Aflibercept biosimilar (Alvotech)

Record Total Revenues of $236 million for the first six months of 2024, an over ten-fold increase compared to same period in 2023Product revenues for the first six months were $66 million, a 190% increase from the same period last year, with Q2 product revenues contributing $53 millionLicense and other revenues for the first six months increased to $170 million, with Q2 license and other revenues contributing $145 millionAdjusted EBITDA in the first six months was $64 million, compared to negative ($147) million for the same period last year, with Q2 adjusted EBITDA contributing $102 millionAchieved numerous development and performance milestones including the recent filing acceptance of EU marketing application for AVT06, biosimilar candidate to Eylea® (aflibercept)Alvotech will conduct a business update conference call and live webcast on Friday August 16, 2024, at 8:00 am ET (12:00 pm GMT) Alvotech (NASDAQ: ALVO, or the “Company”), a global biotech company specializing in the development and manufacture of biosimilar medicines for patients worldwide, today reported unaudited financial results for the first six months of 2024 and provided a summary of recent corporate highlights. “These are truly exciting times for Alvotech. In the first half of the year, Alvotech generated record results, with an over ten-fold increase in total revenues compared to the same period in 2023 and positive Adjusted EBITDA for the first time, both for the second quarter and the first half of the year. Product revenues are growing rapidly, as we launch multiple products globally, backed by exceptionally strong milestone revenues in the second quarter,” said Robert Wessman, Chairman and CEO of Alvotech. “Our order book for biosimilar Humira in the U.S. for 2024 has already grown from the initial 1 million units previously announced, to approximately 1.3 million units today. Revenues generated from these U.S. orders will be predominantly recognized in the second half of the year. Our recent launch of Stelara in Canada, Japan, and Europe highlights our global, multiproduct strategy. As we enter the second half of the year, we are already receiving replenishment orders in certain markets.” Recent Highlights Commercial and Development MilestonesAlvotech announced positive topline results from a confirmatory patient study for AVT03, a proposed biosimilar to Prolia® (denosumab) and Xgeva® (denosumab). Alvotech also announced positive top-line results from a pharmacokinetic (PK) study assessing the PK, safety, and tolerability of AVT03 compared to Xgeva in healthy adult participants. Previously, Alvotech announced positive top-line results from a separate PK study comparing AVT03 to Prolia. Alvotech and STADA strengthened their existing strategic alliance, to include AVT03. Upon approval, STADA will assume semi-exclusive commercial rights in Europe, including Switzerland and the UK, as well as exclusive commercial rights in selected countries in Central Asia and the Middle East. Alvotech and STADA also agreed to extend STADA’s commercial rights for biosimilars to Humira® (adalimumab) and Stelara® (ustekinumab) to Commonwealth of Independent States (CIS) countries in Central Asia. Alvotech and Advanz Pharma expanded their partnership with an agreement regarding the supply and commercialization of Alvotech’s proposed biosimilar to Eylea® (aflibercept). Alvotech is currently developing AVT06, a proposed biosimilar to Eylea® low dose (2 mg) and AVT29, a biosimilar candidate for Eylea® high dose (8 mg). Advanz Pharma has exclusive commercialization rights for AVT06 and AVT29 in Europe, except for Germany and France where the rights are semi-exclusive. Alvotech and Advanz Pharma also announced that the European Medicines Authority had accepted the EU/EEA marketing application for AVT06. The process to obtain marketing authorization could be completed in the third quarter of 2025. STADA and Alvotech announced the launch of Uzpruvo® (ustekinumab), known as AVT04, the first approved biosimilar to Stelara® in Europe, across a majority of European countries. The pioneering launch came immediately upon expiry of exclusivity rights for Stelara. Previously, AVT04 had been launched in Canada and Japan. Corporate MilestonesAlvotech announced that holders of the majority of subordinated convertible bonds, originally issued by Alvotech in 2022, with maturity on December 20, 2025, (the “Convertible Bonds”) elected to convert the principal and accrued interest into ordinary shares of Alvotech at the fixed conversion price of US$10.00 per share. On July 1, 2024, Alvotech issued 22,073,578 new ordinary shares in exchange for the convertible bonds. Subsequently the pro-forma total number of issued shares in Alvotech as of July 1, is 324,801,040 and the pro-forma total number of outstanding shares as of the same date, is 301,481,596. On July 11, 2024, Alvotech announced the closing of a senior first lien term loan facility of $965 million, in two tranches (the “Facility”) with a group of institutional investors, led by GoldenTree Asset Management. Upon closing, Alvotech also announced that it had refinanced its outstanding debt obligations, reducing the cost of capital and improving its overall debt profile. The Facility, for $965 million in aggregate principal amount, matures in June 2029. As per the terms of the Facility, upon closing Alvotech settled its existing debt obligations. Holders of the Convertible Bonds that did not exercise their right to conversion obtained repayment in July 2022. As a result, Alvotech does not have any convertible bonds outstanding. Outstanding debt is limited to the Facility, mortgage debt and equipment financing. All outstanding debt has maturity in June 2029 or at a later date. Summary of the Financial Results for First Six Months of 2024 Cash position and sources of liquidity: As of June 30, 2024, the Company had cash and cash equivalents of $10.9 million, excluding $25.0 million of restricted cash. In addition, the Company had borrowings of $1,055.9 million, including $999.0 million of current portion of borrowings, as of June 30, 2024. Taking into effect the refinancing in July, the Company had a proforma cash balance of $153 million excluding $25.0 million of restricted cash and proforma gross borrowings of $1,035 million. Product Revenue: Product revenue was $65.9 million for the six months ended June 30, 2024, compared to $22.7 million for the same six months of 2023. Revenue for the six months ended June 30, 2024, consisted of product revenue from sales of AVT02 in select European countries and Canada, launch of AVT02 in the U.S., launch of AVT04 in Canada and Japan and pre-launch sales for select European markets. License and Other Revenue: License and other revenue was $169.7 million for the six months ended June 30, 2024, compared to ($2.5) million for the same six months of 2023. The license and other revenue increase of $172.1 million was primarily attributable to the recognition of $119.0 million research and development milestone including the approval of AVT04 in Europe, the commencement of a clinical phase for the AVT16 program, the Confirmatory Efficacy and Safety (CES) completion of AVT03 and the CES completion of AVT05. This also included $30.1 million of performance milestone relative to the product launch of AVT04 in Japan, the achievement of sales target of AVT02, and the launch of AVT02 in the U.S., and a net milestone revenue of $14.3 million for the execution of commercial contracts during the six months ended June 30, 2024. Cost of product revenue: Cost of product revenue was $65.2 million for the six months ended June 30, 2024, compared to $67.9 million for the same six months of 2023, as a result of sales in the period, including the launch of AVT04 in Canada, Japan and pre-launch in a select European countries tempered by lower production-related charges and lower costs associated with FDA inspection readiness. Cost of product revenue for the period is disproportionate relative to product revenue due to the timing of new launches and elevated production-related charges, resulting in higher costs than revenues recognized for the period. The Company expects this relationship to continue normalizing with increased production from the scaling and expansion of new or recent launches. The Company estimates that the anticipated increase in sales volumes will result in a greater absorption of fixed manufacturing costs. Research and development (R&D) expenses: R&D expenses were $97.5 million for the six months ended June 30, 2024, compared to $99.6 million for the same six months of 2023. The slight decrease was primarily driven by a one-time charge of $18.5 million relating to the termination of the co-development agreement with Biosana for AVT23 recognized during the six months of 2023 and the decrease of $2.4 million primarily related to programs which have completed clinical phase (i.e., AVT02 and AVT04 programs), partially offset by a $17.3 million increase in direct program expenses mainly from four biosimilar candidates, AVT03, AVT05, AVT06 and AVT16 that are in clinical phase. General and administrative (G&A) expenses: G&A expenses were $29.6 million for the six months ended June 30, 2024, compared to $41.9 million for the same six months of 2023. The decrease in G&A expenses was primarily attributable to ongoing streamlining of the operation of Alvotech, including $5.8 million in lower third-party services, lower insurance premiums and less headcount, coupled with a $4.2 million decrease in expenses for share-based payments. Operating profit: Operating profit was $43.5 million for the six months ended June 30, 2024, compared to ($189.1) million for the same six months of 2023. The increase of $232.5 million was primarily attributable to the sharp increase in total revenues due to a combination of expansion of our product launches and milestones recognition for advancing our product through our pipeline and achieving contractual sales targets. This is coupled with a decrease in operating expenses driven by continuing efforts by the Company to scale and rationalize operations. Finance income: Finance income was $80.8 million for the six months ended June 30, 2024, compared to $122.5 million for the same six months of 2023. The Finance income for the six months ended June 30, 2024, was primarily attributable to the change in fair value of the Tranche A Conversion Feature of the 2022 Convertible bonds impacted by the bond holders exercising their right to conversion into ordinary shares on the last scheduled conversion date prior to maturity, which is 1 July 2024. The Finance income for the six months ended June 30, 2023, was mainly attributable to a favorable change in fair value of the Predecessors Earn Out shares. Finance costs: Finance costs were $277.4 million for the six months ended June 30, 2024, compared to $64.3 million for the same six months of 2023. The Finance costs for the six months ended June 30, 2024 were primarily attributable to a $120.5 million change in fair value of the Predecessors Earn Out shares, which was negatively impacted by the increase in the Company's share price during the six months ended June 30, 2024 and by the settlement of the existing debt obligations upon execution of the agreement led by GoldenTree Asset Management for a senior secured first lien term loan facility of $965 million. The early redemption of the existing debts, which were settled concurrently with the new facility in July 2024, resulted in the acceleration of previously deferred debt issue costs and debt discounts resulting in $63.1 million loss on remeasurement for the six months ended June 30, 2024. The Finance costs for the six months ended June 30, 2023, were primarily attributable to the interest charges on existing debt obligations. Exchange rate differences: Exchange rate differences resulted in a gain of $7.7 million for the six months ended June 30, 2024, compared to a loss of $3.1 million for the same six months of 2023. The change was primarily driven by the movements in the exchange rate of foreign currencies, predominantly Icelandic krona and euros. Income tax benefit: Income tax expense was $5.1 million for the six months ended June 30, 2024, compared to a benefit of $49.9 million for the same six months of 2023. The decrease in benefit was mainly driven by a substantial decrease in operating losses and was netted into an overall tax charge as of June 30, 2024, due to the weakening of the Icelandic krona against the U.S. dollar, which decreased the U.S. dollar value of Icelandic tax loss carry-forwards that the Company expects to fully utilize against future taxable profits. Loss for the Period: Reported net loss was $153.5 million, or ($0.61) per share on a basic and diluted basis, for the six months ended June 30, 2024, compared to a reported net loss of $86.9 million, or ($0.39) per share on a basic and diluted basis, for the same six months of 2023. As mentioned above, the net loss for the period is heavily impacted by the fair value costs associated with our derivative liabilities and the impact of the early redemption of the existing debt obligations. Profit for the period in Q2 2024 was $65.2 million. Business Update Conference Call Alvotech will conduct a business update conference call and live webcast on Friday, August 16, at 8:00 am EDT (12:00 pm GMT). Registration for the conference call and access to the live webcast is found on https://investors.alvotech.com/events/event-details/q2-2024-earnings, where you will also be able to find a replay of the webcast, following the call for 90 days. About AVT02 (adalimumab) AVT02 is a monoclonal antibody and has been approved as a biosimilar to Humira® (adalimumab) in over 50 countries globally, including the U.S., Europe, Canada, Australia, Egypt, Saudi Arabia and South Africa. It is currently marketed in the U.S. as SIMLANDI and under private label, in Europe as HUKYNDRA, in Canada as SIMLANDI and in Australia as ADALACIP. Dossiers are also under review in multiple countries globally. About AVT03 (denosumab) AVT03 is a human monoclonal antibody and a biosimilar candidate to Prolia® and Xgeva® (denosumab). Denosumab targets and binds with high affinity and specificity to the RANK ligand membrane protein, preventing the RANK ligand/RANK interaction from occurring, resulting in reduced osteoclast numbers and function, thereby decreasing bone resorption and cancer-induced bone destruction [2]. AVT03 is an investigational product and has not received regulatory approval in any country. Biosimiliarity has not been established by regulatory authorities and is not claimed. About AVT04 (ustekinumab) AVT04 is a monoclonal antibody and a biosimilar to Stelara® (ustekinumab). Ustekinumab binds to two cytokines, IL-12 and IL-23, that are involved in inflammatory and immune responses [1]. AVT04 has been launched in Canada as JAMTEKI, in the EEA as UZPRUVO, and in Japan as USTEKINUMAB BS (F). It has been approved in the U.S. as SELARSDI. Dossiers are also under review in multiple countries globally. About AVT06/AVT29 (aflibercept) AVT06/AVT29 is a recombinant fusion protein and a biosimilar candidate to Eylea® (aflibercept) 2 mg and 8 mg dose, which binds vascular endothelial growth factors (VEGF), inhibiting the binding and activation of VEGF receptors, neovascularization, and vascular permeability [2]. AVT06/AVT29 are investigational products and have not received regulatory approval in any country. Biosimilarity has not been established by regulatory authorities and is not claimed. Sources [1] EMA Uzpruvo product information[2] Prolia product information[3] Eylea product information Use of trademarks Humira is a registered trademark of AbbVie Inc. Stelara is a registered trademark of Johnson & Johnson Inc. Prolia and Xgeva are registered trademarks of Amgen Inc. Stelara is a registered trademark of Johnson & Johnson Inc. Elyea is a registered trademark of Regeneron Pharmaceuticals Inc. and Bayer AG. About Alvotech Alvotech is a biotech company, founded by Robert Wessman, focused solely on the development and manufacture of biosimilar medicines for patients worldwide. Alvotech seeks to be a global leader in the biosimilar space by delivering high quality, cost-effective products, and services, enabled by a fully integrated approach and broad in-house capabilities. Alvotech has launched two biosimilars. The current development pipeline includes nine disclosed biosimilar candidates aimed at treating autoimmune disorders, eye disorders, osteoporosis, respiratory disease, and cancer. Alvotech has formed a network of strategic commercial partnerships to provide global reach and leverage local expertise in markets that include the United States, Europe, Japan, China, and other Asian countries and large parts of South America, Africa and the Middle East. Alvotech’s commercial partners include Teva Pharmaceuticals, a US affiliate of Teva Pharmaceutical Industries Ltd. (US), STADA Arzneimittel AG (EU), Fuji Pharma Co., Ltd (Japan), Advanz Pharma (EEA, UK, Switzerland, Canada, Australia and New Zealand), Dr. Reddy’s (EEA, UK and US), Biogaran (FR), Cipla/Cipla Gulf/Cipla Med Pro (Australia, New Zealand, South Africa/Africa), JAMP Pharma Corporation (Canada), Yangtze River Pharmaceutical (Group) Co., Ltd. (China), DKSH (Taiwan, Hong Kong, Cambodia, Malaysia, Singapore, Indonesia, India, Bangladesh and Pakistan), YAS Holding LLC (Middle East and North Africa), Abdi Ibrahim (Turkey), Kamada Ltd. (Israel), Mega Labs, Stein, Libbs, Tuteur and Saval (Latin America) and Lotus Pharmaceuticals Co., Ltd. (Thailand, Vietnam, Philippines, and South Korea). Each commercial partnership covers a unique set of product(s) and territories. Except as specifically set forth therein, Alvotech disclaims responsibility for the content of periodic filings, disclosures and other reports made available by its partners. For more information, please visit www.alvotech.com. None of the information on the Alvotech website shall be deemed part of this press release. Please visit our investor portal, and our website or follow us on social media on LinkedIn, Facebook, Instagram, X and YouTube. Alvotech Forward Looking Statements Certain statements in this communication may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements generally relate to future events or the future financial operating performance of Alvotech and may include, for example, Alvotech’s expectations regarding competitive advantages, business prospects and opportunities including pipeline product development, future plans and intentions, results, level of activities, performance, goals or achievements or other future events, regulatory submissions, review and interactions, the potential approval and commercial launch of its product candidates, the timing of regulatory approval, and market launches. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential”, “aim” or “continue”, or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Alvotech and its management, are inherently uncertain and are inherently subject to risks, variability, and contingencies, many of which are beyond Alvotech’s control. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) the ability to raise substantial additional funding, which may not be available on acceptable terms or at all; (2) the ability to maintain stock exchange listing standards; (3) changes in applicable laws or regulations; (4) the possibility that Alvotech may be adversely affected by other economic, business, and/or competitive factors; (5) Alvotech’s estimates of expenses and profitability; (6) Alvotech’s ability to develop, manufacture and commercialize the products and product candidates in its pipeline; (7) actions of regulatory authorities, which may affect the initiation, timing and progress of clinical studies or future regulatory approvals or marketing authorizations; (8) the ability of Alvotech or its partners to respond to inspection findings and resolve deficiencies to the satisfaction of the regulators; (9) the ability of Alvotech or its partners to enroll and retain patients in clinical studies; (10) the ability of Alvotech or its partners to gain approval from regulators for planned clinical studies, study plans or sites; (11) the ability of Alvotech’s partners to conduct, supervise and monitor existing and potential future clinical studies, which may impact development timelines and plans; (12) Alvotech’s ability to obtain and maintain regulatory approval or authorizations of its products, including the timing or likelihood of expansion into additional markets or geographies; (13) the success of Alvotech’s current and future collaborations, joint ventures, partnerships or licensing arrangements; (14) Alvotech’s ability, and that of its commercial partners, to execute their commercialization strategy for approved products; (15) Alvotech’s ability to manufacture sufficient commercial supply of its approved products; (16) the outcome of ongoing and future litigation regarding Alvotech’s products and product candidates; (17) the impact of worsening macroeconomic conditions, including rising inflation and interest rates and general market conditions, conflicts in Ukraine, the Middle East and other global geopolitical tension, on the Company’s business, financial position, strategy and anticipated milestones; and (18) other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in documents that Alvotech may from time to time file or furnish with the SEC. There may be additional risks that Alvotech does not presently know or that Alvotech currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Alvotech does not undertake any duty to update these forward-looking statements or to inform the recipient of any matters of which any of them becomes aware of which may affect any matter referred to in this communication. Alvotech disclaims any and all liability for any loss or damage (whether foreseeable or not) suffered or incurred by any person or entity as a result of anything contained or omitted from this communication and such liability is expressly disclaimed. The recipient agrees that it shall not seek to sue or otherwise hold Alvotech or any of its directors, officers, employees, affiliates, agents, advisors, or representatives liable in any respect for the provision of this communication, the information contained in this communication, or the omission of any information from this communication. ALVOTECH INVESTOR RELATIONS AND GLOBAL COMMUNICATIONS Benedikt Stefansson, VPalvotech.ir@alvotech.com Unaudited Condensed Consolidated Interim Statements of Profit or Loss and Other Comprehensive Income or LossUSD in thousands, except for per share amountsSix months ended 30 June 2024Six months ended 30 June 2023Product revenue65,91222,715License and other revenue169,678(2,460)Other income5745Cost of product revenue(65,167)(67,909)Research and development expenses(97,479)(99,582)General and administrative expenses(29,554)(41,910)Operating profit / (loss)43,447(189,101)Share of net loss of joint venture—(2,706)Loss on sale of investment in joint venture (2,970)—Finance income80,823122,480Finance costs(277,414)(64,300)Exchange rate differences7,742(3,081)Non-operating (loss) / profit(191,819)52,393Loss before taxes(148,372)(136,708)Income tax (expense) / benefit(5,132)49,854Loss for the period(153,504)(86,854)Other comprehensive income / (loss) Item that will be reclassified to profit or loss in subsequent periods: Exchange rate differences on translation of foreign operations 121(1,523)Total comprehensive loss(153,383)(88,377)Loss per share Basic and diluted loss for the year per share(0.61)(0.39) Unaudited Condensed Consolidated Interim Statements of Financial PositionUSD in thousandsNon-current assets30 June 202431 December 2023Property, plant and equipment239,535236,779Right-of-use assets138,110119,802Goodwill11,69212,058Other intangible assets19,90119,076Contract assets33,45710,856Investment in joint venture—18,494Other long-term assets8,9522,244Restricted cash25,00026,132Deferred tax assets306,638309,807Total non-current assets783,285755,248Current assets Inventories96,57474,433Trade receivables93,52141,292Contract assets39,77135,193Other current assets44,33731,871Receivables from related parties46896Cash and cash equivalents10,94411,157Total current assets285,193194,842Total assets1,068,478950,090 Unaudited Condensed Consolidated Interim Statements of Financial PositionUSD in thousandsEquity30 June 202431 December 2023Share capital2,6022,279Share premium1,716,6051,229,690Other reserves35,62742,911Translation reserve(1,407)(1,528)Accumulated deficit(2,359,349)(2,205,845)Total equity(605,922)(932,493)Non-current liabilities Borrowings56,877922,134Derivative financial liabilities 201,670520,553Lease liabilities121,873105,632Contract liabilities90,12073,261Deferred tax liability1,39453Total non-current liabilities 471,9341,621,633Current liabilities Trade and other payables58,56680,563Lease liabilities10,6449,683Current maturities of borrowings999,03638,025Derivative financial liabilities39,714—Liabilities to related parties26,5289,851Contract liabilities4,48459,183Taxes payable1,031925Other current liabilities62,46362,720Total current liabilities1,202,466260,950Total liabilities1,674,4001,882,583Total equity and liabilities1,068,478950,090 Unaudited Condensed Consolidated Interim Statements of Cash FlowsUSD in thousandsCash flows from operating activitiesSix months ended 30 June 2024Six months ended 30 June 2023Loss for the period(153,504)(86,854)Adjustments for non-cash items: Depreciation and amortization14,74810,934Change in allowance for receivables—18,500Change in inventory reserves(6,936)—Loss on disposal of property, plant and equipment—323Loss on sale of investment in joint venture 2,970—Share of net loss of joint venture—2,706Finance income(80,823)(122,480)Finance costs277,41464,300Share-based payments5,29411,911Exchange rate difference(7,742)3,081Income tax expense / (benefit)5,132(49,854)Operating cash flow before movement in working capital56,553(147,433)Increase in inventories(15,205)(7,896)(Increase) / decrease in trade receivables(52,229)16,665Increase / (decrease) in liabilities with related parties16,769(102)(Increase) / decrease in contract assets(27,179)1,215Decrease in other assets3693,711Decrease in trade and other payables(21,758)(6,182)(Decrease) / increase in contract liabilities(35,881)37,679(Decrease) / increase in other liabilities(6,056)4,395Cash used in operations(84,617)(97,948)Interest received2625Interest paid(41,037)(29,427)Income tax paid(372)(652)Net cash used in operating activities(126,000)(128,002)Cash flows from investing activities Acquisition of property, plant and equipment(10,271)(22,594)Disposal of property, plant and equipment—133Acquisition of intangible assets(1,430)(2,764)Restricted cash in connection with amended bond agreement1,132—Net cash used in investing activities(10,569)(25,225)Cash flows from financing activities Repayments of borrowings(75,059)(84,507)Repayments of principal portion of lease liabilities(4,815)(3,700)Proceeds from new borrowings67,50093,561Gross proceeds from equity offering150,451136,877Fees from equity offering(5,812)(4,141)Proceeds from warrants4,8416,365Options exercised76—Net cash generated from financing activities137,182144,455Increase / (decrease) in cash and cash equivalents613(8,772)Cash and cash equivalents at the beginning of the year11,15766,427Effect of movements in exchange rates on cash held(826)2,811Cash and cash equivalents at the end of the period10,94460,466 Attachments MD&A Q2 2024 Unaudited Consolidated Financial Statements Q2 2024 Presentation Q2 2024

Total revenues in Q1 2024 increased to $37 million compared to $16 million in the same period last year. Gross margin in Q1 2024 increased to $17 million, by $40 million compared to the same period last year. Alvotech signed new commercialization agreements for its high concentration interchangeable biosimilar to Humira® in the U.S. and for its proposed biosimilar to Prolia® and Xgeva® in the U.S. and Europe. Alvotech raises topline revenue guidance to $400-$500 million and tightens guidance for bottom line range for 2024 to $100-$150 million. Management will conduct a business update conference call and live webcast on Wednesday May 22, 2024, at 8:00 am ET (12:00 pm GMT). REYKJAVIK, Iceland, May 21, 2024 (GLOBE NEWSWIRE) -- Alvotech (NASDAQ: ALVO, or the “Company”), a global biotech company specializing in the development and manufacture of biosimilar medicines for patients worldwide, today reported unaudited financial results for the first three months of 2024 and provided a summary of recent corporate highlights. “This year is turning out to be the busiest in Alvotech’s history. We secured U.S. Food and Drug Administration (FDA) approval of AVT04, our biosimilar to Stelara® in the U.S., signed a key strategic partnership and commercialization agreement for our high concentration interchangeable biosimilar to Humira® in the U.S., under private label, as well as a new commercialization agreement in the U.S. and Europe for AVT03, our proposed biosimilar to Prolia® and Xgeva®. In addition to the U.S. private-label commercialization agreement, our partner Teva is making great progress on discussions positioning our Humira® biosimilar on formularies in the U.S.,” said Robert Wessman, Chairman and CEO of Alvotech. “Pipeline development progressed briskly as well. On top of the recently announced results from our confirmatory patient study for AVT06, our biosimilar candidate to Eyela®, we’ve now announced positive top-line results from the confirmatory patient study for AVT05, our proposed biosimilar to Simponi® and are thus on track to file marketing applications for at least three biosimilar candidates in the second half of this year. Joel Morales, Chief Financial Officer of Alvotech, added: “Based on rapid progress in commercialization and development, we raise our revenue guidance for 2024, to $400 - $500 million and tighten our guidance for EBIDTA to $100 - $150 million for the full year.” Recent Highlights Alvotech and its commercialization partner in the U.S., Teva Pharmaceuticals (“Teva”), announced that the FDA approved AVT04 (ustekinumab-aekn) for marketing in the U.S. as a biosimilar to Stelara, under the tradename Selarsdi. The biosimilar has been launched in Canada, will be launched in Japan imminently in May, and is expected to be launched in Europe in Q3 2024 and in the U.S. in February next year. Alvotech announced a U.S. strategic partnership agreement with Quallent Pharmaceuticals (“Quallent”), a subsidiary of Cigna group. Alvotech’s high-concentration interchangeable biosimilar to Humira (adalimumab) will be distributed under Quallent’s private label. As this is the first high-concentration, citrate-free biosimilar to Humira granted an interchangeability status by the FDA, Alvotech will have interchangeable exclusivity for the high-concentration presentation 40mg/0.4mL. Alvotech signed a commercial partnership agreement with Dr. Reddy’s Laboratories Ltd. (“Dr. Reddy’s”), for the commercialization of AVT03, Alvotech’s biosimilar candidate to Prolia® and Xgeva® (denosumab). The commercialization agreement includes an upfront payment to Alvotech with subsequent payments upon certain development and commercialization milestones as well as royalties on product sales. Dr. Reddy’s commercialization rights are exclusive for the U.S. and semi-exclusive for Europe. Alvotech announced positive top-line results from a confirmatory clinical study for AVT05, a proposed biosimilar to Simponi® and Simponi Aria® (golimumab). Alvotech is the first company to announce positive topline results of a clinical trial using a proposed biosimilar to Simponi and Simponi Aria and is one of only two companies known to have initiated such a patient study. Financial Results for First Three Months of 2024 Cash position and sources of liquidity: As of March 31, 2024, the Company had cash and cash equivalents of $64.8 million, excluding $25.0 million of restricted cash. In addition, the Company had borrowings of $978.1 million, including $37.6 million of current portion of borrowings, as of March 31, 2024. Product Revenue: Product revenue was $12.4 million for the three months ended March 31, 2024, compared to $15.7 million for the same three months of 2023. Revenue for the three months ended March 31, 2024, consisted of product revenue from sales of AVT02 in select European countries and Canada, launch of AVT02 in the U.S and launch of AVT04 in Canada. License and Other Revenue: License and other revenue was $24.4 million for the three months ended March 31, 2024. No license and other revenue were recognized during the first three months ended March 31, 2023. The license and other revenue of $24.4 million was primarily attributable to the recognition of a $6.5 million research and development milestone due to the approval of AVT04 in Europe and $16.8 million relative to research and development milestone due to the CTA submission for the AVT16 clinical program. Cost of product revenue: Cost of product revenue was $20.0 million for the three months ended March 31, 2024, compared to $39.1 million for the same three months of 2023, as a result of sales in the period, including the launch of AVT04 in Canada, tempered by lower production-related charges and other costs associated with FDA inspection readiness. Cost of product revenue for the period is disproportionate relative to product revenue due to the timing of new launches and elevated production-related charges, resulting in higher costs than revenues recognized for the period. The Company expects this relationship to continue normalizing with increased production from the scaling and expansion of new or recent launches. The Company estimates that the anticipated increase in sales volumes will result in a greater absorption of fixed manufacturing costs. Research and development (R&D) expenses: R&D expenses were $49.9 million for the three months ended March 31, 2024, compared to $50.9 million for the same three months of 2023. The slight decrease was primarily driven by a one-time charge of $18.5 million relating to the termination of the co-development agreement with Biosana for AVT23 recognized during the three months of 2023, and a $17.8 million increase in direct program expenses mainly from five biosimilar candidates, AVT03, AVT05, AVT06, AVT16 and AVT23 that are in clinical phase. General and administrative (G&A) expenses: G&A expenses were $15.5 million for the three months ended March 31, 2024, compared to $22.2 million for the same three months of 2023. The decrease in G&A expenses was primarily attributable to $3.7 million in lower 3rd party services, lower insurance premiums and less headcount, coupled with a $1.9 million decrease in expenses for share-based payments. Finance income: Finance income was $0.8 million for the three months ended March 31, 2024, compared to $1.2 million for the same three months of 2023. This was primarily attributable to interests received on bank accounts resulting from lower cash balances versus the same period in the prior year. Finance costs: Finance costs were $184.1 million for the three months ended March 31, 2024, compared to $207.6 million for the same three months of 2023. The decrease was primarily attributable to lower fair value of derivative liabilities from $179.1 million for the three months ended March 31, 2023, to $140.9 million for the three months ended March 31, 2024, partially offset by an increase in interest charged on additional borrowings and convertible bonds issued during 2023. Exchange rate differences: Exchange rate differences resulted in a gain of $6.5 million for the three months ended March 31, 2024, compared to a loss of $1.7 million for the same three months of 2023. The increase was primarily driven by the movements in the exchange rate of foreign currencies, predominantly Icelandic krona and euros. Income tax benefit: Income tax benefit was $6.4 million for the three months ended March 31, 2024, compared to $29.4 million for the same three months of 2023. The decrease was mainly driven by a decrease in operating losses and an unfavorable foreign currency translation effect during the three months ended March 31, 2024 due to the weakening of the Icelandic krona against the U.S. dollar. Loss for the Period: Reported net loss was $218.7 million, or ($0.89) per share on a basic and diluted basis, for the three months ended March 31, 2024, compared to a reported net loss of $276.2 million, or ($1.24) per share on a basic and diluted basis, for the same three months of 2023. As mentioned above, the net loss for the period is heavily impacted by the fair value costs associated with our derivative liabilities. Business Update Conference Call Alvotech will conduct a business update conference call and live webcast on Wednesday, May 22, 2024, at 8:00 am EDT (12:00 pm GMT). Registration for the conference call and access to the live webcast is found on https://investors.alvotech.com/events/event-details/q1-2024-earnings, where you will also be able to find a replay of the webcast, following the call for 90 days. About AVT02 (adalimumab) AVT02 is a monoclonal antibody and has been approved as a biosimilar to Humira® (adalimumab) in over 50 countries globally, including the U.S., Europe, Canada, Australia, Egypt, Saudi Arabia and South Africa. It is currently marketed in multiple European countries as HUKYNDRA and LIBMYRIS, in Canada as SIMLANDI and in Australia as ADALACIP. Dossiers are also under review in multiple countries globally. About AVT04 (ustekinumab) AVT04 is a monoclonal antibody and a biosimilar to Stelara® (ustekinumab). Ustekinumab binds to two cytokines, IL-12 and IL-23, that are involved in inflammatory and immune responses [1]. AVT04 has been launched in Canada as JAMTEKI and has received market authorization in Japan as USTEKINUMAB BS (F), in the EEA as UZPRUVO and in the U.S. as SELARSDI. Dossiers are also under review in multiple countries globally. About AVT03 (denosumab) AVT03 is a human monoclonal antibody and a biosimilar candidate to Prolia® and Xgeva® (denosumab). Denosumab targets and binds with high affinity and specificity to the RANK ligand membrane protein, preventing the RANK ligand/RANK interaction from occurring, resulting in reduced osteoclast numbers and function, thereby decreasing bone resorption and cancer-induced bone destruction [2]. AVT03 is an investigational product and has not received regulatory approval in any country. Biosimiliarity has not been established by regulatory authorities and is not claimed. About AVT05 (golimumab) AVT05 is a biosimilar candidate for Simponi® and Simponi Aria® (golimumab). Golimumab is a monoclonal antibody that inhibits tumor necrosis factor (TNF) alpha. Elevated TNF alpha levels have been implicated in several chronic inflammatory diseases such as rheumatoid arthritis, psoriatic arthritis, and ankylosing spondylitis [3]. AVT05 is an investigational product and has not received regulatory approval in any country. Biosimilarity has not been established by regulatory authorities and is not claimed. About AVT06 (aflibercept) AVT06 is a recombinant fusion protein and a biosimilar candidate to Eylea® (aflibercept), which binds vascular endothelial growth factors (VEGF), inhibiting the binding and activation of VEGF receptors, neovascularization, and vascular permeability [4]. AVT06 is an investigational product and has not received regulatory approval in any country. Biosimilarity has not been established by regulatory authorities and is not claimed. Sources [1] https://www.ema.europa.eu/en/documents/product-information/uzpruvo-epar-product-information_en.pdf [2] https://www.pi.amgen.com/-/media/Project/Amgen/Repository/pi-amgen-com/Prolia/prolia_pi.pdf [3] https://www.janssenlabels.com/package-insert/product-monograph/prescribing-information/SIMPONI-pi.pdf [4] https://www.regeneron.com/downloads/eylea_fpi.pdf Use of trademarks Humira is a registered trademark of AbbVie Inc. Stelara is a registered trademark of Johnson & Johnson Inc. Prolia and Xgeva are registered trademarks of Amgen Inc. Stelara, Simponi and Simponi Aria are registered trademarks of Johnson & Johnson Inc. Elyea is a registered trademark of Regeneron Pharmaceuticals Inc. About Alvotech Alvotech is a biotech company, founded by Robert Wessman, focused solely on the development and manufacture of biosimilar medicines for patients worldwide. Alvotech seeks to be a global leader in the biosimilar space by delivering high quality, cost-effective products, and services, enabled by a fully integrated approach and broad in-house capabilities. Alvotech’s current pipeline contains eight biosimilar candidates aimed at treating autoimmune disorders, eye disorders, osteoporosis, respiratory disease, and cancer. Alvotech has formed a network of strategic commercial partnerships to provide global reach and leverage local expertise in markets that include the United States, Europe, Japan, China, and other Asian countries and large parts of South America, Africa and the Middle East. Alvotech’s commercial partners include Teva Pharmaceuticals, a US affiliate of Teva Pharmaceutical Industries Ltd. (US), STADA Arzneimittel AG (EU), Fuji Pharma Co., Ltd (Japan), Advanz Pharma (EEA, UK, Switzerland, Canada, Australia and New Zealand), Cipla/Cipla Gulf/Cipla Med Pro (Australia, New Zealand, South Africa/Africa), JAMP Pharma Corporation (Canada), Yangtze River Pharmaceutical (Group) Co., Ltd. (China), DKSH (Taiwan, Hong Kong, Cambodia, Malaysia, Singapore, Indonesia, India, Bangladesh and Pakistan), YAS Holding LLC (Middle East and North Africa), Abdi Ibrahim (Turkey), Kamada Ltd. (Israel), Mega Labs, Stein, Libbs, Tuteur and Saval (Latin America) and Lotus Pharmaceuticals Co., Ltd. (Thailand, Vietnam, Philippines, and South Korea). Each commercial partnership covers a unique set of product(s) and territories. Except as specifically set forth therein, Alvotech disclaims responsibility for the content of periodic filings, disclosures and other reports made available by its partners. For more information, please visit www.alvotech.com. None of the information on the Alvotech website shall be deemed part of this press release. Please visit our investor portal, and our website or follow us on social media on LinkedIn, Facebook, Instagram, X and YouTube. Alvotech Forward Looking Statements Certain statements in this communication may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements generally relate to future events or the future financial operating performance of Alvotech and may include, for example, Alvotech’s expectations regarding competitive advantages, business prospects and opportunities including pipeline product development, future plans and intentions, results, level of activities, performance, goals or achievements or other future events, regulatory submissions, review and interactions, the potential approval and commercial launch of its product candidates, the timing of regulatory approval, and market launches. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential”, “aim” or “continue”, or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Alvotech and its management, are inherently uncertain and are inherently subject to risks, variability, and contingencies, many of which are beyond Alvotech’s control. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) the ability to raise substantial additional funding, which may not be available on acceptable terms or at all; (2) the ability to maintain stock exchange listing standards; (3) changes in applicable laws or regulations; (4) the possibility that Alvotech may be adversely affected by other economic, business, and/or competitive factors; (5) Alvotech’s estimates of expenses and profitability; (6) Alvotech’s ability to develop, manufacture and commercialize the products and product candidates in its pipeline; (7) actions of regulatory authorities, which may affect the initiation, timing and progress of clinical studies or future regulatory approvals or marketing authorizations; (8) the ability of Alvotech or its partners to respond to inspection findings and resolve deficiencies to the satisfaction of the regulators; (9) the ability of Alvotech or its partners to enroll and retain patients in clinical studies; (10) the ability of Alvotech or its partners to gain approval from regulators for planned clinical studies, study plans or sites; (11) the ability of Alvotech’s partners to conduct, supervise and monitor existing and potential future clinical studies, which may impact development timelines and plans; (12) Alvotech’s ability to obtain and maintain regulatory approval or authorizations of its products, including the timing or likelihood of expansion into additional markets or geographies; (13) the success of Alvotech’s current and future collaborations, joint ventures, partnerships or licensing arrangements; (14) Alvotech’s ability, and that of its commercial partners, to execute their commercialization strategy for approved products; (15) Alvotech’s ability to manufacture sufficient commercial supply of its approved products; (16) the outcome of ongoing and future litigation regarding Alvotech’s products and product candidates; (17) the impact of worsening macroeconomic conditions, including rising inflation and interest rates and general market conditions, conflicts in Ukraine, the Middle East and other global geopolitical tension, on the Company’s business, financial position, strategy and anticipated milestones; and (18) other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in documents that Alvotech may from time to time file or furnish with the SEC. There may be additional risks that Alvotech does not presently know or that Alvotech currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Alvotech does not undertake any duty to update these forward-looking statements or to inform the recipient of any matters of which any of them becomes aware of which may affect any matter referred to in this communication. Alvotech disclaims any and all liability for any loss or damage (whether foreseeable or not) suffered or incurred by any person or entity as a result of anything contained or omitted from this communication and such liability is expressly disclaimed. The recipient agrees that it shall not seek to sue or otherwise hold Alvotech or any of its directors, officers, employees, affiliates, agents, advisors, or representatives liable in any respect for the provision of this communication, the information contained in this communication, or the omission of any information from this communication. ALVOTECH INVESTOR RELATIONS AND GLOBAL COMMUNICATIONS Benedikt Stefansson, Senior Director alvotech.ir@alvotech.com Unaudited Condensed Consolidated Interim Statements of Profit or Loss and Other Comprehensive Income or Loss Three months ended March 31, 2024 Three months ended March 31, 2023 USD in thousands, except for per share amounts Product revenue 12,430 15,864 License and other revenue 24,422 - Other income 42 19 Cost of product revenue (19,957) (39,095) Research and development expenses (49,868) (50,864) General and administrative expenses (15,488) (22,198) Operating loss (48,419) (96,274) Share of net loss of joint venture - (1,164) Finance income 783 1,226 Finance costs (184,063) (207,600) Exchange rate differences 6,532 (1,748) Non-operating loss (176,748) (209,286) Loss before taxes (225,167) (305,560) Income tax benefit 6,438 29,380 Loss for the period (218,729) (276,180) Other comprehensive loss Item that will be reclassified to profit or loss in subsequent periods: Exchange rate differences on translation of foreign operations (820) 648 Total comprehensive loss (219,549) (275,532) Loss per share Basic and diluted loss for the year per share (0.89) (1.24) Unaudited Condensed Consolidated Interim Statement of Financial Position USD in thousands 31 March2024 31 December2023 Non-current assets Property, plant and equipment 235,394 236,779 Right-of-use assets 127,440 119,802 Goodwill 11,779 12,058 Other intangible assets 19,370 19,076 Contract assets 10,356 10,856 Investment in joint venture 18,494 18,494 Other long-term assets 2,285 2,244 Restricted cash 25,000 26,132 Deferred tax assets 318,223 309,807 Total non-current assets 768,341 755,248 Current assets Inventories 92,236 74,433 Trade receivables 41,252 41,292 Contract assets 30,059 35,193 Other current assets 62,900 31,871 Receivables from related parties 1,038 896 Cash and cash equivalents 64,811 11,157 Total current assets 292,296 194,842 Total assets 1,060,637 950,090 Unaudited Condensed Consolidated Interim Statement of Financial Position USD in thousands 31 March2024 31 December2023 Equity Share capital 2,604 2,279 Share premium 1,726,610 1,229,690 Other reserves 38,883 42,911 Translation reserve (2,348) (1,528) Accumulated deficit (2,424,574) (2,205,845) Total equity (658,825) (932,493) Non-current liabilities Borrowings 940,593 922,134 Derivative financial liabilities 330,976 520,553 Lease liabilities 110,585 105,632 Contract liabilities 88,913 73,261 Deferred tax liability 1,610 53 Total non-current liabilities 1,472,677 1,621,633 Current liabilities Trade and other payables 50,175 80,563 Lease liabilities 11,161 9,683 Current maturities of borrowings 37,550 38,025 Liabilities to related parties 24,532 9,851 Contract liabilities 46,258 59,183 Taxes payable 1,096 925 Other current liabilities 76,013 62,720 Total current liabilities 246,785 260,950 Total liabilities 1,719,462 1,882,583 Total equity and liabilities 1,060,637 950,090 Unaudited Condensed Consolidated Interim Statements of Cash Flows USD in thousands Three months ended March 31, 2024 Three months ended March 31, 2023 Cash flows from operating activities Loss for the year (218,729) (276,180) Adjustments for non-cash items: Long-term incentive plan expense - 6,449 Depreciation and amortization 7,190 4,841 Change in allowance for receivables - 18,500 Change in inventory reserves (5,379) - Share of net loss of joint venture - 1,164 Finance income (783) (1,226) Finance costs 184,063 207,600 Share-based payments 2,828 - Exchange rate difference (6,532) 1,748 Income tax benefit (6,438) (29,380) Operating cash flow before movement in working capital (43,780) (66,484) Increase in inventories (12,424) (3,766) Increase in trade receivables 40 2,952 Increase / (decrease) in liabilities with related parties 14,539 (573) (Increase) / decrease in contract assets 5,634 895 Increase in other assets (2,959) 5,246 Increase in trade and other payables (28,927) (18,600) Increase in contract liabilities 4,176 616 (Decrease) / increase in other liabilities (7,139) (4,477) Cash used in operations (70,840) (84,191) Interest received 26 21 Interest paid (4,403) (1,845) Income tax paid (186) (116) Net cash used in operating activities (75,403) (86,131) Cash flows from investing activities Acquisition of property, plant and equipment (4,069) (11,327) Acquisition of intangible assets (543) (2,548) Restricted cash in connection with amended bond agreement 1,132 - Net cash used in investing activities (3,480) (13,875) Cash flows from financing activities Repayments of borrowings (1,629) (50,812) Repayments of principal portion of lease liabilities (2,338) (1,525) Proceeds from new borrowings - 60,421 Gross proceeds from equity offering 138,049 136,879 Fees from equity offering (5,743) (4,141) Proceeds from warrants 4,841 6,365 Net cash generated from financing activities 133,180 147,187 Decrease in cash and cash equivalents 54,297 47,181 Cash and cash equivalents at the beginning of the period 11,157 66,427 Effect of movements in exchange rates on cash held (643) 2,236 Cash and cash equivalents at the end of the period 64,811 115,844