This was "a pivotal step that would have solidified Sublocade's dominant position and subdued the competitive threat from Brixadi," Oaktree said.
Oaktree was damming about Indivior's financial guidance and statements.
"At Indivior’s...analyst teach-in event, management reiterated its full-year and long-term guidance metrics. Six weeks after that, management lowered its financial guidance: they cited Medicaid redetermination and a litany of other reasons but continued to dismiss the increasingly obvious competitive threat from Brixadi. Five months later, management took down guidance again, finally appearing to acknowledge an aggressive competitor. Management either didn’t recognize the competitive threat, or worse, they failed to appropriately alert the investing public about it."
Oaktree concluded that the "rapid decline" of shareholder value, "lack of focus and accountability" by the board, as well as "failure" to recognize and counter such a clear competitive threat – have exacerbated investor concerns around the company’s strategy and the board’s willingness and ability to hold management accountable."
In a brief statement, Indivior said it has "engaged actively" with Oaktree in recent weeks on these topics, and remains "open-minded" about all proposals to enhance value creation.
"The board is focused on acting in the best interests of all shareholders as we continue to execute on our strategy," the firm continued.
"Indivior looks forward to further engagement with Oaktree and other shareholders," it added.
Shares in Indivior were 0.1% higher at 792.50 pence each on Friday morning.
By Jeremy Cutler, Alliance News reporter
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