The Indivior (LSE:INDV) share price was up 14% today on the back of a positive full-year report. In the 2021 fiscal year, Invidior, a pharmaceutical company specialising in opioid addiction treatments, grew its revenues by 22%. The return of routine visits to clinics and hospitals has undoubtedly helped Indivior. But the company has also been expanding the market share of its SUBLOCADE injectable treatment for opioid addiction. Sales of PERSERIS, a treatment for schizophrenia, are up 21% in 2021, representing good progress in treatment portfolio diversification.
Indivior reported a net income of $205m in 2022 compared to a loss of $148m in 2021. But, for all the fiscal good news, what seems to have garnered the most attention is the board mulling over the possibility of a dual-listing for Indivior shares.
Dual-listing Indivior shares
Indivior derives about 80% of its revenue in the US. The large US revenue component has got Indivior’s board thinking about an additional US listing for the company’s shares. Today, the board has indicated they are actively assessing the possibility of a dual-listing but would consult Indivior’s shareholders before moving forward.
The most common way for a non-US entity to list on American exchanges is with American Depositary Receipts (ADRs). To create an Indivior ADR, Indivior stock is bought on the London Stock Exchange and given to a depositary bank in the US. The depositary bank issues ADRs, which represent one or more or a fraction of the Indivior shares it holds. Brokers or dealers then take the ADRs to the US stock markets to be bought and sold.
Would dual-listing be good for the Invidior share price
Dual-listing can improve a company’s profile and visibility. Raising capital in two capital markets should be easier. A dual-listing across the US and UK would increase the time Invidior shares trade on a given day and increase liquidity. These factors sound positive for the Invidior share price.
On the other hand, dual-listings incur an expense to set up. There are also ongoing expenses from dealing with different regulatory and accounting requirements (the US uses GAAP and the UK, IFRS) and from communicating with two investor bases. Dual-listed companies tend to be quite large, perhaps a reflection of the complexities involved. Indivior, at a market cap of £1.6bn, is small compared to the other dual-listed companies.
Dual-listing might be positive for the Invidior share price. But then again, it might not. I would point to some old but still relevant research from Mckinsey that suggests that, on average, dual-listings do not create value in any measurable way.
Why did the Indivior share price rise today?
Given the buzz around the dual-listing, I would suggest this helped lift the share price. However, the solid financial performance Indivior produced in 2021 is also a massive factor. Of the two reasons, I think the second, if it continues, will drive the share price in the future.
Indivior entered agreements in 2020 to resolve criminal charges and civil complaints related to one of its opioid addiction treatments in the US. There are penalties for failing to meet them. In addition, there are hundreds of preliminary stage civil lawsuits brought against the company as part of the opioid class action litigation. Legal risks remain high for Indivior.
