Indivior Opioid Crisis at Bay as Analysts See No Quick Generics

(Bloomberg) -- Indivior Plc’s rivals will take some time to bring generics for the British pharmaceutical firm’s opioid addiction treatment to market, analysts said, calming investor panic after a U.S. court ruled that competitor Alvogen Inc. didn’t infringe its patent.

While it will appeal the Delaware ruling, Indivior could see a “rapid and material loss of market share” for Suboxone film in the U.S., the Slough, England-based company said in a statement. The stock fell as much as 24 percent, making it the biggest decliner in London in early Friday trading, before paring its slump to 6.7 percent.

Indivior Opioid Crisis at Bay as Analysts See No Quick Generics

America’s growing addiction to Opioids, a group of drugs intended to provide short-term pain relief, led President Donald Trump to declare the epidemic as a national emergency last year. Here are the views of analysts on Friday’s announcement from Indivior:

Stifel, Max Herrmann

(Buy, 600p)

“Whilst this is disappointing news, given there remain multiple hurdles before a generic Suboxone film can launch in the U.S., we still see the launch of a generic in 2018 as unlikely.”

  • Even if the FDA approves Alvogen’s generic, Indivior’s appeal is likely to take 12-24 months, and it also has a further two key patents it has asserted against Alvogen, which have yet to go to court
  • “We see it as highly unlikely that Alvogen will therefore be in a position to launch a generic version of Suboxone film in 2018”; continues to predict the launch of a generic in mid-2019

Numis, Paul Cuddon

(Buy, 600p from 640p)

“Another patent setback, another buying opportunity”: Indivior is now in a very strong net cash position, and having gained approval for Sublocade -- its monthly injectable opioid abuse treatment -- key risks have been overcome.

  • Cost-reduction plans are in place and Indivior could deliver material reductions without compromising the launch of Sublocade
  • Assumes Indivior loses the appeal, with no new evidence being submitted; base case remains that Indivior settles with Alvogen and Dr Reddy’s allowing generic entry in FY20
    • NOTE: Court ruled against Indivior in similar case against India’s Dr. Reddy’s Laboratories Ltd. last year
  • Shares currently offer a “very attractive entry point”

Morgan Stanley, Patrick Chen

(Equal-weight, 450p, corporate broker)

Unless the generic maker launches “at risk,” these patents would need to be litigated first -- a process that could take two years.

  • Notes that “at risk” launches are uncommon, but awaits commentary from Alvogen
  • Morgan Stanley’s estimates already bake in a 2020 generic launch and the bank doesn’t expect today’s news to alter consensus projections

Jefferies, James Vane-Tempest

(Buy, 500p, corporate broker)

Any major share price correction is a buying opportunity, as any generic launch this year would be unlikely.

  • Says Sublocade is the key value driver of the stock, currently in launch phase, and uptake likely to materially pick up in second half
  • Says Dr Reddy’s is still the most likely to launch first, but adds Indivior is in a stronger position than previously, with a strong balance sheet that places it in a good position for the roll-out of Sublocade

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