Alvotech Aktie

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.

Great. Well, good morning, everyone, and thank you for joining us. My name is Matt Dellatorre and I'm a biopharma analyst here at Goldman Sachs, and we're very pleased to continue the next session this morning with Alvotech, where I'm joined by Robert Wessman, Founder and Executive Chairman; and Balaji Prasad, Chief Strategy Officer. Robert and Balaji, thank you for being here.

Thank you for hosting.

Thanks for inviting.

Maybe to start, Robert, before we get into specific programs, and I know you guys had announcement this morning and you made a big announcement last week. Maybe just for those of us less familiar with Alvo, give us a brief overview of the company and then frame for us where you all stand today, kind of like your key priorities. And how you're thinking about the outlook and strategy over the next couple of years?

It's a very good question. And yes, so I founded the company in 2013, and the vision has been building a pure-play biosimilars, not focusing on anything else. We wanted to build end-to-end R&D in-house from cell line development to develop BLAs. We wanted also to have all the manufacturing in-house. Those 2 elements were always critical to us because it's a fairly complex products to develop and those are also very complex to manufacture to have it all in-house.

So we have invested in R&D and manufacturing close to $2 billion since we started in 2013. And the company went commercial for the first time in U.S. mid-2024. So the company is fairly young on the market, but we have been building all the infrastructure and what we have is a portfolio of 30 products, which we believe is the broadest portfolio in the industry, if you will.

We have launched 5 products outside the U.S. We have 2 products on the market in U.S. And by later this year or late this year, we expect to launch another 3 products into U.S. And then, of course, a few of the submissions, we will talk about, I'm sure, super exciting. And our aim is always to be in the first wave or be first to market. And we have all the infrastructure now which we can engage. We have commercial partners, which are covering more or less every market in the world, so we can roll out our products into 80, 90 markets and compete with the brand.

So holistically, it's all coming nicely together, and the company is at a massive inflection point, we believe, now after we resubmitted the 3 BLAs into U.S.

Great. Yes. Maybe kind of diving into those resubmissions last week and some of the news this morning. You guys made a pretty material announcement last week that you've resubmitted your BLAs for biosimilars, Simponi and Eylea. I think many people were expecting this closer to end of the month. So maybe this came a little earlier than we all expected. Maybe walk us through how you got here and kind of how significant this is for you all?

Yes. I mean we are operating globally. So we basically -- currently our facility is approved by all major regulatory health authorities in the world, including U.S. FDA. It was unfortunate that we got a CRL in the first round of the 3 pipeline products. There were no comments on the BLAs themselves, but there were comments -- some comments on the facility. We have, of course, worked over 10 months in details to fix what we felt we needed to fix to make sure that we would not be in a position again to receive a CRL. So a lot of work has gone into that. We resubmitted last week biosimilar to Simponi, we are the first and the only one in Europe.

We have launched now with our partner in Europe. We are seeing a very strong uptake in market share. We are up to 40% in some of the markets. We are seeing strong market uptake in Germany and Scandinavia and elsewhere. We have one competitor, which we believe will launch in Europe one day. And the same one might launch into U.S. But we think we are in the first wave, potentially still first to market with biosimilar to Simponi in the U.S. And then we are launching Eylea, biosimilar to Eylea and then Prolia/XGEVA. So that will drive the growth of the business next year and going forward, but more importantly, the submissions and the filing acceptance by FDA on Entyvio is really, really a big milestone for us.

So I think on the question that you asked, right, that most investors are expecting this towards the end of the month and now, I think it was also because we had this FDA inspection last month, which we cleared very successfully. And so investors were wondering if because of that, we will be pushed out beyond June 2. And we are very happy to assure our investors that the observations that we had, a few observations were manageable. And more importantly, the FDA also went through a lot of very comprehensively and that we are filing it on time in June, in the first week of June, signals that the inspections were really solid, and that's why the market also reacted the way it did and has more confidence in us now and today's news on AVT16 was like an icing on the cake. So really important to note that.

Great. Yes. Could you maybe remind us a little bit of what [Audio Gap] that you implemented were? And then can you talk about any kind of safeguards that are in place now to prevent any kind of similar issues in the future?

Yes, I may be -- so basically, when you go through an inspection, you answer the 483s and then FDA sends you a PAL letter stating what they felt were missing to basically approve your new filings. There were 3 main issues there. First was the rubber stopper in our syringes. So we have a German made machine from Bausch+Strobel, which I think every second sterile manufacturer has. So this machine requires a pharmaceutical grade silicon to lubricate when you start to operate the machine, especially with the rubber stopper, so they flow through the machine.

FDA didn't like that. I think this might be a new theme. And we are most likely the first one to receive that one. But how that ended is that we managed in the end after stopping for a couple of weeks to operate a machine without any lubrication. So that was our answer to that. We are, of course, new in the market, as I said, in the U.S. We had complaints in U.S. over 500, 600 auto-injectors. At that time, we had produced 5 million, which proportionally is very small. But the overall FDA wanted us to tighten up the process, how we follow up to receive some of the faulty pen back because in U.S., as you might know, if you dial in to your pharmacy, you claim that your pen is full, you get a new one. And the patients are not often giving the pens back, which in the end, we need to investigate. But we believe we have both internally and with process itself. So far, pen as [ Wegovy and isfomebsomet ] in Switzerland, and we have not had any mechanical issue with the pen, to be honest.

And then on -- when it comes to third point, which is general environmental monitoring. We had hits in the facility, all below action limits, which means that they are not critical enough to be above action limits. But still, we wanted to have fewer of them. And collectively, we have implemented over 200 CAPAs to reach that. And we submitted -- resubmitted with a 3-month data where we did not have any hits anywhere, even though we are looking at only below action limits.

So I think we have addressed the fundamental, of course, what was pending, but more important, the fundamental of this facility. So I think we have gone over and above simply to make sure that we are not going to end up in a similar situation with the CRL.

Great. Right. And then your biosimilar Prolia and XGEVA, I think they were not included with this resubmission. What are your kind of expectations in terms of time lines for filing?

Sure. So Prolia and XGEVA is the marketing -- the authorization is with Dr. Reddy's, our partner. So in the U.S. for most parts, we have partnered with Teva and this one is with Reddy's, and so they will be filing, which will be imminent.

Great. Maybe just lastly on the Simponi and Eylea. The FDA just completed, I think, a routine cGMP surveillance inspection at Reykjavik. I guess how do you view the likelihood of another reinspection?

Yes, it's an interesting question. So basically, we believe that the FDA went through all the open items from the PAL letter. We did not get any comments or outstandings on the BLA itself. So technically, they would not have to come, but we know that FDA has their own agenda. And -- but what we have said, it doesn't really matter to us if they come or not. We are ready to receive FDA and we would just welcome them if they come. But they could also decide not to come. But it's a 6-month clock. We expect that FDA generally is using the 6 months, so it's early December, which allows us to launch the 3 products into U.S. before year-end.

Got it. Maybe shifting over to the Entyvio update. This morning. You guys had a big announcement there. Maybe kind of just walk us through the update. And then you recently submitted an MAA to the EMA for the biosimilar in Europe. I guess how are you thinking about the opportunity in both Europe as well as the U.S.

Sure. So this is something that we're really excited about. We are very happy that the submission and that acceptance of it came through. And it's one of our most important near-term to medium-term opportunities that we have discussed about in the past. For context, the global market size of this is pretty large, right? It's $7.5 billion and has a sizable market in the U.S., right? And we expect to be in not just one of the first to market, but also going to be a limited competition for quite a while. So we are really happy to have this around and of course, set the clock for a 12-month approval time line from the date of submission, right? So it could be one of our critical launches that we'll be looking forward in the next -- in the near term itself.

Yes. I just want to underline what Balaji said. I mean, we have there a $7.5 billion opportunity. We believe there is only one developer, which is close to us. We are not aware of anyone which have submitted. We have also the subcu version of the product, which is important. So all in all, we believe that for most markets, this will be a launch next year for us. And so I want to underline what Balaji said. I mean we are super excited about this opportunity. And this is by far the biggest opportunity in our short history of being commercial, which is coming up.

Great. You touched on this a bit, but I guess in that context, how are you thinking about the opportunity for Simponi, Eylea low dose and Prolia/XGEVA.

I mean, overall, I think Simponi as being alone, of course, outside the U.S. still today, it's being shown to be a good opportunity and being either first or 1 or 2 in the U.S. will also be very exciting. But again, Simponi is around $3 billion product. So just from a size perspective, Entyvio most likely will be even more exciting, if you will.

We think with the low dose Eylea, there is still a strong market for the product. And we think we will be in a good position. I mean, we know that Amgen has been super successful in U.S. And we have launched the product now into U.K. with a pretty strong market share just in a couple of months, over 5%. And we have rolled out the product into European Union. So excited about that. Prolia/XGEVA, we have always seen as more competitive. And that product was one of our first one to develop. So we ended up finish it -- finishing it, but from gross profit, gross margin, I think for everyone, it will be more competitive to the other 2.

And in terms of market opportunity on both of these, so I think investors also tied up the fact that we had -- we didn't get to the market at the end of Q4 '25 or as we had thought. But the commercial opportunity of both of these, especially Simponi and Eylea, they're very much intact because most of the settlements are towards Q4 2026 or Q1 2027, and we'll be coming in with the next wave of launches. So the Eylea commercial opportunity, even if I had gotten approval last year, would still be very much the same and intact.

And with Simponi, again, there is only one other filer who got approved a couple of weeks ago, and they have stated that they will be launching in Q4 2026, which with the resubmission that we announced last week, we expect to basically be in the first wave, if not the first to market with Simponi still. So the commercial opportunity is something which is very much intact and which clearly they misread or misunderstood the situation there. So that's, again, I think, important to highlight, Matt.

Yes. Great. Yes. And then maybe kind of in the context of low-dose Eylea, I think you guys are also pursuing high-dose Eylea. How are you thinking about kind of those time lines and that relative opportunity?

Yes. So I think Alvotech has been one of the pioneer to adjust to the changes of the brands. So we were the first to adopt from low dose to high dose on biosimilar to Humira. And we went into Entyvio with a subcu when we saw the brand going there. We also -- when we saw that Regeneron was going to launch a high-dose 8 milligram, we basically internally, before the product came to market, made 5, 6 prototypes in-house. And when the product then launched, one of our formulation was perfect formulation from both [ mets and IV ] standpoint.

So we always expect it to be in the lead. It's -- we have seen 40% conversion in Europe, 40% conversion in U.S. And that conversion, we believe, will continue. And we saw that Amgen announced that they are starting their clinicals for U.S. in June. And we have already been working on our clinical. So we should be ahead of them in the U.S. And we are pretty imminently filing already into rest of the world markets with the product. And what is also interesting is that the safety device or the OcuClick, which they have been developing, we have spent 2 years on a similar device. So I think we will be in an absolutely pole position when it comes to high dose Eylea, super excited about that.

In terms of timing?

We will be submitting in rest of the world this year. And I would not rule out that, that could be [ lump-sum ] approval. We are then finishing the clinicals for the U.S. market. So we will be submitting a bit later there.

And then in terms of launch timing for U.S., is that -- do you have any clarity on that? Or is that...

I would not comment on that until our clinical is done, if you will.

What we have said, though, is that we would -- it's one of our medium-term opportunities. And so definitely think about it in that time frame, that we are really excited about and it's a clear differentiator for us.

And then maybe moving to another kind of mega blockbuster KEYTRUDA. Obviously, very competitive market. But you guys recently, I think, you guys have a partnership with Dr. Reddy's there. I guess maybe kind of walk us through the strategy for that molecule.

Yes. I mean it was kind of -- as we all know, it's the biggest molecule in the world. In our mind, we wanted to have it in our pipeline to be able to offer it to our clients. But knowing also how many companies are developing the product. It, in many ways, was not commercially as lucrative as it would be with the less competition. So we were kind of early adopter of stop doing the patient study or Phase III study already.

We expected that we could skip the patient study for KEYTRUDA, which brought the cost substantially down. And then this is a co-development with Dr. Reddy's, where they will be in the end producing the drug substance. So we are sharing the cost. We believe we will be more cost competitive than most others. So that's kind of the approach we did to be in the product. But overall, I think it will be a pretty competitive molecule going forward.

Great. Maybe switching over to business development. You all recently announced a partnership with Fujifilm Biotech that expands your global manufacturing network and I guess, establishes a second source of commercial supply in both the U.S. and the U.K. Maybe can you elaborate on what drove the rationale for that deal?

Yes. So it's a very good question. So we have one facility in Iceland. It's state-of-the-art, both drug substance, drug product with the capacity we have set beyond 2030. We have though 5 products on the market. We have 30 products in the pipeline, which we believe, again, is the strongest pipeline in the industry. When we saw the patient study would be not needed going forward. Over 2 years ago, we increased the capacity in cell line development, process development and where we felt we had bottlenecks. So we have been on the case for starting new R&D program almost every second month for over 2 years.

So when it comes to the capacity, we are seeing 3 launches in the U.S. end of this year. We are seeing that we are growing market share substantially outside the U.S., especially for biosimilar to Simponi. We are seeing our good colleagues here at Teva growing the shares in both biosimilar to HUMIRA, STELARA, which is nice to see. And then on top of that, we will be expecting to launch Entyvio into multiple markets. And this will all come into a very similar time frame. It will all happen, of course, throughout next year. So having Fujifilm as a partner, which mainly is working with big pharma, was something very valuable for us and will allow us to be more flexible in case we gain more market share, if the order from our clients come in, in the same quarter to be able to still deliver on that. So it was very strategic and long term. But of course, we will be using our own facility at the same time fully.

So we should think about it, it will be used for both commercial and pipeline products.

Yes. Yes, absolutely.

Okay. Great. Maybe kind of stepping back and looking at the biosimilar market a little more broadly Obviously, the opportunity over the next decade is very significant and kind of things have been changed regulatory-wise, you touched on some of the FDA changes. And then we've also seen changes on the payer side with private labels and things. I guess, how do you guys kind of internally strategize and kind of think about the category overall in that context?

Yes. I think if you start at the beginning because it's a fairly young industry, if you will, as you know. So we saw quite a few players coming in at the beginning. And it was same -- I mean, I was a pioneer in the generic industry since 1999. I built Actavis, Alvogen, quite a number of generic companies and we are starting a new era with biosimilars as we did 26 years ago in generics, if you will. And it's only 5, 6 years since really adoption in U.S. and market share gains started to happen for biosimilars.

We know those products are very effective, but very costly. We're seeing the trend now about 40% of the $1.8 trillion pharma market is biologics. We are seeing in Phase II, Phase III from the top 10 big pharma companies is biologics. So basically, we think we will see the trend from 40% to 50% and even 60% going forward. At the same time, the early adopters, some of them are leaving the scene, if you will. We have seen Boehringer Ingelheim. We have seen Pfizer and we have seen all [indiscernible] scaling down. One could say it's cheaper now to develop biosimilars. And the answer is yes. It does cost still $60 million to $90 million per product. And you need to build a facility, which costs you $0.5 billion at least. So it's a $1 billion venture before you get really into it and usually take 10 years.

So I'm not seeing necessarily even though the regulations are changing a bit that we will see a float of new players coming in. So all in all, I mean this is -- company like ours is really needed just to sustain health care systems around the world. We have the pipeline to basically grow and support the markets in U.S. and Europe and where it is globally. So overall, I mean, we are extremely excited about our journey, which, in many ways, commercially is just starting.

Yes. And I think it's also important to note that though there's CES waiver, the FDA may say, okay, CES waiver, but they're going to increase their scrutiny on all of the data that we submit for companies. And that really plays well for companies like us with a very strong R&D track record, a very strong process and analytical data capability to be able to showcase that. And this is not something that can be acquired by any new entrant overnight. So that really forms a moat to the industry and forms an entry barrier. That's something that we think that -- especially some of the top incumbents like us, it helps for us to grow and capitalize into this explosive growth period in biosimilars that is coming up over the next 10 years now.

And maybe how do you think in terms of how we'll actually see it play out with not requiring the Phase III? Do you -- I mean, clearly, some companies are still running Phase IIIs. And if you read the FDA guidance, it's like make an argument for why you don't need it. So do you all imagine it will be -- essentially no one will be running Phase IIIs in a few years? Or it will be dependent on...

I think it will be very exceptional if Phase III will be run going forward. And you need to have the analytical data to support that your product is interchangeable. And we have seen if you pass the PK, the Phase III was not really adding anything into the development. That's why we expected this to come on this to happen, and that's why we adopted to it earlier than anyone else. And then, I mean, you asked about the market dynamics, private labels like in U.S., I mean, that's a U.S. thing, it mainly applies to retail products with our pharmacy benefit. We had Humira of course being the biggest one.

There are not too many pharmacy retail benefit products coming out. So we are not really seeing the private label necessarily playing a big role going forward. It did in Humira with different success between the 3 PBMs. But overall, we think it will still be -- especially when you have a product more medical benefit, it will still be some of the smaller ones, both smaller PBMs and promotions and providing quality products to the market which will count.

Opportunity kind of outside of channel you're saying?

Yes.

Okay. Maybe turning to your guidance for the year. You gave 2026 guidance on the top line and then also EBITDA, maybe walk us through kind of what expectations are built into those. And given kind of the recent developments, how should we think about changes to those.

Yes. I mean we gave a range and in the lower end of the range, which is $650 million and $180 million EBITDA. We did not have any of the 3 products, which we are launching now into December into U.S. And because it's only 1 month, we took a moderate value being shipped to U.S. on the high end. So that's kind of explaining the range. But with the confidence we have in, of course, the U.S. market, we strongly believe that we will be launching. And -- so that was kind of the rationale when we gave out the guidance because the clarity was not fully there when we gave the guidance out a few months ago.

Yes. That said, despite the FDA and some of the slowdowns that we take on, we should still see Matt, that even at the lower end of the range [Audio Gap] '26. And once the wave of launches materialize, we will be in a significant period of growth over the foreseeable next few years, and we're really looking forward to that.

Yes. Great. Great. You highlighted several times, the biggest probably pipeline in the industry, I think 30 molecules in the pipeline. Maybe kind of in the last few minutes, walk us through what is, like, your strategy for selecting new molecules at this point? I mean, do you guys think revenue ranges?

No, it's a good question. I mean we have always said we want to open up access for patients. And we are doing that in Alvotech. I've been doing that in my career for 26 years. So if you're going to open up on access, we need to come with a molecule, which is still not widely open for biosimilars. And that's why you heard us talking about first with high-dose biosimilar to Humira, first with Entyvio, first subcu with Entyvio, first with Simponi, first with high-dose Eylea because if you're not first or in the absolute first wave, you are kind of not opening up the access if there are already 5, 6, 7 [ players ]. And so our portfolio strategy is evolved and developed around that. And as you can imagine, you start a journey with the product and then we usually take 5 to 7 years to develop a product. And we closely monitor what the brand is doing. And then very often, we adjust to what the brand is doing to be able to open the access to the main strength or form of dosing they're adjusting to, if you will.

I think also, on Robert's point, you said earlier, reveal some of the secret sauce there. We have an exceptional R&D team. And that's why we have been able to get so many of these unique assets, be the first to market. So 6 of the next 8 to 9 launches that we are looking at over the next few years, near to medium term, they're all going to be -- we are going to be either the first to market or in the first wave of biosimilars. And that is why earlier called out an explosive period of growth for us over the next few years. And so we have like -- apart from these, we have Ilaris, we have Cimzia, we have Taltz. These are all assets which will have a strong revenue and EBITDA contribution for us as we get to those periods.

Yes. Great. Great. Well, with that, Robert and Balaji, thank you both for joining us.

Yes, thanks for the invitation. Pleasure.

We look forward to watching the updates over the coming months.

Thank you so much.

Thank you so much, Matt, and the Goldman for hosting us, and great questions. Thank you.

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.

Good day and thank you for standing by. Welcome to the Alvotech First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded.

I would now like to hand it over to our first speaker, Benedikt Stefansson, Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to our listeners. Yesterday evening, the company issued a press release announcing our financial results for the first quarter of 2026. Material accompanying today's earnings call, including a supplemental earnings report, providing additional operational details and business updates and the presentation we'll be referring to on today's call were also published on our investor portal, investors.alvotech.com, in the Earnings Calendar section under the heading Q1 2026 Earnings Call.

Our press release, earnings report, presentation and statements that we make on the call today may include forward-looking statements. These statements do not ensure future performance and are subject to risks and uncertainties that are outlined in company filings with the Securities and Exchange Commission. Any risks and uncertainties could cause actual results to differ materially from forward-looking statements that are made.

Presenting on today's call are Robert Wessman, Founder and Executive Chairman; Lisa Graver, Chief Executive Officer; and Linda Jonsdottir, Chief Financial Officer. Robert will begin today's presentation with a summary of our progress with the U.S. regulatory pathway and some key business highlights. Lisa will then present a commercial and pipeline update. Linda will conclude with a discussion of the financial results. Following the introductions, our team will be happy to take your questions.

With that, I would like to turn the call over to Robert Wessman.

Good morning, everyone, and thank you for joining us. The first quarter was focused on three priorities, progressing the FDA resubmission, maintaining a high level of inspection readiness and continuing to expand our commercial business globally, including the launch of three biosimilars across Europe and rest of the world markets.

Last week, the FDA began a routine GMP surveillance inspection at our Reykjavik facility, which is currently ongoing. Routine surveillance inspection are normal part of operating an FDA regulated manufacturing facility and our previous surveillance inspection took place in 2024. We continue to engage constructively with the agency throughout the process and expect it to be concluded by the end of business day tomorrow.

Since our most recent pre-license inspection, which took place in July 2025, we have implemented several important enhancements across our quality system and operations. The work to address the findings has been approached in a highly structured and disciplined manner and is well advanced.

Importantly, we have deliberately taken additional time to substantially derisk future operational and regulatory disruption and to ensure that when we resubmit, we do so with a package that fully address the agency's requirements and support the long-term growth and value of the company. These actions have impacted manufacturing throughput, resulting in a slowdown at certain points during 2025 and the first quarter of 2026.

But I'm very pleased with the progress the organization has made and the resubmission of our biologics license applications for our biosimilars to Simponi, Simponi Eylea, Prolia and Xgeva are now in the final stage of completion. As we complete the current resubmission process, we believe there is significant near-term value within our pipeline, which we believe is one of the most valuable in the industry today.

We are approaching a number of important milestones across several high-value programs that will drive the company's anticipated strong growth in 2027. This includes submissions in 2026 of biosimilar to Entyvio and Eylea high dose and the resubmission for biosimilar to Eylea, Simponi, Prolia and Xgeva.

These programs target large and growing biologics market and position us with the first wave of biosimilars entrants in their respective segments. Together with our leading pipeline of 30 biosimilar products, these submissions underscores the strength and the momentum of our pipeline, which will support Alvotech's long-term growth.

More broadly, we have built out one of the strongest integrated biosimilar platform in the industry, combining research and development, manufacturing, regulatory capabilities and global commercial partnerships. With the platform now built, our focus has increasingly shifted towards execution, launches and converting our pipeline into commercial growth.

Alvotech entered the U.S. market in mid-2024, marking the transition from an R&D-focused organization to a global commercial biosimilar company. Today, we have a commercial presence in over 90 countries and continue to expand patient access to biologics throughout the world. We believe the company is well positioned for its next phase of growth.

And with that, I will hand the call over to Lisa.

Thank you, Robert. Our primary focus during the quarter has been execution, both in relation to the regulatory process and in continuing to scale the commercial business globally.

As Robert noted, with the FDA now on site, we remain highly focused on a successful inspection outcome and on resubmitting the BLA is now pending approval. We believe the actions taken to date strengthen not only the specific resubmission packages, but the broader operational platform supporting future pipeline execution. We will provide the market with an update once the inspection has closed.

As we continue to leverage our Reykjavik site for global supply, we have also been exploring additional manufacturing capacity, especially in the United States. Last night, we announced a manufacturing agreement with Fujifilm Biotechnologies, covering multiple products within our portfolio. This agreement represents an important strategic step in further strengthening and diversifying our global manufacturing network, including expanded U.S.-based manufacturing capability.

As our commercial portfolio and late-stage pipeline continue to scale, manufacturing resilience, supply reliability and operational flexibility become increasingly important. This agreement enhances our ability to support future launches and long-term commercial growth while further strengthening supply continuity for our partners and patients.

Fujifilm brings significant technical expertise and manufacturing capabilities, and we believe the agreement complements the strength of our existing vertically integrated platform.

We're in the process of initiating technology transfer activities and expect to begin supplying products for the U.S. market in the second half of 2027 as the transfer and qualification process progresses. This additional capacity will become increasingly important as we move into the next phase of commercial launches and pipeline progression over the coming years.

With respect to the financial performance in the first quarter, we had sales of $106 million and EBITDA of $24 million. Both revenues and EBITDA were impacted by the timing of milestones and the slowdown in production related to facility improvements, which reduced product revenues in the quarter. We do expect improvement in product revenues as normal operations resume through the second quarter since underlying demand remains strong. Linda will provide more details later in the call.

With respect to our marketed portfolio, we are seeing solid underlying demand trends and expanding adoption of biosimilars more broadly. For AVT02, our biosimilar to Humira, the U.S. market continues to evolve as expected with ongoing transition toward a multi-biosimilar market.

Based on available market data, AVT02 has now become the fastest-growing biosimilar to Humira in the United States and achieved a 10% market share within the segment. In Europe and other international markets, AVT02 remains an important contributor to our commercial portfolio. We believe there is further opportunity for biosimilar adoption as the overall market continues to grow.

For AVT04, our biosimilar to Stelara, Teva continues to expand Stelara's market through formulary and commercial execution, while in Europe, Uzpruvo continues to hold a leading share of the biosimilar segment in launch markets. We expect further biosimilar adoption and commercial growth across the ustekinumab market during 2026.

For our biosimilars to Symphony, Eylea, Prolia and Xgeva, where we received approvals in Europe, U.K. and Japan at the end of last year, our partners continue to progress launch activities. We remain optimistic on the commercial prospects for these products, particularly for AVT05, the biosimilar to Simponi, which remains the only biosimilar for a predominant presentation in the market.

Taken together, these launches continue to diversify our commercial portfolio, strengthen our revenue base across multiple geographies and support the long-term value of our integrated biosimilars platform.

With respect to long-term value creation, there were a few highlights in the quarter regarding our pipeline. Our portfolio strategy remains highly selective and focused on molecules where we believe there is a compelling combination of market opportunity, durable mechanism of action, high scientific barriers to entry, manufacturing capability and commercial attractiveness.

Specifically, we are pleased to report that we have submitted a marketing authorization application to the European Medicines Agency for AVT16 and AVT80, our proposed biosimilars to Entyvio. Today, sales of Entyvio in Europe are close to $2 billion and growing.

Our biosimilar to Entyvio represents a significant market opportunity in Europe, supported by strong underlying demand trends in inflammatory bowel disease. And we believe we are well positioned to be within the first wave, if not the first biosimilar for this product.

Turning to the biosimilar of high-dose Eylea, AVT29. We are on track to submit a marketing authorization application with the EMA in 2026. In addition, we have enrolled the first patients in the pivotal efficacy and safety study for AVT29 in support of the submission in the U.S. in 2028.

With this, we believe we could be the first to submit a biosimilar to high-dose Eylea in Europe and the U.S. Today, the combined low-dose and high-dose market for Eylea is approximately $8 billion, with $5 billion in the U.S. and $3 billion in Europe.

Together with our biosimilar to low-dose Eylea, Alvotech is well positioned to participate in the future evolution of the global Eylea market as longer-acting dosing regimens become increasingly important. As we look ahead, our focus remains on disciplined execution across the commercial business, the regulatory process and the pipeline.

With that, I hand the call over to Linda to review the financial results in more detail.

Thank you, Lisa. I will now take you through the financial results for the first quarter of 2026. Unless otherwise stated, the figures I will go through are adjusted numbers. Reconciliations to the corresponding IFRS measures are included in our earnings materials, which have been published on our investor portal at investors.alvotech.com.

Turning to the financial highlights for Q1 2026. Total revenues in the first quarter were $106 million, representing a 20% decline compared to the same quarter last year. As stated in our previous year's earnings call, we are still seeing impact on our financials from our facility improvements and the associated slowdown, and we are expecting Q4 2026 to be the strongest quarter of the year.

Gross margin for the first quarter was 57%, an improvement of 6 basis points compared to the same period last year. This reflects the blend of product and licensing revenues in the quarter, which was equally split.

Product margin in the quarter was 11%. Margins during the second half of 2025 and Q1 '26 have been impacted by reduced manufacturing throughput associated with facility improvements at our Reykjavik site. As manufacturing normalizes and volumes recover, Alvotech will be positioned to enter 2027 with a stronger margin profile. Adjusted EBITDA in the first quarter was $24 million, representing a margin of 23% versus EBITDA of $21 million, representing a margin of 15% in Q1 2025.

We have recently seen changes in regulatory guidance from both the FDA and the EMA, including where comparable clinical studies can be waived. This places greater emphasis on analytical similarity for approval that means we can demonstrate technical feasibility earlier in the process.

As a result, certain development programs now meet the criteria for capitalization under IFRS under IAS 38 at an earlier stage. This has increased the proportion of development costs that are capitalized and the updated approach has been applied prospectively from the beginning of 2026.

Further on revenues, about half of the revenues in the first quarter of 2026 come from product revenues, leveraging the continued commercial momentum. As we have discussed in the past, there is typically a timing lag between our partner sales performance and the recognition of revenue in our results. As a result, strong partner performance typically flows through into our reported revenue over subsequent periods as the year progresses.

Product revenues for the first quarter were $51 million. The key contributors were our biosimilar to Humira, AVT02 and the biosimilar to Stelara, AVT04. Our three newly approved products, AVT03 are biosimilar to Prolia and Xgeva, AVT05 are biosimilar to Simponi and AVT06 or biosimilar to Eylea also began contributing incremental product revenues as launches expanded across Europe, the U.K. and Japan.

Licensing revenues for the quarter were $55 million. As we have noted on previous calls, milestone revenue recognition is inherently lumpy, driven by the timing of development progress, regulatory submissions and contractual milestones achieved with our commercial partners.

Turning to cash flow. Cash at hand at the end of the quarter is $64 million, while operating cash flow is negative in the quarter by $25 million, driven mostly by working capital.

As you can see from the cash flow bridge, other drivers impacting our cash flow in the quarter were net interest payments of $35 million per quarter following the transition from PIK to cash interest mid-2025, CapEx at $7 million in the quarter and was low in line with plans. Investment in intangibles is $39 million in the quarter, and we remain focused on achieving positive free cash flow in Q4 2026, which continues to be a key financial priority.

Then looking into our balance sheet. I will start with briefly summarizing key items on the asset side of our balance sheet. We have a strong asset base, which has been supported by strategic acquisitions in 2025 and pipeline investments.

From year-end 2025, non-current assets were up by $52 million, mainly driven by an increase in intangible assets and higher contract assets due to the timing of revenue recognition. Total current assets decreased by $118 million due to collections of trade receivables and reduction in cash to finance operating activities and debt service in the quarter.

Next, a few notes on the key movements across equity and liabilities. Derivative financial liabilities reduced by $32 million, mainly due to fair value changes on conversion futures and earn-out shares. Trade and other payables decreased by $28 million due to investments and timing of orders in Q4 2025. Contract liabilities decreased due to recognition of licensing revenues as development milestones have been achieved.

Turning to our financial outlook for the full year. We target revenues in the range of $650 million to $700 million, representing continued double-digit growth compared to 2025. Adjusted EBITDA is expected to be in the range of $180 million to $220 million. As a reminder, the lower end of our revenue guidance range does not include revenues from the approvals and launches of AVT03, AVT05 or AVT06 in the U.S.

As we look ahead to 2027, we expect to deliver strong year-on-year growth driven by continued expansion of our commercialized product portfolio, contributions from our pipeline and associated milestone revenues. We also expect to benefit from increasing manufacturing output following the completion of the facility improvement and operational enhancements implemented since mid-2025.

With respect to our balance sheet, the anticipated growth in 2027 will allow us to be in a position to deliver healthy leverage in 2027, which will open up further opportunities for us to optimize our capital structure.

With that, I will hand the call back to the operator for Q&A.

[Operator Instructions] Our first question will come from the line of Christopher Uhde from SEB.

Two for me, please, to start. So, the first would be on the Fujifilm partnership and its implications. So, is this just ensuring less scope for regulatory commercial disruption from politics and so on? How critical was getting this partnership? And should we see it as having a tangible impact on your growth trajectory? And then perhaps you can put that in the context then of the consolidation we've seen in -- during the, I guess, quarter and after within the industry?

And then my second question is, so based on your comments, it seems like Simlandi is taking share in the U.S. looking at Q4 versus now, whereas Uzpruvo seems sort of flattish, possibly down somewhat in Europe. What can you tell us about sort of market share position within markets? I mean is it stable or more fluid than overall position? And are there any kind of sort of factors that we can think about that are driving those dynamics?

Christopher, thanks for the question. Maybe taking the Fujifilm question first. So, as we talked about on the last earnings call, we were in advanced discussions. It is very much a strategic move for us. Obviously, happy that we were able to bring this across the finish line as quickly as we did.

It really is what we said it was. It is an ability for us to diversify our capacity across markets, certainly having a presence in the United States as well does give us the advantage being one of our large markets. But I think from a perspective of timing, as we've said, we do expect to introduce product for the U.S. market specifically in the second half of '27. So, all of this was really aimed at continuing to ensure that supply chain reliability as we continue to see demand.

And maybe heading into your next question, that demand is really being pulled through primarily in the U.S. with Simlandi. Teva has done a fantastic job continuing to grow that for us as well as just the natural evolution towards biosimilars in the market. I think we're sitting at about an exit share of 60% of the market being biosimilar in the U.S. now.

So, it's a combination of just commercial execution as well as just overall growth in the biosimilar segment. So clearly, anything we can do that will continue to ensure that we meet that demand across our manufacturing platform is something that we're going to prioritize.

In terms of ustekinumab, particularly in Europe, we are seeing somewhat of a flattening in Q1. I will say we still have three quarters to go. I'm not going to say today that, that's the trend we expect. We are still seeing the Stelara biosimilar market grow in Europe as well as in the U.S. It's sitting at about 56% at biosimilar now in Europe. So, I think there's still opportunity there.

Certainly, we are seeing growth in Germany, not unexpected. Germany is one of the key markets for us across our biosimilar platform. But certainly, we are still seeing that growth. So, I think from our perspective, growth will continue in the U.S. In Europe, we are seeing some stability through Q1, but I think we clearly have the remainder of the year to go. So optimistic we'll still see some further top line growth there.

Just a clarification on the first one. What sort of proportion of your U.S. sales should we think about as coming from Fujifilm in the future? I mean, is it a majority? Or is it a minority? Or any detail you can give there?

Yes. I think it's too early to say from our perspective what -- I mean we're going to leverage across our platform to ensure that we hit our markets. So I think at this point in time, a little too soon to give type of breakdown, but there's no question that the Reykjavik site will continue to be a predominant player across the markets, but we will continue to look at ways to leverage both the Fuji site as well as our Reykjavik site.

[Operator Instructions] Our next question will come from the line of Ash Verma from UBS.

This is Di on behalf of Ash. I just have to -- sorry if I missed some of the conversation earlier. But I just want to check like the FDA remediation. Just can you briefly outline the remaining steps to file the three pending products by end of 2Q, I guess? And do you expect like the FDA inspection? I think I heard Robert in the beginning, but I wasn't sure it's happening now. Or like what's the status on that? And then if there's an inspection required, like are you guys still comfortable with the year-end approval time line?

And then the second question is just on the, I guess, like the 1Q temporary production slowdown. I think that's like due to the FDA remediation plan. So I just want to confirm, is that now fully resolved? And then is there any risk to happen again? That's all.

Yes. Thank you so much, Robert here. As we discussed in my part earlier, we basically have a catalyst coming up with, of course, the resubmission and we discussed Entyvio submission and high-dose Eylea. So for us, it's very important that we clear all regulatory risk going forward, if you will.

So we decided to prolong the slowdown, as I mentioned in my intro -- and we see that as a short-term investment to then reap the growth of the launches, which are coming, we believe, end of this year and, of course, going into '27. And I think I mentioned that we expect to see a strong growth year-on-year. And that's why we want to eliminate any future risk.

But I'll leave the rest to Lisa to answer.

Yes. Just on the FDA piece. So we are in an inspection now. So FDA is on site. It is a routine surveillance inspection that we do expect to close out this week. As Robert noted, we were well positioned and have been positioning ourselves to respond, and we are on track to respond to the call that was received last year. That will position us in the second quarter to resubmit the pending BLAs and the target is still and does remain the fourth quarter.

So again, to emphasize the work that we've been doing since last year through first quarter really is setting us up for that success, and we think we will be able to provide further update once the current inspection closes out. And I think we do anticipate resuming normal operations from a production standpoint this quarter. And again, the underlying fundamental was to remove any further overhang from the CRLs that we received last year, and we think we're going to be in a great position to do that come this quarter.

Our next question comes from the line of Arvid Necander from DNB Carnegie.

So just picking up on what we said previously with Simlandi capturing meaningful market share in Q1 and prescription trends also look pretty supportive for Selarsdi as well, I suppose. But could you just provide a little bit more color here? What has changed commercially to drive this step-up when it comes to Simlandi uptake this far into the life cycle? If there's anything else that can be said on that?

And then I guess, secondly, you mentioned the sort of lag typically seen between partner performance and sales. Is this the main explanation why we didn't see a sharper increase in sales in Q1? Or does it also reflect any other dynamics at play when it comes to pricing strategy or any other factors? I'll start there.

To address the Simlandi uptake. So this is really a factor of the continued erosion of the Humira product. So we are seeing that exit share of biosimilars in Q1 being 60%. So that continued growth in terms of the biosimilar market is just a larger addressable market that we are -- through our partners have able to take advantage of.

I think we've also been, again, through our partner, very execution-oriented in growing that business in terms of taking advantage of both the branded and unbranded market position. So I think it's a factor of both, and we're hopeful that we're going to continue to see that growth certainly through '26 and beyond.

In terms of your second question on the contribution from product revenue in Q1, I think we have said in the past, we do see lumpiness in terms of how orders are placed and how product is pulled through in the quarter. So we have some degree of control over that, but it is predominantly driven by customer order pattern and invoicing. So it is not, from our perspective, a dynamic of pricing at this point. It is really truly order pattern, and we will and do expect to start to see that pick up as we go throughout the remainder of the year.

Great. Just the last one, if I may, on the Fuji partnership. So, can you comment anything on what sort of investment commitment this comes with from your side? Any guidance on the costs associated with this partnership?

Yes. I think this is something that we touched on as well on the last call. It has been a plan in terms of looking at diversifying our manufacturing capacity, whether it be through further investment internally or externally. So it is something that was anticipated. I would also say that because of the nature of this being a tech transfer, we do expect that the batches at the end of the day will be sellable batches come '27. So it's an investment balanced with the ability to recover that through these sellable batches when we hit '27.

Our next question will come as a follow-up from the line of Christopher Uhde from SEB.

I was wondering a couple of things. So could you talk a little bit about the impact of reform in Germany and whether that could have a presumably positive impact on your business. But how do you see that evolving as it's implemented?

And then we also heard, I think, during the quarter and in the reports, discussions about the main immunotherapy products and Dupixent loss of exclusivities potentially being extended in comments by manufacturers, for instance. What is your thinking around the launch timing for those biosimilars?

So I think maybe just to address the questions around Dupixent. So I think for us, it's a little too early for us to comment on precise launch timings. Certainly, it is something that's in our portfolio, and we're working towards. But I think from a timing commitment, I think it's a little too early for us to put out there our position.

And maybe just to -- sorry, to go back to the first part of your question on the German reforms. So I think for us, we do think there still could be opportunity, and we are certainly seeing today growth, but we do think even if we see a tender market and once we see a tender market form, and that's been under discussion obviously for quite some time in the German market, we do think it will allow for still multiple players. We do partner well in Germany. STADA, obviously, is one of our primary partners who's a very strong player in the market.

So we think we still have a really good opportunity to position ourselves even if and when that market starts to transform into a more tender-like market. We do think it will be a multiplayer tender market, not a one and only market. So I think that does position us well given the strength of our partnerships there.

And I'm not showing any further questions in the queue at this time. I would now like to turn it back over to Benedikt for any closing remarks.

So on behalf of the team presenting today and all of us at Alvotech, I thank everyone who joined us for this webcast. We look forward to talking to you again and wish you a wonderful rest of the day. Goodbye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Good day, and thank you for standing by. Welcome to the Alvotech Q4 2025 and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Nicole Pilcher. Please go ahead.

Thank you, and welcome to our listeners. Yesterday evening, the company issued a press release announcing our financial results for the full year and fourth quarter of 2025. Material accompanying today's earnings call is also published on our investor oral investor.alvotech.com in the earnings calendar section.

Our press release, presentation and statements that we make on the call today may include forward-looking statements. These statements do not ensure future performance and are subject to risks and uncertainties that are outlined in the company filings with the Securities and Exchange Commission. Any risks and uncertainties could cause actual results to differ materially from forward-looking statements that are made.

Presenting on today's call are Robert Wessman, Founder and Executive Chairman; Lisa Graber, Chief Executive Officer, Designate; Joseph McClellan, Chief Operating Officer; Linda Jantadier, Chief Financial Officer. Also with us on the call is Balaji Prasad, Chief Strategy Officer.

Robert will begin today's presentation with a summary of business highlights. Lisa will present a commercial update. Joseph will discuss the status of our pending biologics license applications with the FDA and our R&D pipeline. Linda will then conclude with a discussion of the financial results. Following the introductions, our team will be happy to take your questions.

With that, I would like to turn the call over to Robert Wessman.

Hello, everyone, and thank you for joining us today. 2025 was an important year for Alvotech. We continue to strengthen our position as 1 of the leading profile developers of biosimilars. We expanded our commercial footprint advanced several pipeline programs and strengthen the financial position of the company through successful capital market transactions and our listing on NASDAQ Stockholm.

At the same time, we have addressed the regulatory observation followed as the inspection of our [indiscernible] manufacturing facility, and we implemented a comprehensive quality improvement program. Based on the progress made so far, we expect to resubmit the affected applications to the FDA during the second quarter of 2026. We will, of course, update the market once those submissions have been accepted.

We have addressed regulatory observation before in the industry, and we know how to solve them. Our focus has been on strengthening the operational platform so that we can continue to scale the business probably going forward. Alvotech has clrbiosimilars in development today. We are advancing plans to have a second source manufacturing site for some of our key products going forward. This includes manufacturing of drug substance under a product at a strategic CMO partner based in the United States. This will give us greater operational flexibility and over time, reduce operational dependence on a single manufacturing site. Lisa will provide more details on the progress we are making with this initiative.

Stepping back for a moment. The long-term drivers of the biosimilar market remains very strong. Across the pharmaceutical input, we are seeing a continued shift towards biologic medicines. Today, around 40% of global pharmaceutical sales come from biologics. But if you look at the development pipeline, this shift is even more pronounced, around 60% of Phase II and Phase III pharmaceutical development today in malls Biologics. This tells us as the reliance on biologics will only increase over time as more targeted therapies are developed. At the same time, more than 100 biologics are expected to lose patent protection over the next decade.

While health care systems around the world are under increasing pressure to reach cost, this creates a very significant opportunity for biosimilars. Another important development for the industry was that the FDA rough guidance related to biosimilar development. In practice, it means that large expensive efficacy trial will increasingly not be required. Some studies in the past have costed around $100 million per program and after 1 to 2 years to development times, reducing that requirement substantially lowered the development cost on time needed to bring biosimilars to market. But I will try to be anticipated those changes, and we are part with our development strategy already several years ago.

The new FDA guidance, therefore, does not change our strategy but rather validates the approach we have already taken. Importantly, we are now well positioned to benefit from those changes compared to many of the other companies that are still set up for the [indiscernible] Joseph will discuss this in more details and explain how these cases may benefit our pipeline.

Turning to the next slide. Our ongoing investment into our platform mean that today, we can initiate development of a new [indiscernible] program roughly every 2 months. This has enabled us to build one of the most comprehensive biosimilar pipeline in the industry. We now have 3 biosimilars in development representing more than $185 million in global sales. This pipeline is what will drive Alvotech's future growth, and we will continue to, of course, expand it.

Before handing over, I would also briefly highlight our financial performance for the year. In 2025, total revenues increased by 20% to $591 million while adjusted EBITDA increased by 27% to EUR 137 million. Linda will discuss the financial results in more details shortly. Finally, as we have announced earlier this year, Lisa [indiscernible] has joined Alvotech as the Chief Executive Officer. From the beginning, by [indiscernible] CEO, to be a time-defined appointment focused on building the company's platform and profile partnerships. Lisa and I have worked together over 20 years, and she has served as our Alvotech Board member since [indiscernible] Lisa brings a wealth of experience in commercial, R&D, manufacturing and quality compliance. With Lisa appointment as our CEO; Linda's appointment our CFO, and Joseph and [indiscernible] stepping into expanded roles, the key management positions are now all based on site in Iceland and the senior leadership has been strengthened.

With a platform of people now firmly in place, the company is entering into a new phase focused on operational execution and commercial scale. I will continue to serve as Executive Chairman and we actively engaged in the business, and I'm very much looking forward to work closely with Lisa and the leadership team. We, as a team, will, of course, continue to build Alvotech into a leading global biosimilar company.

And with that, I will hand the call over to Lisa.

Thank you, Robert, and hello, everyone. In addition to continuing my collaboration with Robert, I'm excited to help maximize the full potential of the robust pipeline Alvotech has built and is continuing to build. Before going into an overview of 2025 achievements, I'd want to address upfront a key priority of the team and myself. The team has been executing on an extensive improvement plan to address all outstanding issues related to the FDA inspection in July 2025. to ensure we receive FDA approval for all pending applications for ABT-003 to '05 and '06 this year.

Despite continuing to commercialize our existing products in the U.S. and receiving approval for and commercializing ADT03, '05 and '06 in markets outside the U.S. We are committed to addressing all areas where improvement is required. To that end, I want to highlight an initiative that we have been advanced since last year that looks to dual source the manufacturing of some of our key products. As part of strengthening the long-term resilience and scalability of our platform, -- we are also evaluating opportunities to broaden our manufacturing footprint for selected products.

Importantly, any future expansion would build on the strong manufacturing platform we've established in I Fund, which remains the cornerstone of our global production network and a critical source of our technical expertise and operational scale. As we evaluate options to broaden our manufacturing footprint, the United States is a natural area of focus given the importance of the U.S. market for biosimilars and the increasing emphasis on supply resilience within the U.S. health care system. We expanded our manufacturing base for selected products would support several important objectives.

First, it was strengthen supply resilience by reducing reliance on a single manufacturing site. Second, it will support future launches and increasing commercial volumes across global markets. Third, a more diversified manufacturing platform strengthens our value proposition to commercial partners who prioritize supply reliability alongside product quality and economics. And finally, it provides greater strategic flexibility in a more complex external environment, including evolving health care policy environments as well as broader supply chain dynamics.

Taken together, these steps will further strengthen the resilience and scalability of our manufacturing platform as we support future launches and increasing global demand.

Turning to our 2025 achievements. Over the past year, we have continued to expand the commercial footprint of our biosimilars portfolio while strengthening the operational foundation that supports long-term growth. Our focus has been on 3 priorities: first, continuing the rollout of our approved biosimilars across global markets through our commercial partners; second, ensuring reliable and scalable supply as volume increases; and third, positioning the company to capture the next phase of biosimilar market evolution, particularly in the United States.

During 2025, we achieved several important milestones across the company. Our commercial partner, Teva launched Solaris in the United States, marking our second milosimilar launch in the U.S. market and demonstrating the strength of our global partnership model. We also received geographic expansion with approvals and first launches for golimumab, vendusimab, aflibercept across Europe, the United Kingdom and Japan, targeting some of the largest biologic franchises in medicine. As we continue to build our pipeline, we form new commercial partnership agreements with [indiscernible], which included our SYNVIA program and with Dr. Reddy's for our KEYTRUDA program.

We further expanded our global commercial partnership network with the addition of Sandoz to broaden our reach across major pharmaceutical markets. As part of our efforts to further strengthen our technical and regulatory capabilities, we continue to expand our process development organization. Integrating [indiscernible] R&D team in Stockholm has added highly experienced scientists with deep expertise in biosimilar development. and enhanced our ability to enhance multiple programs in parallel. The acquisition of [indiscernible] assembly and packaging business gave us greater flexibility and added capacity to meet increasing global demand for our biosimilars.

It establishes a centralized assembly and packaging hub from which we can serve multiple global markets from a single location. From a corporate perspective, we further strengthened our financial position during the year. raising $300 million from the capital markets to support continued investment in our development programs and manufacturing platform. We also broadened our investor base through the listing of Alvotech shares on Nasdaq Stockholm, providing greater access to Nordic and European investors and further strengthening our presence in the region. These transactions are a testament to the strength of our platform, our strategy and our execution capabilities.

Turning to our on-market portfolio. HUMIRA remains one of the largest biologics markets globally, and biosimilars continue to gain share. At the beginning of 2025, the originator held roughly 70% of the U.S. market. By the end of the year, that share has declined to around 45% and continues to fall as patients switch to biosimilars. This continued shift toward biosimilars in the Humira market reflects strong payer support growing physician confidence. In the United States, [indiscernible] saw continued volume growth between the third and fourth quarters, and we are expecting further growth in 2026. [indiscernible] now got approximately 9% of the market in the U.S. making it the second largest and one of the fastest-growing biosimilars in the segment.

In Europe, [indiscernible] continues to demonstrate a consistent performance despite entering the crowded market. Elsewhere, our partners continue to extend access across Latin America and Middle East markets. In 2026, we anticipate further launches in rest of world markets. and that [indiscernible] will remain an important contributor to our commercial portfolio. [ STELARA ] represents another large and attractive biologics market with significant biosimilar opportunity. and we continue to see strong rollout of [indiscernible] across key regions. In the United States, where biosimilars now account for approximately 40% of the market, Teva continues to expand formulary coverage for [indiscernible] holding a strong and growing market position.

In Europe, [indiscernible] has established a leading position with more than 20% share of the biosimilars segment. We expect continued biosimilar adoption across this market in 2026. Turning to [indiscernible], our biosimilar to Symphony, which currently faces very limited competition in markets where it has been improved. We expect to be first to launch in several key markets and potentially the only biosimilar option for a period of time. Being first to market in a highly attractive biologics segment with limited competition, represents a significant commercial opportunity for Alvotech, and we expect commercial momentum to build across launch markets through 2026. In Europe, [indiscernible] was the first biosimilar to Symphony to be approved by both the ENA and the MHRA Marketed under the [indiscernible] brand, our partner [indiscernible], began launch activities following shipment of product in December had a successful national health service tenure award in the U.K.

In Japan, [indiscernible] is also the first and only approved biosimilar to Symphony. Our partner, Fuji Pharma, has announced a market entry date of May 2026, and we anticipate being the first to launch of Symphony biosimilar in this market. and for there to be a limited competition for some considerable time. Elsewhere, we have filed for approval in several additional rest of world markets. In Canada, we are the only company to have filed to date based on available information. and we expect a decision in the first half of 2026. Following approval of the [indiscernible] in Europe, the United Kingdom and Japan in the second half of '25, we announced a licensing and settlement agreement that resolves all remained at disputes related to aflibercept 2-milligram worldwide.

The agreement provides clear pathways for market entry of [ AVT06 ] across key global markets and allows our partners to prepare for launches with confidence. In the U.S., we have a licensed entry date in the fourth quarter of 2026 or earlier under certain circumstances, which positions Alvotech and our commercial partner, Teva, for a potential launch in the U.S. market this year, pending FDA approval. Following the shipment of product to Japan, our partner, Fuji Pharma, launched in February this year, with the first and only a [ fliverstep ] biosimilar in that market, and they are reporting strong early demand.

Products has also been shipped to Europe. While we expect this market to be more competitive, our partners expect to gain a strong market share. Together with our commercial partners, we believe this positions Alvotech well to compete in the global aflibercept market, which is evolving toward longer-acting dosing regimens that reduce the burden on both patients and physicians. The high-dose version of ofligrestat supports extended dosing intervals compared with the original formulation is expected to represent an important part of the future market. In anticipation of this shift, we have been developing a biosimilar candidate for IZEA HD.

We are targeting a first regulatory submission in 2026, which would potentially put us in the first wave of biosimilar launches for the high-dose product. Having both low dose and high dose of liver set programs allows Alvotech to participate across the full evolution of the global osliversapt market, which remains one of the largest for ophthalmology globally. Following the approval of [ ABT-003 ] in Europe in November 2025, first wave launched supplies were shipped to our commercial partners in December. Our partner, STADA and BRL have successfully launched in Germany and select European markets.

As we anticipated, early pricing dynamics have been competitive, particularly in tender-driven segments. Despite the competitive environment, we believe that [indiscernible] represents an important addition to the denosumab biosimilar landscape, and we expect commercial momentum to build gradually through 2026 as launches expand and biosimilar adoption increases. In Japan, [indiscernible] remains the first and only biosimilar to have secured approval, with our partner, Fuji Pharma preparing for market entry in 2026.

I want to emphasize the continued expansion of our commercial portfolio is closely linked to the strength of our development pipeline. The investments there in and the licensing revenue from that portfolio. The performance of our business going forward is also reliant upon our focus on cost optimization across all aspects of the company, which Linda will address later. I will now pass it to Joseph, who will provide an update on our R&D programs and our continued success in building that pipeline.

Thank you, Lisa. I will briefly cover 3 areas today. First, the status of our U.S. regulatory submissions second, progress across our development pipeline; and third, recent regulatory communications impacted biosimilar development. Last year, Alvotech had 4 active U.S. Biologics license applications with the FDA for proposed biosimilars to Symphony, Sibraria, the dual products for the XGEVA and EYLEA.

In the fourth quarter of 2025, we received complete response letters from the FDA for these applications. Further, after receiving the CRLs, we received a post application action letter or Paul, detail in the remaining open items with the FDA after review of our [indiscernible] response. The CRLs were related to issues identified following the FDA's inspection of our [indiscernible] facility in July of 2025. No issues were raised regarding the analytical pharmacokinetics or clinical efficacy and safety data submitted in the applications. The doses themselves were considered complete.

Following the inspection, we initiated a comprehensive remediation program addressing the FDA's observations. By the end of 2025, we had implemented most of the required corrective actions, our focus since then has been on demonstrating that these improvements are effective and sustainable over time, which is a normal part of the quality process to ensure that improvements are durable before resubmission. Based on current progress, we remain on track to resubmit the BLA in the second quarter of this year, which would position us for FDA decisions before the end of the year. Importantly, our [indiscernible] facility remains an FDA-approved manufacturing site we continue to manufacture our on-market products for both the U.S. and the rest of the world markets.

Turning to the pipeline. Over the next decade, more than 100 biological medicines are expected to lose exclusivity Against that backdrop, Alvotech continues to build one of the largest possible pipelines in the industry with more than 30 candidates currently in development. When selecting new programs, we focus on biologics where we see a combination of multiple factors, including significant market opportunity, durable mechanism of action, high scientific barriers to entry where Alvotech can be successful and opportunities where Alvotech's integrated development and manufacturing platform can create meaningful differentiation.

Consistent with our strategy, we are excited with the progress we are making with our [indiscernible] candidates to both the intravenous and high-concentration subcutaneous use forms of ENTYVIO. Earlier this year, we announced positive top line results from a pivotal pharmacokinetic study, which allows us to move forward with regulatory submissions in major markets with all dosage forms and strength currently approved for ENTYVIO. ENTYVIO is an important therapy for inflammatory bowel disease and represents a multibillion-dollar opportunity in the immunology market.

Based on current plans, we expect to submit regulatory applications later in 2026. Importantly, we anticipate being among the first companies to launch a biosimilar to ENTYVIO including both the intravenous and subcutaneous use presentations. Another important program in development is our optimal candidate for KEYTRUDA, one of the highest selling medicines in the world with annual sales, excluding USD 30 billion. KEYTRUDA has transformed treatment across multiple oncology indications and continues to expand into new therapeutic areas. Through our collaboration with Dr. Reddy's Laboratories, we are combining development expertise with global commercial capabilities to pursue this opportunity, sharing development costs and marketing rights for Keytruda biotargets and global markets.

We are anticipating submitting a therapeutic pharmacogenetic study for our proposed biosimilar KEYTRUDA and are on track to submit a marketing application in 2028. This would position us for a launch upon [ Merck's ] loss of exclusivity. More broadly, we continue to expand the capabilities of our integrated biosimilars platform. Last year, we increased our R&D capacity through the acquisition of a new center of excellence in [indiscernible] in manufacturing, we strengthened our downstream integration through the acquisition of [indiscernible], which adds capabilities into device assembly, packaging and logistics.

In Iceland, we've added to our perfusion capacity which supports production of our STELARA and Symphony biosimilars, and we continue to implement improvements for both perfusion and [indiscernible] batch production. Also, we are adding new drug substance and new drug production suites in our existing [indiscernible] facility expanding our manufacturing capacity. This additional capacity will enable us to support demand for approved products as well as our development pipeline. These investments further strengthen our end-to-end development and manufacturing platform.

Before closing, I would like to briefly comment on the recent FDA draft guidance related to biosimilar development. Up until now, to support the approval of a biosimilar application in both the EU and the U.S., developers may have been expected to conduct a 3-way pharmacokinetic similarity study and a comparative clinical [indiscernible] safety study, in addition to a comprehensive analytical are assessment. The draft guidance reflects a move toward more efficient and science-based development pathway. In particular, it reduces the need for a large comparative efficacy and safety clinical study as well as providing flexibility in the use of reference products.

In practical terms, this means that in most cases, companies will be able to support the demonstration of biosimilarity with a 2-arm pharmacokinetic study, either in a healthy subject population or a therapeutic setting. Further, it gives study sponsors flexibility in the selection of reference products for the study and foregoes the need of a 3-way pharmacodiatic bridging study. Importantly, Alvotech anticipated this regulatory evolution. Over the past years, we proactively aligned our development strategies with both the FDA and the EMA engaging early and often across multiple programs to obtain scientific advice.

Notably, the FDA provided early recommendations for our early-stage products even prior to issuing the draft guidance. encouraging streamlined development in clarifying [indiscernible] PK study without a U.S. sourced comparator is acceptable. This foresight by Alvotech, and proactive regulatory engagement uniquely positions us to capitalize immediately on the streamlined framework, reducing costs and strengthening our leadership in global [indiscernible] development.

To summarize, Alvotech continues to make progress across its late-stage pipeline and its research, development and platform capabilities. With a broad pipeline and fully integrated development and manufacturing platform, we believe we are well positioned to address the growing global demand for lower-cost biologic medicines.

With that, I will hand the call over to Linda, who will provide an overview of our financial results.

Thank you, Joe. [indiscernible] attachment on a full year for Alvotech. Since joining in July last year, I had the permit of witness in person test on what this team can accomplish in a short period of time. Despite the challenging operating environment, the company delivered important operational, financial and commercial milestones, appending major launches, expanding our global footprint and strengthening our financial position. What has put out most to me since day 1 is a strong belief in delivering on a mission, not just at the deficit level but across the organization.

With that context, let me walk you through the fourth quarter and full year financial results. Unless otherwise stated, the figures discussed today are adjusted numbers, reconciliations to the corresponding IFRS measures are included in our earnings materials. Starting with [indiscernible] from 2025. performance landed within items with a strong close to the year. Cost was primarily driven by license revenues on the back of continued development progress and successful achievement of several performance milestones related to our new loan sets outside the U.S. when product sales were softer.

Total revenues in the quarter were up 13% compared to the same quarter last year, $173 million with licensing revenues making up 75% of the total and being the key driver of the quarter. This mix rested gross margin to 66% and adjusted EBITDA of $69 million or a 40% margin. On the product side, revenues was $43 million and product margin negative by 37%, reflecting timing of orders and planned facility upgrades to surpass of renounces. As noted last quarter, we did expect product margin to be impacted by facility improvements and lower throughput in the second half of 2025.

Looking towards 2026. we are expecting operating performance as consulted in Q4, in line with trends in 2025 on previous years. Operating cash flow was negative at $28 million, mainly impacted by lower revenue collections from soft product revenues in the [indiscernible] related to upcoming launches. Our year-end cash balance was $172 million, supported by the [indiscernible] completed in Q4, the $108 million convertible funds and $100 million in near term loan. These transactions strengthen the balance sheet, provide more operational visibility and support the [indiscernible] program happening into 2026.

So overall, we closed the year with strong [indiscernible] driven by licensing revenues while we continue to invest in product launches and market expansion. Turning now to the full year of 2025. This slide summarizes the highlights for a year but delivered solid top line growth, strong licensing contributions and positive operational cash flow for the first time. Total revenues for the year were $593 million, up 21% year-on-year. The mix was split evenly between product revenues and licensing revenues demonstrating the continued strength of our licensing model and its important role in funding R&D activity and pipeline progression.

Product revenues were driven by commercial momentum for our [indiscernible] biosimilar which launched in the U.S. in Q1 '25 in addition to the 3 new approved products, we delivered assessments for those products to our commercial partners in December and these new products will continue to deepen our commercial footprint. Gross margin [indiscernible] showing the benefit of licensing roles within the next -- as we converted our R&D pipeline into commercial products, we expect product revenues to become a larger share of the mix over time with licensing milestones revenues at similar levels as now.

Adjusted EBITDA for the year was $137 million, up 27% over the year. That represents a margin of 23%, reflecting strong licensing income translating [indiscernible]. Operating cash flow for the year was positive for the first time at $7 million and reset the company's conversion inflection points in 2024 to 2025. Turning to cash flow. The main impact on our cash flow is around our inventory [indiscernible] related to launch provision or acquisitions alongside the impact of our financing actions in the fourth quarter. The full year [indiscernible] shows a movement from $51 million operating cash of $172 million in cash balance at year-end.

Looking at the [indiscernible] bars together, we see positive operating cash flow before interest and tax of $7 million Working capital outflows is largely tied to inventory build for multiple upcoming concepts, M&A investment, including the [indiscernible] resulted under CapEx and acquisition, and you also see a significant staff for new equity and our borrowings in 2025. In Q4, specifically, operating cash flow were negative by $28 million. mainly driven by timing of collections in the quarter. CapEx and intangibles totaling $16 million, reflecting ongoing investments in 1 of our new capacity impact on investments -- last interest payments were $35 million, following the transition from [indiscernible] cash interest on the existing term loans. [indiscernible] million driven by the completion of the financing packet in Q4, which strengthened liquidity and enhance the financial capability having into 2026.

The next slide summarizes the financing activities stated in Q4 and how they enhance our liquidity and financial flexibility has been into 2026. The capital structure is the balance between term senior security facilities and the new convertible bond. While net debt increased with the Q4 financing inflows, our leverage ratio being late to adjusted EBITDA, lower to 9.3x and is attracted to improvement fully in line with our 2026 outlook with open digit revenue growth and tax funding EBITDA.

And on the prospect of revenue growth, the next slide summarizes how we continue building a diversified [indiscernible] revenue base supported by more progress on the market, other geographical risk and sustained progress across the R&D pipeline and future product launches. With an R&D pipeline of around [indiscernible] licensing milestone revenues are started to continue on a clinical basis, consistent with prior years. Additionally, its incremental loans at diversification and improved visibility into future revenues and strengthens quality of earnings.

Turning to the parties financial outlook. We are reaffirming the outlook for 2026 with revenues in the rent of $650 million to $700 million, which reflects continued double-digit sales growth as we advance our commercial portfolio and bring additional products to market across approved geographies. Adjusted EBITDA is expected to increase to $180 million to $220 million, supported by portfolio expansion and increased operating scale. The lower end of the range assumes no U.S. launches in 2026. Just to briefly summarize key items on the asset side of our balance sheet. Our asset base increased during the year, affected by strategic acquisitions and ongoing pipeline investments.

Total noncurrent assets increased by 19%, driven primarily by the [indiscernible] acquisitions of [indiscernible], capacity expansions, capitalized pipeline investments and higher contract assets due to timing of revenue recognition and payments. Deferred tax asset adjusted downwards by $130 million, inventory increased by $92 million over the year as result ahead of ofcoming product launches across approved markets Trade receivables decreased by $70 million, largely due to time of product segment and improved collection cycles.

Next, a few comments on the key moment across equity and liabilities. Our equity position improved by $128 million, mainly driven by profits for the period and capital contributions linked to our [indiscernible] the movement in derivative financial liabilities decreased by $156 million, mainly reflecting far volume cases on earn-out shares or [indiscernible] increased primarily due to the convertible bonds and $100 million senior turnaround facility completed in Q4 2025.

And to summarize, this is the last slide I want to leave you with here today. in line with our outlook for the full year, a very strong net driven primarily by licensing revenues, while product sales were softer, reflecting timing of workers and planned facility upgrades to support [indiscernible] diversification in used to strengthen as more of the portfolio is launched across Europe, Japan and other regions. This diversification reduces concentration risk and to costs long-term sustainable growth. As stated before, there is high focus on reaching cash flow positivity by the year-end of 2026.

Operating cash flow was positive in Q4 2025 for the first time at $7 million. The average is trending down, and we expect that to continue in line with our reaffirm 2026 outlook for double-digit revenue growth and margin expansion. And with that, I'd like to hand over to Lisa.

Thank you, Linda. Before we open the call for questions, I would like to briefly summarize where we are today. Alvotech has built a fully integrated biosimilars platform, simple by a broad pipeline, global manufacturing capabilities and strong commercial partnerships. During 2025, we continue to expand that platform while also strengthening our operational foundation through significant investments in quality systems and compliance.

Looking ahead, our priorities remain clear. We will continue advancing our biosimilar portfolio toward approval and commercialization in all markets, including the U.S. We will maintain strong focus on operational excellence, efficiency and regulatory compliance, which includes expanding our manufacturing footprint with key dual sourcing initiatives, and we will continue expanding our pipeline in the most cost-effective way and strengthening our global partnerships. The biosimilars opportunity remains large and durable, and we believe Alvotech is well positioned to capture that opportunity.

With that, operator, we would be happy to take questions.

[Operator Instructions] We will take our first question, and the question comes from the line of Ash Verma from UBS.

Maybe just like on the U.S. approvals where your -- you said that you completed the remediation program. Can you give us a sense of what are the pending items between now and the filing? How confident are you this saying that this would result in an approval, any chances of additional inspection from the FDA. And then second question, just I'm trying to understand like the guidance that you provided, the $650 million to $700 million compared to what you did for 2025 at $593 million, like is there any assumption of these 3 new products for U.S. market at all at the low end of the guide? If you strip that out, like what would be the outlook for the full year.

[indiscernible] for the question. I'll take the first part, and then I'll hand it over to Linda for the second. So we, as we said, completed our remediation efforts, we are now gathering the information showing that our changes are effective. And so we're compiling that information and putting that forth. So that is why we're in the final stretches of being ready to submit. We're working really hard to do it by the end of the first quarter, but we're also prepared that it could be in the second, but definitely in the first half of this year.

The approval process has been a 6-month clock based on the BSUFA guidelines. And then, yes, there is an opportunity for them to inspect the FDA again. However, we are working to have as comprehensive as a response as possible that would potentially could not require them to come and inspect again. Linda?

Yes. And on the guidance question, like on the outlook for 2026, like in the lower end of the range, we are not including revenues from our U.S. land sales. So yes, I think that's the answer to that one. I mean, I just think about the offer, and that's like -- I mean I would just think about the lower end [indiscernible] revenues from the U.S. and then the upper end is what we're striving for.

The question comes from the line of Glen Santangelo from Barclays.

Just 2 quick ones for me. Linda, I did also want to follow up on the guidance. And I think I hear you loud and clear that you're not really building much in terms of the U.S. approvals into the guidance. But when I sort of walk that bridge from the $593 million you generated this year to the $650 million to $700 million for fiscal '20. Can you just give us a sense for what type of incremental commercial approvals outside of the U.S. may be required to sort of get into that range? Or are you not building in any incremental approvals into that guidance?

And then secondly, Lisa, kind of curious to follow up on your comments about expanding the manufacturing platform. I just wonder if you can give us a better sense for timing, how you're thinking about that, the cost associated with that?

And also to follow up on Joe's comments with respect to the FDA draft guidance changes, how that may impact your R&D costs and your operating expenses. I'm just trying to get a sense for how the cap structure may evolve here over the next sort of 12, 18 months based upon your ambitions. Thanks so much.

Yes. On the guidance question, like what we're building in there is just the momentum on the launches we've already got an approval on. So looking at Europe and Rest of World. And then as I stated before, like what we are firmly targeting is then to get before year-end and getting to the upper end of the range, the approvals in the U.S.

Okay. Thank you for the question. It's Lisa. So regarding the dual sourcing and the capacity, so it's something that we've been evolving. It's certainly something that, as Joe has detailed in the past, as we look at our expanding portfolio and pipeline that certainly is needed in order for us to capitalize and maximize on commercial potential. So from a timing point of view, I think we're -- this is a first half event in terms of being able to secure that. We're not in a position today to sort of name the party or parties we're talking about, but we will certainly, once we've secured that.

I think from a cost and a CapEx perspective, I mean, this does somewhat dovetail with the changes that we had been anticipating in terms of R&D expenditure. For us, this allows us to do more for the same cost base that we've been anticipating over the last few years. So it allows us to do more in terms of actual programs, but it also allows us to be able to build into that the anticipation around capacity building. So I think what we'll see as we unfold the year is it is very much within scope of our expectations in terms of spend, both CapEx and I include in that R&D spend as well.

The question comes from the line of Christopher Uhde from SEB.

Christopher Uhde from SEB. I guess I'd like to start with some big picture things. And so maybe Lisa, congratulations on the new role. As you take the reins, how should we think about your aims and ambitions? Is this continuation evolution or revolution. And I know you highlighted, of course, manufacturing investments, but what do you see as the most pressing short-term priorities? And in particular, anything you think needs to be done differently or emphasize differently, both short term and long term?

So I think it's very much evolution, not revolution. I think the team has certainly built a solid platform, as I've said in my remarks. And as you've heard, from Joe and others. So I think it's really ensuring that we execute truly on the pipeline that we're building and continue to make sure that we launch those programs through our partners, of course, but that partnership model really is very heavily reliant on our performance, not only on R&D, but ultimately approval and being able to supply. So from a priority perspective, there is no question, and I think that was outlined as well in our remarks, that is sort of #1, 2 and 3 across the board.

And I think working alongside on the compliance piece, I mean, the U.S. market obviously continues to be important to us. Europe and other markets continue to perform very well for us, as you saw through our '25 and we anticipate that continuing in '26. So we do need to make sure, and it's certainly my intent to work with the team that we continue to build upon the scaling that we've done so far from a commercial production perspective.

Okay. Great. If I could ask just a little bit more of a specific question. Could you talk a little bit about Iran or disruption risk to your supply chain and logistics, where is there more exposure, manufacturing like disposables, tissue culture media, other items or shipping costs?

Yes. I think from our point of view right now, I mean, we do have markets that we're expanding to in the Middle East, but those are still early days in terms of expansion, most of what we're anticipating from a contribution point of view continue to come from the key markets, U.S., EU, Japan. So right now, we are not seeing that as an immediate direct impact on procurement or supply.

Okay. Great. And if I could just ask one more bigger picture question before getting back into the queue. The big concern we hear back from investors is around the competitive landscape, so would you please just walk us through, let's say, an update on your thinking around how you can mitigate competitive exposure, whether that be development strategy or niches or some other kind of innovation at some level that could insulate you?

Yes. Yes, absolutely. So I think as we've said, I think we anticipated some of the changes on the regulatory front, particularly in the U.S. I think we started early, which allowed us to do a larger subset of programs, I think being first and forming in the first wave, but ultimately being first to market is our goal, that it comes from the speed of our development, which I think has been fantastic, and we have a good track record with I think it then comes to approval and our IP positioning, which, again, I think we're very strategic in terms of how we design our products, both from an IP perspective in U.S. as well as other markets. So very complementary from that perspective.

And so for us, we try and choose programs where we can enable that first-mover advantage, and that comes from both the complexity of the program, our investment in it as well as our strategy, ultimately, commercially, both from an IP entry point of view as well as how we tackle contracting in the U.S. and the partnerships we have with very players that have the ability to penetrate quickly [indiscernible].

[Operator Instructions]

We will take our next question, and the question comes from the line of Arvid Necander from DNB Conergy.

Thank you and good afternoon. So first off, a question. Just trying to understand the underlying momentum of the established portfolio here. So product sales have been a bit on the software side over the past 2 quarters. Data that we can track is incomplete, but it seems like TRx growth for O2 seems to be moderating into 2026 and PBM dynamics are, of course, simplifying. So just wondering if the sort of scripts and sales trends represent a true signal here or if it's just noise. And if you can say anything on the revenue growth trajectory that you're expecting for O2 and how it will evolve through the year?

And then secondly, on R&D spend, which steps down quite significantly in Q4 while your guidance, I guess, implies an increase on a total spend basis for 2026. So how should we think about the sequencing of R&D through 2026? Is this more likely to be back-end loaded. Yes, I'll stop there.

Maybe I'll start just on some of the performance pieces on our commercialized programs. So when we look at '25, I think we're certainly exiting the year from a sales out into the market perspective in the U.S., we've seen growth in O2 and O4. We are continuing and expect to see that growth in A lot of that growth is through certainly a new and our partnership with Teva. In Rest of World markets, we do have shot up for O2 and O4. I think O2 in Europe, a little more challenging from a growth perspective, but we're still anticipating it. We did form that market last but we have been able to secure leading positions in some of the European markets like Austria and Sweden.

So we are still anticipating top line growth on O2, certainly on O4 there is, we believe, continue to be opportunity in '26, especially when we look at our exit position in '25. I think we were sitting at around a 5% share in the U.S., about a 9% share on O2 in the U.S. So we do think that there's continued momentum certainly in the very near term. And we're positioned well, I think, with our partners, even though some of the PBM pressures, our formulary business continues to contribute our unbranded business as well, is also contributing to that overall growth perspective.

And maybe finally, just to say these markets are still evolving in terms of generic erosion of the branded base. So I think we're going to continue to see AbbVie get excluded in '26, which will help, obviously, our additional ability to secure new business, but just to maintain and grow just through volume the business we've secured today.

Maybe I'll turn it to [indiscernible].

So perhaps also just to comment a bit on the revenue piece, unlike costly fluctuations. I think it's also good -- so keep in mind, like we are a B2B company. So you can always expect to see some fluctuations between quarters, depending on like timing of quarters -- but if I move into the R&D spend, like I would say, it's fairly -- going to be fairly balanced throughout next year. We continue to invest in our R&D efforts, which have been paying off a lot looking at our pipeline.

Perhaps also to mention that as I mentioned in the call itself, we are expecting '26 to be back-end loaded towards the end Q4, so just also keep the [indiscernible].

The question comes from the line of Christopher Uhde from SEB.

So I guess, maybe on the question that we just heard a follow-up around the dynamic with [indiscernible]. So what can you say about the overall dynamics, market dynamics over the past year for the HUMIRA biosimilar market? And what's the future of private label sales for you in the U.S. And I guess for both products, I mean, do you see -- in the past, I think we've heard management say that you could have probably 3 or 4 years of sales growth from a given product before erosion could start? Do you still see that as the case? Or obviously, we'd be looking for a return to growth at this point?

Yes. Yes. So I do think that what we've seen through the end of '25 has been that continued growth. I think that a lot of that is truly coming from the continued loss of business for the innovative product. So I think the exit was a biosimilar [indiscernible] roughly 55% share. So I think there's still that continued opportunity amongst the subset of players that are out there today, and we're sitting at a decent spot in terms of that 9% share in terms of [indiscernible]. So we do think there's more continued growth on that formulary business just as a factor of that erosion of the branded space.

In terms of private label for O2, I do think we continue to seek opportunity there. I'll never say that there's no opportunity, but I think the formulary business will continue to be a focus for us, certainly in '26 and beyond. O4, as I mentioned, we are seeing decent growth. I mean that's a more recent launch. And certainly, we're still young in terms of the overall erosion. I think the exit was about 41% in '25 for biosimilar share. So there's still opportunity there. And Teva has been very a very good commercial partner in terms of how they're growing the market and partnering on the unbranded space as well as on the formulary piece.

So we're optimistic still that we will continue to see growth over this -- over the next few years. For us, we're not ready to say this is plateaued by any stretch. just given the fact that we're still seeing that brand erosion continue to happen.

And if I could then ask about whether you could quantify the sum of sales for the 3 new launches that happened in 2025. So product sales that is?

We don't quantify it specifically, but it is like -- I mean, it is definitely a part of our contribution in Q4.

Okay. And -- then I guess, for the guidance high end, well taken on the revenue of new products -- of the U.S. launches not being part of the low end -- but at the high end, would it be licensing revenues only or also product sales.

It will be both like on the high end.

The high-end [indiscernible] high end is mainly reflecting growth in supply revenues. It is both.

Okay. And then so -- is it still fair to say that just with respect to the cadence that you discussed, is it still fair to say that your 6-month visibility remains extremely high, I mean, essentially that the orders have been placed.

Yes. We have good visibility into the next 6 months.

Okay. Great. And then I guess -- so then the last thing I wanted to ask about was just in terms of the product gross margin, and I might have missed this, I didn't quite catch it in your comments, obviously, negative for the past 2 quarters. When do you expect the portfolio to deliver leverage again there?

So I would say like -- I mean, we are definitely seeing impact from our facility improvements, both in Q3 and Q4, and that's in line with what we also commented on in Q3, but it will flow into Q4. I mean, I think things are moving well on that front. So we should be seeing this trending up now in '26.

Maybe to add to that, Robert here. If you look at our gross margin because we need to look at the gross margin, which includes then, of course, both licensing and supply revenues because there is always a trade-off, I mean, if you have a lower milestones, you would get a higher margin on vice versa. So we are basically seeing 62% gross margin in our business towards '25. And if you look at the comparable companies like Samsung and Celltrion, we are delivering today a gross margin, which is higher than those 2. But as mentioned by Linda, those revenues can be lumpy, both the license 1 and, of course, how we ship. But just to underline that, we have, of course, been in a shutdown due to FDA remediation a few times this year. That is, of course, reflecting a bit how we ship also.

Thank you. This concludes today's question-and-answer session. I'll now hand back for closing remarks.

Thank you. On behalf of the team presenting today and all of us at Alvotech, I want to thank everyone who joined us for this webcast. We look forward to talking to you again and wish you a wonderful day.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Okay, everyone. Welcome to this global investor call in connection with Alvotech launching up to $125 million convertible bond offering.

I'm pleased to introduce the CEO of the company; Robert Wessman, the CFO of the company; Linda Jonsdottir, the CEO; Joseph McClellan, and the Head of Investor Relations, which is Patrik Ling. There is one page in the presentation with the convertible bond terms. We can go through that afterwards. There will also be a Q&A session [Operator Instructions].

But now I will hand over to the CEO, Mr. Robert Wessman.

Yes. Thank you so much. First of all, I want to thank you, everyone, for joining in here today, and this was on a short notice, I guess, for some. So thanks for joining. We will have 15 minutes presentation, so we will go fairly fast through the deck, but as mentioned, we will have a Q&A in the end.

So the company was founded 2013 by myself and other investors which came in later on. We wanted to build out one of the leading biosimilar companies in the world. And the key ingredients being best-in-class R&D, best-in-class manufacturing, strong portfolio and pipeline and then having a global marketing reach.

Since 2013, we have invested around $2 billion into the business. We have around 30 products in the pipeline, in the development pipeline. We have now five products outside U.S. on some of the key markets. And we have two products for now until we clear the CRL, which is out there for the pending approval until next year. So we have 19 commercial partners, and I will talk about that a bit more on following slides.

The company has been growing around 74% CAGR since '21 until '26. But we are releasing today also indicative guidance for both top line and EBITDA. We launched the first product into the Europe towards '22. And we launched the first commercial product into the U.S. market 2024.

If we go to the next slide, as I said, we have a very healthy partnership and network of strong commercial partners. All those partners are -- we can say, co-investing into our R&D, simply because they are paying us milestones for access to our intellectual property. So you can see in our P&L that milestone revenues now have exceeded R&D costs. So we can say, technically, our partners are basically paying us fees with cumulative are higher than our R&D cost.

And then we have exclusive supply arrangement with all those partners. And once we get approval across the world, we start to roll out the products where we produce those in Iceland. We basically have Teva, the lead partner in U.S., the biggest market in the world. We have a private label with Quallent. We have done a very strong partners in Europe, which includes data and advance. And then we have multiple partners covering Latin America, Middle East and Asia.

The company today has around 1,500 employees and over 1,000 people in Iceland, where we have both manufacturing, main part of the manufacturing, main part of R&D. And we have then the second biggest function is in Sweden, Stockholm, where we did buy out the R&D function of Xbrae half a year ago or so. We then have a supportive units in both Germany, in Switzerland and India towards the regulatory and R&D. And that kind of is our network of offices and team across the world.

So before I hand it over to Joseph McClellan, which is our Chief Operating Officer, we have been going through since year 2022, multiple regulatory health authorities inspection, multiple times through the EMA. We are approved in Canada, Latin America, Middle East, Japan and multiple other markets, European Union, of course. We went through earlier this year through EMA and Japan, health authorities, which actually resulted in approvals and all those inspections, we got some minor comments.

And last year, we went through 2x FDA inspection. And as I mentioned earlier, it was only midyear last year, we became commercial in U.S. and the first inspection with FDA was 143 and very late last year, which was a very broad GMP inspection, we got two fairly minor 483s.

This time around, we got the team to come in, and this was a pre-approval inspection, which is slightly different than a general GMP inspection, which resulted in delay of getting through three product approved. actually 4 BLAs. So the company has been working pretty hard since then to make sure that the comments which FDA had on our facility is being addressed.

We believe that we are in a good place. We have implemented close to 200 CAPAs, and we will be hopefully sending FDA soon next year update on the CAPA and the CAPA effectiveness, which is the basis of getting approval.

But with this, I want to hand over to Joseph McClellan, over to you.

Thank you, Robert. Hello, I'm Joseph McClellan, Chief Operating Officer for Alvotech. I'm with Alvotech now for over 6 years, start off as Chief Scientific Officer and have expanded my responsibilities recently. I've been responsible for helping to drive all of our R&D portfolio and now looking to continue that good progress with our growing portfolio, as well as driving products on market.

If we go to the next slide, as Robert said, we have received complete response letters for our 4 BLAs that -- 3 of our 4 BLAs that we submitted in the fourth quarter of 2024. Those are for the biosimilars to Simponi and Simponi Aria and Eylea. We also do anticipate based on our clarification letter for those CRLs called the [ PAL ], receiving a CRL for our AVT03 for the dual product, Prolia and Xgeva. Since our inspection closed on the 4th of July of this year, we have been working very closely with the FDA to resolve all of the outstanding issues, and we're very optimistic they will be all closed very shortly.

As Robert said, as part of our requirements and request for funding, we're continuing to build out our R&D pipeline. That does include our strategic acquisitions. Robert mentioned for the R&D operations in Stockholm, Sweden, as well as our Iverzly, CMO for assembly pack and label of our devices. We also are very focused on scaling up and launching our products that are approved recently in Europe and Japan as we get excited for that exciting information. And so these fundings, this offering will help support our lead position in development of biosimilars, while also enabling our strategic launches of our products around the world.

On the next slide, we can talk a little bit more about our current on-market products, where we continue to see a good amount of momentum in growth. We are excited that AVT02, our biosimilar to Humira and AVT04, our biosimilar to Stelara, are doing very well on both the U.S., European markets, as well as in other markets around the world. Regarding our biosimilar to Humira, it continues to hold the second largest market share of Humira biosimilars in the U.S. And in Europe, we're seeing that it has top position in several of the top 10 European markets. We continue to see very good quarter-over-quarter growth.

Our biosimilar to Stelara, we also are seeing a positive impact in the U.S. of our STADFAST strategy with our U.S. partner to grow the business. And in Europe, where we were one of the first to launch in many markets, we are seeing that we continue to have a leading position. And so while we continue to see the shift for these two products go from the reference product, to biosimilars, we see a very nice runway for our products in the future.

On the next slide, I want to talk about our exciting launches for our three products. that we have recently gained approval for in the U.K., Japan and the European economic area. These are very important products ex U.S., where the total addressable market for these products is approximately $3 billion outside the U.S. We're most excited about our biosimilars to Simponi and Eylea. For Simponi, we are the first to launch. We do anticipate being alone in many of the European markets. And we're also excited for our Japanese launch in the first half of 2026.

For Eylea, we were able to launch very early upon the loss of exclusivity. And so have been seeing a very nice strong order book pulling through our products in Europe and the U.K. And we're also anticipating our Japan launch in the first half of 2026. We also are on the market for AVT03, our biosimilar to Prolia and Xgeva in Europe. So it's wonderful to see that these products are launching, that we have wonderful partners to help us pull through and gain appreciable market share in Europe.

On the next slide, I just want to talk briefly before I hand it over to Linda regarding our overall R&D pipeline. As Robert said, we have over 30 molecules in development. We have been very focused on building our portfolio, building upon the success of our first 5 molecules to get first class approval. And we're seeing that we have a few market products that we'll be able to submit BLAs and/or MAAs next year. Those are similar to Entyvio and biosimilar to Eylea HD. So these are really exciting that these products are advancing. We also are excited that our potential biosimilar to Xolair is likely to gain approval next year in the U.K. and European markets.

After that, we have a growing portfolio. We anticipated in 2023 that the regulations would be changing associated with the expectations for patient confirmatory efficacy and safety studies. And as a result, we began to really invest in building out best-in-class R&D capabilities from beginning to end so that we can take advantage of the opportunity of having a very large portfolio of potential biosimilars understanding that many biologics are coming off a patent over the next 5 to 10 years, and there will be a lot of opportunity for us to provide these very important medicines to patients around the world and provide good value to our stakeholders.

With that, I will turn it over to Linda.

Thank you very much, Joe. Quick introduction of myself. My name is Linda Jonsdottir. I joined Alvotech in July this year. So a few months in and very much loving the entity around here on this very important journey we are on. I was prior working for a big part of my career for a global company in food tech called Marel, listed in two markets.

So I was there for 15 years, 8 years as CFO and 2 years as COO. Also been in industries as banking, transportation and been on a number of boards. There are like a few slides about the financials in the past that I'm happy to take questions on, but I would want to jump to the 9 months financial slide just to cover a bit high-level picture.

Alvotech has delivered strong take growth in past years since launching of our first biosimilar, and there is a strong continued momentum in demand for our on-market products. We are, like steo-by-step getting also more and more diversification into our revenue profile as we launch more products to the market. And when I mentioned diversification, it is both with respect to revenues by products and also by geographies as we continue scaling of our commercialized products with our recent approvals of AVT05, AVT06 and AVT03 in Europe, U.K. and Japan.

This slide shows like well the trend since our -- on our financial side since 2022 to date. To focus on the financials for the first 9 months of 2025, we did deliver good revenue growth of 24%, and that is also related to our momentum after U.S. launch of Humira and early traction for Stelara. Gross margin was at a strong level of 59%, also supported by strong licensing revenues.

And even though we see improvements in product margins looking at the first 9 months of 2025 compared to 2024, we did see some softness in product margins in Q3 '25, where product revenues and product margins were impacted by timing of orders and investments in facility improvements related to FDA matters that Robert and Joe both covered.

Looking at the adjusted EBITDA, it is at the level of 16% for the first 9 months. Margin was comparatively higher in 9 months '24 due to the higher licensing revenues related to 3 biosimilar submissions and the U.S. launch of our biosimilar to Humira, along with the launch of our biosimilar to Stelara in Europe. We also see impact from higher R&D and G&A in '25 on our EBITDA.

On the cost side, increased R&D efforts are in relation to the accelerated pipeline expansion to build up the most valuable portfolio of biosimilars in the industry and to drive future growth that Joe covered well on the previous slide.

We are as well higher on the D&A cost, and that's was needed to enable us to scale operations and infrastructure and with in mind that we want to drive operational efficiency as we continue our journey. Cash position reflects outflows connected to inventory buildup that are needed to support our launches that are taking place now. Also CapEx investment, the company is well invested and M&A activities.

Then if I jump to the guidance slide for 2025. When we issued our Q3 quarterly results, we did come out with a revised guidance for 2025 and are today reconfirming our guidance on strong performance in Q4 '25, both for revenues and adjusted EBITDA.

And as you can see highlighted on the slide, the top line guidance is $570 million to $600 million, and EBITDA is in the range of $130 million to $150 million, which then translates into 19% increase in revenues year-on-year and 30% improvement in adjusted EBITDA.

Q4 '25 will, therefore, be the strongest quarter like for licensing revenues, which is driven by significant contributions from early phase assets combined with newly signed licensing agreements. where we have been like getting marketing approval and launches of new products across Europe and also continued advancement of mid- to late-stage assets in development. So reconfirming the guidance we gave out around the Q3.

And then touching finally the 2026 guidance, which is new. We're giving -- coming out with a guidance for 2026 during this process. We are anticipating revenues in the range of $650 million to $700 million, reflecting continued double-digit sales growth -- adjusted EBITDA expected to increase to $180 million to $220 million. And I want to highlight that the lower end of the guidance assumes a cautious view on the timing of U.S. market entry for our pending launches.

We are investing a lot in R&D around $250 million planned for 2026, which will then allow us to continue having such a strong and valuable biosimilar pipeline. And the new funding will support us on that journey. And we are going to be cash flow positive in Q4 2026. And this will -- new funding will bridge us to that cash flow positivity.

Just a bit like on the overall picture, the strategic focus for the next 18 months is like very much on execution to unlock long-term growth. We will continue advancing the pipeline and also supporting multiple global launches to deliver the solid sales growth.

And I would say also the diversification of revenues across geographies and products is also very important. So yes, very much looking forward to working on this with the team. So I'll stop here and hand it over hand it back over. I guess we are down to Q&A now.

Yes, Christian, are you going to assist us with that? I think...

Yes. [Operator Instructions] So I'll start with one question, and it's regarding if you can say a little bit more about the -- you mentioned the revenues and the EBITDA for 2026. Can you give a little bit more update on how you see the CapEx in 2026, roughly?

Yes. So like on tangible CapEx, I would say like the company is very well invested. We have been investing a lot in building up the foundation. So I do see opportunities to lower the investment amount going into tangible CapEx for the year 2026.

And at the same time, we are like in a position to continue our growth journey despite that. On the R&D part, we will continue as planned, like we are planning to, yes, continue having this pipeline that Joe was walking you through, and that will mean continued investment on that front.

Yes. Very good. I don't see any questions here. We'll do one more question, which I think, which we have been receiving some questions on, and it's regarding the complete response. Robert, maybe you can just briefly describe what that was all about.

Yes, Joseph. I think maybe you take the top three items there, if you will?

Yes. Thank you, Robert. Happy to. Yes. So we -- as we said, we concluded an inspection in July of 2025, which led to our complete responses that we received so far for our BLAs. In that, it was clear that there were 3 issues of concern from the FDA as they rank them. The FDA always when they provide their deficiencies, they put them in the order of what they believe is the perceived severity.

Observation one was regarding the application of silicon oil to our drug product machinery. This is something that we've been doing since 2018 at the guidance of the manufacturer for the machine, and it also is associated with our earlier approved products. And they asked that we just remove it. We've ultimately agreed that we will remove the silicon oil from our drug product manufacturing parts, and we can manage around that.

The second was regarding how we handle complete -- sorry, our product quality complaints. We saw a reasonable uptake in product quality complaints in the U.S. between our two inspections, one of which was in September of '24, followed by the one that we had in June, July of '25.

Understandably so, we went from approximately 100,000 to 200,000 products in the market in the U.S. to over 2 million. And so we had an increase. The FDA had some concerns about how we just manage that. We've been working through that with them, and we've fully overhauled the way that we do our product quality complaints and have an improved process that we're very confident in moving forward with and addresses the FDA concerns.

Lastly, an opportunity for environmental monitoring, microbial control. We look at this as something that's very much a continuous improvement for us. We agree with the FDA that there always can be improved safeguards.

However, it's important to note that the FDA's deficiencies and observations were about concerns of things that could happen to the product, but nothing actually has. We've never had any sterility issues with our drug product manufacturing. We passed all media fills that we've done over the last 7 to 8 years. And we have never had a failure in our product that we produced from a sterility or a microbial contamination perspective. So a lot of confidence that our product is very safe.

That's why we're still very good standing with EMA, with the PMDA, they've inspected us and even the FDA, right? The FDA, it is very important to note that none of these concerns led to us changing the classification of our site nor prohibiting the manufacture and supply of our biosimilars to Humira and Stelara to the U.S., which we have continued to manufacture and deliver that. Hopefully, that answers that question.

Yes, there was very good. There was actually -- there is a question regarding the CRL here, and it actually you have answered some of it. So the question here, you seem confident that the issues related to the CRL 404 can be resolved shortly. Can you please provide a bit more detail on what remains to be addressed and where you are in the process?

Yes. These were actually the three main topics, which was in the CRL. So I think Joseph have already answered that.

Okay. I think we covered the CRL then, and there are no further questions. So with that, I think we will conclude this global investor call.

Yes. Thank you so much for joining. Great pleasure to have a chance to tell you all about Alvotech, and hope to see some of you in the book. So thank you so much.

Thank you very much.

Good day, and thank you for standing by. Welcome to the Alvotech Q3 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Benedikt Stefansson, Vice President of Investor Relations and Global Communications. Please go ahead.

Thank you, and welcome to our listeners. Yesterday evening, the company issued a press release announcing our financial results for the first 9 months and third quarter of 2025. A presentation accompanying today's earnings call was also published under our investor portal, investors.alvotech.com under News & Events.

Our press release, presentation and statements that we make on the call today may include forward-looking statements. Please see our disclaimers on Slide #2 of the presentation. These statements do not ensure future performance and are subject to risks and uncertainties that are outlined in company filings with the Securities and Exchange Commission. Any risks and uncertainties could cause actual results to differ materially from forward-looking statements that are made.

Presenting on today's call are Robert Wessman, Chairman and Chief Executive Officer of Alvotech; Joseph McClellan, Chief Operating Officer; and Linda Jonsdottir, Chief Financial Officer. Also with us on the call is Balaji Prasad, Chief Strategy Officer. Robert will begin today's presentation with a discussion of the status of our pending biologics license application with the FDA and facility inspection and present some business highlights. Joseph will discuss the status of our development pipeline. Linda will conclude with a discussion of our financial statement and full year guidance. Following the introductions, our team will be happy to take your questions.

And with that, I would like to turn the call over to Robert Wessman.

Thank you, Benedikt, and thanks to everyone for joining us here today.

Please turn to Slide #4 in your deck. We are now approaching the end of very eventful year, marked by increased pipeline development, successful product approvals across multiple markets and growing licensing and products revenues. Alvotech has come a long way in its 12-year history. We have invested approximately $2 billion to build a global pure-play biosimilar company with integrated R&D and manufacturing under one roof. We commercialized globally through a network of nearly 20 partners, reaching over 90 countries worldwide.

After launching our first biosimilars in 2022 and second biosimilar in 2024, we entered the U.S. market last year. The 2024 global launches drove a 420% revenue growth in that year, and we are guiding approximately 20% growth for 2025. With exclusivity expiring on dozens of originator biologics each year and the regulators waiving costly efficacy trials, the biosimilar market is set for explosive growth. With resources and strong focus on developing and manufacturing biosimilars, Alvotech is well positioned to lead the charge.

In fact, we proactively responded to anticipated changes in regulatory guidelines by expanding our research and development initiatives approximately 2 years ago. More recently, we have further enhanced our R&D capabilities with the establishment of an operational base in Sweden. The result is already evident in our growing pipeline, 5 approved biosimilars, 12 other disclosed development programs and already developed cell lines for additional 15 valuable targets, in total targeting greater than $185 billion of originator markets.

Now let me touch upon a few key points that I will discuss today and described on the following slide. This includes an update on the FDA process, our pipeline, I'll comment on the revised outlook for the year and update on our marketed products. So let's turn to the next slide. As announced last week, we received a complete response letter, or CRL, from the FDA for our BLA for the proposed biosimilar to Simponi. The sole reason noted in the CRL concerns unresolved issues identified by FDA during the inspection of our Reykjavik facility, which concluded in July of this year.

Let me make it clear. This CRL did not change the status of Reykjavik manufacturing facility, which continues to be an FDA-approved site that produce and will continue to produce our current marketed products in U.S. Also, the site is approved to manufacture for global markets and continues to get approvals for our new product launches. The facilities referenced in our regulatory application, including our Reykjavik site are, of course, regularly inspected by several global regulatory agency as a routine part of the review process.

For example, both European Medicine Agency and Japan's PMPA inspected our Reykjavik site earlier this year in support of our new product approvals in these markets that will occur in third and fourth quarter. Leveraging several successful inspection by many regulatory authorities including recent inspection by FDA in the third quarter of 2024, which yielded only 2 minor Form 483 observations, we remain committed to continuous improvement of our manufacturing operations.

To support consistent and effective leadership at the site, we have expanded the responsibility of Joseph McClellan, current Chief Scientific Officer, by appointing him as Chief Operating Officer. In his role, Joseph will be responsible for technical operations as well as research and development, supply chain and project management. Before joining Alvotech in 2019, Joseph held positions of increased responsibility at Wyeth and Pfizer in the United States over a span of 17 years.

During his tenure at Alvotech, he has played a key role in advancing and strengthening our high-performing research and development organization and its pipeline. His commitment to uphold best-in-class quality standards and operational excellence will position Alvotech to address any concerns raised by FDA at our facility.

Although we are disappointed by the approval delay resulting from the CRL, we remain committed to promptly resolve any outstanding matter relating to the facility. Once FDA provides clarity later this month on the specific issue identified during the inspection, we will address those in a timely manner. Once we respond to the CRL, we anticipate the approval of our BLA may be granted as early as the first half of 2026 in accordance with 6-month statutory review periods.

With this review timing, we still anticipate being one of the first, if not the only approved biosimilar to Simponi in U.S. and other global markets. Of note, we have already received approval in Japan and U.K. with the EMA approval expected shortly for our biosimilar to Simponi.

So please turn to the next slide addressing our revenue growth. Later in the call, Linda will discuss our third quarter financial results and full year guidance in detail. When we reported our full year guidance in March, we signaled that the first half and second half of the year would be relatively balanced, while the fourth quarter would be the strongest of the year due to anticipated product approvals and launches which were occurring later in the year.

Following the receipt of CRL from FDA, we revised our outlook for full year to $570 million to $600 million top line revenues and adjusted EBITDA of $130 million to $150 million. We believe the cost incurred on temporary loss in product revenue are necessary investment in our future growth and will make the company stronger as we continue to expand our portfolio of products and launch into additional global markets.

As you can see on this slide, Alvotech's revenue growth has been extraordinary or 127% on average per year from 2021 to year-end 2024. With the latest guidance we have given, we are projecting a compounded average growth rate of 94% from 2021 until end of this year. As we are launching 3 more biosimilars this year, this contributes to both licensing and product revenues, and our strong pipeline and increased R&D will allow license revenues to continue to be a significant revenue contributor.

We are very pleased to say that we are seeing very strong global interest in our enhanced product portfolio. We continue to sign numerous contracts with our partners globally, which will continue to deliver strong milestone revenues and secure strong market share globally going forward.

So please turn to the next slide. Now I will turn to how the markets for the existing products have evolved. In the U.S., we continue to hold the second largest market share in the Humira biosimilar segment and our products remain the fastest-growing Humira biosimilar. The originator share is eroding and expected to fall below 50% of its original volume by year-end, with most volume continuing to shift to biosimilars and much smaller portion transitioning to novel therapies.

In Europe, our partner's data continues to grow volumes for Hukyndra. We have seen average quarter-on-quarter growth of 12% the last 4 quarters. Hukyndra now holds the top position in several of the 10 largest EU markets including Austria and Sweden and has reached 10% share in France, competing against 9 other biosimilars. In Canada, SIMLANDI marketed with MAP Pharma remains the fastest-growing Humira biosimilar.

With respect to our biosimilar to Stelara in U.S., our partner, Teva, continues to secure formulary coverage and we are among the top 3 biosimilars on the market for this reference product. In Europe, we were first to launch Stelara biosimilar. And while the competition has increased, we are still holding a leading position in the European markets, where we have launched our product with about 10% share of the total Stelara markets and 25% share of a biosimilar segment. We expect 50% of Stelara's European market to transition to biosimilars by year-end.

With that, I will hand the call over to Joseph McClellan, who will discuss our portfolio, including the near-term launches. So over to you, Joseph.

Thank you, Robert. As described on the next slide, our products, AVT06, a biosimilar to Eylea; AVT05, our biosimilar to Simponi; and AVT03, biosimilar to the dual products of Prolia and Xgeva are scheduled for launch in Europe this quarter.

AVT06 has received approval in Japan, the U.K. and the European economic area. Last week, the U.K. High Court rejected Regeneron's and Bayer's request to stop Alvotech's manufacturing of its Eylea biosimilar in the U.K. This ruling enables us to manufacture in anticipation of commercial launches after the Eylea supplementary protection certificates expire on November 23 of this year.

We are prepared to launch AVT06 prefilled syringes and vials across Europe, post expiry of exclusivity and look forward to entering the market with strong partners. AVT05 has already received approval in Japan and the U.K., and we are expecting a favorable decision from the European Commission for the EEA in the later part of November, following the EMA's CHMP recommendation early this summer. We intend to proceed with the launch properly after approval, anticipate being the sole biosimilar to Simponi available on the European market for several months. In Japan, we have secured the necessary rights and plan to initiate launch activities during the first half of 2026.

For AVT03, which has been approved in Japan, European Commission approval for the EEA is anticipated in the second half of November, following EMA's CHMP recommendation this summer. The intention is to ship launch supplies to our commercial partners in Europe during this quarter. It is expected that AVT03 will be among the first products available with established partners supporting its market introduction.

Turning to our development pipeline on the next slide. We are pleased to report ongoing growth and advancement across our programs. In collaboration with partners, Kashiv and Advanz, we have submitted a biosimilar candidate to Xolair in the EEA and previously filed for approval in the U.K., where the review process is ongoing.

The development of AVT29, a biosimilar candidate to high-dose Eylea as well as AVT16/80, a biosimilar to Entyvio for both intravenous and subcutaneous administration, is proceeding towards regulatory submissions targeted for 2026. Progress continues on our candidate to Keytruda in partnership with Dr. Reddy's, including completion of manufacturing for clinical supplies. Additionally, we have initiated clinical manufacturing for our candidate to Cimzia with positive developments underway.

Our investment in the early-stage pipeline remains strong. Today, we are announcing 2 new molecules, biosimilar candidates to Hemlibra and Imfinzi, which are currently in process development. Further, we have over 15 cell lines completed for future development within our expanding portfolio.

At this point, I invite Linda to deliver the financial overview.

Thank you, Joe, and good day to everyone who has on the call today. Today, I will take you through the financials for Q3 and the first 9 months of 2025. The earnings deck is more detailed than usual, and we hope you appreciate the additional insights into the quarterly results provided in the next few slides.

As Robert mentioned, Alvotech has delivered strong CAGR growth in the past 4 years since launching our first biosimilar, and there is continued momentum and demand appetite for our on-market products of biosimilars to Humira and Stelara.

Turning to the next slide, which highlights our Q3 financial performance. As we communicated, as part of our Q2 results, we were expecting Q3 to be a soft quarter followed by a strong Q4. This was primarily driven by lower product revenues and product margins, which were impacted by the timing of orders, portfolio mix and temporary loss in product revenues related to facility improvements, as Robert noted earlier.

In Q3, licensing revenues were at the high level of $81 million, supporting a strong gross margin of 69%. We also finalized the integration of Ivers-Lee into our financials that were acquired in July. Ivers-Lee is a Swiss-based assembly and packaging service provider and will increase our capacity for finished product assembly and packaging.

Adjusted EBITDA was $14 million or 13% of revenues and was impacted during the quarter by costs associated with improvements in operations to support new launches. Operating cash flow is then a function of our revenue collections in the quarter, down from a very strong quarter in the second quarter of '25 and outflow driven by inventory build in support for upcoming launches.

And looking at the year-to-date on the next slide. Alvotech delivered total revenues of $420 million for the first 9 months, which represents strong 24% growth year-on-year. This shows our strong commercial momentum following the launch of our biosimilar to Humira in the U.S. and the early traction for our biosimilar to Stelara in both Europe and the U.S. Gross margin was at 59% and underscores the strength of our licensing model while product margin of 27% reflects quarter 3 softness. Adjusted EBITDA in the first 9 months was $68 million or 16% margin.

When compared to prior year, it is important to note that 2024 included very high licensing revenues tied to 3 biosimilar submissions and the U.S. launch of our biosimilar to Humira, along with the launch of our biosimilar to Stelara in Europe. Cash balance at the end of September was $43 million and reflects outflows connected to inventory buildup ahead of product launches, CapEx investments and M&A activity.

If we then double-click on the revenue and EBITDA trends on the next slide. Our revenue model as a B2B company naturally leads to quarterly fluctuations related to timing of orders from our partners. However, despite these fluctuations, we delivered strong double-digit growth in revenues both in the quarter and in the first 9 months, up 11% and 24%, respectively, with a trailing 12-month run rate of $571 million in revenues.

Adjusted EBITDA margin for the first 9 months 2025, however, was at 16% compared to 26% last year. This was driven by higher R&D investments to accelerate pipeline expansion as well as higher D&A costs to scale operations and infrastructure to be able to drive operational efficiency across the organization. Finally, I would like to highlight that we continue to diversify geographically with growing contributions from Europe as market share in Europe and other markets outside of the U.S. continues to grow.

Moving to cash flow on the next slide. As I touched on earlier, cash flow in the quarter was a function of lower revenue collection due to timing and planned inventory buildup in support of upcoming launches. We also continued strategic investments in CapEx and intangibles to expand capacity to support new launches and our growth plans. New working capital option of $100 million will be used to capture swings in working capital. Cash is impacted by the costs associated with acquisition of Ivers-Lee and interest payments since from June '25, we are paying cash interest on our loans.

Next, I would like to quickly touch on the balance sheet on the next 2 slides. Our asset base remains strong, supported by recent bolt-on acquisitions and continued investment in R&D to drive future growth. Current assets are stable overall with expected shifts in inventory and trade receivables during the period.

Looking into the equity and liability side, a couple of things to mention here. Our equity position strengthened by $236 million, driven by profit for the period and the inflow of capital contributions for most recent lifting. Derivative financial liabilities decreased by $167 million, mainly due to fair value change on earn-out shares. And lastly, the overall contract liabilities decreased due to recognition of licensing revenues.

If we then turn to the next slide featuring our revised full year outlook. On November 4, we revised our outlook following the CRL from the FDA. We updated our outlook for the full year to a range of $570 million to $600 million in revenues and adjusted EBITDA range of $130 million to $150 million. This revision reflects actions taken to respond to any issues identified by the FDA inspection, impacting production efficiency in 2025. Some of the licensing agreements were pipeline assets that were expected at the end of Q4 are now shifting to 2026.

Despite these short-term headwinds, we expect a strong finish to the year, especially with licensing revenues that translate directly to EBITDA. At the midpoint of the guidance, we are targeting to deliver 19% year-on-year revenue growth and 30% EBITDA growth. Fundamentals remain strong. We expect margin recovery and accelerated revenue contribution with following new launches and continued geographical diversification.

More importantly, we continue to see growth in markets outside the U.S., which helps balance our revenue profile. Based on the committed orders we have for our new launches in markets outside the U.S., combined with the growth momentum we are seeing with our currently marketed products, we are well positioned to deliver top line and EBITDA growth in 2026. Management will provide new future guidance no later than with the Q4 '25 results.

Our strategic focus for the next 18 months is on focused execution to unlock long-term growth, advancing the pipeline, realizing multiple global launches to deliver solid sales growth and diversification of revenues across geographies and products. At the same time, we will drive cost optimization and operational efficiencies to support margin expansion. Working capital management will also be our key focus to achieve positive free cash flow and support our growth trajectory.

This brings me to my final slide. I think it's always good to look a bit backwards and see where we're coming from, where we are today and where are we heading. Our journey from its 2013 foundation to today reflects the transformation into a leading biotech company with one of the industry's most valuable biosimilar pipelines. From 2013 to 2023, the focus was on building a vertically integrated platform, investing in R&D and talent and establishing global partnerships to enable successful launches of Humira and Stelara biosimilars.

And 2024 to 2025 period marks a major inflection point, multiple global approvals, including those referencing Humira and Stelara in the U.S., accelerated pipeline development and fivefold revenue growth from '23 to '24. We achieved positive EBITDA in '24 and are targeting around 30% growth in 2025 on EBITDA level.

Looking ahead to 2026, our priorities are diversification and scale, advancing our pipeline, executing multiple global launches and critically adhering to regulatory standards and ensuring FDA compliance as a cornerstone of success. With a $20 billion addressable market for upcoming biosimilars, we are positioned to deliver sustainable growth and long-term shareholder value.

I'll now turn the call back over to the operator for Q&A.

[Operator Instructions] We will now take the first question from the line of Ash Verma from UBS.

So yes, I wanted to just get back to the focus on the CRL. So can you kind of explain this? Like what are the observations this time that are different from the last time? And I think you mentioned that you've effectively taken actions to resolve them. Just to give us a status of where we are on that.

This is Joe McClellan, Chief Operating Officer for Alvotech. We have been in a situation where we have done a significant number of improvements since the inspection has concluded. The observations were not repeat observations. Let me say it clearly. There were no repeat observations in the deficiencies identified in the Form 483 from the FDA conclusion of the inspection.

And so it's a number of things that we have to improve about the facility associated with some of our aspects associated with manufacturing, control of our facility, documentation, investigations. We have committed to the FDA to complete more than 180 different changes to address all of their observations plus more so that we will not be in the situation again. In doing this, we have now completed 93% of these commitments, and we have communicated them to the FDA. We're in the process of completing additional actions that we will continue to keep the FDA updated on.

And just as a follow-up. So I know Form 483, you have 10 observations. And even for Humira back a while ago, I think you ultimately turned up to 18. Just like taking a step back on the manufacturing facility, if this has been a little bit of a channel, like has that made you think about like the strategic value of keeping the manufacturing in Iceland? I'm just trying to understand like is there something that is driven by less of an availability of pharma talent or anything of that regard and whether if you would not have it at that location or at some other places, that it might ultimately solve the problem in the long run.

Yes. Thank you for the question, Robert Wessman here, CEO Overall, I mean, the concept and the vision and the strategy around the business is keep everything in-house, both R&D and manufacturing. We think creating a platform like we have is extremely important. We can say that in U.S., we are around 8 months into being a commercial company, if you will. We have gone through 3 FDA inspections over the 18 months. And the first two, which was early '24 was only one for 483. And then late last year, we had a general GMP inspection, which we only got 2 minor 483s.

So overall, I would say it was very disappointing to get this CRL and unexpected. But the company has continued to grow and strengthen further the quality systems, and we have full intention to absolutely stay and be best-in-class when it comes to GMP and quality. And I mean, that's reflected. We have gone through successfully piped EMA inspections. We have gone through at least 4 inspection from different global health authorities and now 2 successful FDA inspections.

So as Joe explained in detail, we took this very seriously. And I think overall, we have done substantial improvement. And Joseph himself has shown amazing success in R&D and brought all of our 5 currently approved or marketed products to a success and the 12 products which are in late stage in R&D. And he has extensive experience, as I mentioned in my part, from Pfizer, and he lives in Iceland. And that is a big factor, to have the core team living in Iceland to take charge.

And I have great expectations with those changes that all future deficiencies hopefully will be behind us. But saying that, of course, we are in pharmaceuticals. We are seeing that companies, whether it is big pharma or biotech or biosimilars or small molecules, there are unfortunately FDA's 483s or even CRLs coming up on a very regular basis. So it's a kind of moving target, and we will continue to move with it, if you will.

Okay. I have just one more question. So I guess, like just for the 3 products that you've tried to pursue now with the FDA approval, you've got a CRL. I mean, I'm trying to understand what type of impact does that create when you're having the conversations with your customers effectively.-- is that something that you faced like when you were launching Humira, and now that you have seen this like at the time of Stelara, how do you think that might impact the conversation when you're trying to contract it out?

Yes, I think it's a very appreciated question, if you will. I mean, we continue to see a very strong interest in our products. I mean, we definitely have the broadest portfolio of all biosimilar companies in the industry, and that is our strength. But this of interest, of course, leave aside 11, 12 successful inspection from EMA to U.S. FDA to other health authorities in the world. Our clients are doing also inspections on ourselves.

So our customers are very much aware of the status of the facility. And overall, we have not seen any reduction of interest in our products. And we keep our key clients up to date, what we are doing to continue to evolve the coke quality system, if you will. And we highly appreciate that for all of our portfolio of products that are using more than 2, which are showing strong interest in those products at any given time.

We will now take the next question from the line of Thibault Boutherin from Morgan Stanley.

Just a couple of questions on the revenue impact of this year and in Q4. Our understanding is that the lower revenue is related to fixing the manufacturing process, so basically revenue loss. Should we think about this as a phasing of shipment into next year after the issue has resolved? So is it just a sort of phasing? Or should we understand this as lost revenues? And does that mean that your commercial partner may face supply interruption impacting the revenues? So I'll start there and I have another one after.

Okay. It's Linda Jonsdottir here, CFO. If I understood your question correctly, it's about the change in guidance that we announced on November 4. I would say it's twofold. The revision is about like actions taken at response to any issue.

So that is slowing us down on the production side and impacting our revenues in 2025, but we are also seeing some of the licensing agreements for pipeline assets that were expected at the end of Q4 are now shifting to 2026. That's just like a timing impact. That has sizable EBITDA impact in Q4 since it's like licensing revenues that flows directly into EBITDA.

However, like if I also comment a bit on 2026 and our comfort levels there, if I look into the committed orders we have for new launches in markets outside of the U.S. and in combination with growth momentum noted in currently marketed products, we are in a very good position to deliver top line and EBITDA growth in 2026.

And can you just confirm that you are confident on how long the operations are going to be impacted in terms of having visibility on how long it's going to take to fix it regardless of the answer you're expecting from the FDA? Or could this change depending on what you get from the FDA?

No. Robert here again. I think we have a pretty clear visibility on that. And the drug product part of the facility is undergoing some minor adjustments as we speak. And we will then close the drug substance for a particular period in December for both general maintenance and adjustments. So I think as Linda said, we have most of the orders which are involved, booked to be delivered end of this year produced.

They still need to be -- some of them are sample to pack, but mostly they have been produced. And we have a pretty good visibility how the year-end, we believe on comfort level, how that will end. And as you can imagine, based on the guidance we gave and based on year-to-date EBITDA, it's fairly easy to see how strong the fourth quarter will be. And this is a good, as Linda said, good momentum with order book. So based on what we are seeing, we are fairly confident on growth, both top line and EBITDA for '26, no matter what.

[Operator Instructions] Our next question comes from the line of Arvid Necander from DNB Carnegie.

So going back briefly to the CRL and the slowdown in production you anticipated after the CRL came. Could you be as concrete as possible. What amendments did you do to the ongoing production lines? And you touched on this a little bit, but is it fair to say that you're more or less back to operating at full capacity for the approved products?

And secondly, on the R&D spend, at the beginning of the year, I think you were expecting R&D spend of roughly $160 million to $165 million for the full year. It seems to be trending higher than this. Do you anticipate a meaningful step down for Q4? I'll start there.

[Technical Difficulty]

One moment, please. Your conference will resume shortly.

Okay. If I continue. So I was going to say, observations around putting the manufacturing controls, improving the way you do investigations, laboratory controls, documentation practices, those kinds of aspects. So we committed to doing over 180 different actions to the FDA, things such as ensuring that we have the microbial controls by putting measures in to prevent actions that could be considered. Because it's clear that the FDA made observations, for example around our manufacturing controls that may lead to lack of sterility but not that actually it was observed, right?

So we did things to then strengthen that putting practices in terms of how we do, say, for example, visual inspection, how we make sure that our air flow is correct to make sure that our procedures associated with changing and gowning are all improved, right? So we did all of those improvements over the last few months since the 4th of July. Since then, we have the young manufacturing. We made the product that we are delivering in the fourth quarter, this product that has been manufactured in both the third and the fourth quarter. So there are actions progressing. We are manufacturing.

As Robert said, there's always going to be the need for minor actions for maintenance. Those things are taken into account, and we make sure that we improve those. But in general, we are manufacturing and delivering product that for this quarter that we have recently manufactured since the slowdown we referenced in the press release. Linda?

Yes. And to touch on your cost question, like on the R&D side, we had elevated levels on R&D both in Q2 and Q3. That's also related to timing of clinical and manufacturing activities as well as launch preparation for our upcoming launches. In Q3, we also had impact in R&D related to the improvement Joe was covering. And we are expecting that also to touch our R&D numbers in Q4. But I can confirm that like we're still expecting lower R&D in Q4 than in Q2 and Q3.

We will now take the next question from the line of Thibault Boutherin from Morgan Stanley.

Just a question on the impact of the change of regulation you mentioned with the lower requirement for Phase III trial. Can you talk a little bit about how that impacts your plan for your earlier stage biosimilars, in particular, thinking about Keytruda and where the timelines could move based on your decision to run an efficacy study or not?

Yes. Robert Wessman here again. I will hand this over to Joseph, but I just want to underline. So we anticipated this change over 2 years ago. And based on that, we changed our approach to R&D, if you will. And as we have already stated on this call and the previous calls we have all in all between marketed products, approved products, late-stage development, early-stage development over 30 products in the pipeline. So we think we have used the time very well taking advantage of the changes which are coming now by kind of assuming and expecting this to come. So we are already bearing the fruits of that vision we had back in time.

But for the detailed answers maybe, Joe, if you take that.

Yes, absolutely. So this is Joseph. For sure, right, we are doubling down on our strategy. We have a proven development engine. We are leveraging that. As Robert said, we forecasted and anticipated that the need to do patient efficacy studies was going to go away from a regulatory perspective. It has. And because we made the bets over 2 years ago, we are now in a good position to take advantage of that. And we are doing that for products as we're developing them, right? So you can imagine that, yes, would be one of those as well.

Thank you. There are no further questions at this time. I would like to hand back over to Benedikt Stefansson for closing remarks.

Yes. Thank you. So on behalf of the Alvotech team, I would like to thank everyone who called in and listened to our call today. And we look forward to speaking with you again, and wish you a good rest of the day.

Thank you.

Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Okay. Perfect. So we'll start. So good morning, everyone in the room. Thank you for joining this session of the Morgan Stanley Global Healthcare Conference. I am Thibault Boutherin. I am co-head of the European Pharma Equity Research team based in London.

Before we start the session, I need to refer to important disclosures. Please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan sales representative.

So for this session with Alvotech, I am delighted to have with me Balaji Prasad, Chief Strategy Officer of the company. Thank you for joining us today. We will shortly go through a Q&A. But before that, Balaji, do you want to start with some introductory comments on Alvotech and the outlook of the company.

Sure. Thank you, Thibault. Firstly, let me thank Morgan Stanley for inviting us. It's been a very productive day of conference meetings yesterday for us and delighted to be participating in this fireside. So thank you Thibault for doing that.

About Alvotec, so we have had a journey now over the last 12 years. We've started selling in the U.S. from last year with biosimilar Humira and this year with biosimilar Stelara, [ Selarsdi ] last year, respectively.

We are at the edge of what we believe is the next phase of our growth trajectory with a few key approvals that we are awaiting. So that would take us from like a 2-product company primarily to a 5 to 6 products company by next year, and we are really excited about it, right?

And as we see today with the approvals for biosimilar to Hylia, Prolia, Xgeva and Symphony, Symphony ARIA. We are really excited to be standing at this threshold and to expand our offerings to the public for improving health care and at a lower cost, right? So really excited about it and looking forward to these and to our next phase of growth. Over to you. Thank you.

Thank you for the introduction. So -- just maybe very quickly before we move on to actually talking about the business. Just want to mention the current U.S. policy contacts with tariff. So obviously, your business model is very unique. You out-license products to partners who then do the commercialization. So in that context, how the U.S. pharma tariff impact you in any way? Does it have an influence on your recent discussions with partners?

So like the -- getting the easy questions out of the way, right. Luckily for us, it's actually a relatively easier viewpoint for us from it. So as you know, all of our R&D and manufacturing is based in Iceland. So everything we sell in the U.S., it's exported from Iceland to here.

And the way the setup is that we manufacture, package and then our partners pick it up from us. And our partners are responsible or all of the tariffs or any duties or anything else that they have to pay, right? Stepping aside from that model, just on the tariffs itself, right, as things stand today, there have been multiple tariff rates that are floated around. But as we sit today, it looks like there's possibly a 15% tariff on pharmaceutical goods and with a possible 0% cargo for biosimilars and generics.

So we do not expect to pay any tariffs on that, if this comes out to be the case. But beyond that, even if you think about it, if we are looking at tariffs in the double-digit rate for instance. It as we have said before, there's no material impact for us, right? We sell it with partners pay through it and so for us in terms of actual impact, it's limited. But if we get to a 0% tariff rate on biosimilars and generics, that's the best case policy outcome for us.

Okay. Perfect. I want to maybe talk about your 2025 outlook, the split between recurring revenues and milestone and the bridge to the '28 guidance. So for this year, you provided a guidance for $600 million to $700 million of revenues with a bit more than half coming from product revenues and declare on half from milestones. Is this a particularly strong on the milestone side? How should we think about the split between recurring revenues and milestone beyond this year?

Sure. The milestone story is the natural part of our evolutionary process of the company. We were milestone heavy in the start where we didn't have commercial products in the market. So all of our earnings were coming from milestones. And as we progress through, milestones will still be substantial on an absolute basis, but we would want it to be as a relative part of proportionate to our overall revenues.

Milestones will go down, we will see more and more royalties? That's a natural part of our evolution. Before I get into the guidance, I just want to make clear, the 2028, I think, we've said $1.5 billion it's -- we would not call it a guidance. It's our aspirational target. I think I can see both upside scenarios to this, downside scenarios to this.

But I think if we do what we are doing, which should be somewhere in that ballpark. And of course, to come to a more precise guidance for 2028, we'll probably be doing at the early phase of 2028 or somewhere around that timeframe, right?

Coming to the 2025 guidance, $600 million to $700 million. So we're looking to generate at least $600 million of revenues, at least $200 million of EBITDA and within that, of course, as you called out, milestones is a fairly chunky part of it, and that is linked to multiple things with regard to milestones on commercial achievements, milestones and improvements, so there are quite a few components to this milestone.

And as we called out, we are at the cusp of multiple approvals -- potential approvals that we are looking forward to eagerly. And as and when these approvals come through in Q4, we should be taking these milestones and that really forms the base of our outlook for the year.

Okay. That's very clear. And now I want to touch a bit on your product portfolio and the current products on the market. You have 2 products on the U.S. and excess market, as you mentioned, the biosimilar Humira and Stelara. Maybe if we start with biosimilar Humira. Can you touch a little bit on how the U.S. market is developing how you see the performance between the private label, but also on the -- outside of the private label segment maybe starting here?

Yes. Biosimilar Humira market, it's a very interesting 1 because that's 1 of the first major pharmacy imbursed biosimilars market to form. We got into the market in early-2024. It's now been like around 6 to 7 quarters for us. And we are very, very excited with how we have progressed through this, right?

Last year, we had a pretty substantial amount of units sold, as you know, with the purchase order that we commented on. And this year, again, we've had a pretty good first half. And as we look at the market, again, very interesting answer to it. I mean private label deals did form a meaningful part of it. But then again, there is various ways to skin the cat. And private label deals are 1 such way with the biosimilar Humira market. I can contrast this with biosimilar Stelara, where we have said that we are not actively pursuing the private label deals. We see better economics for us in other forms of contracts, right?

Where is the market at this point of time, we had called out a few months ago that we would expect the biosimilar market overall in Humira to be around 50%. Recent update from Cigna, I think it was last week confirmed that it is around 50%. We are very happy that we are the second largest -- we have the second largest market share both as a function of the formulary based and the private labels.

As of July, we have the second largest market share. And I also want to call out our commercial partner, Teva, was doing a phenomenal job, especially on the formulary side and we have full confidence in them to continue to drive this growth on the formulary side.

Okay. Amazing. That's very clear. And outside of the U.S. how is the situation progressing here? Are you and your partner in ex-U.S. gaining share? And how should we expect the growth for this asset to develop in coming years?

Yes. Thankful to you for asking that question because Alvotech is definitely not a U.S.-only story. We are a global story. We are selling in 70 to -- 70 countries. We have bought around 20 commercial partners. We plan to pull in a few -- few more countries with 90 countries that we have partnerships for -- and Europe is a very substantial part of our growth story, too, right? We have exceptional partners with STADA and Advanz and all. So with biosimilar Humira again, we see this as a long-term growth story.

We'll see -- we expect to see volume growth coming through in multiple geographies as we expand our presence, we have dominant market share in many of these countries. We'll be launching in a few more -- and as we think about you on the U.S. dynamics like we were so -- would we expect overall to continue to see this volume growth, and we'll see how pricing evolves. Sometimes it follows a natural curve of the product life cycle, but we are eagerly looking forward to continue to driving this growth.

Amazing. And can you also give us an update on situation for Stelara as well? We -- yes, so for Stelara, maybe similar question between the evolution of the situation in U.S. versus ex-U.S.?

Yes. So it's been around 4 or 5 months since we launched SELARSDI biosimilar to Stelara in the U.S. As I said, it's -- the market is still forming. It's still in early stage. That said, at around this point, the market is definitely a bit more advanced than what the biosimilar Humira market look like, where it was around 4% to 5% conversion. We are at around 13%, 14% conversion. And we continue to win newer contracts.

I mean, we have -- as I said, there are multiple ways to skin a cat and we are looking at unbranded deals. We're looking at multiple adoptions. And we called out in our Q2 call that we are not actively pursuing private label deals because we think that from a Alvotech perspective and where we want to ensure that we have a sustainable, profitable business model, there are deals, other forms of deals that we would also want to pursue, okay?

So that's in the U.S. We'll look forward to driving this, and we'll provide an update as we come towards the end of the year. In Europe, it is definitely been a very strong success story for us. We launched in multiple major markets in Europe, Germany, France. And in most of the key markets, we are either #1 or #2 in terms of market share. So we're extremely happy with how our partners have succeeded commercially, and we expect that would continue to be the case.

Japan is another strong growth story for us, where we launched it in Japan and Canada, and we are seeing market share traction in these geographies, too, and we expect that to continue the case. So continuing to reiterate that our model of global growth continues to deliver across not just the U.S., but all major geographies.

That's clear. And if we take a step back and we look at the U.S. biosimilar market, obviously have been evolving a lot since the launch of Humira for the pharmacy dispensed biosimilars. It's interesting that you decided not to go private label with Stelara.

Can you just tell us sort of how you see the U.S. biosimilar landscape evolving in the future. And that decision it took with Stelara, is it something that we expect will be replicated in the future? Or is sort of a case-by-case decision you're going to make?

Yes. The U.S. biosimilar market, since the first biosimilar launched in 2015 has gone through multiple phases. I mean, the whole 2015 to 2019 phase, where biosimilars really achieve -- struggled to achieve traction 2019 [indiscernible] was 1 of the first ones, which actually achieved meaningful traction there on the buy-and-bill side.

And then Humira market 2023 onwards, that was a different case right now for the pharmacy reimburse side. And as we stand today, 2 years post the Humira market went biosimilar way, it's -- we are standing at a 50% conversion and this conversion will continue to expand further. So we've had 2 case studies now with the pharmacy reimburse side with Humira and Stelara.

Now the next set of launches are back to the buy-and-bill model, where since you asked about private label deals, we don't think private label deals will matter meaningfully on the buy-and-bill side. There are different aspects of buy-and-bill -- those will drive having a strong brand positioning with maybe associated patient services as the case may be, those would drive, and we have confidence in our commercial partners, so far Prolia and Xgeva, it's Dr. Reddy's and for Symphony and Eylea, it's Teva. We have confidence in our commercial partners that they will deliver.

I want to reiterate again that our choice of a commercial partner is really like going for the strongest local player. It's not a global partnership as we won't tie-up with 1 company for a global partnership, but see, which is a dominant company need geography commercially and tie-up with them. And that way, they have Teva's really done a great job till now for us.

Okay. Amazing. And so you just mentioned a bit about your near-term pipeline, you're going to launch several assets in the future, including biosimilars of denosumab, Prolia, Xgeva, Symphony, Eylea, which 1 of these opportunities -- are you and the organization most excited about?

So it's like me asking you which of your bio-rated companies are most excited about, right? So -- all of these opportunities are equally exciting. That said, I've called out that Prolia we expect it to be a competitive market. We think that where we are, but it's still going to be an important -- very important asset for us.

Coming next to Eylea, again, we would expect to be one of the first we said we would be second to market, but we'll be 1 of the early entrants in -- with Eylea for sure. And it is an important opportunity, especially as the anti-VEGF market opens up. And I mean, when we saw incentives a few years ago and now Eylea coming through. We expect to see the physicians definitely opt-in for biosimilars and the conversion to happen.

So Eylea is going to be an important asset for us. And also because we have both forms of presentations, both the PFS and vile forms of presentation, right? Now this plus our future anticipated launch with Eylea, high dose that we are expected to bring to the market in a couple of years, I think these 2 would form a strong combination in the anti-VEGF market for us.

And then coming to Symphony, again, very excited about it because we'll expect to be the first to market, and we expect to be the first market for some time. So it's going to be a limited competition opportunity for us. And as you know very well Thibault, economics is, especially if you're sold biosimilar or you're 1 of the early ones, definitely, it's an attractive asset and market size overall is also very attractive. So...

Amazing. And if we zoom a little bit on Eylea, obviously, biosimilar launching, first on the low dose, Regeneron in the U.S. and Bayer ex-U.S. are working very hard try to switch as much patient as they can to the high dose. So how do you see sort of that market evolving? And if you can tell us a little bit about your ambition for the high-dose formulation?

Yes. It's still in the clinical development phase. So it's probably early days to really call out how to -- how we see the market develop itself as we come to the market we'll wait for approval, and then we will give better indications around when we expect to launch. As I said, we expect to launch as soon as possible post approval.

And it's a buy-and-bill market. It's 1 of our first buy-and-bill markets. So we will be on top of a commercial aspect. But getting into how the market itself would shape up post our approval, I think it's premature at this point of time. But we'll definitely give more color on it, when -- as and when the time is right.

That's very clear. And beyond these launches, when we think about your long-term pipeline, you have obviously a very broad biosimilar pipeline. So can you talk a little bit about how this is going to unfold over the next few years, sort of cadence of launches and how you see the portfolio evolving in the medium term?

Yes. We had our first set of launches? And then over the next after this phase, we have another phase of approvals coming through. We have -- we'll be awaiting approvals to biosimilar Entyvio on high dose Eylea as I called out, biosimilar Xolair. Those would be the next 3 approvals that we'll look forward to in the 2027, 2028 time frame. Beyond 2028, we would also be looking forward towards biosimilar to KEYTRUDA, biosimilar to Dupixent, amongst others, biosimlar Cimzia, some of these are like exclusive assets like Entyvio is something, where we expect it to be a limited competition market.

Cimzia, a very attractive asset for us. We expect it to be a limited competition product. I mean, as far as we know, at this point, there's only 1 other development -- developmental project called Cimzia. So this would be limited competition opportunities, right?

And then beyond this, we have another 6 to 7 disclosed assets. So around 14 disclosed assets in total and then another 14 assets, 14 cell lines that we can bring to development. So 28 assets in our pipeline that we can bring to development over the next 10 years.

And this would be like forming the growth trajectory for us for the foreseeable future and the distant future too. We're very excited. This is 1 of the most comprehensive biosimilar pipelines globally. And if not, we believe it's 1 of the most valuable pipelines.

Okay. That's great. And just coming back on you mentioned Cimzia. Coming back on the Xbrane deal, you acquired the R&D organization at Xbrane and including that Cimzia biosimilar. So if you can come back on this deal and what it brings beyond the Cimzia biosimilar.

Yes. Xbrane was a fantastic asset for us. I'll probably summarize it into 3 points, right? It was a great asset. We got in R&D. We got in Cimzia asset. We got around 40 experienced R&D personnel along with this asset, right?

And it was great. Point 2, Cimzia itself just more than justifies the acquisition of it or more than recoups the cost for us. We have just signed an out-licensed deal with Advanz Pharma for Europe Cimzia. We are getting calls. We are fielding calls for the U.S. market or for the ROW markets for partnering on Cimzia. Why? Because it's a unique asset in the immunology space. It's 1 of the rare ones, which is approved for rheumatoid arthritis and other chronic immunology conditions for women of child-bearing age.

So it's a very unique asset that we were smart enough to identify. Our team was looking enough to get the deal done, yes. Point 3, as I said, we are looking to expand our R&D filings programs from around 3 to 4 a year to 4 to 6 a year. Xbrane was 1 of the reasons that allows us to make this possible because it expands our R&D developmental capability of bandwidth.

We plan to take the Swedish operations from 40 to 200 FTEs over the next couple of years. So we definitely have greater ambitions for Xbrane and how we can leverage and capitalize on this and expands our number of assets that we can bring into the market at a more rapid pace.

Okay. That's clear. And on the biosimilar Cimzia in particular, can you remind us the timeline of this program when you think you could launch the asset? Because I think IP is not going to be the limiting factor, right? It's going to be depending on how fast you can develop the assets?

Yes. It's not an asset that we called out as something that we would launch before 2028. So it's going to be some time after that. As and when our -- we complete the documental part of it and we have better visibility on the timelines, we'll definitely announce it. But it's at least for the time being, what I would like you to take away with this is that in our 2028 aspirational dollar from $1.5 billion seems that does not form a part of it. It's excluding it.

Very clear. And 1 thing that's been quite remarkable on the biosimilar industry over the recent past was -- we started to see players sort of skipping or downsizing some Phase III programs on their assets based on feedback from the [ EMA ] and the FDA basically sort of lightening the regulatory requirements to get biosimilars approved.

So it seems that there is sort of a real opportunity to streamline biosimilar development. So what does it mean in terms of sort of development timeline and cost? And how are you thinking about this?

Yes. The biosimilar developmental timelines and costs has evolved over the years, right? When I was looking at biosimilars for the first time as an analyst many years ago, and we are all thinking -- speaking about biosimilar development cost being $300 million, that kept a lot of companies, especially companies who are not serious about biosimilars out of it. So out of this, right?

And then as things evolve, there have definitely been some economies that have brought some cost down, but we are very excited about this development because a, it brings down the cost of development. We can advance more programs into the developmental phase. B, it also compresses the time line -- and what also means on the other side is that the FDA is not just going to reduce these requirements and not be more stringent than others.

There's going to be greater PK data, which is needed. There's going to be a greater focus on CMC. And we, as a company, pride on our quality controls and our manufacturing process. So we think that this definitely brings us a complete advantage. Earlier, I said that we plan to take go from 3 to 4 products a year to 4 to 6 projects and Xbrane makes it feasible and this lowering the cost of development also makes it feasible for the handful of biosimilar companies globally.

Okay, very clear. However, when we think about development costs being sort of lowered, definitely lower cost, lower accelerated timeline, but also probably means lower bias to entry. So how do you think about the trade-off between the opportunities provide in terms of expanding our pipeline versus the risk of seeing more competitors for which I said?

Yes. I'm glad you asked this because I think the -- there are multiple differentiating factors. I mean this is a question that I get offered where investors -- some investors could mix up the biosimilars industry for the generics industry, very different. Like the the entries to barrier, especially with technology, with access to resources with knowledge with capital is significantly higher on the biosimilar side because ultimately, it's biologics that we're developing.

Let me just remind you that Alvotech [indiscernible], we have invested over $2 billion in this facility over the last 10 years. This is -- that's not going to change. The requirement of investments that's required for overall, that's not going to change. Your clinical costs may come down, and which is why I don't think that these going to open the floodgates for newer companies to Russia and saying that, hey, biosimilar cost of development has gone down from $200 million to possibly $100 million, so let's jump in. I don't think so. I don't think that's going to be the case.

Could it mean that biosimilar companies could expand their pipeline. We definitely plan to expand it, and we will see some of our more serious peers also doing the same.

Okay. And maybe 1 thing that's been emerging in the biopharma industry, I think, more and more over the last few years has been the emergence of China in terms of a source of innovation for large pharma, but definitely sort of technology modalities they have has progressed very, very quickly. What does it mean for biosimilars? And what role do you see China playing in the biosimilar landscape as originator of biosimilars in the next 3 years?

Yes. Incidentally, I read your report on China and its biotechnology the team -- report that the global pharma team put out last week, I think. It's a good report. So China, especially, I think, as we think about it, I think it's a meaningful content. On the biologics side, we have 1 or 2 companies that are -- that we do see.

And -- in terms of the market shape and formation itself, I think what we have seen over the last 20, 30 years, I was asked this question 20 years ago about China as a serious generic threat, which never materialized, right? While China became the API hub of the world, 90% of the API is coming from there, it never materialized as a generic threat.

China, I think, has been historically reluctant to be a front-ending partner in the Western world, in Europe or in the U.S. for multiple reasons, Chinese companies. And I don't think that's going to change. The base case is likely to be the same. So they are likely looking for partners. And if there's scope for us to partner, we'll partner, but -- but otherwise, I don't expect to see a flood of bio-tech water companies on the biologics side or biosimilar side from China.

Okay. That's clear. Just to touch a bit on your long-term margin profile -- profile, sorry, 2025 guidance suggests an EBITDA margin half in the mid-30s, 2028 aspiration, roughly sort of 40%, 45% EBITDA margin. So how should we think about the long-term margin potential for Alvotech, and what could be sort of peak margin in the long term?

Okay. I wont call out a peak margin because that will be limiting ourselves. Now we will definitely continue to strive to improve margins every year. We have just started on this journey of last year of being profitable on the EBITDA side and generating this EBITDA and we would expect this to be the case for the distant future too. Right?

As more and more products enter the markets globally in the U.S., we would expect to see margins expanding. So 2028, again, we will be more precise call around 2028 there, but inherently think that as our products expand, we get great economies of scale. We have presence in more geographies or more countries and especially as we get into the buy-and-bill side, too. So we'll expect to see margin improvement consistently, yes. But beyond that, I think we'll give greater color on 2028 or definitely on the peak margins, it'll strive to continue to improve.

And then I want to also talk about the sort of process to select the biosimilar opportunities you're going into. Can you run us through the sort of key consideration that you have when you select rising opportunities and the balance between the size of the drug and also the competition risk that comes with it.

Sure. Maybe before responding to that question, I want to call out our Chief Scientific Officer, Joe McClellan, I think, who I think is extremely impressive person, who has an amazing team with him. And has been 1 of the drivers for us to be in this position where we are today. And so that's really the thing, right? Being able to identify assets that in 7, 8 years from now could be material and starting development work on it, which explains why on some of the assets like biosimilar Entyvio, even highly edge, high dose or biosimlar symphony. We see limited competition or no competition, and it is there's astuteness, which is born out of decades of experience in the industry that has got us to the spot.

And so I just wanted to especially call out Joe and his team there. That's 1 of the key drivers, right? Then what are the other factors? Obviously, the total addressable market, the opportunity size that matters a lot and who else we expect to be in competition for that. If we think that on $1.5 billion biologic drug will see 10 players because the technology is not that prohibitive then we are not likely to work on it. But if you think that even a $1.5 billion, $1 billion product could be 1 where we have a technology edge, and we can be in the market before or ahead of others, we'll definitely work on it.

And that's really how we would think about it. And last point, again, because we are a global partnership model, we also have to think about the attractiveness of this asset to our partners, too.

Okay. That's clear. On the CapEx side. So the CapEx intensity for the company right now is very light considering that you're primarily an R&D and manufacturing business -- so how far can your current capacity carry you in terms of manufacturing the biosimilars? And should we expect at some point of another CapEx cycle to increase the capacity?

Yes. For the benefit of those following this conversation, what we have put out in terms of guidance for CapEx is around $70 million for 2025 and the next couple of years is around approximately $25 million per year for the next few years after 2028. Change, but we don't see any incremental need for capacity, it's around about way of telling you that we are very comfortable with capacity. We think that with the existing capacity, we can address both our current commercial products and future anticipated launches up to 2030 and beyond.

That said, we also want to be future ready, ready for phase in 2030, 2032, and beyond where we need more capacity. And we are constantly war gaming it, and we will plan for it and expand as and when needed. Ties back to the earlier point that I said, that we already invested $2 billion over the last 10 years into the facility we have at [indiscernible]. And the CapEx investments have been done and now it's a matter of generating the returns of those CapEx investments.

And maybe in the last sort of couple of minutes that we have, can you help us understand -- and I think there's been a debate in particular from generic investors the sort of shape of revenues for biosimilar products, maybe across regions. Is it in sort of the ramp-up phase and we reach a peak and then we expect it to decline on the geographic sort of split and then when you take a product at Alvotech, where you have multiple partners on the road, what does it mean for the shape of revenues for an opportunity.

Yes. Again, glad that you asked a question too, I will take pains to stress that it's not a generic product life cycle curve, where you had a first-to-file or a 180-day exclusivity you would have like a bonanza in the first 6 months on day 181, it falls off the cliff. It is not that. So the biosimilar market is very different in its dynamics for multiple reasons, primarily being the competitive landscape being much more spares, right?

We would normally expect to see, I don't think biosimilar Humira marketed has peaked. We would expect to see -- after 2 years after all the biosimilars have entered, the biosimilar Humira market hasn't peaked. I think we will expect to see greater conversion in 2026 and possibly even 2027. So that -- we are now looking at possible market life cycles of anywhere between 3 to 5 years for the -- for a product like that.

And Stelara as I said, first year, we are at 15%. We would expect this biosimilar conversion to go on as greater formulary exclusions come into place just as we saw with biosimilar Humira this year in July 1, we saw the formulary exclusions taken into effect. We'll see Jan 1 again. We'll see a similar dynamic. And as these things grow, addressing from a U.S. market, we will see this volume growth trend continue.

Ex-U.S., it's going to be a volume growth story for the first few years, at least. And as we introduce it into newer geographies, for us, overall, the assets as a whole will still see volume growth too.

Amazing. We are at the end of the time. So Balaji, thank you very much for your time and for joining us at the conference.

Thibault, thank you so much for the questions. And again, thank you, you and Morgan standing for inviting us to participate in the conference. And I wish you the very best. Thank you.

Thank you.

Good day, and thank you for standing by. Welcome to the Alvotech Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Benedikt Stefansson, Vice President of Investor Relations and Global Communications. Please go ahead, sir.

Thank you, and welcome to our listeners. Yesterday evening, the company issued a press release announcing our financial results for the first 6 months of 2025. A presentation accompanying today's earnings call was also published last night on our investor portal, investors.alvotech.com under News and Events. We will be referring to individual slides during the presentation today. Our press release, presentation and statements that we make on the call today may include forward-looking statements.

Please see our disclaimers on Slide #2 of the presentation. These statements do not ensure future performance and are subject to risks and uncertainties that are outlined in company filings with the Securities and Exchange Commission. Any risk to these ingesting materially from forward-looking statements that are made.

Presenting on today's call are Robert Wessman, Chairman and Chief Executive Officer of Alvotech, and Linda Jonsdottir, Chief Financial Officer. We also have with us on the call, Anil Okay, Chief Commercial Officer; and Joel Morales, outgoing CFO. Robert will begin today's presentation with a [indiscernible] summary of the first half of the year and quarter, including financial and business highlights. Linda will cover the financial performance in more detail. Following that, Robert has some closing statements, and then the team will be happy to take your questions.

And with that, I would like to turn the call over to Robert Wessman.

Thank you, Benedikt. And thanks to everyone for joining us here today. I'm very pleased to have with me today our new CFO, Linda Jonsdottir, who joined our team in July. Linda has a background in finance and corporate leadership internationally, have worked across different industries as transportation, banking, food technology and health care, both as our CFO and the COO and Chairman. At the same time, I want to thank Joel Morales for his valuable part in Alvotech's journey as CFO.

We are very pleased here today to announce our operating results for the first half of the year and this quarter. These results confirms our continuing momentum as a leading global fully integrated biosimilar company.

Alvotech's strong growth momentum in the first half of the year can be attributed to strong reorders successful product launches development progress and the improved efficiency in manufacturing. Among the highlights from this quarter, we saw good performance in major markets from our 2 marketed products. We signed significant partnership agreements for our early stage pipeline. We increased our revenues in the first half of the year by 30% year-on-year. And we also delivered the fifth consecutive quarter of positive adjusted EBITDA.

The cash flow of the quarter from the operating activities reached $77 million, which is an improvement of USD 161 million year-on-year. Product revenues in the first half of the year grew by over 200% and product revenues in second quarter 2025 grew by 77% year-on-year. Product margin were 33%, driven by new product launches, growth in revenues from existing markets and increased product volumes. Linda will talk more about these financial results later in the call.

Let's now switch gears and discuss the performance of our marketed products. Starting with our biosimilar to Humira, which is marketed at SIMLANDI in America and some other parts of the world and [indiscernible] in Europe. In Europe, our partner continues to gain market share with [indiscernible], which has now entered its fourth year in the market in Europe. We are quite pleased with the solid performance of the biosimilars despite entering a fairly clouded market back in the year 2022. In the U.S., the Humira biosimilar market started opening up last year when our Humira biosimilar SIMLANDI was launched. As pharmacy benefit managers PPMs are starting to exclude the originator from formulary, we are now seeing an accelerated conversion to Humira biosimilars, which in July, had reached over 40% share of the overall U.S. Humira market as per our estimate. This is in line with our expectations that biosimilar conversion could reach 50% in the U.S. Humira market by year-end.

At the same time, I'm very pleased to say that Alvotech has the second largest market share as a biosimilar to Humira in the largest market in the world, the U.S. markets. We also continue launching this biosimilar in markets outside North America and Europe, and our partners now selling a biosimilar to Humira in 33 markets globally, and we have gained marketing approvals in 67 markets total. And we are, therefore, continuing to roll out the product into new markets going forward.

Our biosimilar to STELARA AVT04 is marketed as SELARSDI in U.S. and UZPRUVO in Europe. We were the first entrant in Europe, Canada and Japan last year with very strong results. We launched with Teva in the U.S. market this February. UZPRUVO continues to outperform our expectations in Europe. Sales volumes are very strong. And we remain the biosimilar with the first or second largest market share in all the key markets in Europe. The uptake of Stelara biosimilar in U.S. is progressing as we expected.

Biosimilar share reached over 20% of overall STELARA market in U.S. in July as per our estimate. With our product marketed under sellers brand, but Teva, we are on track with our internal forecast in terms of price and volume. As mentioned on our last call, pricing in STELARA market is quite competitive with some of our competitors offering pricing that we believe are not sustainable in the long run. We are convinced that our strategy by focusing on product margin rather than volume and market share will prove more successful for all of our stakeholders in the long run.

In the U.S., although we have not signed any private label, we have signed unbranded product deals with a few leading players through our commercial partner, Teva, we have marketing application and the review in major global markets for AVT03, our proposed biosimilar candidate to Prolia and XGEVA, AVT05, our proposed biosimilar to Simponi and Simponi Aria and AVT05 proposed biosimilar to EYLEA. Finally, our marketing application for AVT23 are proposed biosimilar to Solar is currently under review in U.K. We also plan to file with EMA application for AVT23 in third quarter this year.

We look forward to provide further information as we near the approval and launch stage for these products. as laid out at the beginning of this year, Alvotech has decided to ramp up its R&D effort significantly, expanding the industry most valuable R&D pipeline. In June, we completed our transaction of the R&D operation of Xbrane in Stockholm. And also, we bought the rights to a biosimilar candidate referencing Cimzia. We continue to hire into our R&D team, both in Sweden and Iceland since then.

The result of our enhanced R&D activity can also be seen in the recent partnership deals announced during the quarter. During the quarter, we expanded our partnership with Advance Pharma licensing European rights to 4 biosimilar candidates, referencing ILARIS, KESIMPTA, Cimzia and 1 undisclosed biologic. Advance has shown great confidence in Alvotech by signing license deals for biosimilar referencing now more than 10 different biologics.

We also announced our second partnership deal with Dr. Reddy's, a collaboration to codevelop, manufacture and commercialize biosimilar candidate to KEYTRUDA. The collaboration will allow us to diversify and mitigate development risks and extend the global reach of biosimilars. Shortly after the end of second quarter, we completed our acquisition of Ivers-Lee in Switzerland. This acquisition gives us better control of the full value chain and increases our capabilities and flexibilities in assembly and packaging of our devices.

Before I conclude, I would like to extend a special greeting to our many new Swedish investors as this is the first earnings call held after our official listing of Alvotech on Nasdaq Stockholm. After initial placement of about 7.9 million STRs on Stockholm market, float on the Stockholm exchange has continued to increase. Shareholders are now able to trade Alvotech shares on 3 NASDAQ exchanges in Iceland, in U.S. and now in Sweden. The listing on the Nasdaq Stockholm further broadens our shareholder base and increases trading liquidity to the benefit of all investors interested in participating in Alvotech's exciting journey.

In summary, we are very happy about the results of previous 6 months and our momentum going into the second half of the year. And with that, I would like to hand the call over to Linda. So Linda, over to you.

Thank you, Robert. I'm very excited to join the fantastic team at Alvotech. And even though it has only been a few weeks, I can really feel the energy, the passion and drive of our people. And I'm happy to report that this is reflected in our numbers as well. So let's move to the key highlights for the financial results for Q2 and first half of the year. Overall, our performance in the first half of the year was strong, both in terms of revenue growth, margin expansion and continued cash flow robustness.

Moving to Slide 9 in the deck, highlighting our adjusted financial results. Let me start with the revenues. Revenues continue on a strong momentum, and we're up 30% at $306 million compared to $236 million in the first half of 2024. Our revenue growth year-on-year was mainly driven by strong product revenues coming in at $205 million in the first half of the year. compared to $66 million in the same period last year.

The key driver for the increase year-on-year were increased sales of our biosimilar to HUMIRA and continued success of our biosimilar to STELARA in Europe and its launch in the U.S. in Q1 this year. Licensing revenues in first half were $101 million compared to very strong first half last year, when licensing revenues were $170 million. This difference in licensing revenues was driven by the timing of development progress impacting R&D milestones.

Revenue recognition of milestones can be up. And during Q2 last year, we achieved a number of significant development milestones. We do expect a similar dynamic to occur this year towards the latter part of the year. Looking at Q2 specifically, we recognized total revenues of $173 million compared to $199 million Q2 last year and $133 million in Q1 this year. This lift between product revenues and licensing revenues in Q2 this year was $95 million and $78 million.

After a very strong Q1, marked by the launch of our biosimilar to STELARA in the U.S., the second quarter benefited from increased demand for our biosimilar to Humira across key markets and our STELARA biosimilar in Europe. And to further illustrate the inherent loftiness, I referred to earlier, in terms of quarterly phasing, we do expect product revenues as well as milestone revenues to soften in Q3 followed by a much stronger results in Q4.

Moving to operational performance and margins. In the first half of the year, the adjusted product margin was 33%, which is in line with our previously stated expectations of a mid-30% range for product margin in the period. Adjusted EBITDA in the first half was $54 million compared to $64 million during the same period in the prior year and adjusted EBITDA in Q2 was $18 million versus $102 million during Q2 last year. This is a function of the lower contribution of licensing revenues as milestone revenues transferred directly to EBITDA.

Turning to the next slide, you'll find a summary of our cash and liquidity. During the first half of 2025, we generated $77 million of positive cash flow from operations, which is a net improvement of $161 million compared to the same period last year. In Q2, specifically, we generated $59 million of positive cash flow from operations, which is a net improvement of $73 million year-on-year. In terms of operating cash flow, Q2 2025 is the strongest quarter in the history of Alvotech and demonstrates the strength of our core business operations, which is reflected in high product revenue collections during the period and this accomplished while we are still building inventory in preparation of new launches.

We've also taken a number of important steps in the first half of the year in terms of our capital structure. We closed the period ending June 30 with $1,139 million in TAP and $151 million of cash on hand, which was positively impacted by operational performance and proceeds from our Swedish offering and private placement in June. As per the agreement reached with our lenders in late June and on the back of our improved financial performance over the past year, we were able to reduce the rail of interest on our existing senior secured term loan facility to SOFR plus 6%, with a maturity date in 2029, which will reduce our cost of capital and lower our tax interest payments in the first 12 months by an estimated $8.2 million.

In Q2, we completed the acquisition of the R&D organization of Xbrane in Sweden and biosimilar candidate to Cimzia. The total purchase price was $28.9 million paid in cash by assumption of convertible debt and assumption of accounts payable. After the close of the quarter, we also announced the acquisition of Ivers-Lee in Switzerland. Both acquisitions are very important for our ongoing and future operations. In the appendix to our presentation, you'll find a table with reconciliation of our reported to adjusted results.

And finally, over the past few weeks, I have witnessed the strong team at Alvotech and their dedication to deliver with focus on operational excellence and financial performance. I'm excited to get to know the company better as to identify and maximize the opportunities ahead and contributing to a sustainable long-term growth of the company for the benefit of all stakeholders.

And with that, I would like to hand the call over to Robert for some final remarks. Robert?

Thanks, Linda. In closing, the second quarter was another strong quarter for Alvotech. We are expanding existing products into new markets and preparing for future launches. We will maintain focus on accelerating pipeline development going forward. At the same time, we are scaling manufacturing and increasing operational efficiencies.

Thank you, Robert and Linda. And let's now turn the call back over to the operator for Q&A.

[Operator Instructions] And it comes the line of Christopher Wooder from SEB.

So I guess a few. I'll take them one by one, if that's okay. Halfway through 2025, you're not changing guidance, but the Q2 was clearly at least a lot better than the Street predicted. So what can you tell us about your confidence in the top line guidance going forward? And then, I mean, you've previously indicated that memory serves that you have very high 6-month visibility. So is it fair to say we should not expect the guidance raise in Q3 then? That's my first question.

Can you hear?

Thanks for the question, and it's Linda here. I will at least -- I will touch on the guidance, perhaps just to start by summarizing a bit like Q2, I mean, we see a lot of strong momentum, both in the Q2 numbers and the first half. And of course, like underpinning the strong product revenue growth there driving solid EBITDA results. We also see that like licensing revenues are impacted by timing of development milestones and cash flow from operation is strong.

So I would say like a number of solid staff taken now in the first half. We have also said like in the past that revenue recognition is lumpy with respect to milestone revenues. And there, if you like look into, for example, '24, we had a number of significant development milestones there. And we do expect similar dynamics now this year towards the latter part of the year. And that's why we also commented based on the quarterly phasing, we do expect product revenues as milestone revenues to be soft in Q3.

So we are expecting Q4 to be much stronger. At the same time, like we are coming out with new launches, and we are building up inventories in connection to that. But otherwise, I mean I only referred to our earlier guidance that we have stated before.

Okay. Appreciate it. And then is there growth for SIMLANDI left from the Quallent channel in the U.S.? Or should we view that particular channel as maxed out?

I can take this question, of course. So we do have still a valid contract with Quallent. However, our focus on all 2 in the U.S. market is the value rather than the volume. So we do expect this business to be more challenging in the second half of the year. But we had a very good first half of the year volumes going to call, and we do expect this business to continue.

Okay. Then on, I guess, AVT03, 05 and 06, I guess most investors would see FDA inspections as the most likely reason for a delay to ultimate approval if one were to occur. Assuming you agree, should we expect any press releases once FDA has given feedback on the inspection outcomes? That's all for me for now.

Yes. I think, Robert here, thanks for the question. I mean as a part of prior approval, if you will, we did have an inspection. And we believe that this is just as it is an ordinary course of business, if you will. We, of course, are seeing we have had in the facility, both European health authorities, Japanese health authorities, FDA, and this is becoming just a part of our life. So we had already 2 FDA inspections last year. We, of course, sent out a press release on the first one when the facility got approved.

The second one, late last year went very well. But I don't recall we did send out any pressure lease around that. But of course, we will keep the market open and informed once we get approved on the approval of the products, if you will, going forward.

Now we're going to take our next question. And the next question comes from the line of Ash Verma from UBS.

Congrats to Linda, and Joel, you'll be missed. So maybe just -- I guess a couple of questions that I wanted to ask. Just on the guidance, I don't see like reiterating or kind of making any specific comment beyond what you're saying for 3Q. So where you are right now in terms of revenue in the first half, so $306 million, that is roughly at the market, the low end of the revenue that you had guided before, the $600 million to $700 million. So are we to assume that, that piece is intact?

And then on EBITDA, $54 million adjusted EBITDA in first half versus your prior guidance was $200 million to $280 million. So where are we? Like that seems like roughly 20% -- 25%, I'm sorry, on the EBITDA in the first half. Are those like guidance ranges still impact? I'm just trying to understand is that something that you can expect despite the strong 4Q that you are indicating?

Yes, Robert here. I think the best answer is we are basically in line with what we expected, maybe slightly better first 6 months. And as Linda mentioned, there is a lumpiness in the quarter. So like last year, we will see the fourth quarter being by far the strongest quarter of the year. And for now, we have, as mentioned already, we are not changing the guidance. So I would say, net-net, I mean, basically, what we are seeing in the first 6 months is in line with what we expected.

Got it. Okay. And just maybe on -- I think some of the products that you mentioned, the dynamic. So for Humira, are you exiting 40% and expect that you can get to 50% by the end of the year in the U.S. market share if you can comment on like the market share dynamic that you expect to happen in the next year. And then just on STELARA. So where do you expect to get to the market share by the end of the year from the 20% that you have here?

Sure. Maybe let me take it, Ash. So a couple of answers to both products. First of all, let me start with AVT02 in Europe. So in Europe, we have successfully plugged in Biogaran as an additional partner in France. Remember, French market had only 15% biosimilar penetration. So we are now driving the biosimilar penetration in France, still a very sizable market for us to grow. So we have the best partner in France to drive that market together with STADA. So that's giving us additional volumes and better pricing.

So in Europe, we continue to see significant market share increase from last year to this year, 30% growth. So we are having a very steady growth and a very stable volume market share in Europe. And we expect to continue to grow in those markets, mostly driven by France, but also other markets are also contributing. So that's the European situation.

If you go to U.S. As you have seen, we had multiple shipments to the U.S. based on the purchase orders we had, both from Quallent and also from Teva. And we continue to have a valid forecast from both companies for the second half of the year. And as they purchase orders come to us, we will continue to deliver. And what I can say in the U.S. market, there are actually 3 companies who can really claim a certain position in adalimumab market. These are, of course, us, Sandoz and Organon. All other 7 players are not having any meaningful share.

So we are -- in our opinion, we are in a good position to drive this market further in the U.S. When it comes to AVT04. I think we have a very good position. And again, in both markets, let me start again with Europe, which was the earlier market that we launched. So we are still either 1 or #2 in different markets in Europe. We continue to grow at a significant pace. So we are very happy with our performance in Europe for this product, and we continue to grow market share as we go through.

In the U.S. also, we had a successful launch. And we also got already a couple of downstream accounts and independent accounts through Teva. So we are expecting our uptake in line with our assumptions in our 2025 guidance. So there is no surprise for us coming from the U.S. market in AVT04 market.

[Operator Instructions] And the question comes line of Carl Byrnes from Northland Capital Markets.

Congratulations on the results. I'm wondering with respect to the BLAs in the U.S. that you expect approval by year-end, do you have any concerns that any of them might slip into the first quarter of '26? Or you still remain highly confident that you will see all of those improved as well?

Yes, Robert here. Thanks for the question. I mean we have set the [ BsUFA ] dates, and we are targeting those states, we have not given exact date, I think we gave months. So we believe that those are itas we are still targeting and typically, you are not seeing slippage on the [ BsUFA ] dates historically, I think.

Great. And then going back to -- sorry to be the dead horse here for the guidance. If we look at product sales and we look at the midpoint, which is $375 million, you did $205 million already. So that implies $170 million for the second half Again, you mentioned in the third quarter would be soft and then pick up in the fourth quarter. Does that $170 million gaps still seem realistic? And then with respect to milestones, same thinmillion is basically the midpoint you did a bit over $100 million, $101 million and change, so it leaves about $174 million. I would imagine most of that because of the timing of the BLA is going to fall in the fourth quarter. Are those proper assumptions as well?

Robert here again. I think, overall, I mean, you are seeing a lot of the milestones coming throughout approvals and launches. And also shipments coming out of approvals and launches. So I think you had -- we had a similar situation, if you will, second quarter last year. So with our very high milestones, if you recall, so that's the basis for our forecast on the basis for why we believe that the fourth quarter will be, by far, the strongest one of this year.

[Operator Instructions] Dear speakers, there are no further questions. I would now like to hand the conference over to Benedikt Stefansson for any closing remarks.

Well, on behalf of the Alvotech team here in Iceland and all over the world, we want to thank you all for calling in. And please have a good day and evening wherever you are. Thanks, and goodbye.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Okay. Okay. Great. Well, good morning, everyone, and thank you for joining us. My name is Matt Salter, and I'm the generic pharma analyst here at Goldman Sachs. And we're very pleased to have Alvotech with Chief Strategy Officer, Balaji Prasad.

Balaji, maybe just to get started, could you give us a brief overview of the company, and walk us through the Alvotech platform and just some of the key differentiators.

Sure. Firstly, Matt, let me thank you and the Goldman Sachs team for inviting us to the conference. It's a pleasure being here.

So what makes Alvotech different, I think it boils down to 3 major factors as you can think about having been closely associated with the company, though I've been just with the company for a month, but I've also known them for more than a few years.

I think, firstly, the very close integration between R&D and manufacturing is a very strong differentiator for Alvotech. It gives us competitive advantages in many, many ways that is like long to list out here. Second, we have a very, very custom-built purpose-built platform. We have invested over $2 billion -- nearly $2 billion into this over the last 10 years. And what we have today is a very tight vertically integrated organizational set up, a very close network, collaboration on set between R&D and manufacturing and large capacity, which really is a differentiator for us.

Third, I'll also call out the management team. So we have a management team, which is, I think, exceptional in thinking and breathing biosilimars and starting maybe the founder, Robert Wessman, who many of you know from his many successes in the generics and biosimilar space. And he's been instrumental in setting this up 10 years ago and taking it to where it is, where we stand currently as a company potentially generating around $600 million to $700 million in revenue this year, as we have said, and at a very major material inflection point as we see in terms of revenue trajectory, EBITDA trajectory and all of it. So I think he's been material in getting the company to this situation.

So I think this would be, if I were to say, the 3 major differentiators for us versus peers.

Great. And then maybe what are you all most focused on from an execution perspective over the next 12 to 18 months?

Sure. As I said, we are at the -- at an operating -- at an inflection point in our career growth. Alvotech over the last 10 years has been largely in a setup phase and start-up phase, right? Building up cell lines, building up R&D, developing days, tying up with partners and -- and the last year was when we became EBITDA positive, and we now had 4 successive quarters of positive EBITDA, and we have like very strong EBITDA guidance for the year.

And at this inflection point, it's important to ensure that execution continues onwards. And the whole team, management team and the rest of the company is really geared on focusing on executing now. So what does this execution translate into which is, one, continue to ramp up by Sunivera and BismusTelara that we have launched in U.S. and outside years, nearly 25-plus countries outside the U.S. too.

Two, we have 3 major approvals coming over the next -- in the next 6 months, so ensure that we get those approvals, launch their mass successfully as we can and continue our commercial trajectory into next tier. That is true.

And three, if I were to say, you would have recently followed that we acquired parts of Xbrane operations in Sweden. So integrate those R&D operations in Sweden, along with the already well-established R&D platform in Iceland. There are multiple synergies that comes out of this integration, primarily the one which is acceleration of our R&D programs into a number of platforms or programs that we expect to launch every year.

So ensure that this integration goes smoothly and as a consequence, our R&D pipeline continues to build, notwithstanding the fact that we have the largest biosimilars pipeline amongst 3, 4 peers globally, and show that these R&D platform continues to build into next year.

Great. So as you mentioned, you do have one of the largest biosimilar pipelines out there. However, many of us are only kind of familiar with some of the Teva partnered assets including myself. What would you highlight kind of beyond those? And what has enabled you all to build out your pipeline so aggressively?

Sure. So for the benefits of those listening in, in the audience, I want to summarize our pipeline. So we have currently 2 commercial assets. We have disclosed 14 assets in total in various stages of development. And beyond that, we have another 14 assets. So we have 28 assets that were set, which is the largest biosimilars program globally.

And then we also think about how XRAN will contribute incrementally to this, right? So what that takes us is a very large R&D platform. So which amongst this is now key or material as I said. I think amongst the ones that [indiscernible] already launched [indiscernible] we're also excited about the upcoming launches, which includes Ilya, the low-dose version and then there is Symphony and Symphony Area, which we believe is going to be a limited competition opportunity and where we can differentiate substantially.

Looking beyond that into 2027, we are also very excited about 2 particular assets. One is [indiscernible] one is [indiscernible] and the other one is Hilado. So that's something that we're looking at as the third wave of our launches of Black Butte word, which will come up in the 2027 to 2028 period.

Great. Great. And then you mentioned this kind of operating inflection. You all recently raised your 2025 guidance -- could you maybe just remind us what this entailed and what led to the raise and what drives your confidence?

Sure. So going into the year, early February, we had come out with a very strong guidance for the year. And post that, once we concluded the acquisition of Xbrane for which we paid $21 million. We also got [indiscernible] et Cimzia, yes, regulator entity enough molecule, further boosting our immunology pipeline.

And what we realized as we acquired this asset is this is a truly differentiated asset. We got multiple inbound calls with partners wanting to partner on this particular asset. So I think with the visibility that we had, so we felt that there's going to be some partnerships that we're going to sign up. As a consequence, we'll also get some milestone income. So that was one of the primary reasons. And then we had incremental progress in multiple other programs.

So combining both of these without it is prudent to increase our guidance. So we took up our revenue guidance by around $30 million to -- and then our EBITDA guidance by around $20 million to $200 million to $280 million, so primarily led by Cinzia.

Got it. Got it. And then walk us through maybe kind of from a longer-term perspective, your 2028 targets from both like a revenue growth and EBITDA margin perspective?

Sure. So where we stand this year is we have our guidance out for the year with around $600 million to $700 million on the top line and $200 million to $280 million EBITDA. And for the benefit of those, this is a substantial revenue growth over last year. And last year, 2024, we ended with around $108 million of EBITDA. So from $108 million of EBITDA in 2025, we are almost doubling EBITDA at the lower end of the range to $200 million, and at the higher end of the range, substantially more than doubling to $280 million.

From here, where we see -- because of this operating inflection that I spoke about is that we expect our EBITDA in -- let me start on the top line. We expect our top line to grow from 600 to 700 this year to $1.5 billion in 2020. That's more than double -- of this $1.5 billion, we expect product revenues to contribute around 80% to 85% of this approximately, let's say, $1.2 billion, $1.3 billion. And then milestone revenues between 20% to 25%, which is, again, approximately $200 million to $300 million.

So where is this coming from? So as I said, we have 3 -- 2 products currently, which are commercial globally, U.S., Europe, Canada, Japan, multiple of the geographies, and then we are expecting in the near term 3 material launches. And there we have also discussed prior to our 2027 and 2028 product launch opportunities. So we expect that to take to the $1.2 billion range.

And below that is milestone income. So milestone comes from approximately $250 million, let's say, for 2028. But what will happen from now to the next 4 years is every year, we expect our milestone income to be approximately $250 million. So we will be generating $1 billion of revenues from 2025 to 2028 and cumulative milestone income, which is a phenomenal number to think about, right?

So we'll be generating $1 billion of -- expect to generate $1 billion of revenue milestone revenue in this period. Trickling down from revenue to EBITDA level. So we expect COGS to be around between 35% to 40% in terms of SG&A and some R&D of about 15%, 20%. So there's not going to be any material change there, which takes us to our EBITDA where we expect EBITDA margin of 40% to 45% by 2028.

Of this 40% to 45%, the product revenues would be around 60% to 65% of product revenues. So this operating inflection, as I said, comes because our capacity is set, our fixed costs are more or less fixed now. We can like start really building our EBITDA trajectory and also has significant impact on the cash flow that we expect to generate and the cash returns that we expect to generate over the next few years.

And mind you, all of this is on CapEx that we expect to be limited or minimal. This year, we expect to incur a CapEx of $60 million to $70 million. Next 3 years, we expect to see CapEx of around $25 million annually. So we don't need any incremental CapEx. We are well invested into -- well set up into delivering on our commercial goals and launches with the existing infrastructure, which we think will carry us into 2030 and even beyond 2030. So very strong guidance, a very strong target out there that the companies geared to or working towards delivering.

Great. That's super helpful. stepping back and kind of just thinking about the market overall, how do you guys kind of think strategically about the current biosimilars market? And what's your longer-term outlook on the space?

Sure. We are extremely excited about the opportunities in the business market. We -- the way we saw this develop over the last 10 years, the market is into some sort of maturity in terms of like big, we have seen the buy and build oncology launches. We have seen the immunology pharmacy benefit launches.

So the market is really coming into its own now. And if I have to like take a step further up and look at the overall market development, think about this, Matt, 14 out of 62 biologic drugs that have gone off patent, only 14 have seen as of today, some biologic launches. You still have like literally what about -- is it 48 biologics, which are off pattern, but no launches currently, yes?

So there is a lot of -- just from this existing off-patent, there's still a lot of scope for us to address. And then if you think about where this next set of growth coming from, again, there's -- if you think about the current clinical trials globally, around 60% of Phase II, Phase III assets are biologics, which means that the -- even if I were to think about, let's say, what is my growth going to be beyond 2035 for even drugs that I don't know today that exist. There is going to be a long, long tail of opportunity, right? So that is long growth beyond that too.

And with our existing pipeline that we have said about, I've spoken about 28 molecules, we are targeting $185 billion of total addressable market. So with just our existing pipeline of 28 drugs that we have in various stages of development. We have a very large ramp to grow with this $185 billion of TAM that we are targeting.

So we're extremely excited about the biologic -- biosimilars market. We think it has phenomenal growth opportunities. And we believe we are one of the best positioned, if not the best position company out there with our pipeline, with our integrated platform, with the team that's executing and a very unique model in operations, which is a partnership model. I've not spoken about that before, so let me just address that, too.

So we -- as you know, we do not sell commercially front end in any of our markets. We chosen [indiscernible] we believe is the best player in each market commercially and we have partnered with these companies and we sell through these companies, right? And each of these companies are invested into it because they have paid us in terms of various milestone income, they have paid us royalties. And so they are fully invested into our platform and into the program. And when the drug is eventual commercial, ensure that they also generate the returns on their investment.

So this model has really helped us build a differentiated R&D program and an R&D program, which is also self-sufficient of self-funding many -- most of our projects are now basically covered their costs fully. So -- and that kind of factors are positive or a virtuous cycle in terms of expanding our platform.

And that's what gives you guys kind of the margin profile that you have, which is...

Absolutely. Yes. Also one of the factors.

And maybe kind of just -- are there any key aspects of your strategy when you all decide the type of biosimilars to choose or go after? Just anything that you would highlight there in terms of the kind of foundations of your strategy.

Sure. Probably there -- I don't think there's a secret sauce because ultimately, the first step to developing a biosimilar program is to look at the size of the molecule and see if it is large enough for us to justify an investment of approximately $200 million, give or take, $25 million, $50 million made the site. A $200 million investment into developing a biosimilar platform. So the drug has to be a reasonable size. The pathway has to be clear.

And I think in terms of technological capabilities, I think we have always been very confident of our ability to develop biosimilars. And so that's not been a big barrier. So -- but it's been a barrier for many of our peers, but we have been [indiscernible] multiple limited competition or ones where we are the sole biosimilars, at least as far as we know. So each of these comes into play, and we are able to develop these biosiliar programs.

Maybe just touching on biosimilar HUMIRA Walk us through how you all secured the private label for that program despite being 1 of the later assets to market.

Sure. So as you know, the biosimilar HUMIRA went off patent -- HUMIRA went off patent a couple of years ago. Where we're really fortunate was, again, our ability to have these differentiated assets. And for us, biosimilar HUMIRA was always a differentiated asset, our biosimilar HUMIRA and that we had the only high concentration citrate financing and all that, but high concentration interchangeable biosimilar HUMIRA matter.

And what it meant was though we came to the market late, we were like the eighth or ninth player. We were able to -- because of the uniqueness of our asset, we had an exclusive interchangeable eye concentration biosimilar HUMIRA exclusively ran for 12 months, which ended recently. That really helped us to have a commercial edge and win the private label deals. So could that be relevant for -- in the future biosimilar programs. We'll see. FDA's thinking revising its interchange products.

But that said, that was what helped us and -- but we have -- if I have like take the biology further and think of future launches will future launches, see similar competitive advantages, we have limited competition launches coming up, too. So we'll be 1 or 1 or 2 players and that will help or security.

And then we touched on this a little bit already in terms of the margin profile. But how do you all think about the kind of the profitability of biosimilars broadly? And then also, obviously, for Alvotech, specifically, just given how you guys structure your terms.

Sure. So when I spoke about our 2025 guidance and target 2028, you got some insight into how we have -- how our operating profits are and how we expect to ramp up, probably going a bit deeper into this to the extent I can. Our partnerships are structured in a way. I think typically, we tend to have like a 60-40 revenue split in fare of the partner in far of our commercial partner who was launching the drug and 40%, and again, that rolls down into product margins of around 60% to 65% of EBITDA margins for us, despite just from that 40% of the cut. So we're good.

So the partner takes on the commercial risk and everything else. And for us, because of the capacity that we have, so again, as said fixed costs, more or less fixed costs. And we expect each of these assets to be profitable further.

The important differentiator that I would say matters, as we sit today, we have launched 2 drugs, which are primarily in the pharmacy reimbursement space. [indiscernible] we'll also be launching our next set of assets will be in the oncology and the buy and bill space, which you're going to be interesting, which are going to be very different.

So the dynamics are going to be -- channel dynamics are going to be different. And we expect the probably even more profitable. And some of these, as I said, [indiscernible] high dose, there will be ones where we are the first to market or we'll be the only ones in the market for some time. So that will help us -- the profitability from that we could expect would be great.

And then we often hear about kind of the differences between the U.S. market and the European market and any of the other ex U.S. markets. How do you all kind of strategize with regards to that? And what do you see as kind of the key differences or long-term kind of outcomes there?

I'm glad you asked about the ex U.S. market. We constantly reiterate that we are not just a U.S. growth story. The U.S. market opportunity is phenomenal, and we are happy to be providing a low-cost biologic drug to the U.S. health care system. But we see our opportunity as global. We are present in 90 countries with -- 90 countries with 19 partnerships. The margin profile for each of these varies ultimately, because different countries, different ASPs that's inevitable.

But each of these territories or each of these countries individually profitable for us. I will obviously not break down into what the profitability for each of these geographies are, but you can assume that based on what we sell at and what we get, they are very profitable for us to a corporate level at a group level. Yes.

Great. And then how do you all think about maybe the ideal market size to balance kind of the competition level and then also the opportunity, sometimes we hear a $1 billion to $5 billion range is kind of maybe the sweet spot. Do you think that's fair? Or do you guys look for something different?

I think that's anything about $1 billion, I think it's fair. But we'll also have to see how the cost of developing a program evolves? What are the other things, other factors which can have an influence on somebody's ability or decision to invest in a biologic platform. If the cost of developing a biosimilar program goes down from $250 million to $100 million to $125 million, then could we see some of the below $1 billion biologic assets seeing programs in development?

Why not, I would not be surprised. And I think it's needed. -- mate. So I think that's going to be 1 of the determinants for this programs -- future programs.

Maybe given what we've seen so far in the biosimilar HUMIRA market and then also the early days of the STELARA market, how do you see those 2 markets evolving? Do you expect STELARA to kind of just mirror HUMIRA and then additional kind of large PBM-based markets to kind of look similar? Or just how do you guys think about what those will look like in a few years?

So we've seen how -- let me start with biosimilar HUMIRA. As we have said, we expect -- we ended last year with around 20% of the HUMIRA market converting to biologics to biosimilars, [indiscernible]. 2025, we believe this could be around 50% of the market would convert to [indiscernible] we expect this to ramp into 2026. Probably at some point, dissipate maybe end 2026, it could plateau.

But at least for the next 6 quarters, we expect this to the market conversion to continue to evolve. We have said that we expect to be in the low double digits market by -- with biosimilar HUMIRA. And moving on to Talara, it's still early days in terms of market formation. But STELARA again, let me remind you that it's a story which is not just U.S. focused for us. It's also Europe.

Europe, we have seen -- U.S. launch has gone well. Europe has been a fantastic launch till now because in most of the countries, in every country that we are present in, we are either #1 or #2 in terms of market share. And our Japanese launch has gone on very well. So where we -- believe low single-digit market share already.

So beyond U.S., we've had multiple successes in multiple geographies with biosimilar STELARA. Biosimilar STELARA will continue to ramp up into 2026, again, plateau at some point of time. But if you look at our target 2028 of $1.5 billion revenues that we are targeting -- and if you look at that, biosimilar HUMIRA, biosimilar STELARA still contribute a substantial chunk of our revenues, around 30% to 35%.

Which means that they may plateau, but they're not going to fall off a cliff like most generic products would have done on day 1 81, after the exclusivity period, you have seen how they would go, that's not going to be the case at all here. we will expect to see some natural dynamics of the business compressing some prices at all, but we also expect to see significant volume uptake into 2027, 2028 with these 2 assets.

Great. Great. And then you touched on this a little bit in terms of some of the next assets you'll be launching are in the medical benefit, and those could be more profitable even in terms of kind of like longer-term perspective, is there -- are there any nuances that you guys keep in mind about across the different segments in terms of sustainability, medical benefit pharmacy benefit or different therapeutic areas that you think are maybe more or less promising.

I don't think we necessarily think of it as therapeutic areas per se. Ultimately, biosimilars, we kind of have the capability to develop across therapeutic areas. It just so happens that -- our first 2 set of launches have been in the immunology space, and next will have the buy and bill space and oncology assets and some of the regional assets coming into play, which is just the wave of [indiscernible] expiry and everything else. But I don't think there's any therapeutic area which necessarily restricts us, and we don't think about it in that terms.

Got it. Got it. Maybe shifting gears to kind of policy considerations. At a high level, how do you see that the IRA impacting the biosimilars market? What do you view as the pros and what do you view as the comps.

So had -- there's one is still, I would say, working programs are evolving, but we had multiple -- I have multiple conversations with other management with the FDA, with the regulators over the last couple of years trying to figure this out.

And the way we see it right now, I mean, IRA, I think some of the basic tenets is that there's going to be negotiated prices for those biologics, which do not have biosimilars development at all. Could this disincentivize future biosimilar programs, possibly. But I think what it does is like especially some of the smaller players, not some of the smaller biosimilar players could be demotivated in developing these programs, which could mean that future assets could still be a limited competition opportunity for us.

I think it probably plays well for the larger the larger biosimilar companies out there. That said, there are not too many biosimilar companies globally. We have like probably around close to a dozen. And some of the smaller ones could really not have the ability or the financial wherewithal to invest into an area where they see policy uncertainty and regulatory uncertainty that's not necessarily be a bar for us.

And then as you think about kind of, let's say, a drug, it's been Medicare negotiated. And so obviously, that segment of the market compresses a little bit. Do you -- do you view that as kind of having any real impact in terms of the market opportunity for you guys?

It's a very good question, Matt. I don't think so because ultimately, if the price of a drug goes a biologic drug or an innovative drug goes down, will it diminish the market TAM, yes. But will -- in terms of our ability to generate the return on cash that we would -- on the capital that we invest in our program would impacted substantially so that we don't invest in the program, do not think so.

So I think it's still going to be a meaningful asset for us to work towards a biosimilar programs. Ultimately, the company's goal, while generating returns to our shareholders is also to provide access to low low-cost, high-quality biosimilars to patients across the world. And we are not going to forget that vision to while balances with our ability to, without need to generate returns on -- to our shareholders.

Okay. Maybe lastly, just kind of shifting to tariffs. These have obviously been a big -- or potential pharmaceutical tariffs have been a big overhang on the sector, both branded and generics and biosimilars -- how are you all thinking about that risk at Alvotech kind of maybe at a high level? And then also for Alvotech specifically, are how are you guys positioned?

Sure. Addressing both parts of the question at a high level and specifically for Alvotech. Starting with Iceland. Iceland has one of the lowest tariff rates, 10% because we have a trade surplus versus the U.S., we import more than we export to the U.S. So which means that we would expect to phase a tariff Iceland would expect to phase a tariff of around 10%. So that puts us in a relatively comfortable position.

Two, Alvotech specifically, our contract that builds or develop such that it is our commercial partners who take the cost it from the moment, they take the product, control the product from the shipping at whatever point in the supply chain, it's their responsibility brings to the [indiscernible] pay any import duties, paying tariffs and sell it to the market.

So we have put out our PR around 3 weeks ago, where we have stated that we expect the impact of tariffs for Alvotech specifically because of these 2 points to be very, very minimal.

Interesting. Interesting. Great. Well, with that, I think we're all out of time. But thank you, [indiscernible] very much for joining us. Really appreciate your time.

Matt, thank you so much for the question. Great speaking to you. And again, thank you for inviting us, and Goldman Sachs for inviting us to the conference. Thank you.

My pleasure.