A class action lawsuit was filed against Indivior PLC (INDV) by Levi & Korsinsky on August 2, 2024. The plaintiffs (shareholders) alleged that they bought INDV stock at artificially inflated prices between February 22, 2024 and July 8, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Indivior stock during that period can click here to learn about joining the lawsuit.
Indivior is a specialty pharmaceutical company with a focus on developing drugs to reduce opioid use disorder (OUD) and dependence and treat other serious mental illnesses. The company boasts a flagship drug, SUBLOCADE, which comes in a once-monthly injectable form to treat moderate to severe OUD. Plus, it markets PERSERIS, an injection for treating schizophrenia in adults in the U.S. Moreover, in October 2023, Indivior launched a nasal spray called OPVEE to reverse opioid overdose.
The company’s claims about the prospects of the three drugs are at the heart of the complaint.
Indivior’s Misleading Claims
According to the lawsuit, INDV and two of its senior officers (Individual Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about the company’s anticipated revenue and other financial metrics and ancillary issues from SEC filings and related material.
For instance, at the beginning of the Class Period, Indivior’s CEO acknowledged during an earnings call that the company was facing certain challenges related to PERSERIS owing to the entrance of a new competitor. Even so, the company said that it expects the drug’s growth to increase, considering its “differentiated clinical profile” in treating schizophrenia and strong feedback.
Furthermore, during the earnings call held on April 25, 2024, the CFO noted that PERSERIS sales were up 10% sequentially and that the company was confident about achieving its FY24 revenue guidance of between $55 million and $65 million.
Similarly, during an analyst teach-in event dated May 23, 2024, the company highlighted PERSERIS’ differentiated nature and superior performance compared to rival drugs. It also stated that the drug was capturing a higher market share.
However, subsequent events (discussed below) revealed that the Defendants made misleading statements about the importance and strategic positioning of PERSERIS drug in the market and overstated revenue expectations, leading to disappointment among investors.
Plaintiffs’ Arguments
The plaintiffs maintain that the Defendants deceived investors by lying and withholding critical information about the company’s business practices and prospects during the Class Period. Importantly, the Defendants are accused of misleading investors about the revenue potential of the company’s various drugs and the potential impact of changing legislation.
The information became clear on July 9, 2024, when Indivior abruptly announced a business update and revised guidance for Q2 and full-year Fiscal 2024. The company said that it now expects FY24 revenues to be between $1.15 and $1.215 billion, down from the previous range of $1.24 to $1.33 billion.
Moreover, the SUBLOCADE revenue estimate was cut to the range of $765 to $805 million from the prior outlook of $820 to $880 million. Also, revenue from OPVEE was now projected between $9 and $14 million compared to the prior guidance of $15 to $25 million. What’s worse, Indivior announced the immediate halt on all sales and marketing activities of PERSERIS, citing intense competition and looming changes that could intensify payor management in the category. Following the news, INDV shares collapsed 33.6% on July 9.
To conclude, Indivior misled investors about the correct prospects of its drugs and the impending changes to legislation that could impact sales. Year-to-date, INDV stock has declined 37.5%, causing massive damage to shareholder returns.
