Excellent. Thank you guys for being here. Super excited to have Alvotech. For those of you who don't know, Alvotech is Teva's partner on all the biosimilar portfolio, or most of it, I believe. In fact, can you just clarify that?
Yeah, so they're a partner for the U.S. for, I would say, the majority of our portfolio. But we do have 19 global partners. I think that's one aspect that hopefully we can talk about today, is the global nature of biosimilars.
Got it. So maybe just remind us then, Ming, in terms of the key programs. So Humira launch is underway, and you guys are heading towards Stelara launch next. But maybe just remind us of the portfolio and the cadence of launches, and we'll dig right into it.
Gotcha. So we've been obviously investing heavily in biosimilars for 13 years now. So a lot of this investment's behind us. And so we've launched Humira outside the U.S. We've launched Humira in the U.S. We've also launched Stelara in a multitude of countries, including Canada, Japan, and all across Europe. The Stelara U.S. launch, as you said, is expected in February of 2025. We have a settlement date for that. We're also submitting three different BLAs this year. So Prolia, Xgeva, Stelara, and Simponi and Simponi Aria all submitted this year.
Wait, wait, sorry. Let me just get that list right. So Humira's on the market. For next year, you said Prolia, Xgeva?
Prolia, Xgeva. Yep, we're submitting it this year. Prolia, Xgeva. Simponi and Simponi Aria. So those are for J&J product, as well as.
Stelara.
No. Eylea, sorry.
Eylea.
Yeah.
Okay. And sorry, where's Stelara?
Stelara is already launched across Europe, Canada, and Japan, and U.S. 2025.
U.S. launch is date certain? It's already certain?
It's a date certain. It's approved. It's ready to go. We're actually producing commercial volumes, or have commercial volumes.
It's approved, but it's not launched yet. And I guess what's the holdup on?
Just the settlement date, the license date. So it's a.
Remind me, when is that?
February 2021. 21st of February.
Okay, and I guess, Ming, there's one world in which I could argue. Because of the rebate structure on Humira, biosimilars did not do well. I want to come back to that in a second. Presumably, why wouldn't a lot of that apply to Stelara as well?
I mean, it is. So Humira was the first PBM-driven product to go biosimilar of size. And Stelara will be the second one. So I would say 2023 got off to a rough start for biosimilars on Humira. But that's starting to change in 2024. And we see expansion in 2025 and even 2026 and beyond, as far as conversion to biosimilars. A lot of the plumbing that was established, like for example, on the private label side, is going to be ready for Stelara in 2025, where in 2023 this was all new, right? So we see it better than Humira as far as starting out. But we see all these products as growing for several years, right? It's not like a generic where you have a big jump and then a rapid decline as competitors come through.
We see these evolving over time, not just in the U.S., but outside the U.S., where the growth in some of the outside-the-U.S. markets could be much longer than three years, actually.
Got it. So remind me the size of the brand and what's a realistic market share into next year?
So the brand, I think in the U.S., if we're on Humira, I think was peaked at like $18 billion.
Oh, sorry, I was talking about Stelara.
Oh, Stelara. So Stelara is a global $10 billion product. In the U.S., it's around $7 billion.
Yeah.
We haven't put a market share target out there, but what I'd say is that.
Is it $5-$10, or is it lesser than that?
I mean, we feel that we can do better than that, and especially over time, we should be, we expect to be a leader in this space.
Remind me, the total biosimilar penetration on Humira right now?
I believe it's just shy of 20, something like that.
Less than 20%, and you guys have how much of that?
So we haven't commented on share because some of the data is not, as many of you know, not readily accessible. What we have said is that we're a B2B company, right? So we have orders for 1.3 million units. We've supplied, which is roughly, call it 13% of the market. We've supplied about just over 40% of that and hope to supply the remainder of that order book before the year ends.
Wait, just to be clear, 1.3 million units, and you've supplied 30% of it?
A little over 40%, yeah. So we have roughly just under 60% to supply before year end.
And I guess, presumably, your supply should be ready to go the moment the order comes in, no? Or is it like taking longer to get the manufacturing?
No, I think there's a cadence that we've established with our partner, Teva, who is just presenting, as well as our other partners. And so we have visibility on our orders roughly five months in advance, right?
So 60% of the 1.3 million units to be delivered in 4Q?
In 4Q, yeah.
So 4Q is about to be a massive Humira number.
It'll be our biggest product revenue number of the year.
So will it remain choppy like that? 1Q is going to be light, 2Q comes in heavy?
You know, there's still going to be choppiness, and it's partially because we have multiple launches, so we have Stelara coming up, so you may have quarters where you're Stelara heavy and some that are Humira heavy. There's a different margin profile on each one, so there is a little bit of a choppiness. That'll start to go away as we start to expand further launches, like we expect three launches next year, at the end of next year, and so 2026 will be one where you have multiple products, like up to five on the market, and so it'll be a little bit less choppy as our top line matures.
Remind me the price point on Humira for you guys, net price?
Yeah, we haven't disclosed net price, but there was.
What was the price? Was how much of a discount?
There's a couple. There's people have listed high and low. I tend to not talk too much about list pricing. Ultimately, net pricing is what impacts us. We have a competitive net price with the market.
Okay. But remind me, the brand price and what was the WAC? A lot of the early discounts? I remember looking at it a while back.
Yeah, I mean, the discounts were north of 80%, 85%, so.
The discounts were north of 80%, 85%. So this product was $10,000 or less broadly for most biosimilars. Is that right? Okay.
Yeah.
How much in sales have you guys done so far?
So our guidance is $400-$500 for the year. I think it's safe to say, well, we're going to meet that guidance.
How much have you done previously of the $400-$500?
We are 80% there, right? So already through the year.
So, first three quarters. Wait, wait.
Maybe let me clarify one thing.
You delivered 40%, but you've done 80%?
No, of the top line. So maybe just to take a step back, we have two sources of revenue, right? So one's product revenue, product from Stelara, product from Humira. And the other is milestone revenue. So our agreements as a B2B company contain substantial milestones. Like the original agreement we had with Teva is over $500 million in milestone payments that we collect over time as we continue successful development, successful launches. So we are getting close to that $400 number already as we speak, as a combination of product and.
Okay. And when you said 1.3 million units is the order?
Yes.
One unit means one month or four units per month?
No, one unit is an auto-injector, right? So think of it as like $10 million pens-ish for the Humira market in the U.S.
Okay, got it. But I was just thinking about if it's $10,000 broadly for a biosimilars annual, how many units in a year? 52?
It's 26 times per year is the dose.
Okay.
But we think of it just in volume terms, right? So if you have $10 million, 10 million doses, the 1.3 million is 13%.
Okay, got it. And because I was just running the math, if you have yet to deliver 60% of the 1.3 million, so that's about $0.78. And let's say each unit is $10,000 divided by 26?
I just want to be clear. I'm not giving net pricing out today.
No, sure, sure.
I think where we're going is we want to be a leader in the market. We have a substantial order book that we'll be fulfilling this year. We're already getting orders for Q1, right? Our product revenue has grown each quarter, and it'll grow in fourth quarter. As you said, it'll be our biggest product revenue quarter.
But is this like a $200 million type of quarter, or is this like, because based on the guidance numbers you're laying out, it sounds like it's only a $100 million quarter?
Look, I think we're safely in the range that we've provided, right? And again, our revenues are just product revenues, right?
I see. I see.
You have to break it down. It's a lot of different moving parts.
So, I guess, then, what happens next year? So it sounds like your allocation. I don't know why it's $1.3. Why can't it be $5 million? Why is it $1.3 million? Is this the PBM order?
It's a combination between orders from Teva. And we also are a partner with Quallent. So Quallent is Cigna's private label. So that $1.3 million comes from both Teva as well as Quallent.
Next year, should we just assume you replicate $1.3 million again?
I mean, our belief is that we will expand into 2025.
Expand into 2025?
Yeah. We haven't given a number or anything.
That's because of the PBM arrangement you have now?
You know, I think it's because overall, we see each year expanding as far as biosimilar conversion, right? So we expect demand to continue to increase in 2025 as well as 2026 from a volume perspective.
Because I remember you guys were the first auto-injector with all the attributes checked. And I would have thought the share would be a lot higher than 13%.
Yeah. I mean, look, I think that you got to remember, we were the last adalimumab approved. We were the second one on a private label. I think we've done well. But when you look at the PBM-driven space, it is going to be a gradual increase regardless. So the differentiation that you're noting, the high concentration, interchangeability, and all of that, that allowed us to be effectively late, but still competitive in the market. So we see it growing for the next couple of years.
Got it. So 13% share on Stelara as well, then? Is that reasonable?
You know, again, we haven't put out any kind of guidance. But as I said, we expect to be a leader there.
But just to be clear, on Humira, your market share is 13%.
We are delivering 13% of the market this year, or we expect to, yes.
Got it. Remind me, Eylea, what's going on? I'm very confused by this. I don't cover Regeneron right now, but I kind of broadly track it.
Yeah. So interesting. So for us, we've submitted the product. We are going to launch in Europe, right, the low dose of Eylea. In the U.S., we're going to be as prepared as possible. I think what we said on our last call is that we obviously know the arguments that led to the injunction of some of the companies that are looking to do so, as well as Amgen's, right? So Amgen has actually launched the market. So the Eylea biosimilar market in the U.S. has technically formed, right, which I think is a little bit of a surprise. So our expectations was always $27.
$27 launch?
That's what we expected. And while we're not committing to anything earlier at the moment, what we can say is that we have a different approach on the IP than the enjoined group. And so we want.
You can dig into that. What's their approach and what's?
Yeah, I don't want to get into the specifics of it. But it's formulation patents, right? So we've taken a design-around approach on the formulation patents. And we want to be in a position to go as early as possible. I think that's probably all I can say now. But I think what is interesting is the market's already formed. And we want to aggressively pursue the earliest date possible. And so.
When you say market is formed, can you walk me through what that means?
Amgen has launched a biosimilar of Eylea in the U.S., and I think that surprised a few.
Any early traction or any feedback on how that's going?
I mean, my personal opinion is I think they'll do well. I think biosimilars will do well in this market. I think it'll convert faster than the PBM-driven market, and maybe I'll add one other point here is that we're also, as you know, Regeneron is trying to move patients to a less frequent dosing on the high dose. That is also a product that we've developed and seeking to bring to market also as quickly as possible.
How does the commercial dynamic play out? When you have these vials out there, somebody could just do eight milligrams on their own, no?
You do have to do some work to get it switched over. So we have sought scientific advice to ensure that we can rely on the previous development work as much as possible. But there is additional work that needs to be done.
Okay. You can't just market two milligrams and doctors are just doing it on their own.
Yeah.
Because of price reasons.
Many reasons, but yes.
How much is the price discount currently in the market?
I don't believe it's very high because you only have one competitor on the market today.
They're still launching okay.
I'm sorry?
They're still launching okay.
Yeah.
In a market like that, remind me the economics on ASP Plus. Like how does that work? And if the doctors are incentivized to do biosimilar?
Yeah. I mean, it doesn't have the same rebate structure, right? So maybe a good corollary is Lucentis, right? So Lucentis converted to over 30% in year one. I think Coherus was the market around that product. So we expect Eylea to be as good or better from a conversion point of view.
Got it. No, eight milligram will remain safe for now.
Yes. But I guess from our perspective, if we can get the market or have a more expedited path, we expect to have high dose in the not too distant future as well.
Well, so both in 2027 timeframe or so?
Potentially. And potentially on the low dose earlier.
I see. And do we know what your competitors are at on high dose?
We don't. But I think we're very comfortable that we are in a pole position there. We know that we were the first to seek the scientific advice. We take a generic mindset to development. I wouldn't say Alvotech's a generic company. But we started developing the high dose as soon as we understood what was going on.
Remind me again, do doctors make less money by giving biosimilar Eylea versus the brand?
No, it's an ASP Plus, right? So I think the incentives to obviously, there's some product characteristics that are important, which is why.
But if the ASP's lower, presumably your spread is lower, no?
No. Look, I think that the Lucentis example just shows that there's an incentive to do as long as your product is competitive. So that's one of the reasons we want high dose and low dose. Because if we can be of a small group that's doing high dose, I mean, this is a branded type market, right?
Got it. And would it make sense to have a settlement, or you want to just be out there?
Yeah. I mean, it usually ends up that way. I think from our perspective, it's always being as aggressive as possible, trying to seek the earliest date possible, and also embedding the IP strategy in our development, right? So these are formulation patents on both.
Got it. The other one I wanted to touch up on, which is of a lot of interest, is Xifaxan. Is that Alvotech, or is that?
No, that's another company.
It's one of your related sister companies, but it's not Alvotech.
It's not Alvotech, no.
How does that work? Norwich and Alvotech are part of Alvogen, or how does it work?
No, no. It's completely separate companies. And I think the importance of Alvogen is that it allowed Alvotech to basically invest as a private company. I mean, if you think about a standalone pure-play biosimilar company with manufacturing infrastructure, large pipeline, there's not that many of them that just do biosimilars. In fact, only the Korean companies come to mind. But it's very rare. And the reason why the company was able to make that kind of investment is because we were private. And it started as an offshoot of Alvogen, right? But as we became public, as Alvotech matured, it's its own company, completely different shareholder base, completely different staff. It's just a different company.
Got it. Excellent. Maybe in the last couple of minutes, if you could just remind us of the balance sheet.
Yeah. So we just this summer consolidated all of our debt into a private facility, right? So we pushed all the maturities out to 2029, which was an important step for the company as we start to ramp up our revenues. From a cash perspective, we ended the last quarter at $118 million, which is sufficient to get us to cash flow positivity. I mean, each quarter is increasing product revenues. So we're starting to. We're really at an inflection point right now.
Got it. And how much is the total leverage?
It's roughly $1 billion in debt. Think of it that way.
$1 billion in debt.
Yeah.
Okay, got it. And the plan would be, as you guys go profitable, you start to tip it down.
Yes. Yeah. I mean, obviously, we're in a turning point. I mean, one of the reasons we put the private facility in place is over the near term, we expect a significant amount of diversification and a significant amount of growth, right? And the facility we put in place has great non-call features. So we should be in a place in the not too distant future to improve our leverage.
Excellent. My final question. Keytruda, what's your timing?
We'll be commencing a clinical trial starting next year.
Is this a launch before 2030?
Yeah. We haven't given timing, but we want to be prepared for that, yes.
You think the IP allows for that, or is there a lot of IP they have piled on?
So that's going to be different depending on what market you're in. I mean, what makes Keytruda interesting is we're a global company, right? I think even this year, we expect up to a third of our product revenues to be outside the U.S. And I think maybe even more going forward. So it'll depend on which market you're talking about. But Keytruda is such a big product.
So for U.S.?
Yeah. It's tough to say when the exact date's going to be. But we want to be ready as soon as possible, which would be before the market.
Would you characterize, I mean, I'm sure you guys go through external law firms on figuring out the patent wall. Is this a massive patent wall or not quite?
I mean, there's a number of patents, right? So it's not similar to Humira, but they're significant IP.
So if that's the case, 2028 patent was a patent filed by Organon back in 2008. So that's like the end, and Keytruda wasn't even in development at the time. And then they did like indication-specific, dosing-specific. So it sounds to me like the early 2030s patents might be fairly strong still. So 2028 may or may not be a realistic possibility. I'm just curious how you guys think about that.
Yeah. I mean, I think we obviously develop our strategy early and want to be as aggressive as possible. But I think at the end of the day, we have to get closer to it before we give any definitive comments on timing.
Okay.
Yeah.