Indivior's Q1 2024 earnings call presented a mixed bag. While boasting double-digit revenue growth, a closer examination reveals potential weaknesses in the performance of its flagship opioid use disorder (OUD) treatment, SUBLOCADE. Indivior attributed SUBLOCADE's underwhelming 2% sequential growth to Medicaid patient disenrollments and the cyberattack on Change Healthcare, a key claims processor.

While these factors undoubtedly contributed, their impact seems disproportionately large. The company estimated these issues collectively reduced sequential dispense growth by mid-to-high single-digit percentages, a significant blow. Furthermore, the coincidental occurrence of atypical destocking, estimated at $5 million to $7 million, during the Change cyberattack period, suggests a more intricate interplay of factors.

It's tempting to accept Indivior's explanation, particularly as they reaffirmed their full-year 2024 guidance. They point to promising trends, including robust growth in the Criminal Justice System channel (now 25% of SUBLOCADE's U.S. revenue) and a fully deployed expanded sales force. However, the question persists: is Indivior leveraging these narratives and the focus on retail channel expansion to conceal potentially slowing growth of SUBLOCADE in its core market?

The retail channel expansion, while strategically sound, appears premature. The pilot program with Albertsons, though promising, is nascent. Doubling the number of injection locations to 80 and experiencing a 50% sequential increase in patient injections is encouraging, but pales against the scale needed to offset any potential stagnation in SUBLOCADE's primary growth drivers.

Adding to this suspicion is the stark contrast between Indivior's optimistic SUBLOCADE projections and the muted market data reflected in IQVIA. Indivior, recognizing this discrepancy, attributed it to IQVIA's inability to capture data from justice systems, specialty distributors, and a significant portion of the organized health system (OHS) business. This explanation, while plausible, conveniently shields SUBLOCADE's actual market performance from independent scrutiny.

A deeper look at the numbers reveals that the 4% sequential dispense growth for SUBLOCADE in the U.S. mirrors the sequential growth in total patients receiving the treatment. This implies that new patients are driving most of the growth, a trend that may not be sustainable in the long run. Increased penetration within existing OHS accounts and heightened prescribing depth are vital for sustained growth. While Indivior emphasizes progress in these areas, the sequential growth figures offer little reassurance.

The timing of the announced primary U.S. listing, alongside the emphasis on retail channel expansion, could be perceived as a strategic maneuver to divert investor attention. By shifting the narrative towards the long-term potential of the retail channel and enhanced visibility in U.S. capital markets, Indivior might be attempting to preempt concerns regarding SUBLOCADE's immediate growth prospects.

This is not to accuse Indivior of deception. The OUD treatment market remains vastly underserved, and SUBLOCADE undoubtedly plays a crucial role in tackling this crisis. However, investors should approach the company's narrative with a healthy dose of skepticism. While the retail channel expansion holds promise, its ability to compensate for potential sluggishness in the core market, particularly against intensifying competition, remains to be seen.

The disconnect between Indivior's reported figures and the IQVIA market data underscores the need for increased transparency and independent validation of SUBLOCADE's market performance. The company's upcoming analyst teach-in, scheduled for May 23, presents a vital opportunity to address these concerns and provide a clearer picture of SUBLOCADE's actual growth trajectory.

Hypothesis:

Indivior is strategically emphasizing the retail channel expansion and upcoming U.S. listing to deflect attention from potential slowing growth of SUBLOCADE in its core market.

Numbers to watch:

Revenue Growth Comparison: SUBLOCADE vs. PERSERIS

This chart compares the year-over-year net revenue growth of SUBLOCADE and PERSERIS in Q1 2024 based on data from Indivior's earnings call transcript. It highlights the difference in growth trajectories between the two products.

By closely monitoring these metrics and critically evaluating the narratives presented by Indivior, investors can gain a more nuanced understanding of SUBLOCADE's true performance and the company's long-term prospects.

"Fun Fact: The U.S. Justice System channel, often overlooked, has emerged as a significant growth driver for SUBLOCADE, now accounting for 25% of its U.S. revenue. This highlights Indivior's commitment to addressing the opioid crisis across various segments of society."