Alvotech ($ALVO)

Hi, everybody. Ash Verma here, covering SMID cap biotech and spec pharma at UBS. I'm really excited today we have Alvotech for a fireside chat and Balaji Prasad, who is the Chief Strategy Officer. Hey, Balaji, how are you?

Ash, doing great. Thank you very much for inviting us and hosting us on this. I appreciate it.

Yes. Thanks a lot. So, like, this is our third virtual Generics and Biosimilar Day, a lot of people listening in. So I'm looking forward to having a good discussion with you on the story, a lot of different exciting developments that have happened, right, in the recent past couple of weeks. So yes, I would love to dive in. I'll just give a quick reminder for folks. I mean, as you know, like [ Extel survey ] is going on. I'm in the Spec pharma and SMID cap biotech category. So for the investors who are listening in, feel free to vote if you like our research, interactions, events, stuff like that, would love to get your support. And I know Balaji were also on the same side of the aisle, not too long ago, right? So you understand the drill. And I mean, I'm going to open up to the audience, like, at a later point of time, just like we -- once we make enough progress on the conversation here between me and Balaji, and then we can ask more investors to come in and ask questions if they want to. But yes, so with that out of the way, I guess, like, if you can just give us a little bit of a quick overview, Balaji, on the Alvotech platform, like what is your kind of capability as it stands right now, sort of an overview of the business, just briefly before we get into more specific questions.

Yes, sure. Absolutely happy to jump into that, Ash. But before that, let me also say thank you for doing this investor event focusing on generics and biosimilars. It is a very important sector. And I mean, we all should know that. But the fact that you gave it a focused attention for a day or half a day and host this is commendable. So thank you for that. Coming to Alvotech itself, let me start with a brief overview. We were set up, incorporated in 2013. It was set up from the word, set get-go as a pure-play biosimilars-focused company. So one of the very few biosimilars focused company globally. We have a completely vertically integrated infrastructure in our large facility in Reykjavik -- so based out of there. And over the last 12 years, we have invested more than $2 billion into this platform and the portfolio development. What we have as a consequence is nearly -- is more than 30-plus biologics under various stages of development, commercial ones, 5 commercial products, all of it. And we believe we have the largest pipeline, if definitely not one of the largest pipelines in biosimilars globally. And the big differentiating factor for us within these biosimilars in this pipeline is that a lot of these are differentiated assets where we are first to market or one of few to market. So it's a limited competition opportunity, technically difficult, multiple reasons for companies not to have been able to come there, but Alvotech has been able to bridge that gap, and we are there. So one of the key data points as I was looking at recently was that we expect 5 or 6 of our next 8 launches to be into a limited competition field. A couple of them will be even one where we'll be the only ones for a fairly long time. So we're really excited about this play, the next phase of growth for Alvotech after being a commercial company 2 years ago in the U.S. when we launched biosimilar Humira. Beyond that, Ash, look, this call today is also very nicely coincidental for us because we just had a couple of major updates on -- from our side, including the resubmission news that we announced last week, late last week and also the FDA acceptance of our biosimilar to Entyvio earlier this week. So a pretty opportune time for us also to be discussing this. And as we look further down, I think over the next couple of years, we'll look to bring many of our differentiated assets into the market. We are at the edge of a critical inflection period for Alvotech, looking at a period of explosive growth over the next couple of years as this large wave of biosimilars comes into the market and the opportunities comes into the market, we are ready to be one of the most critical players in the space.

Yes. Yes. Wonderful. That's great. Yes. I mean it seems like there is -- like we did this analysis just recently as well, kind of what you're alluding to that there is a massive TAM that is opening up over the next 5 years, like we look at $250 billion and like more than 80 product opportunities opening up. Obviously, when you're focusing on biosimilars, I mean, it's like it's been -- like you've shown demonstrated a pretty decent commercial execution on the products that you've got an approval on like when you think about the U.S. market opportunity, what are some of the -- like the key winning success strategy to maximize the revenue opportunity for someone like you?

Sure. Firstly, an overarching statement is that by design and by intent, we set ourselves up as a B2B platform. So we do not sell commercially anywhere globally. And we have 19 partners globally who provide us access into 70 to 80 countries. And for the U.S. market, our key partner is Teva. And Teva is the one who was launched biosimilar Humira for us, biosimilar Stelara, been a very good partner on multiple ways. And we'll also be launching the next wave of our assets, including Eylea and Simponi and all. We also have a partnership with Dr. Reddy's who'll be launching Prolia. Coming to what is it -- what is the most critical success factors, definitely, speed and execution play a big role and also be having a vertically integrated infrastructure that I called out earlier, which really helps us. Apart from these, I think from a purely commercial standpoint, being early to file or the first to market is a strong differentiator. What we have seen is that there is definitely a first-mover advantage for the first, I would say, 2 to 3 players in the market. And then it also tends to be fairly sticky and especially from a longer-term share capture and tail perspective. So a blend of all of these and maybe further down the not so obvious factors, which are pretty important is reliable manufacturing. We have, as I said, one of the largest biologics facility in Europe in Iceland, where we have said that we have enough capacity to supply up to 2030. We have a very strong channel strategy. And of course, our commercial partners and a very strong leadlenth partnership strategy with Teva or with JAMP or with Fuji means that we are fully, fully integrated into the commercial planning and execution that really also helps us a lot. And that is why as we speak today, we have the second largest market share in biosimilar Humira. We are gaining significant market share in biosimilar Stelara, and we are looking forward to very eagerly to the launch of Simponi and Eylea regular dose towards the end of the year.

Yes. Great. So yes, I mean, I think this is good to get more information on. Maybe I think just like when we look at some of the filings that you put in here like for Simponi, Eylea, Entyvio. I know there has been a big focus on this, like in terms of where we are right now. So you've submitted the filing basically, like you said like by end of 2Q, you will be in. And we saw that like it's worked out perfectly from that standpoint. I mean, I think from here, obviously, like a lot of focus on regulatory approval. And what would love to understand is like what's your confidence level that you should get an approval? Are there any steps along the way that you would inform investors on any milestone, any interaction with the FDA as you're going through the process? Just help us understand like what can be learned going forward from here.

Yes, absolutely. Ashwani, the FDA visited us last late June and early July and then issued the 483s, and then later on in September, they came out with a post-action letter stating that there were 3 pending observations from these 483s and considered the other 7 resolved by then. For us, the path forward was very clear. But what we also wanted to -- and actually, this is extremely important to emphasize is that we are not just looking to address the FDA questions just from this post-action letter, but to really put the firm in a very strong position of what I could almost say, call it FDA-approved or regulatory agency-proof over the next few years. And which is why we, as a management team, took the conscious decision to really strengthen the process beyond more than what was just being asked. We went over. We implemented nearly 200 CAPAs over this period. And so collected abundant data that led us to the resubmission now. In the process, and I'm sure we'll discuss it later, we also implemented multiple slowdowns and shutdowns, which had its implications on the PL of the last couple of quarters, too. But we decided to take that and invest that into strengthening the firm from a longer-term perspective, right? So we were extremely happy to have submitted the -- resubmitted the BLA responded to the FDA and resubmitted the BLAs on June 4, which sets us on a 6-month review clock and a potential approval by December '26. How do we feel about it? We feel extremely confident about it. We think that there is -- we have done more than adequate what is needed. But of course, there are always 2 parties to this. There's still the FDA, which will need to say that they're okay with us. With regard to this, one of the things which also played out to our advantage was the surprise inspection by the FDA in the first week. That was a cGMP inspection. What we had last month in the first week of May was a cGMP inspection. And so the inspectors went through everything in detail. And obviously, they had the benefit of the previous observations, too. And in fact, we, as a management team, requested the FDA to look into the specific observations that were mentioned in the post-action letter. And one of those few instances where a pharma company actually request the FDA to inspect us more thoroughly and said, please look into this and give us your thoughts, and they checked all of it. So that gave us the further confidence and validation, not just by some ex FDA inspectors, consultants, but current FDA itself too. So from here, what is the path forward? So we have resubmitted the BLAs, starts a 6-month clock. We do not know at this point whether the FDA would plan to reinspect us or not. They could or they could not. We will look into that. And yes, and come December first week, I believe and hope that we will be -- we would have received the approval and be looking to and getting up for a launch immediately.

Yes. Yes, it's great. I mean I think inspection, like from our research perspective, seems a little bit unlikely given that you've just recently gone through that, and you've clarified some of the steps with the FDA. So is this like for these filings, are we going to get to know like when they accept the filing? Do you typically disclose that? And just I'm trying to understand like is it like between now and like December 1 week, is there any information that you would be providing on any interactions with the agency or acceptance or...

I think if you look at what -- almost all our peers have done in a similar circumstance, Ash, there's limited information that we would give out, right? Because this is an ongoing process sometimes it could be an ongoing process. We'd love to provide some updates, but unlikely that we'll provide an update before the approval comes through on December.

Got it. Okay.

If there's something incrementally that we can provide some color to for investors, if there is scope for anything at all, we will always be happy to look at it. But at this point, there's nothing that I can guide towards.

Yes. Yes, that makes sense. Okay. And in terms of just the -- like how should we think about the -- like the approvability of Simponi, Eylea, versus Entyvio? I mean, is there any -- so obviously, like your partner submitted the application, right? At the end of the day, like the prior CRL was just around the manufacturing facility. So there wasn't any type of issue pertaining to the molecule or clinical data that was highlighted by the FDA. Just correct me if I'm wrong. So if you have addressed like the manufacturing plant issue and FDA is comfortable with it, that should mean the same outcome for all 3, irrespective of who filed it?

Yes. Yes, I would agree with you on that. And we were, in fact, very relieved on -- of course, there were no observations or pushbacks on the BLA itself on the quality of the data on the evidence that we submitted and the BLA package itself on any of the 3 drugs that we had submitted. If you look at the CRL, probably in the public domain. But if you look at it, what the CRL states is there are outstanding issues with the facility. And as long as the facility -- these 3 -- as long as the facility issues are outstanding, we will not be approving these new drugs. And so that gives us a lot of confidence. We still need to, of course, get the approval in hand really to be full confident. But of course, we are -- we believe and are sure that we have done everything that could have been done. Between Simponi and Eylea, Simponi and Entyvio, I think it's it will be -- I'll be speculating at this point. We can't conjecture there. But the one point that I'm going to say is that with all our applications till date, we have never had pushback -- FDA pushback on the quality of the data, on the quality of the product itself or any such clinical questions. So we have had like a 100% success record with regard to that. It's on the facility side that we have had twice these delays.

Yes. Yes. Got it. Okay. Maybe just like a quick word on the commercial opportunity here. Like if you look at Simponi, obviously, like you have potential for first to market and then Prolia, like -- so that's like something that will be done by Dr. Reddy's. And then Eylea, if you can talk about just like how do you how do you see the competitive landscape by the time that you get to the market?

So what we have said is -- so purely in terms of the commercial opportunity, let me start with how we have thought about these 3 assets. We are always excited -- we have always called out Simponi as the one of these 3 assets, which was the most attractive for us considering that we'll be in a very limited competition space for this drug, right? So Simponi, as we speak today, there are only 2 known filers. It's us and Bio-Thera. Bio-Thera got approved on May 16 or May 17. And then we saw a press release stating that they are looking to launch in Q4 of '26. And we -- instead of being approved in Q4 of '25. We are now looking towards approval in Q4 of '26. So the commercial opportunity for us is very much intact even when we launch in Q4 '26. Yes. That's -- there is no delta or change in the commercial opportunity. It's going to be the TAM is intact for us. Of course, what was there is the opportunity cost of not having launched a couple of quarters earlier, and I acknowledge that. The second one is Eylea, again, Eylea regular dose. As you know, most of the players in this space are settled towards a Q4 '26 or a Q1 '27 launch. And again, in terms of a commercial opportunity, even if we had gotten approved last year, we would have come in and launched only in Q4 where we have a settled date with Regeneron, yes. So 0 commercial impact per se. The last one was the one which we have always called out as the most competitive and probably the least attractive of the 3, the least revenue generating of the 3 was Prolia. And that still is the case. And so again, because of how it was in our pecking order and the relative position of this asset within these 3 drugs, again, no commercial impact there for us. It was -- it didn't contribute much in our earlier plans, and it's the same now, too.

Got it. Okay. All right. Perfect. This is good. So maybe I have lots of questions, but I actually want to just like open it up here. Operator, maybe if you can open up and see if any of the investors listening in want to ask questions.

[Operator Instructions] We have no questions at this time.

Okay. Perfect. So yes, let's talk about Fujifilm, right? So that's a big strategic step for you, obviously, just like securing a secondary source of manufacturing capacity. I mean, I think where I was like trying to understand the implications of this, I think some of the companies like some of the companies that we're hosting today even and others that I talked to, they talk a lot about like just the advantage of vertical integration through and through. So when you think about that for you guys, like do you have like a reliance on a CDMO for the U.S. market, does that make challenge the notion that vertical integration not necessarily is as big of an advantage as some of the other companies are claiming it to be?

So again, let me clarify that stance, Ash. I think we also have this discussion probably around post earnings calls. So we are a vertically integrated company, right? Everything from research and development up to manufacturing happens. It is the commercial front end because of the company and [ overall ] priorities and what we are focusing on, it's something where we're partnered with partners globally. This partnership, as I said earlier, brings in significant advantage in that we are able to launch and sell in 80, 90 countries without any challenges. Of course, it also means that we share the economics and with partners, but the partners also bring us resources to expand our pipeline, carry 4 to 6 pipeline programs at any point of time in the year. right? So that's one. Fuji is our partner for manufacturing and is a second source of commercial supply in the U.S., as I said. We are extremely excited about this because we have always said that we have manufacturing capacity up to 2030 at least from Reykjavik, where we have invested a significant amount of money. And as we think about this next stage of growth for Alvotech, as I said earlier, we're going from a 2-product company in the U.S. to 5 products. We already sell 5 products globally. And next year, we'll also have additional products coming through both in Europe and in the U.S. And we thought it just makes a lot more sense to have this partnership in place. And Fuji is a highly respected manufacturing partner. They have the largest facility in North America for biologics. So it gives us immense flexibility, right? So multiple things. One, flexibility in supply; second, a U.S.-based manufacturing source, which has its own strategic advantages. And third, Reykjavik will always remain the most important part of Alvotech's R&D and manufacturing network, but it will also give us significant operational flexibility to based on how things based on particular periods of growth or otherwise that we can leverage and push and pull with these 2 facilities.

Yes. Great. Okay. And then just like a couple of questions in my remarks from investors. So in terms of like the Eylea high-dose, obviously, a lot of investors focusing on that. Just wanted to understand like from your standpoint, what is -- like what is the time line? What is the litigation path? When do you start to think that, that market can open up in a big way? Just help us understand how does that go?

Yes, sure. Eylea, both the high dose and the low dose is an extremely attractive opportunity for us, especially on the high dose side, right? On the low dose, we discussed the potential approval by the year-end and that we will be looking to launch -- our partners will be looking to launch soon after approval and allows for market timing with other competitors in 4Q. High dose is very different. We believe we are significantly ahead of all our peers. We have announced that we started clinical trials that sets us up for a filing and submission over the near to medium term and launch soon thereafter. We are confident about navigating the IP landscape around high-dose Eylea, and we firmly maintain that we expect to be the first to market. And we watch the progress of the Eylea market or the conversion of the Eylea market from the low dose to the high-dose market because it just, like, increases the opportunity that will exist for us when we launch that product in a couple of years from now in terms of how impactful the high dose market or how relevant the TAM will be at the time.

Yes. Have you guided to like -- sorry, yes, have you guided to a time line for when you think you might be able to enter the market?

We have qualified it as a medium-term opportunity, Ash, because you saw that we recently announced the start of the clinical trials and sets us up for a path towards to a medium-term filing and approval. So we are looking towards that as a medium-term opportunity. And I think even earlier, we had always called it out as something that's going to be a critical part of our, let's say, '28, '29, '30 growth opportunity.

Yes. Okay. And then just on like Entyvio, I mean -- so this is another one that I get like a fair bit of investors' questions on that because I know like you guys are effectively guiding to like a '27 launch, whereas the innovator like claims that the patent protection goes out to 2030. So is there any additional like patent dance, any other process that needs to play out here? Or do you think that you like you have freedom to operate or any nuance around like at-risk launch or that type of scenario?

And all scenarios are possible. We'll continue to evaluate it, and we are extremely excited about it. As I said, we are going to be on track to -- so we have guided this to a potential launch in the near term, not in the medium term. So we know that we are going to navigate and get it through. How exactly we're going to get there? We haven't disclosed that in detail for understandable reasons. But let's disclose the opportunity itself, right? I mean it's a massive opportunity, in both within the -- in Europe and the U.S. $7.5 billion in sale and growing. It's around $2 billion in Europe, around $4 billion plus in the U.S. And we have both the IV and the subcutaneous presentations, which are extremely important. So we not only expect to be the first biosimilar to be approved for both U.S. and EU for this IV and subcutaneous presentations. But I think some of our peers don't have both forms of presentations, too, right? And it's with that regard that the Monday announcement of our [ IES ] submission being -- Entyvio submission being accepted by the FDA was very critical. And the market also saw the importance and recognized it too. But I think as we get closer, we'll provide greater details around this.

Yes. Yes. That's great. We are almost out of time. So this is great. Thank you so much for this. And yes, looking forward to learning more about Alvotech and good luck with the regulatory review process.

Absolutely, Ash. Thank you very much for this. I appreciate all the engagement and the questions. I also want to flag and call a couple of other opportunities that we have not disclosed, but they are also limited competition opportunities for us beyond Eylea, Entyvio, Simponi. We are also looking at Cimzia, TALTZ, ILARIS. That's also going to be in the next waves of launches. And we're equally excited about the opportunity there and the fact that, that's again where most of the assets will be first to market or in a limited competition landscape. So the next 5 years looks to be extremely strong for us from a product pipeline and launch and progression perspective and looking forward to get to the next stage with Alvotech there. Thanks again, and I appreciate the questions.

Yes. All right. Have a good one. Take care. Thank you.