Indivior PLC (INDV) 2017 Q4 法說會逐字稿

Okay. Good morning, everybody, and I can't tell you how pleased and proud I am to be here once again to give you our fourth full year results presentation. I think as our performance has showed, we have really earned the title of the leader in the global treatment of addiction. As most of you know, my name is Shaun Thaxter, I'm the CEO of Indivior. And I'm very pleased to be here with you all today.

I'll assume that you've read the forward-looking statements, and so let's look at the agenda for the morning. I will make some opening remarks; and then Mark Crossley, the CFO, will take us through last year's financials. We'll have a legal review from Javier and an R&D update from Christian Heidbreder, our Chief R&D Officer.

So we've made tremendous progress in the last 3 years towards our vision to ensure that patients all around the world have access to evidence-based treatments for the chronic relapsing conditions of addiction. We really have made a lot of progress, not only in the U.S. but in Canada and Australia and in other markets.

Let's just focus on some of the key strategic highlights, some of the priorities that we set for ourselves and some of the progress made. The SUBOXONE Film resilience has been extremely robust in the U.S., well over 50% market share, in fact, average market share of 57% across the year. This is an outstanding achievement in the context of the competitive price pressure that we are now experiencing in the U.S. This reflects not only the value in the SUBOXONE Film technology, but also the quality of the relationships that our field force have with treatment providers.

We've made tremendous progress in our pipeline. Not only did we get SUBLOCADE approved, which is going to be a transformational product for treating patients with opioid addiction, but we also made progress with RBP-7000, and that is now under FDA review with a PDUFA date at the end of July. So we should have 2 new products to launch this year.

We continued to expand access to treatment, market growth is in healthy double digits and we see more patients getting into treatment in the U.S., Canada and Australia. And financially, we've created greater long-term certainty for the business. We've strengthened our balance sheet and we've continued to make progress with new IP to protect our intellectual property position.

All of this progress is reflected very nicely in our financial results for last year. You'll be aware that we raised our own expectations of ourselves through the year, and our results fell within that range. Top line growth of plus 3%, net income growth of plus 6%, continued to build our cash position, finishing the year with $376 million of net cash. So I think as we look through some of the operating reasons why that has continued to grow the market in terms of the number of patients in treatment, continue to maintain a strong position with our base business, but as we think to the future, we not only have all these wonderful assets, but we've made progress on business development. We've recently, as you know, tied up with Addex, and we have access to their portfolio of technologies for modulation of the GABA(B) pathway. So this is a very good long-term opportunity and will add to the strength of our pipeline.

We continue to set high standards for ourselves, and full year guidance this year reflects that. At the midpoints of our guidance, we've got 5% improvement in net revenue and 30% growth in net income.

I do, in the interest of transparency, want to make sure that you're aware of the adjustment that we made to our legal provision. I'm not going to go into this in detail. Everything that we are able to say has been released within our press release, so I'd refer you to that. And the key changes that we have increased our provision to $438 million.

But the real news, the exciting news for the future of our company, of course, is the approval of SUBLOCADE. This is a fantastic technology. It is the first once-a-month technology for the treatment of Opioid Use Disorders. Patients receiving this treatment will have a plasma concentration of 2 nanograms per milliliter for the whole month. We know that's incredibly important in giving a blockade effect to the patient. So not only do they get the symptomatic relief that they need from their symptoms, there will also be a blockade effect. So if they do relapse, if they do choose on a bad day to try and use any opioids on top, they won't get any effect because the blockade effect will ensure that.

Not only that, from a sort of clinical perspective, but the convenience of this product for the patient to only have to dose once a month and the reassurance that the clinician has that the patient is benefiting from their medication for the whole month means that this is a very compelling proposition.

We're ready for launch. We're manufacturing all our launch volumes, our sales force are trained. There's a lot of excitement in our company about going out into the community and talking to treatment providers. And the product will actually be available in a few days' time.

As you know, we are going to launch this in the U.S. and then quickly follow through in other countries of the world. We're working on our filings for Canada, Australia and Europe.

We have 2 doses for SUBLOCADE, a 100 milligram and a 300 milligram dose. In terms of pricing, we have priced both these doses at the same price. We want the physician and the patient to be able to choose the optimum dose for that patient without having to give a consideration for the price. So we think that's something that's going to be very helpful.

This product will be distributed through a specialty distribution system, so that's reflected in the cost within our business and this will be delivered by a specialty pharmacy. So the process is that the doctors will order the product from the pharmacies. The specialty pharmacy will deliver it to the doctors. So there's a very new distribution channel and process that doctor's offices are going to have to go through.

For that reason, despite the fact that we're very excited and very confident in at least $1 billion of peak net revenue for this product, we have to be measured in terms of how we think this is going to pick up in the first few months. We've repeatedly said this is not a tablet-to-film model, and I thought that if I just walk you through logistically the process of how this will work, it will help you think about how to build your models for the year.

So this product will be available at the end of this month. The innovative pioneering doctors will start prescribing through the month of March. Realistically, it takes a month for the product to get delivered back to the patient for -- to the doctor's office for a number of reasons. This is a new process that the doctor's office has to learn. This is a new ordering mechanism; the specialty pharmacy, the insurance companies have to work out the building. And this is quite normal and customary of this type of distribution model. We've looked at other specialty pharmacy distributors. We've looked at what experiences they had, what learnings can we get to optimize that as quickly as possible. But nevertheless, prescriptions written in March, product arrives and gets administered in April, so it's only really May before that first wave of patients are coming back to the physician. We anticipate that they will have very positive experiences. So in June, in the second half of the year, we should expect to see that the volumes build.

You shouldn't be concerned about the complexity of the distribution. It adds a lot of value to both the doctor and the patient. It's just something new that has to be worked through. We have hired a team of reinvestment specialists whose job it is to call on doctor's offices and help doctors figure all this out. So we think that it's a very short-term phenomenon.

We're making excellent coverage -- progress with the payers. Payers see a tremendous amount of interest in this product. The CEOs of insurance companies are really starting to come together and see that they have a responsibility in addressing the opioid crisis. So we think the payer environment is leaning towards being very supportive for this product. In most plans, we expect that this will be a medical benefit rather than a pharmacy benefit, but that will vary by plan.

Something we're very proud of is that we don't want price to be a barrier for any more patients than it needs to be. So for insured eligible patients, we are going to buy down the co-pay to $5. So most patients who are eligible can get the new technology for $5. But also, we don't want the patient out-of-pocket cost to determine whether the patient should have SUBOXONE Film or SUBLOCADE. So we are also bringing down the out-of-pocket cost for eligible patients to $5 for SUBOXONE Film as well. So if you're a patient, your out-of-pocket cost isn't going to force you to choose one medication or another. If you are the physician, the dose is not going to be determined by the price. So we think that we've done a very responsible job here in trying to help those -- both those groups.

So I'm pleased to hand over now to Mark who will take us through the financials.

Thanks, Shaun. Good morning, and good afternoon to everyone. Pleased to be here to share Indivior's 2017 financial performance. As you know, one of our key strengths are operational excellence and an ability to control the controllables. And as we execute on our growth thesis moving forward. At the start of the year, we shared our strategic priorities for 2017, maintaining SUBOXONE Film's resilience, ensuring the launch -- successful launch of our products, expanding global treatment and continuing to manage our overhangs, pay down the debt and manage the balance sheet.

Our full year results demonstrate our delivery on these commitments to you.

We grew both the top and bottom line for the second year in a row in the face of a competitive market. Overall results are in line with guidance, which was materially raised at the half year. We generated strong cash flow and exited 2017 with $376 million of net cash. Lastly, we refinanced our debt with a 3-year extension to 2022, 150 basis point reduction on the coupon and more favorable covenants.

Looking forward in 2018, we expect another good year. Our guidance reflects the confidence we have in our ability to execute and generate long-term shareholder value.

Let's move on to the financial results and start with the income statement. As per normal, we share our income statement on an adjusted basis to give a clear snapshot on our underlying progress. The nature of the exceptionals are covered in the release but, as expected, the vast majority relate to the legal provision that Shaun spoke to earlier and the tax reform, which we disclosed a couple of weeks ago.

What you see here is another year of good underlying performance. Despite intense competition, we've delivered the top line at 3% and with 4% operating profit growth demonstrated tight control on the base businesses to maintain our operating margin at 37% during a time when we've added materially -- material investment to fuel the launch of SUBLOCADE and to prepare the way for commercialization of RBP-7000.

Below the operating line, we've picked up further benefits with the lower financing expense that we spoke to, to get 6% improvement on net income, which at $270 million is comfortably within our raised guidance.

Now let's take a look at a few of the key P&L line items, starting with the revenue line. As always, there are several moving parts on the revenue line, but the overall message is very strong momentum in a competitive market. With 80% of our net revenues in the U.S., it continues to be our largest market and underlying conditions remain strong throughout the year. On the volume side, market growth of low double digits was due to the benefit of a full year of positive regulatory changes that were enacted in the second half of 2016. As you recall, these were focused on expanding OUD treatment capacity, specifically an increase in the patient cap to 275 and expanding our certified treatment professionals to include nurse practitioners and physician assistants.

In addition, the awareness of the opioid epidemic in the U.S. has continued to grow, with the President declaring it a national emergency.

The positive U.S. market backdrop was partially offset by share loss we experienced in the most price-sensitive portions of the business. More specifically, we saw our share drop from the start of the year by 5 percentage points or 2.5 points on average. This is a result of the pricing dynamic in some of the Managed Medicaid accounts, which is uneconomical and resulted in us coming off formulary.

On the pricing side, we took a modest 5% list price increase when coupled with mandatory government rebates as well as tactical rebates led to a slightly negative pricing impact on the year.

Also partially offsetting the overall market growth was the mix in the U.S. Medicaid to the business. This lower-margin business is increasing at a faster rate than the overall market. And while we're pleased to have increased treatment access, it does come with a little bit of a negative mix impact on the business.

Looking at rest of world. We continue to generate strong volume growth in Australasia, where attitudes towards addition treatment are focused on recovery, in part, due to our efforts. The balance, mainly Western Europe and Canada, generally held share with growth coming from one-offs during 2017.

Now let's turn to margins and costs. Looking at the gross line, we saw continued strong gross margin performance with a slight deterioration, primarily due to revenue mix, while on the operating line, we maintained our margins at 37%, effectively funding Indivior's operations and the prelaunch efforts through the growth that we experienced. And these investments were in line with what we shared at the 2016 fiscal year-end results. Lower R&D has also contributed to the stable margins.

Drilling down into the key operating costs, the increase in SD&A reflects the incremental prelaunch growth investments, primarily for SUBLOCADE. As Shaun noted, these investments include building an entirely new go-to-market model as well as enhancements to our compliance capabilities. Looking forward, these investments will continue to be there and grow a bit into '18 as we fuel for SUBLOCADE as well as ramp up for the RBP-7000 launch.

I'll cover this a bit more in the '18 guidance.

R&D is down year-over-year, mainly due to the completion of the clinical activities and the focus on NDA submissions with regards to SUBLOCADE and the risperidone monthly injection. We'll see this activity shift in the current year and again, we'll talk that in the guidance as well as in Christian's section.

For net income and tax, our adjusted net income was in line with our rates guidance. We benefited from $9 million of lower finance expense in the year due to required prepayments under our legacy obligations. As you saw from the press release, there were several one-off puts and takes that impacted the tax rate. But on an adjusted basis, our rate ended up just a little bit higher than the 24% guidance at the beginning of the year, and that's mainly due to the geographic mix of the revenues.

I think the most important element of the tax discussion is our go-forward impact on the new U.S. tax law, along with our operational structure, which continues to draw benefits. You'll recall we published in a separate announcement the rate expectation is that our going rate in the coming years will be in the high teens, a significant benefit.

On the balance sheet, the key message is our financial position. It does continue to strengthen. By end of 2017, our gross cash position reached $863 million and our net cash at $376 million was an improvement of $245 million year-over-year.

At this juncture, we do consider it prudent to maintain our cash to protect the business against potential at-risk generic film launch and to give us the flexibility to resolve the outstanding legal matters, while protecting our #1 priority, which is the SUBLOCADE launch.

Just a quick summary on the term loan B. You'll have seen this in the separate releases, but as I mentioned, our financial flexibility was enhanced with the closing of this deal. We improved our coupon by 150 basis points to LIBOR plus 450 and the maturity date was pushed out 3 years. Other key covenants have been either eliminated or loosened, such as mandatory principal payments, annual cash sweeps and provided an additional financial flexibility through the SUBLOCADE launch.

Cash conversion remains strong at 73%. It is down versus prior year, primarily due to working capital investment in 2017 and trade payables and receivables.

Guidance for 2018. As in the past, we're providing guidance assuming no material changes to the marketplace, including no launch at risk by a generic film manufacturer. The takeaway is that we're looking forward to delivering top and bottom line growth for the third straight year and with an acceleration over the growth versus 2017.

Taking you through some of the underlying assumptions, starting with volume for our base film business. As you know, the opioid epidemic is having horrific impacts on patients and families in the U.S. We expect this to drive market growth in the high single digits to low double-digit range, slightly lower than 2017, primarily due to the annualization of the legislative changes in 2018. On share, we face annualization of the 5 percentage share point loss and have the potential for similar rates of loss in 2018 as competitive pressures continue.

On pricing, we took a 5% list price increase January 1, which, similar to past years, will net out significantly lower after mandatory government rebates.

When also taking into account expected tactical commercial rebating as well as Managed Medicaid mix, which will continue into '18 as well as this investment in the $5 co-pay carried on the film, will likely result in a negative overall price mix impact.

At our rest of world business, we expect heightened competitive pressure and renewed austerity measures in France during the year. And we had a few one-off benefits in '17, so a bit of pressure there. Taking all of these points together, combined with the SUBLOCADE launch, we expect our top line to be in the range of $1.13 billion to $1.17 billion in 2018. At the midpoint, as Shaun said, this reflects 5% growth, a step-up from 2017. We do, however, want to remind you of the launch dynamics Shaun spoke to earlier with regards to the SUBLOCADE revenues and that the growth will be phased into the back half of the year.

On the cost side, our goal is to launch SUBLOCADE with excellence and to ensure its long-term success. This will require a further step-up in investment as we annualize our commercial team that was added in the back half of the year and our hub is launched and benefiting patients on their journey. These will allow us to differentiate SUBLOCADE in the marketplace and create a seamless patient and physician journey as well as drive enduring brand loyalty moving forward.

On top of the investments for SUBLOCADE, we will invest to complete our new behavioral health unit and prepare for the anticipated launch of RBP-7000 in the fourth quarter. As we've said, this will not be a large pharma-type launch in the traditional sense, and we will scale our investment as we see pull-through in the market with the new asset.

Looking at R&D expense, we expect activity to shift towards post-marketing commitments, rest of world SUBLOCADE preparation, disease state investments and early pipeline investments as well as some supply-related work associated with RBP-7000. Christian will take you through the full R&D agenda a bit later.

Finally, 2018 guidance does reflect the interest and tax benefits that I spoke to earlier in the presentation.

So with that, I'll go ahead and hand over to Javier, who will take you through the legal section.

Thank you, Mark. Good afternoon, everyone.

As previously mentioned, we have increased our legal provision for the DOJ investigation and various other legal proceedings to USD 438 million in line with accounting rules. As stated in the provision, we are not presently able to predict with any certainty what the ultimate resolution, cost or timing of these proceedings may be and it's possible that the final aggregate settlement amount could be materially different than what's in the provision. I'm sure that some of you may have questions about the status of the negotiations and the change in the provision, but as I'm sure you can all appreciate, given that these legal proceedings are active and ongoing, there isn't much more we can say beyond what was disclosed in the full year press release.

Moving on to the ANDA litigation on SUBOXONE Film. We continue to strengthen our IP portfolio. And since the initiation of the original Paragraph IV lawsuits, we have added 2 additional Orange Book-listed patents to our SUBOXONE Film portfolio, both of which have been asserted against the ANDA filers.

The first of these 2 patents, the 454 patent, was granted to Indivior on June 27, 2017 and asserted against the ANDA filers in September. The expiration date of the 454 patent is August 7, 2029. The second patent, the 221 patent, was granted to Aquestive Therapeutics, formerly known as MonoSol Rx, on January 2, 2018. Indivior is exclusive licensee of that patent in the field and that patent was asserted against the ANDA filers on February 7, 2018. The 221 patent has an expiration date of February 14, 2022.

Aquestive Therapeutics has received a notice of allowance of yet another third Orange Book-listed patent for SUBOXONE Film. We anticipate that, that third patent will grant in early -- or late Q1, early Q2 of this year. In terms of the appeal of the August 31, 2017, DRL district court ruling, opening briefs in that case were filed by DRL, Watson and Par in mid-January. Our reply to those briefs is now due mid-March, and briefing in the appeals should conclude by the end of May. And we anticipate that a ruling by the Federal Circuit will come sometime in Q4 of this year.

So that concludes my brief update. Like to thank you for your time and attention, and I'll turn it over to Christian for an R&D update.

Thank you, Javier, and good morning or good afternoon, everyone. Let me start with a little update on SUBLOCADE. With post-marketing requirement studies and post-marketing commitment studies.

So in terms of post-marketing requirement studies, as clearly defined by the FDA in 2011, we have 4 nonclinical studies. These studies are aiming at understanding the effects of NMP, which is the co-polymer in the Atrigel SUBLOCADE formulation on embryofetal, pre and postnatal development. Two clinical studies that are very important as they will allow us to better understand how SUBLOCADE actually behaves. The first one is to identify patient populations that may benefit from the higher maintenance dose of SUBLOCADE of 300 milligram. Now you may remember that during the Advisory Committee, we already shared data clearly demonstrating that the highest maintenance dose might be beneficial to injector users versus non-injector users. So the FDA would like us to elaborate a little bit more on that and perhaps even identify additional patients that may benefit again from that higher maintenance dose.

The second study is to explore SUBLOCADE, whether SUBLOCADE can be safely initiated without a period of sublingual buprenorphine titration, which is another important question to be addressed.

Post-marketing studies are right now translated into 2 pharmacokinetic modeling and simulation studies in existing data that we collected throughout the clinical development plan.

The first one is to identify whether patients may benefit off SUBLOCADE given at longer inter-dose interval rather than the monthly dosing that is currently in the label. The second one is to evaluate the transition of patients with long-term stability on sublingual buprenorphine. As you know, this is a very different patient population than the patients that we studied in the Phase III trial. So whether or not we can transition very stable patients onto SUBLOCADE is the point of this study.

You may also remember that our health economics and outcomes research, our strategy is fourfold. The first step was to actually include prospectively patient outcome endpoints as part of the Phase III pivotal trial assessing the clinical efficacy and safety of SUBLOCADE. So as part of the endpoints, we focused on the impact of SUBLOCADE on the quality of life, treatment satisfaction, resource -- health care resource utilization as well as employment status and health insurance status. The second step that was basically to focus on similar endpoints, but this time on the second pivotal Phase III trial looking at the long-term safety extension study.

The third step is basically to combine all these endpoints into a model understanding the impact of SUBLOCADE on all these endpoints, but this time by retention, opioid use, withdrawal and cravings.

Last but not least, step number four is our RECOVER study. We initiated that study now more than a couple of years ago as part of the Phase III trials to really characterize the periods of abstinence over extended periods of time. So we will end up with patients treated with SUBLOCADE in the short term, medium term and very long term, really trying to understand the number of days patients remained abstinent, the time to relapse, the number of relapses and the time to return to abstinence after a relapse.

The first 2 steps have been completed and were actually a critical part of our AMCP dossier. The third step will be completed in December 2018. And with respect to the RECOVERY study, we will generate the 12 months data points by the end of December this year.

A very exciting additional study that we decided to proactively plan starting last year, but the heavy planning for some of these will happen in 2018, and you will see that depending on the studies, that we may be very busy until 2021 and beyond. So let me take you through some of these clinical studies.

The first one is really dedicated to understanding the root causes of abuse, diversion and misuse of buprenorphine. As you know, this is a very important question that as a responsible company we want to take a deep dive into. The root cause might be very, very different than those associated with prescription opioids. So we are embarking on a wide range of epidemiology studies in the U.S. in order to really tackle this question. We started the planning of these studies in the fourth quarter of 2017, and we will be completed by the third quarter of 2019.

The second study is dedicated to craving. You may remember that we actually generated a lot of data on craving in our pivotal Phase III trials. And you may also remember a comment of Scott Gottlieb, the FDA Commissioner, shortly after our approval incentivizing sponsors to really look into additional clinical endpoints in addiction medicine, and he mentioned cravings. So we decided to proactively explore how craving could be actually added as a valid clinical endpoint, not only in Opioid Use Disorder trial but in addiction medicine in general. Again, we planned these projects in the fourth quarter of 2017, and we should be at least in a situation to understand better how we are going to achieve this validation by the end of this year.

The third study is incredibly important to us as it is really focusing on assessing whether or not induction of SUBLOCADE treatment in the emergency room environment may actually prevent opioid overdose in Opioid Use Disorder patients. So the current standard of care is that when patients arrive to the ER for an opioid overdose, they are obviously taken care of typically with naloxone, Narcan administered either intravenously or more recently intranasally. The patients are, of course, monitored and then, very sadly, they receive a letter with recommendations to see a physician that may help them with their Opioid Use Disorder issue.

Needless to say, we see this as a real missed opportunity. We may actually save lives. The very sad situation right now is that, believe it or not, but some of these patients show up again at the ER just a few hours after being treated. We truly believe that by initiating treatment in the environment, in the ER environment, with SUBLOCADE may actually help the patients to remain abstinent, but also to prevent opioid overdose. So that's a study that is currently under planning in the context of several collaborations in Virginia state, and we are planning to complete that study in the third quarter of 2019.

Last but not least, a very important study as well, what we call a global real-world RECOVER study. I presented to you the RECOVER study in the U.S. Remember, though, that these are patients who were part of our Phase III pivotal trials and here, the opportunity is that once SUBLOCADE is available in the market, we are basically going to design a very similar study, really looking at the determinants of recovery of patients initiating treatment with SUBLOCADE, but this time in a very naturalistic real-world setting. We are in the planning phase right now and we are planning to conduct that study until 2021 or perhaps even beyond, as this is an opportunity to follow these patients over extensive periods of time.

And now a little update on the remaining part of the pipeline. So first, in terms of SUBLOCADE -- SUBOXONE tablet and film. So SUBOXONE tablet, we filed an NDA to the Chinese FDA at the end of 2016. We received the priority review by the Chinese FDA in June 2017, and that NDA is currently under review by the Chinese FDA.

Secondly, the SUBOXONE Film, some great and exciting news in Canada as the SUBOXONE Film has been added to the list of drugs for an urgent public health need in the province of British Columbia, that happened in June last year; and for the Canadian correctional facilities in December last year. So hopefully, the trend that was initiated by British Columbia is now going to spread towards other provinces in Canada.

RBP-7000 for schizophrenia, nothing really new. As you know, we filed the NDA in September last year. The NDA filing was approved by the FDA in December last year, and that NDA is currently under review by the FDA with a PDUFA date of July 28, 2018.

Arbaclofen placarbil, you may remember that we had a 3-stage clinical Phase I bioavailability study. This is now completed. We are currently preparing a package for a Type C meeting with the FDA in order to assess whether the FDA would agree with our vision for this product to work in alcohol liver disease patients.

And then last but not least, our new project in the pipeline, ADX71441. This is in the context of our strategic alliance with Addex Therapeutics. We are currently working on 2 aspects in that collaboration: the first one is obviously the clinical development of ADX71441, which is the lead molecule. The second part of the agreement is to continue working on the development of new GABA(B) positive allosteric modulators, and we have a launch meeting in Geneva on the 1st of March in order to define these 2 different activities.

Finally, some planned conferences and events in 2018. For your information, these are all the conferences we will be attending to present additional data on SUBLOCADE, either encore presentations from the Phase III clinical efficacy and safety, but also very importantly, additional data on the long-term safety extension study for SUBLOCADE and, of course, new data on RBP-7000.

Finally, we will share for the first time some data related to health economics and outcomes research as well as the RECOVER study.

Shaun, back to you.

Thank you very much, indeed, Christian. I think we've got a lot of interesting things to look forward to in the near future.

So just to pull things back together, you can see that all the things that we can control are being controlled very well. We're very well justified based on our performance to claim a leadership position in addiction. In the year ahead, we will continue to focus on building our SUBOXONE Film resilience, not only do we have 2 patents asserted, but there's a third on its way, as Javier said, that we anticipate will grant in the near future.

We've made the right level of investment. We've got the right capability to make sure that we have 2 very successful product launches this year, not only of our once-a-month transformational product for the treatment of Opioid Use Disorder but also our once-a-month risperidone injection that brings a technology to market that doctors don't have today that they've told us that they would really like to have.

We'll continue to expand access to treatment around the world not only in the U.S. but Canada, Australia and European countries where there is a real need for our treatments. We'll continue to focus on capital allocation. We'll manage our risks, and we will start to prepare for further business development and M&A.

So in summary, we're very upbeat. We're very confident. We're ready for the future. We have a lot of known risks that we've managed very well, and we look forward to creating future shareholder value with all of you here today. So thank you very much for your attention, and I look forward to helping answer your questions.

Max?

Max Herrmann from Stifel. Just a couple of questions. On SUBLOCADE, just get a feel for -- you've talked about the sort of pharmacy benefit manager profile. And obviously, you've priced the molecule on approval. What sort of coverage are you expecting from the get go? And then sort of during the course of the year, what are you targeting in terms of pharmacy coverage?

We think we're going to have very good quality coverage. Obviously, the way that coverage, it builds through the year. It's never the case that you go out on day 1 and you have full-on formulary access everywhere. Some health plans are able to list very quickly. Some health plans have a mandatory period before they go on to formulary. But we have built a very sort of strong and assertive build of payout coverage across the year. And from the feedback we're getting at the moment, we anticipate we're going to meet those objectives.

Okay. And the second question was just in terms of ex U.S. for SUBLOCADE. What's the -- you've talked before about filing in Europe and filing in Canada, and we have not seen those time frames. So I just wondered whether you've got more clarity on when you will submit.

We're anticipating submitting this year.

For Australia, Canada and the EU?

Yes, that's our objective.

Is that a central filing in Europe, EMA?

Christian, do you want to...

We didn't define our regulatory filing strategy yet.

It's Matthew Cook of Bank of America. I think you've been very clear that you expect the SUBLOCADE launch to build in terms of sales. But could you give us a perspective of what looks like a successful launch for you at the end of '18 and what sort of metrics we should look at? And then touching again on the pharmacy benefit manager side of it. Can you explain the relevance of it being reimbursed more as a medical benefit rather than a pharmacy benefit? And then one on SUBOXONE Film, in terms of the market share declines that you saw last year, they were heavily weighted towards the first half. You flagged that you could see potential further declines next year, should we expect a similar sort of seasonality or is there any key contracting decisions that we should expect?

Okay. So just remind me of the first question, I'm sorry.

What the key metrics you're looking for in the SUBLOCADE...

All right. Okay. Well, obviously, we've set our financial metrics for the total business. We have a lot of metrics that we're going to be looking at as we go along month-by-month in terms of the progress that we're making. We will be sharing some of those metrics as we move forward. I think we're just sort of thinking what would be the most useful to know that couldn't be misinterpreted a dozen different way. So we're looking at metrics like the number of doctors that have treated at least one patient in the quarter. The number of doctors that have treated 5 or more patients in the quarter. And we're taking a look at that at the moment because we appreciate you need to be able to see how the launch is going. We also know, of course, that the data that go through the specialty pharmacy channel are not publicly available. So we are very mindful of that and I look forward to being as helpful as we can. The second question was, sorry?

Relevance of medical benefit.

All right, relevance of medical benefit. Well, the medical benefit tends not to be managed as closely as the pharmacy benefit. But this is something that varies from plan to plan. So we think that we will get the coverage that we're looking for, irrespective of whether the plan decides to go down the medical benefit or the pharmacy benefit. Obviously, as this product is administered by the doctor and is injected by the doctor, the doctor also gets an administration fee for administering this into the patient. Mark, did you want to speak to the third question with respect to Film revenues?

Matthew, with regards to the phasing of that, I think a reasonable analog is how things progressed last year. So we'll have the annualization plus we'll have a very similar phasing in the year ahead. The plans are pretty well spread out on the same profile this year. So...

James?

James from Jefferies. Just 2, if I can. With the -- I think it's for Mark, actually. I think with increasing Medicaid patients driving growth, I notice receivable days have gone up. Just curious how long it takes to get paid and is this a trend we should expect to continue? And then last year, you mentioned sort of $40 million to $60 million incremental investments, saying growing a bit this year. How should we think about incremental spend this year related to SUBLOCADE?

So James, the way I think about the receivables that you see that are on the balance sheet that are up a bit year-over-year, there's kind of 2 elements to it, right? One is just a natural increase in the actual volume growth that drives some of that. And then the other is just the phasing of stocking at year-end. We have kind of a consistent level of stocking that the wholesalers do at year-end, it's just that's happened more in December this year. So that the terms haven't come due on those. So that's -- nothing on there. We're still very focused on our net working capital. I think we do a very, very strong job there. Nothing uncertain there. So with regards to the $40 million to $60 million, we're not talking about an incremental spend year-over-year. But what we have talked about is we will have this annualization of cost on SUBLOCADE with regards to the FRS, the medical sales liaisons, the hub costs that will all carry over and annualize into 2018. We will have the incremental spend as we ramp up the business unit and the sales force associated with RBP-7000. We do not want to distract from the SUBLOCADE launch, so that will be a separate small business unit with regards to that, that will have some incremental cost. But those costs are captured within the P&L, and I think if you think about R&D cost, with all the activity Christian has, it is relatively flat year-over-year. You can kind of back into those, I think, in your modeling.

Can I just start off with this proposed changes to Part D in the U.S. for Medicare -- essentially, the incremental gap that's going to have to be covered by the companies? How do you see this impacting the SUBOXONE Film franchise, but also the SUBLOCADE launch as well and the profitability of those products?

Yes, so we've done some top line analysis on that as that's filed. We don't see a hugely material amount there with regards to either franchise going forward. So I wouldn't think of that as anything that's going to be a material focus. It's a relatively -- when Obamacare was put in and some of those changed -- it was a relatively modest -- I mean, it's a relatively modest change now with regards to what we're expecting.

Okay. And then just on the -- thinking about the film franchise going into next year, the exit run rate, just to confirm, was 57% when you exited the year. You've obviously got the Orexo CVS impact coming through. And then I'm quite keen to understand what the -- if we think about modeling out the film franchise, you've got price up, obviously you've got discounting increasing, you've got some market share loss. So should we just assume that franchise will be flat at best for 2018 and then essentially the variance essentially is going to be how well the SUBLOCADE launch does? And then on top of that, we see the range of the revenue guide is actually quite narrow, and I'm wondering is the delta there -- what are the moving parts in your forecast assumptions for that small delta?

Sure. Actually, we've increased the range on the revenue guidance. Typically, we've been at $30 million and we went to $40 million to show that there's a little bit more range in there with the launch and with some of the dynamics on the base film. But with regards to the base film, we exited not at a 57%. 57% was the average share, 57.5. So we actually exited at 55% share point standpoint. As we think through kind of the general dynamics, I think they're in line with kind of what I talked in the guidance section, talking about a high single to low double-digit sort of growth as we annualized the legal sort of interventions that happened that opened up access. We'll have more share loss just as a dynamic of we have carryover annualization of that share loss we just spoke to of about 2.5 points. And then if we expect a similar sort of rate in the next year, we've got another average 2.5 that could come out of there. When you take into account the price mix and the pricing situation and our coupon investment, flat to slightly down in the base. If that's what you're working in your modeling, I think is in the ballpark, with the balance being SUBLOCADE.

Okay. Well, if that's all the questions, thank you very much, indeed, for your interest, and we look forward to seeing you through the year at various conferences, road shows and of course for our half year results. So thank you.