With Indivior’s stock price in freefall over the past year, one of the company’s top investors is taking leadership to task, accusing the firm behind the opioid addiction treatment Sublocade of “ignoring competitive threats” and committing “value destruction.”
In a letter sent Wednesday and published in a securities filing Thursday, investment fund Oaktree Capital Management called for a shake-up of Indivior’s board of directors, referring to the more than 50% stock price drop Indivior has suffered in 2024 as “unacceptable.”
“In the face of that value destruction, Oaktree has attempted to engage constructively with the company’s board to address shareholder concerns and improve shareholder value,” Oaktree said in its letter. “However, instead of coming to the table collaboratively and demonstrating that they are taking action, the board and management seem to be doubling down on a failing strategy, ignoring competitive threats and allowing costs to spiral.”
Oaktree’s main concerns come down to Indivior’s alleged mismanagement of funds and failure to protect its key asset, Sublocade, from competition in the form of Camurus’ rival opioid use disorder drug Brixadi, which was approved in May 2023.
In the U.S., Brixadi is marketed by Braeburn under a license agreement with Sweden-based Camurus.
In a response published Thursday, Indivior acknowledged the letter and said it has “engaged actively with Oaktree in recent weeks on these topics.” The company added that it “remains open-minded” about all proposals to boost value creation.
Oaktree, for its part, currently holds a 7.5% stake in Indivior. The investment fund became Indivior’s second-largest shareholder in July, Reuters reported this week.
On the topic of Indivior’s cash allocation problems, Oaktree accused the company of failing to emphasize its core product, Sublocade, in favor of “unproductive acquisitions, a now-discontinued business line and excessive R&D.”
Oaktree specifically called out the company’s $145 million deal for Opiant Pharmaceuticals in 2022, which allowed Indivior to get its hands on the now-approved overdose reversal nasal spray Opvee. Despite the close of the buyout and a green light from the FDA last May, Indivior has “yet to generate meaningful revenue” from Opvee, Oaktree pointed out.
Meanwhile, back in July, Indivior said it would discontinue sales of its schizophrenia drug Perseris, with the company’s CEO, Mark Crowley, blaming “increased payor management” that made Perseris’ “future no longer financially viable.”
At the same time, Indivior significantly cut its full-year revenue guidance and announced it would lay off some 130 employees.
Aside from Indivior’s poor management of funds, the company “essentially disregarded Brixadi’s entrance into the market by failing to take basic steps to protect Sublocade’s competitive position,” Oaktree contended.
Oaktree noted as an example that Indivior waited seven years after Sublocade’s initial approval and more than a year after Brixadi’s market entry to submit prior approval supplements for rapid induction and alternative injection sites, which the investment fund argued would have “solidified Sublocade’s dominant position and subdued the competitive threat.”
To remedy the situation at Indivior, Oaktree wants the company to fix its capital allocation and cost structure, hold management accountable for the drugmaker’s business errors and align its board with shareholder interests.
“We believe that the board must address these issues immediately and work with us to refresh the board with directors who are committed to taking all steps necessary to improve shareholder value and hold management accountable as they seek to address the company’s performance,” Oaktree wrote in the letter.
Indivior’s tussle with Oaktree comes shortly after Pfizer entered its own proxy battle with activist investor Starboard Value.
Last month, Starboard urged Pfizer’s board to “hold management accountable” for what it called poor revenue returns on investments in R&D and M&A.
“We measure success in producing blockbuster drugs, and we all get measured by our track records,” Starboard CEO Jeffrey Smith recently said of the Pfizer situation during the 13D Monitor Active-Passive Investor Summit in New York. “The track record here is not great.”