Indivior PLC (INDV) 2021 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Indivior PLC Half Year Results 2021 Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded, Thursday, July 29, 2021. (Operator Instructions)

I would like to hand the conference over to your speaker for today, CEO, Mr. Mark Crossley. Please go ahead, sir.

Thank you. Good morning, and good afternoon, everyone. Thanks for joining us. With me today to discuss our Half Year 2021 Results and our progress against our strategic priorities are Ryan Preblick, our Chief Financial Officer; Dr. Christian Heidbreder, our Chief Scientific Officer; and Jon Wasserman, our Interim General Counsel. Looking at the agenda, I'll provide an overview of our strategic progress, after which Ryan will detail our financial performance, and Christian will then walk you through our R&D advancements, after which we'll move to a question-and-answer session.

Turning to our second quarter performance on Slide 5. In short, the key takeaways for the quarter are as follows: one, the team has executed well and they've made clear progress against all of our strategic priorities; two, our strategy behind expanding treatment access in organized health systems, or OHS for short, is delivering a fourth consecutive quarter of double-digit quarter-over-quarter growth. This paradigm-shifting treatment continues to gain traction with physicians and patients giving us continued confidence in achieving our long-term $1 billion-plus net revenue goal. Third, we're moving forward with confidence in our growth strategy and outlook for the future. We're backing this by initiating a share repurchase program of up to $100 million, which I'll speak to in more detail a bit later.

Now turning to our report card on Slide 6 for a more detailed discussion of how we're progressing against our commitments to shareholders. Starting with SUBLOCADE, which delivered revenue of $61 million in the quarter with continued solid underlying growth and a large $7 million criminal justice system order. The strong Q2 performance drove net revenue for the first half of 2021 to $104 million, a growth rate of 79% versus a year ago. Our second quarter underlying net revenue, excluding the $7 million CJS order, saw a great benefit from the broad reopening of the U.S. health care system from the end of the first quarter into the second quarter. This led to generally greater HCP activity in the second quarter with increased access for patients leading to strong SUBLOCADE net revenue growth across both new HCPs as well as those already prescribing. We expect solid sequential net revenue growth to continue through the second half of 2021.

In terms of the current operating environment, with the current momentum behind vaccinations, we expect to see continued progress towards reopening of the U.S. health care system. Exiting the second quarter, we had in-person access to approximately 65% of our call platform versus 50% to 55% exiting Q1. Additionally, we're reaching approximately 70% of our organized health system HCP platform, which is also up versus the first quarter. In terms of OHS penetration, 49% of SUBLOCADE's net revenue was coming from organized health system customers exiting Q2, and we continue to expect that we will exit 2021 with the majority of net revenue coming from these systems.

We exited Q2 with approximately 250 parent level accounts towards our long-term goal of 500. In addition to opening up new accounts, we're also continuing to drive depth of adoption within the large systems we have already accessed. As an example, we're now targeting the 200-plus addiction facilities that fall under the Veterans administration parent. And as I just noted, we are encouraged by continued progress of SUBLOCADE in the criminal justice system channel.

As we indicated in our updated guidance release, we're planning to reinvest up to $25 million of our overdelivery this year. A portion of this will be deployed behind accelerating our CGS (sic) [CJS] efforts where we're investing behind a dedicated CJS commercial team. This channel is important as approximately 65% of OUD patients pass through the criminal justice system at some point in their patient journey. In addition, we're optimizing and increasing our digital marketing through the second half. The Internet has proven to be an effective outlet as it is the first place that patients and their caregivers often begin their searches for treatment options.

Looking at revenue diversification. We continue to make good progress in penetrating targeted geographies with new treatments SUBLOCADE and SUBOXONE Film outside the U.S. as well as behind PERSERIS, which is our monthly injectable for the treatment of schizophrenia in the U.S. SUBLOCADE net revenue from ex-U.S. countries increased sequentially to $4 million in the second quarter. SUBLOCADE was approved in Germany and Italy during the quarter, and we're now in consultation on reimbursement. We were also pleased to see initial sales of SUBOXONE Film outside the U.S., including in key EU markets that we expect will contribute to helping us return our ex-U.S. business to growth. Near term, however, launch activities have been somewhat constrained due to sporadic lockdowns in the EU and Australia related to outbreaks of the delta variant of COVID-19.

Turning to PERSERIS. We saw increased uptake versus Q1 resulting in growth to $4 million in the second quarter. In-person promotion among targeted HCPs improved in conjunction with the U.S. reopening. As we've indicated, PERSERIS is still new in a large but competitive category and requires in-person promotion to detail its unique initiation and dosing benefits for patients. Where we've gained access for PERSERIS, we do very well often achieving double-digit market share. We remain confident in our ability to continue to gain traction with this asset as the U.S. health care system continues to open up in the second half.

Christian will take you through the details of our pipeline progress in a moment, but let me briefly highlight 2 events from the quarter. In June, we announced an agreement with Aelis Farma for an exclusive option and license for a leading mid-stage asset for cannabis use disorder. This collaborative partnership is a direct result of our connect and develop model, where Christian and his team locate the most promising assets targeting addiction and substance use disorders, they connect with the asset owners and then partner to advance potential innovative treatments. Christian will provide more detail on the Aelis asset, but cannabis disorders are clearly within our strategic purview and the need for treatment is growing.

The other major development in Q2 was the FDA approval to include results from the buprenorphine fentanyl interaction study in the SUBLOCADE prescribing information. The results indicate that sustained buprenorphine plasma concentrations reduced the occurrence of fentanyl-induced apnea in opioid tolerant subjects. As you may have read, U.S. overdoses have hit a new record, and this includes the growing prevalence of fentanyl-laced drugs, which makes this science extremely pertinent. Starting in the third quarter, our medical team will support a greater understanding of these data, and we await peer-reviewed publication to further aid in its dissemination.

Lastly, on optimizing business model pillar, I'd like to briefly touch on the financial flexibility we've provided Indivior to both reinvest and return value to shareholders. We continue to maintain an intense focus on operational excellence and asset optimization. The tough choices we've made last year, combined with the strong operational performance by the team, has allowed us to both increase investment behind our current business and complete the in-license deal with Aelis.

Given the short-term focus on our near-term strategic priorities and the strength of our balance sheet with cash at $1 billion, the Board has agreed to a share repurchase program of up to $100 million. This program falls within the authorization to purchase ordinary shares under the general authority granted by shareholders at the company's general meeting. The program is expected to begin shortly and will be a non-discretionary, irrevocable agreement to carry out on-market purchase of ordinary shares. We'll include further details and disclosures in a release upon commencement of the program.

So to close off my introductory comments, we continue to deliver on our commitments to shareholders. We enter the second half of 2021 with momentum from a fourth consecutive quarter of strong financial and strategic progress. With that, I'll hand over to Ryan to take you through the numbers in more detail.

Thanks, Mark, and good morning and good afternoon, everyone. We had another quarter of good execution that was driven by continued strength in the U.S. addiction franchise. Our progress with SUBLOCADE with year-over-year growth in Q2 of over 100%, along with SUBOXONE Film strength resulted in overall net revenue growth of 34% in the second quarter. This top line performance drove our strong adjusted operating profit growth in the same period. Our strong Q2 resulted in overall first half performance that allowed us to raise our full year financial guidance.

As we outlined on June 30 and confirmed this morning, we expect total net revenue to be in the range of $705 million to $740 million, which at the midpoint would represent a 12% increase versus 2020, and pre-tax income to be significantly higher than our previous expectations. In sum, we entered the back half of 2021 from a position of strength and remain confident that our growth strategies and resources, including cash of $1 billion position us to deliver profitable growth for the full year.

Now turning to the quarter. Starting with the top line. The increase in total net revenue was largely performance driven, but did include a 4% benefit from FX. The increase in net revenue was mainly a function of 110% year-over-year increase in SUBLOCADE net revenue and continued SUBOXONE Film share resilience in the U.S., which had double-digit year-over-year growth in the second quarter. U.S. net revenue grew by 44% as a consequence. Rest of world, on the other hand, was down 2% year-over-year if we strip out the FX benefit. The slight underlying decline was driven by the ongoing austerity measures and competitive pressure in Western Europe and Canada. Our focus in rest of the world markets, however, remains on net revenue diversification with the new products we have launched, and we continue to expect the erosion rate of recent years to progressively ease in 2021.

Taking a closer look at SUBLOCADE. Total Q2 2001 (sic) [2021] net revenue of $61 million included approximately $7 million from a single large order from a new criminal justice customer in the U.S. and $4 million from rest of world. Excluding the large order and low single-digit trade spend accrual release, U.S. SUBLOCADE net revenue was in line with underlying U.S. dispense growth of 20% to approximately $50 million versus the first quarter of this year. As Mark indicated, we believe Q2 benefited from pent-up patient demand from reopening health systems beginning in late Q1. And while we expect continued solid quarter-on-quarter growth moving forward, our guidance assumes the actual rate of growth is expected to normalize over the balance of this year at rates that are generally in line with previous sequential growth rates.

Quickly touching on PERSERIS. Net revenue of just over $4 million was within our expectations. While PERSERIS performance has been impacted by the constraints COVID is placing on our ability to expand promotion, we are gaining increased access and look to continued progress in the back half of 2021.

Turning to SUBOXONE Film in the U.S., headline net revenue for both the quarter and first half period grew double digits. In addition to benefiting from underlying market growth and stable formulary status through the first half of 2021, we also had a benefit from mix related to non-contracted commercial business. Additionally, we booked a final $7 million of net revenue from the now discontinued Sandoz authorized generic. Looking forward, while we have tempered our share erosion expectations for the remainder of the year based on year-to-date performance, we nonetheless continue to caution that there is no fundamental reason why SUBOXONE Film share should not ultimately revert to observed industry analogs.

Moving down to P&L. Adjusted gross margin of 80% in the second quarter benefited from approximately 2 points of margin related to the final net revenue contribution from the Sandoz AGx program. Excluding this benefit, the underlying gross margin was broadly in line with our low 80% expectations for the full year. The year-over-year decline on an adjusted basis mainly reflects the mix shift in the U.S. SUBOXONE business towards government channels, which make up the vast majority of this business. We continue to expect this dynamic to reverse beyond 2021 as SUBLOCADE becomes a much more meaningful net revenue contributor.

Continuing with Q2 operating expenses defined as SG&A and R&D. On an adjusted basis, we saw a slight decline in OpEx to $105 million versus $107 million in the year ago quarter. This primarily reflects lower SG&A expenses as personnel costs from our 2020 reorganization were reduced as were legal costs with the DOJ matter now settled. R&D, however, was $5 million higher in the quarter reflecting the restart of post-marketing studies that were delayed to COVID as well as capacity expansion projects related to our long-acting injectable technologies. In the back half of 2021, underlying OpEx expenses are expected to step up when compared to H1's $202 million on an adjusted basis.

Assuming reopening continues towards normal levels, we are planning for increased in-person promotional activity and ramp-up in educational sessions as well as the full impact of restarting the R&D post-marketing and capacity expansion programs. On top of that, as we called out in our revised guidance, we are planning for up to $25 million of incremental growth investments. These are focused on accelerating the growth of SUBLOCADE and include formalizing a dedicated CJS team and optimizing our digital marketing capabilities as normalized patient flows return to HCP offices.

Moving down -- next down the P&L to adjusted operating income. A combination of the increase in net revenue and lower OpEx resulted in adjusted operating income of $66 million in Q2. After net finance expense and tax, our adjusted net income was $49 million, which compares to $17 million in the year ago quarter.

Turning next to the balance sheet and our capital position. We generated a net cash inflow from operations of $161 million in the first half, reflecting our solid operating performance, mainly SUBLOCADE along with the SUBOXONE's resilient share performance in the U.S. As a result we ended June with gross cash of $1 billion and net cash of $750 million, both of which are ahead of where we ended full year 2020. You also see that we were able to refinance our debt during July with $250 million in new term loans due June 2026, which provide us improved flexibility. I will come back to this item in a moment.

Looking ahead, we will continue to maintain a balanced approach to capital allocation. Our priorities remain investing beyond our depot technologies in the U.S. and supporting the launches of new products outside the U.S., SUBLOCADE and SUBOXONE Film. We have however, with the Board, determined that our cash position is sufficiently robust and that our business outlook supports returning $100 million to shareholders in the form of a share buyback program. We believe this program underscores our disciplined approach to capital allocation, appropriately balances our capital needs to support and grow the business with our desire to improve shareholder returns.

Let me turn quickly to a summary of the amended and extended term loans. As I mentioned, we have increased our financial flexibility by refinancing our term loan and pushing out the maturity 5 years to June 2026. The new term loan carries interest of LIBOR at a 75 basis point minimum plus 5.25%. Importantly, the loan eliminates the previous leverage covenant and introduces a minimum liquidity covenant, which is greater than 50% of any outstanding balance or $100 million. Finally, I'll just mention that we reconfirmed our upgraded full year 2021 guidance that we published on June 30. The details are outlined in full on Slide 11 for your reference.

With that, I will turn it to Christian for a scientific update.

Thank you so much, Ryan. Good morning, good afternoon, everyone. My update today is 2-fold. First, I will briefly review some salient data on the epidemiology of the disease, including opioid use disorder, alcohol use disorder and cannabis use disorder. And second, I will give you a brief overview of our pipeline activities. You will also find a summary of our peer-reviewed publications and conference presentations in 2021 in the appendix.

Let me start with the disease state. As you can see on Slide 15 drug overdose death rose, unfortunately, nearly 30% in 2020 to a record 93,000 according to provisional statistics released on July 4 by the CDC. It is actually the largest single year increase ever recorded. Synthetic opioids are the primary driver of the increases in all those deaths and accounted for more than 56,000 deaths as of December 2020. And I would say that state and the local health department reports clearly indicated the increasing synthetic opioid-induced overdose is primarily linked to illicitly manufactured fentanyl.

Let's not forget however the devastating effects of alcohol use disorder. The prevalence of alcohol use disorder in the U.S. was about 6% corresponding to 14.5 million people. And among individuals with alcohol use disorder, only about 1.1 million people actually received any treatment for alcohol use disorder during the same period. Use of medications for alcohol use disorder were reported by 223,000 individuals.

On the next slide, let me elaborate a little bit more on cannabis use. In 2018, the United Nations estimated that 192 million people worldwide had used cannabis in the previous year. And in the U.S. alone, we are talking about 4.8 million people with the past-year cannabis use disorder. So I would like to highlight a couple of facts. First, the amount of THC, the active component of cannabis, has increased steadily over the past 20 years from less than 4% in the mid '90s to somewhere between 15% to 20% in 2018. And second, the increased frequency of use and potency of cannabis has led to increased odds of developing cannabis-induced psychosis as well as emergency room visits and hospitalizations.

Let me now give you a brief update as to progress with our pipeline projects. What you can see on Slide 19 on the left-hand side is a summary of SUBLOCADE in the U.S. as well as PERSERIS in the U.S. So SUBLOCADE first. We had a couple of approvals of U.S. label updates, and we reached a final protocol for the last remaining post-marketing requirement study that is really aiming at understanding those patients who may benefit from the highest maintenance dose of SUBLOCADE as well as defining rapid induction protocol.

For PERSERIS, all the post-marketing commitment studies are now considered completed. And the last one that relates to the safety, efficacy and tolerability of the 180 milligram of PERSERIS in the form of twice 90 milligram has now been submitted to the FDA, and we are receiving a PDUFA date of December 12 this year. On the right-hand side, you can see the situation for SUBLOCADE and SUBOXONE Film outside of the U.S. with a great progress in the number of approvals for SUBLOCADE outside of the U.S. and 2 remaining countries, Norway and U.K. that are currently under review.

On the last slide of my presentation, Slide #20, you can see an update as to the other projects in our pipeline. First, the selective orexin-1 receptor antagonist for opioid use disorder. The single ascending dose Phase 1 study is now completed showing some encouraging safety and pharmacokinetics in healthy volunteers, and we are waiting for the final clinical study report towards the fourth quarter of this year. In the meantime, we are planning for the Phase 1 multiple ascending dose currently planned for first subject dose in the third quarter this year.

Our collaboration with Addex Therapeutics is moving along extremely well. We now identified a lead molecule ready to go to the late lead optimization program that we started in the third quarter this year. And last but not least, as Mark mentioned, we initiated our strategic collaboration with Aelis Farma for the development of AEF0117, a synthetic CB1 specific signaling inhibitor. We actually had our first Joint Steering Committee with Aelis Farma to prepare for the Phase 2b clinical proof-of-concept as well as other non-clinical and clinical activities that we will be running in parallel.

On that note, back to you, Mark.

Thanks, Christian. Before turning to Q&A, let me just take a moment to thank our employees and other key stakeholders for their continued support and dedication to our patient-focused vision. Through hard work and adhering to our guiding principles we've placed Indivior on a solid strategic and financial path during a challenging period. We have the right products, the right teams and the resources to not only endure through the dynamic and challenging operating environment we're currently experiencing, but to thrive beyond.

With that, I'll turn it over to the operator for Q&A.

(Operator Instructions) So your first question comes from the line of Max Herrmann from Stifel.

Three, if I may. Firstly, just wanted to try and understand a little bit about the SUBOXONE Film underlying sales and margin guidance. I appreciate that you've had a -- maybe a one-off revenue recognition from the ending of the Sandoz AG authorized generic agreement that you had, but you also mentioned a little benefit from product mix from I think more cash pay patients. And therefore I'm trying to square that with your margin guidance, which is for a negative impact or lower margins as the product is generally trending towards the Medicare kind of lower or Medicaid lower sort of payment contracts or business. So that's the first question.

Second question is just on the Temgesic sale ex-U.S. analgesics and just what the sort of revenues were for last year, so we can understand exactly what that will strip out. And then finally, just to get a better idea of the criminal justice system market, what do you estimate is the opportunity in that market? And other than the one contract that you've mentioned so far have you had other business in that market already or that channel already? Those are my questions.

Thank you, Max. Appreciate the questions, and I'll maybe handle the latter 2, and then I'll hand over to Ryan to talk you through the dynamics on the Film business. With regards to the Temgesic sale I mean, obviously, this is a historic business not promoted, non-strategic that is outside the U.S. About $10 million in sales and so we took the opportunity to leverage the asset, get some cash. And the way the business thinks about it is it basically funded the opportunity and the option value that we have on the Aelis assets. So for us, a good trade-off there. With regards to the criminal justice system market listen, I think with regards to that market there really is momentum picking up in the criminal justice system arena. You see it's a beneficiary of federal funding. There's some legislation that's in Congress with regards to the Medicaid Reentry act to try and help fund treatment in transition out of prisons. And President Biden has continued to keep it in his commentary even at his most recent town hall in Cincinnati, Ohio.

In our view SUBLOCADE, it's a perfect vehicle for providing medically-assisted treatment during incarceration and upon release. I mean, it addresses the complexity and safety issues for daily treatment in the incarceration. And in addition, it provides a full month of treatment upon release to protect the patients at they're -- when they're most vulnerable to both relapse and the highest risk of overdose. So our ecosystem teams have been making some progress. We continue to take bigger steps with the $7 million order and shifting to a dedicated team now with this momentum we think is spot on and strategically exactly where we should go. So with that, maybe Ryan, I'll hand over to talk through what's going on with the dynamics of the Film.

And I'll break it down into 3 buckets for you. So first, when we did provide guidance going into the year, we said our gross margin would decline in the high single digits from the mid-80s down to the high-70s. And that was because as we went from 2020 to 2021, the majority of our Film business was going to be on the state Medicaid channel, which is the less profitable channel. And so that's why when we provided that guidance, we were assuming that our gross margin would erode. And with Film still being a large contributor of our business that's why it had that impact. But what we're seeing so far in Q2 and the reason why we updated our guidance to just in the low-80s is because we are able to maintain more of our commercial, highly profitable channel because it's non-contracted.

So that's what's helping us on that front. And then thirdly, the reason why it was quite strong and it was stronger-than-expected in Q2 in the mid-80s is it included a onetime benefit because of that $7 million tied to the finalization of the Sandoz product. So net-net, still looking forward to our gross margin this year being in the low 80s, still lower than last year because the Film continues to have a strong presence in our portfolio. And then look forward to 2022 where it continues to improve again.

Do you expect that -- the non-contracted business though to continue to be stronger than you expected at the beginning?

I think -- so at this point it would be great if it does, but we no longer promote the Film, and that's up to the payers to make that decision. But as of now, we haven't heard anything differently.

Okay. And just maybe just to follow-up on the question about how big an opportunity is the criminal justice system opportunity, is there any more color you can provide on that?

Sure, Max, maybe a little bit more. About 65% of patients that suffer with OUD travel through the criminal justice system at one point in their journey. I think because of that dynamic and because they re-enter society, it is a great opportunity to catch patients where they are. And just even the absolute revenue in criminal justice is probably the least attractive part because what it does is it provides a launching pad for people to enter recovery.

There's probably about 5,000 prisons -- different prison system entities across the U.S., of which we're primarily focused on the top 1,500. They capture the vast majority of the volume, and there's just a really high prevalence of substance use disorder among this population. So as we move forward, activating those accounts, each one is quite complex, and it -- really there isn't a bolus of a parent in which you open up and you have momentum into children. For the most part, these are (inaudible) on that. So it's block and tackling, it's account to account to account, and that's why we've made the shift from keeping it as part of our ecosystem team, a portion of the business to a dedicated team to deal with the complexity of opening these up and help meet the patients where they are in their journey on recovery.

Your next question comes from the line of Harry Jackson (sic) [Sephton] from Jefferies.

Great. I have 3, please. So maybe just to start with the SUBLOCADE fentanyl label extension, just want to get a sense of how much interest you're seeing from that recent label extension whether you're seeing a meaningful step-up in sales from that?

My second question is on the costs. So first half costs looked at around $100 million -- sorry, $200 million versus your full year guidance of $470 million to $480 million. I just wanted to get a sense of what's going to be driving the ramp-up, you've mentioned the $25 million investment for the LAI products but the phasing of any other costs would be helpful? And then just finally, you mentioned on the refinancing, the strategic flexibility, just wanted to get a bit more clarification around that. Clearly, you've got a very healthy cash balance, just want to get a sense of why you need to maintain the debt position.

All right, Harry. I'll handle the first one and then give it to Ryan for the second 2 on the costs and the refi. I think, first and foremost, this sort of fentanyl label change, it's the sort of work that Christian and his entire team and our medical team, it really demonstrates Indivior's leadership position in addiction. I -- this is breakthrough sort of science. It's really -- if you think about the updated data from the CDC regarding overdose deaths, the label is pertinent and timely. And that data in case folks haven't seen it from Christian's -- it was in Christian's slides but you're talking about 69,710 opioid overdoses a day. That's 190 people each day that pass due to overdose, of which 75% of them are synthetic opioids such as fentanyl.

So for us, this updated label it indicates sustained buprenorphine plasma concentrations reduced the occurrence of fentanyl-induced apnea. So for us, it's early days to see momentum behind scripts with regards to this. But in the third quarter this is a scientific message that our medical team will be able to share because of the new science. And it's something that when the peer-reviewed publication comes out, it will further aid in dissemination of the message. But breakthrough science, very pertinent for this disease space with over 69,000 deaths a year. So Ryan, could you maybe talk through the costs and then the thoughts on the capital structure with keeping the debt.

Yes. I'll start off with the debt. And yes, our goal, as we mentioned, is to keep a very balanced capital position. And with the $1 billion on the balance sheet, one, it does give us that financial flexibility to continue to look at making sure that we are putting the right investments behind our current business, make sure we have the fuel in case we need to pull the trigger on any potential small to mid-term M&A. And also, we have to keep in mind that we have an account payable balance of over $400 million that's tied to Film accruals. So even though those are not coming due just yet, as we mentioned to you, the Film erosion uncertainty.

And if the Film does revert to what analogs say it should, because of having 3 or 4 generic players in the marketplace, there would be a large unwind of that accounts payable that we would need to be able to fund. And then also just making sure that if you take a look at the next 2 or 3 years that we can cover all of our large requirements, such as the DOJ and RB settlement. So net-net, we feel good with our current balance and it does leave us with the financial flexibility for the balance of the year.

Second, in regards to the OpEx, you are certainly correct that the second half operating expense balance will go up versus the first half. But we're excited about that. We are excited about the marketplace starting to open up, we are excited about our field-facing teams having more in person activity. And so with that, there's going to be 3 tactical areas of spend that you'll see increase. One is in sales and marketing, certainly see some more T&E, conferences expenses, cost tied to lunch and learns. So again, that's exciting for us, which allows us to get our presence out there. And then alongside that to make sure that we are supporting our field sales we have scaled up our second half digital marketing efforts to make sure that we can get our message out there at the same time. So you'll see that increase as well.

The second area is in R&D. We are looking forward to our R&D trials to continue to ramp back up after the COVID. I think Christian mentioned some of the work that's being done there. So you'll see those expenses in Q3 and Q4 as well as we're looking at some production capacity projects that we're going to unlock in the second half. And then finally, as you mentioned, it's the $25 million of investment, which will primarily be focused around building out the CJS teams, medical teams as well as obtaining additional real-world data to help support our studies. Those are the 3 areas of what's going to be driving the second half uptick.

The next question comes from the line of Paul Cuddon from Numis Securities.

I also have 3. Just kind of taking a step back on the sort of U.S. market dynamics with a range of buprenorphine-based products and sort of new prescribers coming in I'm just wondering if you could talk about any changing trends of new patient starts, what are people typically starting on treatment, are there any major changes there? Secondly, with the new products coming in rest of the world, Film, SUBLOCADE, SUBUTEX extended release, do you need to put a bit more investment behind those as well? And finally, from me in an era where medical injections are looking like they're going to become mandated do you kind of think there is some potential for SUBLOCADE to become part of a sort of more kind of committed treatment, particularly within the criminal justice system?

Thanks for the questions, Paul. First, on the U.S. market dynamics. I think the last year has really changed some of those dynamics with kind of normalizing telemedicine and physicians being able to initiate treatment outside the office really, which is a new paradigm in this area. And that initiation tends to be on orals. But for us, getting patients into treatment is absolutely the right thing. And we know it's a chronic relapsing disease, and we know the benefits of SUBLOCADE are bringing more and more patients to that kind of paradigm-shifting option for treatment. So we welcome it and are excited about helping more patients throughout the journey whether it's on Sublingual or on again, SUBLOCADE.

As I look to the rest of the world with regards to investment we've been quite targeted with regards to shifting of investment from the heritage products over to the launch. It's -- for us it's a detailed sensitive sort of effort here. And the hospital systems and the socialized medicine systems there haven't required quite the degree of go-to-market investment that you've seen in the U.S. due to the unique call patterns that we had and distribution systems that we have there. So we don't see major step changes in investment in those areas.

With regards to SUBLOCADE and a parallel to vaccines and potential mandating, what I would say is the virtues of SUBLOCADE for me stand on their own and we continue to see those be recognized more and more, right. We have a large market for opioid use disorder with a relatively low treatment penetration. SUBLOCADE is a breakthrough asset, right, with regards to it changes the paradigm. It hits 2 nanograms per mL with 70% to 80% receptor occupancy, which blocks the euphoric effects of opioids and helps disrupt the major causes of addiction which are withdrawals, cravings and that feeling of euphoria. We don't see any other product that delivers that sort of PK profile, that sort of benefits, and so we're excited about continuing to push forward.

Post-COVID, as we shift from COVID which is the near-term sort of pandemic, we see a shift of momentum into dealing with the epidemic. You've seen -- we talked the data on CDC, but we see even more of a shift within the U.S. to deal with this epidemic and hopefully help more patients. In turn this treatment paradigm, which really you've only got about a very low penetration of treatment hopefully you turn it on its head and get more normalized treatment in the 80% penetration range, which is what I think we should all aspire to.

Excellent. Presumably SUBLOCADE continues working beyond 2 months as well.

Yes. Yes, it does.

And no further question at this time. Please continue, sir. Closing remarks.

All right. Just a quick thank you to everyone on the call and to all of our stakeholders for their continued support and interest in Indivior, and we look forward to the one-to-ones and the conferences coming ahead to meet with you in more detail. Thank you so much.

Thank you. This concludes the conference today. Thank you all for participating. You may all disconnect. Thank you all for joining. Stay safe, everyone.