Alvotech Q2 FY2024 earnings call

• Alvotech is transitioning into a global business. Second quarter and first half of 2024 saw record results in total revenues, product sales revenues, milestone revenues, and adjusted EBITDA.
• Current 2024 order book for the US market for the biosimilar to Humira has reached approximately 1.3 million units, with 20% delivered in the first half and expected 80% delivery in the second half.
• Scaled up production capacity and in a strong position to deliver on order book. Strong demand for biosimilar to Humira in US for Q1 2025 and working with partners on 2025 plans for biosimilar to Humira and Stelara.
• Progress in pipeline and new business agreements, with record milestone revenues in the quarter. Regulatory approvals, commercial launches, strategic collaborations, pipeline progress, and refinancing of the company were mentioned as steady accomplishments.
• On biosimilar Humira in the US, addressing private label (partnered with Quallent) and formulary (brand SIMLANDI) channels. Good traction in the market with Cigna Group showing 20% transition to biosimilars in 5 weeks. SIMLANDI listed as preferred on several platforms.
• Global launches of biosimilar to Stelara in Canada, Japan, and Europe, with replenishment orders received. Upcoming US launch of SELARSDI in February 2025.
• Pipeline updates including biosimilar to Eylea (AVT06), high dose Eylea (AVT29), biosimilar to Simponi (AVT05), biosimilar to Prolia and Xgeva (AVT03), biosimilar to Xolair (AVT23), biosimilar to Entyvio, and biosimilar to KEYTRUDA.

For the first half of 2024, Alvotech generated total revenues of $235.6 million, which is an over 10-fold increase compared to the same period in 2023. 84% of the revenues for the period were generated in the second quarter. The second quarter had an EBITDA of around $102 million and the first half of the year had an EBITDA of around $63.5 million. Revenue contribution came from multiple sources including product revenues from Ex-US Stelara and US biosimilar to Humira from both private label and branded channels. Product revenues in the second quarter were driven by shipments to US partners for the biosimilar to Humira and launches of the biosimilar to Stelara in ex-US markets.

• 2024 revenue guidance is $400 million to $500 million, driven by new product launches and milestones.
• Milestone revenue contribution expected to be in the range of $190 million to $200 million in 2024.
• Adjusted EBITDA for 2024 forecasted in the range of $100 million to $150 million.
• Expect product revenues to overtake milestone revenues towards the end of 2024.
• Q3 expected to be a positive EBITDA quarter, with most of the second half EBITDA achieved in the fourth quarter, mirroring the supply schedule.

Statements made may include forward-looking statements which are subject to risks and uncertainties outlined in company filings with the Securities and Exchange Commission. These risks and uncertainties could cause actual results to differ materially from forward-looking statements.

Q: From the line of Carl Byrnes from Northland Capital Markets: What is the outstanding potential milestone revenue that you could achieve from those agreements? And what sort of progression should we look for in gross profit margin on product sales?

A: Joel Morales: We currently have over $1 billion of milestones yet to be collected as a result of the agreements that we have in place. Our Q2 product margins were almost 17%, and we expect our product margins to continue to increase quarter-over-quarter, driven by the increase in volumes and product mix, particularly in the fourth quarter.

Q: From the line of Kirsty Ross Stewart from Citi: On SIMLANDI, could you elaborate on the main puts and takes behind the success of the commercial launch in the US, and on AVT06, what is the timing for a US launch?

A: Robert Wessman: On SIMLANDI, we are the only interchangeable high concentration, size rate free Humira biosimilar in the U.S. market with exclusivity up until May 2025. We are in a good position to drive growth with a sizable firm order book and positive coverage feedback. On AVT06, the timing for the U.S. launch is to be determined, but we feel strongly that we will be there on day one. In other markets, timing is more clear and expected to be sometime next year.