Alvotech ($ALVO)

Our next company presenter at the BofA Annual Healthcare Conference, Jason Gerberry, Pharma and Biotech analyst. Pleased to be introducing Alvotech and Balaji Prasad, Chief Strategy Officer. Balaji, thanks for joining us.

Always a pleasure, Jason. Thanks for having us over.

Yes. So maybe first, just if you want to level set the conversation, can you maybe walk us through some of the key developments at Alvotech over the past couple of years, just to give us a sense of your current partnership structures and approved biosimilar products across your key geographies?

Sure. Thank you. So it's almost around 2 years since we started being commercial in the U.S. market with the launch of biosimilar Humira in 2024. And since then, we have had a bit of a ride globally in the U.S. alone. So we launched biosimilar Humira in 2024. And in Feb 2025, we launched biosimilar Stelara. And just soon after we filed for a couple of biosimilars, including Simponi, Simponi Eylea, Prolia, Xgeva and Eylea. And so we have come through this path where now last year, we delivered around $600 million of revenue, just about, and we delivered around $140 million of EBITDA. And we have guided to around $650 million to $700 million of revenue this year and around $180 million to $200 million of EBITDA. Now that's on the -- what we have done on the commercial side. On the pipeline side, which is where the more interesting story for us definitely is we believe we have one of the, if not the largest biosimilars pipeline globally. We have a total of 32 assets, of which 5 are commercial right now, 2 of them in the U.S., 5 of them in the rest of the world markets. And we have another 15 disclosed assets and around 15 undisclosed assets for which are developed cell lines. So this pipeline, I think, is what truly differentiates Alvotech from a lot of our peers. I believe that 6 of the next 8, 9 launches that we have are going to be limited competition launches for us, where we'll be seeing limited competition, be one of the first to market and definitely look forward to the next phase with a lot of excitement, right? And just to balance the story, I also definitely want to call out the FDA inspection that we had last year. So we are working through fixing the F483s that the FDA had, and we're working through the process improvements for it. And we have commented as recently as last week when we had our first Q earnings that we are going to be resubmitting these in June in the coming month. So we're looking forward to getting that done soon.

Okay. So with respect to that inspection and how that impacts pipeline, that's the impact of CRLs to 3 of your pipeline programs specifically?

That is right. And just to clarify, maybe getting back to what happened. So last year, around late June and early July, the FDA had inspected us. This was for a pre-approval inspection. They finished a week of inspection and then geared 483 with 10 observations. And then we had responded to them in detail later on. And unfortunately, for us, our BsUFA dates for Simponi and Prolia started hitting soon after. So there was not really enough time for the FDA to get through these things. And the FDA issued a CRL stating that they need the observations on the facility to be rectified before they can approve new products. So we had no impact at all on what we are manufacturing and selling to the U.S. every single month. We are shipping out Humira and Stelara, no issues with it. But so the FDA, to answer your question, didn't have any issues with the product itself, but we're more like addressing the facility observations that they wanted to see us fix before approving any new products.

Yes. So in terms of process, was there -- has there been feedback on your responses? Or is the next step in all this just we agree that your steps to mitigate have been successful and you're going to get approvals.

Yes. So once we submitted our response, we got a post action letter in December 2025, which we are awaiting. And there, the FDA said, ultimately, just boiled down to 3 observations. We have addressed all of that. And right now, we have combined enough data over the last 6 months to show that these improvements that we have made are sustainable, can be reproduced and that we can really ensure that this is valid for a long time. I think one of the decisions that we took, painful decisions we took as a management team was to really to ensure that we not only go and address the immediate and near concerns that the FDA has, but ensure that the processes are robust so that over the longer term, we are going to be on the right side of the regulations every single time of CGMP requirements every single time. And towards that, we also took some production slowdowns, multiple production slowdowns which was a conscious decision on our part, and we thought that was the right call to do. And of course, that also impacted our last couple of quarters' numbers, but we'll get back to a normal trajectory soon.

So for these 3, the remediation efforts were -- there was a slowdown so that you could implement, I guess, certain changes in the nature of the 3 outstanding observations. How would you, at a high level, frame those? Are they easier fixes kind of in the middle, more challenging fixes?

So the 3 observations were related to use of silicon lubricants. So basically, we got in touch with the manufacturer of the machine, and we have done away with using the lubricant. The second one was related to the complaints handling process that we had. So the FDA wanted us to fix that. And the last one was related to microbial contamination, which is one where we generated a lot of data, did multiple process improvements, and that's one that we'll be now submitting all of this. To continue on, in June, we have said that we are going to resubmit. And that sets us up immediately after resubmission responding to the FDA, we will resubmit the 3 BLAs and which will set us up for a 6-month clock for approval. So if we submit in June, we expect approval by December of this year.

And somewhere in between there, is a reinspection part of that process?

That's a great question because it also segues to something that we announced 2 days ago on Monday. So 10 days ago, the FDA landed at our facility in Reykjavik for a surprise inspection. We commented on it in 1Q and also announced on Monday that the inspection concluded with a few observations that we believe are absolutely manageable. And a good way to look at this is to think that, okay, if these observations were challenging, then our resubmission time line next month would not happen. But we have said that we are going -- we will be resubmitting -- we believe the observations are manageable and we'll address it and resubmit next month. For this particular process, it is likely that the FDA may decide to reinspect us or there's a possibility that they may also not reinspect us, but we are preparing as a company, we are ready to be inspected by the FDA any single day and that's model. We want to be ready and we want to ensure that these are process that we are through. So we'll be ready when the FDA comes to inspect or if they come to inspect.

Which of these 3 products do you feel like is maybe has more of a time sensitivity to it to enjoy maybe better market exclusivity dynamics as you look at the market conditions, competition, things like that, that you guys would be most eager to get your product in the market on?

Yes, absolutely. So the 3 products were Simponi and Eylea and Prolia. Of these, Simponi is the one we were and we are most excited about. Next is Eylea and then Prolia. Prolia was a competitive market, and we always expected it to be competitive and so limited expectations from it. Simponi on the other hand, was one where we were expecting and we still hope to be the first to market. There's only one other player on the market -- not on the market, one other player in contention who has a BsUFA date in this month in May, and we're looking to see what happens there. But again, the dynamics, it's a buy-and-build market, so completely different. So the commercial opportunity for us as long as we're concerned is completely intact for us. And we have a strong commercial partner with Teva. And so we believe that we can completely tap into this. Eylea, irrespective of whether we got approved in Q4 of last year or Q4 of this year, it's a settlement for us to launch in Q4. So the commercial impact is minimal. There's no commercial impact because we would be launching at the same time irrespective of it. Of course, assuming that we will get approval in Q4, and we do strongly believe that we will.

And apologies, Simponi, my recollection was Part IV, part subcutaneous in terms of the...

Yes. That's right.

So is it all buy-and-bill? Or are there different channels? And is there a channel-specific strategy that you think about here?

So we'll speak more about the commercial plans and the strategy as we get closer to the launch. But you're right in that observation, and we have both formulations and both forms for this drug.

I see. So upon approval, you're saying it would be for both presentation forms. Okay. Cool. Maybe just on the Fujifilm partnership. You recently announced an agreement with Fujifilm Biotech to expand your global manufacturing network and establishing a second source of commercial supply in the U.S. and the U.K. So maybe if you can just elaborate on what drove the rationale behind that decision?

Sure. I'm glad you asked that because that's something that we have been extremely excited about and happy to announce last week. The rationale was, a, we have one of the largest pipelines in the biosimilar companies in the biosimilar world, and we want to ensure that we have capacity beyond 2030. So what we always said in '24 or '25 is that we have capacity to meet the global demand from our Reykjavik facility up to 2030. And sorry about that. And so we have announced that we have capacity up to this time, but we also want to be ready for the future. So that's where this partnership comes in. More importantly, strategically, it also is some of the dependency on the Reykjavik facility, too. So there's that aspect which definitely plays a role. And we did always think about a U.S. manufacturing base, and it gets us that one, too. There are several advantages to having a U.S. manufacturing base. So its multiple -- brings multiple benefits for us in having this partnership around. So currently, we are involved in tech transfer to this site. And we said that it takes around 12 months. And from second half of next year, we do expect to be manufacturing out of here and selling in the U.S. from this facility.

When you think about layering in redundant manufacturing capacity, is that something that you, in the future, would envision go to market if you have 2 sources lined up? Or is there like a lag? And how does that affect the investment cost in getting a biosimilar to market to have dual source as opposed to, say, single source?

I mean there are definitely cost aspects to it that we'll consider on a product-by-product basis and see whether it makes sense for us to have a single source or dual source supply. And it's going to be product dependent and also dependent on the competitive dynamics within the product and how attractive it is. Most likely that we'll be looking at core assets and really thinking about how to secure the supply for these assets that we think are extremely important for us from a commercial perspective. But I think we'll definitely give more color on it when we get to each of these products in the future.

Anything you guys are saying at this point about the timing for, say, established products that you already make and the timing for manufacturing capacity coming online? Or is this going to be more about the future pipeline?

No. I think the tech transfer that we are currently involved in, that is for the commercial products, currently commercial products right now. So that's one we would want to get out of this facility to start with.

Okay. Maybe then shifting gears to pipeline. And last week, you announced that you've submitted an MAA with the European regulator for biosimilar Entyvio. So maybe how you're thinking about this market for Entyvio, both in Europe and the U.S.? And what does the competitive landscape look like now?

Sure. Amongst our next wave of launches, apart from the 3 that we hope to get in December, where I called out Simponi, I think the next ones that we are most excited about is Entyvio. We expect to be the first to market, and we expect to see this limited competition have a fairly long window this competitive advantage period with no other company coming through. So we're excited about it. I mean it's a multibillion-dollar market, both in the U.S. and in Europe, and we just launched in a couple of markets in Europe on approval. So all of the assets that is not you pick upon. But we have said that we will be expecting to get approval soon next year, and we'll be looking to launch.

Got it. So the status of the biosimilar Entyvio is it sort of filing ready? Or there's still some additional steps to getting that to be filing ready?

No, we have said that we will be looking to file this year for the U.S. market and get approval next year.

And you said limited source -- what's the visibility? How many potential entrants could be there?

As far as we can see with our market intelligence, there's another company out there and at least in terms of being in one of the first waves, and then we'll see -- we believe that we have at least 1 to 2 years of competitive advantage period.

Okay. It's a little surprising just given the size of that, right, isn't the revenues north of $5 billion or so?

Yes. Yes. I think we have seen those for multiple reasons, either companies have not gone after it, and we've had this -- woken up to the commercial attractiveness of it a bit late, and that gives us that advantage where we've been able to get it. It ties up a bit something that I've commented quite often that we are one of the best development teams in the biosimilars universe, best research and development teams in the biosimilars universe and which is why we have been able to have this asset like Entyvio or Eylea high-dose, we just announced that we started confirmatory trials. And that's again another critical asset that we believe that we have at least like 1 to 2 years of advantage over our closest competitors. So that's one of the things which really differentiates us. To bundle in with this, we have like another 4 to 5 assets where we expect to see limited competition in the near future.

Yes. I mean my general understanding is you need a constant cadence of launches to be really successful in this business. And so perhaps some of the companies have started to exit the space. And maybe that is to the advantage to you, right, where you see these opportunities now where an entity like Organon may be underinvested in biosimilars because of balance sheet constraints and trying to manage certain EBITDA targets against challenging growth dynamics. So do you feel like there's some competitive whittling away finally? I know it's been like the long promise of last man standing, right? You or something like that.

We have set this out in the public, too. I think the industry -- we won't be surprised to see some consolidation continue in the biosimilars industry. And I mean you and I know we have seen a couple of exits in the last few years. I don't need to name them, but we have seen a couple of exits from the biosimilar space. And I as an analyst at the time, thought that was a strategically wrong decision and I still believe that. But it does whittle down the competition for us. And so last man standing, I think there are a few who are serious contenders with pipelines of 25 to 30 assets coming close to us, and we think these are the ones that will stand out and really differentiate in the market.

Okay. Yes. And is the observation that changed in terms of what the typical product life cycle is before a biosimilar launch may turn from a source of positive growth to a decline? Some analysis on when I look at maybe the first generation, second generation of biosimilars was you got about 3 to 4 years of growth and then you started to see some compression. And I don't know if those factors were price or more kind of just competition and volume driven.

So yes, it will be a function of competitive dynamics for sure. I mean we have seen, I would say, 3 waves of differentiated biosimilar launches, let's say, 2015 to 2019, biosimilars struggled as we saw to really gain traction. The innovators managed to really build a ticket a moat around their brand and just use ban tickets to protect their assets. And we saw it come, we saw biosimilars struggle, right? 2019 probably was the one where we saw some meaningful launch with UDENYCA in the pegfilgrastim space. And since then, we saw a couple of biosimilars achieved pretty good success in the U.S. market, again, addressing this from a U.S. market perspective. And then Humira was the one where -- the third wave, I would say, which had totally different dynamics. pharmacy reimbursement, 8 to 9 players. Stelara was also closed by both of them were similar in terms of that nature, competitive pharmacy reimbursement, private label played a role, all of it, right? So I think the next wave of assets that are coming through are mostly in the buy-and-bill space, very different competitive dynamics for this too. So in terms of peak size and sales, so that's why I say coming to it, 4 to 5 years would be a good number to look at, again, depending on what the competitive dynamics is, but 4 to 5 years. More importantly, after reach a peak, you're not falling off a cliff. There's still going to be a fairly stable tail life to these assets, unlike, let's say, in the generics world. So -- which makes us, I would say, on a general observation, not so dependent on new launches unlike in the generics world where you have to get like 20 new launches every year to be able to sustain the revenues.

Yes. So do you see the role of private label as a long-term trend in the space? And you talked about some buy-and-bill launches versus sort of an outpatient subcu I&I drug like Humira or SKYRIZI eventually, like are those the sort of categories where the private label entities will just opportunistically swoop in on?

I think private label is going to be of less importance for the next wave of launches compared to Humira and Stelara just for very obvious reasons around the way the drug is dispensed in all of us. So I think it's going to be of less importance. And even with Stelara, I think we had said that we were deemphasizing on the channel, and we had other ways where we thought we could gain better traction and better value for our product, and we deemphasized the private label approach.

Okay. So maybe just thinking about the commercial opportunity for Simponi and low-dose Eylea. First starting with Simponi. So you have one other identified potential competitor. You get approval sometime in second half potentially. This is roughly $1 billion-ish net sale product, I think, in the U.S., correct me if I'm wrong. It sounds like with having a subcu, having an IV, you can kind of compete broadly here.

Yes. I think we're in a very strong competitive position with regard to Simponi. And so we definitely look forward to getting approval and getting this product out in the market through our partner as soon as possible. Just, of course, the competitive nature of it and the fact that the other company that we have spoken about, we'll see if they get into the market and when they do enter the market if they are post approval. But I think the, a, the opportunity is intact for us, and I think we are in a very strong position competitively for it. So it should be an attractive one for us to look forward to. Eylea, there are a few players in this market. But again, for us, with the fact that we have high dose in a couple of years from now, and we just started trials on it. So I think the fact that combination of these gives us a strategic advantage.

Yes. So when we look at the behaviors of, say, an AbbVie with Humira, right, or a J&J with Stelara in the U.S. specifically, right? How much -- can you kind of discern how much that seems like they're may be dropping price somewhere 30% to 50% year 1 and hanging on to volume? Is that a playbook, so to speak, for the brand companies where they're seeing how they life cycle manage and mitigate the impact and pain that biosimilars drive to their brand?

I think ultimately, anything where biosimilar penetration has not been achieved is only going to invite regulators and policymakers to look at this and say, why is this product even 4 years after patent expiry? Why are biosimilars not like getting more than 50% share? Why they're not at 70% or 80% share? Because in Europe, I mean, we have seen 80% to 90% penetration for most of the biosimilars. And if you don't get there, I'm sure at some point, policymakers will need to and will be looking at this and wondering what's happening here.

Yes. Is that going to be driven by -- what is it AIM, the policy group that represents low-cost providers of medicines in the U.S.? Like what -- is there a push at all to drive some of those changes? Or what makes that something more concrete, I guess, as well?

Yes, I think it definitely is. I think AIM, of which we are a member to, has been quite in the forefront for this in terms of ensuring that there's greater access to lower-cost medicines, both on the generics and biosimilar side and especially now on the biosimilar side because a lot more value cost savings that can be achieved on the biosimilar side, and that's -- that has been the focus and they've been able to gain significant traction with the regulators on this.

Okay. And then Eylea HD, is this going to be a situation where in you launched this. Is a lot of the volume shifted to Eylea HD. And so you're trying to drive maybe a shift away from the HD utilization to the low-cost LD. I don't cover Regeneron, so I don't know where the splits are at the moment in terms of the opportunity there.

Yes. I mean high dose is a large one, of course, and Regeneron is definitely shifting significant amounts of volumes from regular to high dose understandably because you'll have a few biosimilar versions coming through by the end of the year. So they want to protect their Eylea franchise, understandable. And for us, I think this -- competitively, it just makes it better for us because Eylea, we expect to be one of the first to market and have this period of where we think that we are a couple of years ahead of most of the competitors set. So it works out well for us in terms of like future assets and future value that we can generate from that.

And if you want to outline, if you could, just the cadence of launches post 2026?

Yes. So we've called out biosimilar Entyvio and then we have Xolair in Europe. And then we have a couple of other assets that we have called out on near- to medium-term opportunities beyond this. We're looking at Cimzia, we're looking at TALTZ and many of these are limited competition products, too. So I think those ones we'll be looking forward to.

There's -- we were talking before this, right? There's some big chunky biologics that come off patent technically by the end of the decade. We know these are going to be competitive spaces. So how do you approach that? Do you just say, hey, we have to be there because we're a leader in the space or do you forgo those types of opportunities?

So we've disclosed KEYTRUDA amongst our assets, and it's going to be a competitive market. So the economics for this -- just the sheer size of the molecule, it may not directly reflect it, but at least it's still such a large market that there will be something for everyone. That's the way we think about it. And then secondly, I think also having this portfolio approach too helps and especially for us with these -- some of the assets that we have launched by then, just having this portfolio really helps in getting some traction there, too. That said, would it be something that we would be really excited about on flag and call it out, rather unlikely, but it is an asset that we will be getting it out. What we did strategically, though, which is very interesting is we have partnered with Ades on it and where we share the development cost. So we bring down the cost of development for us by half, and we share the development costs and we'll be looking to get it out at the right time.

This segues to -- when we think about some of the more established products like Humira, how does the portfolio benefit you with like the new product introduction, right? If you're trying to win the big contract with CVS, right, or a big contract within the space, how does having a lot of other things to offer give you, basically give you a foot in the door? Is there the opportunity to maybe do bundling or anything along those lines?

Yes. I'll address this rather in a generic way, but I think it's a no-brainer, right? There over the next 15 -- 10 years, 12 years, there are around 120 biologics going off patent. And having a bundle of these biosimilars, biosimilar versions of this definitely helps in having discussions. And as we started discussing around the industry and the trends of consolidation, if you are just a 1 or 2 trick pony, I think you will be irrelevant in a couple of years from now. And which is where I think having this broad portfolio, this pipeline really gives us a strong seat at the table.

Okay. Maybe then just with Humira, Stelara, current U.S. OUS. market dynamics, where you see the growth opportunities with each?

Sure. Let's take the one that we launched last year, Stelara. We have said that we had deemphasized on the private label. The formulary partner, Teva is doing a great job on the formulary side and getting a lot of traction. Humira, we have the second largest market share with 10% plus market of the biosimilars. And then Stelara, we are winning multiple downstream contracts, so non-branded side. So we are gaining a lot of traction there at economics, which really reflects the value that we bring to the table. So we're definitely getting wins on those sites.

Yes. Is pricing holding up better for you as a biosimilar entity in U.S. or OUS market? And it ultimately translates to sort of revenue and margin. But when you think about those markets?

Yes. I think we have said that, in general, I think with some of these assets, Europe has been a pretty attractive market for us. Japan, again, is another pretty attractive market. The U.S., I think Humira because we have the interchangeability and the exclusivity on it that helped. Stelara is one where I called out the pricing as one which we saw some of competitors go down to pricing that we decided not to compete on pricing at all. We just are undermining the value that we bring to the table and following the pricing curve. And we stuck to what we think is -- reflects the value that we bring. And so there are different dynamics definitely on the Stelara side. But in the next wave of launches, I think those things will probably be less material just because of the nature of the products, the reimbursement dynamics and the limited competition nature of this.

Let me get you out of here on this. FDA seems to be lowering some barriers to entry and expediting review process. So how does this impact either development costs, like speed to market? How should we think about some of those trade-offs between opportunities and competitive risks?

Yes. I can think of 4 ways that it impacts us and impacts it, right? Firstly, development cost definitely goes down, not having to do clinical trials for at least some of the assets, not for all, brings down the overall cost of development. Two, it also compresses the time line. I think where we would say initially 6 to 7 years, we now say 5 to 6 years. Three, what it does, which I think benefits us a lot is that FDA, while it may not ask for clinical trials, is going to focus a lot more on analytical data on the data that is generated. And I think that is one of our strongest points. So it really plays to our strength there. And a function of all of these means that we also are able to now go after more programs at the same time just in terms of being able to use the limited resources that we have and just expand into 1 or 2 more programs and which we anticipated 2 years ago and which is why we have like one of the largest pipelines in the world on the biosimilar side. So we did anticipate this and factor this in and expand our programs accordingly.

All right. Great. We're out of time. So thank you so much for joining us.

Of course, Jason, always a pleasure, and thank you for inviting Alvotech and always a pleasure to speak to us, and thank you for this.

Yes. Great. Thank you.