Alvotech Q1 FY2025 earnings call

Key Points

• Alvotech decided to list SDRs on Nasdaq Stockholm Market, with trading expected to begin on May 19.
• Near term outlook: Received strong feedback from global partners interested in licensing rights to new assets, leading to revising full-year guidance with top line revenue raised to $600 million to $700 million and adjusted EBITDA to $200 million to $280 million.
• Financial performance: Fourth consecutive quarter of positive adjusted EBITDA and operating profits, with triple-digit increases in product and total revenues. Expected to be free cash flow positive in 2025.
• Stelara biosimilar: Launched in U.S. market after successful commercial launches in Europe, Japan and Canada; in most European markets, either market leader or second largest market share; U.S. FDA approved as interchangeable. Ex U.S. markets also have significant growth potential.
• Medium-term product launches: Three biosimilar filings under review in major markets, expected to launch in fourth quarter 2025; fourth biosimilar under review in U.K. and marketing application soon for Europe; by early 2026, will have six marketed biosimilars. Increased pace of development with four to six new biosimilar candidates into in-house process development each year.
• Business development: Increased business development activities due to increased pace of development. Partnership agreements specify partners responsible for customs clearance and import duties; expect U.S. tariffs not to be disruptive in 2025.

In the first quarter, Alvotech delivered the fourth consecutive quarter of positive adjusted EBITDA and operating profits. Product revenues were $110 million, an increase of $97 million or 784% versus the same period in the prior year. Adjusted product margin in the first quarter was 41%, which decreased from 45% in the fourth quarter. Adjusted licensing and other revenue for the year was $23 million. The company achieved positive adjusted EBITDA of $21 million for the quarter ended 2025 versus negative adjusted EBITDA of $38 million for the same period in the prior year.

Guidance

• Top line revenue guidance for 2025 raised to $600 million to $700 million.
• Adjusted EBITDA guidance raised to $200 million to $280 million.
• Expected to be free cash flow positive in 2025, demonstrating self-funding for the first time.
• Anticipated addition of Cimzia to pipeline and accelerated pace of development led to increasing milestone revenue guidance range by $30 million to between $260 million and $290 million.
• Expect each quarter to be EBITDA positive in 2025, with a robust second half driven by three new biosimilar launches and milestone revenue recognition.

Risks

• Tariffs on U.S. imports of pharmaceuticals are still being reviewed. Pharma imports to U.S. remain duty free. Partnership agreements specify partners responsible for customs clearance and import duties. Expect if tariffs apply to pharmaceuticals exported from Iceland, they will not be disruptive for Alvotech or customers in 2025.

Q: Can you help clarify the interchangeable exclusivity for the biosimilar to Stelara and how competitor like Sandoz can get interchangeable label, and the value position of SELARSDI if Sandoz also gets interchangeable label? Also, latest thoughts on when PBMs may drop the brand from their plans?

A: We are happy to have our interchangeability designation on April 30. Not all competition has got interchangeable designation yet, but we expect some to. Regarding PBMs dropping the brand, we have multiple active sales dialogues, and expect more moves from PBMs excluding Stelara from formularies which would open opportunities for biosimilar players.

Q: Can you quantify to your best ability what the buyout of stocking might have been for the Stelara biosimilar in the first quarter given the $110 million net product sales?

A: We are a B2B business, shipping against purchase orders. It's driven more by timing of orders rather than stocking, so hard to quantify in terms of stocking buyout.