23rd Oct 2023 10:07
(Alliance News) - Indivior PLC forked out a bit more than expected to settle an antitrust legal case, though the agreement puts the matter to bed and provides the firm with "greater certainty".
Indivior will pay USD385 million and book a charge of USD228 million in the third quarter, which will be excluded from adjusted earnings. It is above the remaining provision of USD157 million.
The litigation centred on the claim that the pharmaceutical company stymied generic competition for the opioid addiction treatment Suboxone, in order to preserve its dominance.
The settlement marks the end of the multi-district litigation, once approved by the US District Court for the Eastern District of Pennsylvania. A trial, which was set to begin this time next week, has been cancelled.
"Although the final amount for the remaining class action is above the current provision, we are encouraged that Indivior can finally put its legacy multi-district antitrust matter behind it, especially given the cautionary going-concern language," analysts at Jefferies commented.
A "material uncertainty relating to going concern" centred on the litigation, according to Indivior's first-half results. It cautioned that if it were to be found liable in a trial and made to pay damages, its "financial position, results and future cash flows would be materially adversely affected". It said damages could exceed "the group's resources to pay".
Broker Liberum said the settlement "makes the story a lot cleaner" for Indivior.
"This court case was the biggest risk to our forecasts and the going concern, so while the settlement is greater than the provision, resolving this risk at a level that won't exceed cash reserves is a major win for the business," it explained.
"Removing the settlement risk provides a path for the shares to re-rate."
Indivior Chief Executive Officer Mark Crossley said the firm is "pleased" to end the matter.
"The resolution of this litigation, which was filed over a decade ago, provides greater certainty for all Indivior stakeholders and allows us to continue focusing on our important work for patients suffering from opioid use disorder and mental health illnesses around the world," Crossley said.
Liberum and Jefferies rate Indivior at 'buy', with price targets of 1,930 pence and 2,555.0p, respectively.
Indivior shares were 4.4% higher at 1,576.00p each in London on Monday morning.
By Eric Cunha, Alliance News news editor
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