Conference Transcript - ALVO 2026-06-04

Speaker 5

Good morning, and welcome to the Jefferies Global Health Care Conference in New York. My name is Marco Baruzzi from the Jefferies Investment Banking Team, and it's my great pleasure to introduce you to Robert Westman, founder and executive chairman of Alvotech, and Balaji Prasad, chief scientific officer of Alvotech. So maybe to kick things off, would probably be good to get maybe a little bit of background on Alvotech including you know the platform key differentiators and you know the current products you have in portfolio maybe to

Robert Wessman, Chairman

start yeah good morning and thanks for the invitation pleasure to be here today we have been building Alvotech since 2013 it's a fully integrated platform end-to-end when it comes to manufacturing when it comes to R&D. We have invested in the business around 2 billion, where a big portion of that is in the portfolio. And we have currently three, five products on the market in the rest of the world, but two products on the market in the U.S. and with the resubmission which was published just a few hours ago, we expect to have five products on the market the end of this year so our basically strategic advantage we believe is that having a fully dedicated end-to-end by a similar platform where we have everything in-house and we believe we have one of the strongest pipeline in the industry and just to say that we have built out the commercial infrastructure over the last six seven years and that infrastructure is now spanning over 90 countries. So the company is definitely at the inflection point where we are going to use all those tools to basically make the company grow and become more successful going forward.

Speaker 5

So maybe just going back to what you said earlier, you made a pretty material announcement yesterday evening about the resubmission to the FDA of your EUSBLA for biosimilars of Symfony and Elea. Many investors are expecting this to happen probably towards the end of June, so ahead of timing. So could you maybe walk us through how significant this is for Alvotech?

Robert Wessman, Chairman

Yeah, so basically we have three products being resubmitted. Maybe the most important one is the biosimilar to Symfony, Symfony Aria. we managed to be the first to launch that product into Europe and we are seeing that they are gaining or our marketing partner is gaining very strong markets here in Europe already in some of the key markets we still believe that we will be in the first wave there's a very limited competition in US we actually only know of one filer and so this is pretty significant for us And we assume that we will be launching those three products by end of this year. So the other two being BioSematoa ILEA and then Prolia and Textiva.

Speaker 5

Robert, could you maybe remind us of the remediation efforts you've implemented to address the FDA observations on the CRL and maybe also explain what safeguards you've now put in place to prevent similar issues recurring in the future.

Robert Wessman, Chairman

Yes, so first of all, the facility in Iceland is a new one. We have invested half a billion or more into it. We are approved with all the main health authorities in the world today. We are, of course, approved in the U.S. we got those CRLs for the PLAs we had on file with FDA. We only launched the first product into U.S. mid-year, 2024, and since then we have had four FDA inspections. Iceland is very nice to visit, as you can imagine. Since we got the CRLs, what was pending there was pretty straightforward. We are using farma-grade silicon oil for our rubber stoppers in our syringe, as I guess many of the industry competitors, if you will, for a similar machine, which is made by one of the best ones in the world. And we managed to run that machine without any farma-grade silicon oil now. So that's off the table. being a company only 80 months into the US market we had already been working on the process of customer complaint meaning if if your auto injector is claimed to be faulty we have saved five million pants I think we had around 500 faulty pants which in ratio is very low but still the process we have been strengthening and our marketing partner actually in the end is responsible for customer complaint towards the clients but the processes we have been strengthening and the last point is then multiple continuous improvement if you will over 200 kappas implemented and we feel very strongly uncomfortable about the outcome of course being a new facility which give us a advantage but overall I mean being less than two years into the US market this was all long going when we caught the CRL and I can say that we have had three very successful FT inspections to 24 where we got 143 and another one where we got 243 And we actually got an in-between now before we resubmitted FDA into the facility, which concluded in May. And, again, that was underlining all the strength and changes we have done because we believe that the inspection was very successful.

Speaker 5

Robert, in the resubmission, you only included two out of the three products at the CRL. So Peralio was not included in there. Why is that? And when did you expect to resubmit for that product?

Robert Wessman, Chairman

Yeah, it's a good question. It's actually imminent. But in this, with our partner there, our partner will be holding the marketing authorization in the U.S., and they are responsible for the resubmission. So that should be pretty imminent. I'm talking about days.

Speaker 5

Yeah. And, I mean, given the FDA just completed the routine GMP surveillance inspection in May, how do you view the likelihood of another inspection related to your BLA's?

Robert Wessman, Chairman

Yes. So what happens now when you resubmit is that you start a six-month clock with FDA. So we expect to be on the market with those three products and before end of this year. FDA can choose to come or they can choose to basically use the basis of the inspection which happened in May or concluded in May this year so it can go either ways but in our mind it doesn't matter because the company, the facility and the team is fully ready to receive FDA whenever they want to come

Speaker 5

Thanks, Rob. So maybe let's shift topic on your new Fujifilm partnership that you recently announced you know this partnership with Fujifilm that expands your global manufacturing network now you have a second source of commercial supply in US and in the UK could you elaborate maybe what drove the rationale for doing this

Robert Wessman, Chairman

yes so first of all we are of course super proud of having Fujifilm as a partner I think I think we are likely to be one of few, the only one working with them as a buyer similar company. They are mainly working with big branded companies. So big achievements to work with them. When we started the business, as I said, it has been a long journey since I founded the company in 2013, 2 billion gone into it. and a few years ago we expected that the FDA would change the requirement when it comes to clinical and we started to evolve the business over two years ago to adjust for that increasing the capacity in cell and development process development and getting ready to to scale up so those changes are taking place now but we have been working based on this on back of this for a long while, which is basically the reason why we have most likely the strongest pipeline in the industry when it comes to pure play by similar companies. So even though we have said that the capacity in Iceland out of this amazing facility we have invested over half a billion dollars into is very strong, we want it still to have a supportive capacity because the pipeline is even broader than we assumed at the beginning when I founded the company. And we have to remember that we are launching three products in the U.S. end of this year. We are seeing a very strong growth in our, both by a similar to Humira, Stellara. We are seeing ourselves taking a very strong market share in biosimilar to Symfony and Symfony Aria, which we recently launched in the global markets. And we are submitting or have submitted two major products which will be approved next year. So when it all comes into the funnel at the same time, we felt it was super important to have more capacity to basically be able to be in the lead and service our clients well.

Speaker 5

And, Orbit, how are you thinking about this incremental capacity coming online in terms of timing? And will it be more focused towards manufacturing of existing products or pipeline?

Robert Wessman, Chairman

Yeah, it's a good question. We actually have been working on this for quite a while, so we assume that the supplies out of Fuji would take place after mid-next year. So it's pretty imminent, if you will. We will be, for different reasons, both having commercial products and pipeline products going in there.

Speaker 5

Thank you, Robert. Maybe let's shift to pipeline. So you recently submitted an MMA to EMA for your Biosimilar Intivio. How do you view the market opportunity for Biosimilars Intivio in both Europe and the U.S.? And what does the competitive landscape look like?

Robert Wessman, Chairman

Yeah, it's a very good question because Intivio was not a big product when we started to develop the product. it was a couple of hundreds of millions and not many companies by similar companies therefore look that and give you as a big opportunity we assumed when we saw about the and TVO there was a head-to-head clinical study done between and TVO and Humira that and TVO would be for some indications shown some stronger efficacy if you will. So we started to develop that product with intention to be the first to market. The brand has since launched SubQ version also and we of course changed the brand with that. We believe that we are in the pole position. We believe that we should be first to market with it and today is a $7.5 billion global sales of the brand, and we assume that this year we will be done with global submission, including U.S.

Speaker 5

And also in the U.S., do you expect to be able to be first to market?

Robert Wessman, Chairman

We assume that, yes.

Speaker 5

And with respect to the two of the other three biosimilars in the U.S., you see the CRLs, Symfony and Ilya, how are you thinking about the relative market opportunity for each?

Robert Wessman, Chairman

Yeah, I think Symfony area is one of the products we did pick back in time because it's a small to medium-sized brand. It's $3 billion plus globally. and we expected to see a very low competition we we have launched now few months into Europe where we are still the only one on the market we are seeing that only few months in a very strong markets here in Germany where we are seeing around 20% we are seeing very strong markets here in in Scandinavia Nordic Netherlands and all the markets so we are very happy with the outcome there we of course might see a competition both in Europe going forward and in in US but it will be most likely excluding the brand two to three player

Speaker 5

market at most and following 2026 what does the cadence of your launches look

Robert Wessman, Chairman

like yeah I mean we have a very strong pipeline as I mentioned of course very busy towards 26 with with the launches and approval happening this year and the end of this year in the US we will be launching and TVO next year we we have another one which we are very proud to have and we believe we are the first also which is the high dose to ILEA we we have been extremely successful going after the brand and all the changes you are seeing in the brand have been in this business for now 26 years and created seven global companies and and we know that the brand companies likes to move into different forms and strengths and what have you and we have been super successful so when Regeneron announced that they would go from two milligram to eight milligram high dose ilea which we agree is in many ways much more convenient for patients due to dosing frequency or less frequency. We basically started to develop the same before we saw the brand. We started to mimic how the brand could look like. So one day they launched, we already had our formulation, six different formulations. and one of our formulation matches perfectly what Regeneron is doing. So we believe that we are the first one there. We are seeing that 40% of Regeneron sales of ILEA has converted to high dose which is exciting both in Europe and US and we are also super excited about the OccuClick, which Retio Enron is coming with, because we have a strong belief that we will be most likely the only one with that device competing with the brand going forward.

Speaker 5

And on the ILEA high dosage form, where are you currently in the development of that? Sorry, on ILEA high dosage.

Robert Wessman, Chairman

We are basically done with the development for the rest of the world. And we started clinical because USFDA did not give any source of clinical waiver. And we announced the start of the clinical a few months back.

Speaker 5

So your next set of potential launches will be in the buy and bill market. Could you maybe help us better understand how you expect this market dynamic to evolve compared to the pharmacy benefit channel? and what differentiates success factors across the two?

Robert Wessman, Chairman

Yeah, it's a very good question because pharmacy benefit we have seen, of course, by a similar to Humira, Humira being the biggest, we can say, retail product, being the biggest pharmacy benefit product, if you will. And we saw dynamics there where private label was playing a big role, as you know, with three big PPMs. When you have a medical benefit, the role of the big three is different. It's a different channel and the role of any kind of private label is much less or not even existing. So in medical benefit, we are seeing more number of clients and customers, and we are seeing different dynamics when it comes to pricing, if you will, in favor of biosimilars.

Speaker 5

Thanks, Robert. So maybe let's shift to the broader biosimilar market. It's a massive opportunity over the next decade. Could you maybe frame the LOE outlook for the category overall and what portion of that market you're currently targeting?

Robert Wessman, Chairman

Yeah, I mean, as we all know, 40% of the $1.8 trillion market, pharmaceutical market, is now biologics. We are seeing 60% of phase two, phase three with the top 10 pharma companies, 60% being biologics. So I assume the 40% will move towards 50% to 60% going forward. This industry, in my mind, is very exciting because to maintain health care in all global markets, you need biosimilars because it's impossible to treat patients with the brands because of the cost. As we know, cost per patient can easily cost $80,000, $90,000, $100,000. and for chronic use products like Humira to maintain that for any healthcare systems is not possible. So brands and biosimilars kind of needs to hold hands to both continue with innovation and then opening up access. So if you look over the landscape, there are only a handful of existing pure play by similar companies, which have, as I mentioned at the beginning, both R&D, end-to-end, from cell line to finish BLA to filing and regulatory in-house, and manufacturing from drug substance, drug product fill finish and even assembly of devices like auto-injector in-house like we have. So it's a different dynamics going forward, I believe. This industry is a very young industry, as we know, and we only started to see market share being gained by biosimilars around 2018 2019 and this is here to here to come the world markets are actually we are seeing strong conversion in in most of the markets in the world of biosimilars so for us this is very exciting having a company which took us 13 years to build it cost us two billion dollars to build the entry barrier is big because for many others which want to get into the business they have to have to spend the same time most likely well north of a billion at least if they want to have a decent portfolio so I think Alvortech is in a unique position with only a handful of likes of Celtrion, Samsung and a few others which will be opening up access to all those medications for patients going forward. And as I mentioned, having five products on the market and soon five in the U.S. from two, having 30 products in the pipeline, we have most of the valuable products in our pipeline which are going off paid and going forward. And when I say valuable, it has to be products where we are basically opening up access because otherwise we are not adding any value. We are not offering anything new to patients. So if you believe there will be five or ten other competitors, that's not a value-add product. So we believe we have a very strong pipeline which we can use and engage to open access across the world.

Speaker 5

And just following up on that, how do you actually select your pipeline? How do you pick the pipeline candidates? What criteria do you use to select the products to develop?

Robert Wessman, Chairman

Yeah, as I said, it has to be a value add, meaning opening our boxes. So we have to have a conviction that we will be in the first wave or first to market. We also, when we start developing a product, I can almost take every single product in our pipeline, which is late stage, including Humira. When we saw that Humira was changing for low-dose to high-dose, we stopped even developing the low-dose and we were the first to come out with the high-dose. As I mentioned, Hidos, ELEA, we saw Antivio coming, we saw SubQ coming of Antivio, so it's both choosing the right products but on the way adopting, adjusting, because the value add might be different than you think when you start the development compared to where it ends when it comes to change. of the formulation dose of the brands during the development period we have.

Speaker 5

Robert, on the regulatory front, the FDA seems to be focused on lowering the barriers to be able to allow companies to expedite the process of development overall. In your view, how does this impact the market? And how should we look at the trade-offs between obviously the opportunity but also the competitive risk of you know more people coming

Robert Wessman, Chairman

into the the biosimilar space yeah again a very good question so i think overall the reason why we expected this is that you need to show of course by a similarity with the brand without the phase three clinical so the pace or the patient study was really not adding anything to the development in our minds. So if you pass the PK, you had to do, of course, a lot of analyticals before you went into the PK. We felt always that the patient study would not add a lot. It is in many ways, you need to show the biosimilarity through different ways. So I would not say that the bar has been reduced because it's done through different means and then you have to prove the similarity through the PK study. So I don't think the barrier as such has been lowered, but a clinical trial which was not really adding any value was kind of eliminated. this means that it still will cost between 60 to 100 million to develop a buyer similar it will take most companies six years we are down to around five years ourselves after optimizing our processes so it doesn't really change the fact that it takes over 10 years to build a company like this and requires massive investment north of a billion if you want to be a player in this industry so I don't think it will necessarily change the dynamics it will allow us instead we were doing like some are still doing I think one new R&D every every year into our pipeline we are now adding new R&D into our pipeline every second month so that's our change but that is basically the effect on the result of the heavy investment we have already made and the infrastructure we have already built.

Speaker 5

Thanks, Robert. Maybe moving to 2026 guidance, you gave for 2026 a revenue range of $650 to $700 million and EBITDA of $180 to $220. Expectations are that with implied these dose ranges across products you know what's included are there milestones how what's the impact of the CRLs potentially in the ranges you provided yeah I think just to say

Robert Wessman, Chairman

that Alva Tech is at the inflection point this year so those numbers you are mentioning includes on the upper level, higher end of the range, a small revenue launch into US end of this year. And we wanted to give the downside to the investors just so they would see what it means if you would get further delays which we actually don't assume as we speak. This year is also, and last year, is being reflected by the fact that because we decided on purpose to continue to elevate the facility which is brand new, we did have a slowdown in production which impacted the revenues not only because of the trees here else but because we had less of a capacity last year and this year so so even though those product product revenues and I would say EBITDA being only less than two years into commercial in the US with immense pipeline in front of us they are still reflecting that we both last year and this year had a slowdown which is all behind us and that's why again i'm talking when i'm looking at the coming five years saying that the company is at the inflection point today thank you robert uh i think we have 30 seconds

Speaker 5

left i don't know if there's any questions from the public you have to speak first maybe one

Speaker 4

question for Balaji since you were a very senior analyst before. Since you were a very senior

Speaker 3

analyst before what made you join the company and why were you excited about joining the company?

Balaji Prasad, Analyst — Other

Yeah sure absolutely so when Alvotech listed on the Nasdaq in 2022 I started following the stories closely started following I having multiple conversations with Robert and saw the pipeline I thought that Alvotech is probably one of the best position companies in the biosimilars world and I've always been championing the biosimilars industry and saying that this is the decade for biosimilars and Alvotech is one of the best position companies there and that was during my days as an analyst and so when Robert reached out last year inviting me to join him I was absolutely thrilled I thought this is this is a great place to be in in a company which is making a huge difference to the world bringing access to low-cost high quality biosimilars across the world improving access and joined Robert and his mission there so absolutely thrilled to be here 14 months later on great to

Speaker 5

be on this ride thank you perfect thank you