Well, good morning, everyone, and thank you for joining us. My name is Matthew DiLullo, and I'm a Biopharma Analyst here at Goldman Sachs. We're very pleased to continue the next session this morning with Alvotech, where I'm joined by Róbert Wessman, Founder and Executive Chairman, and Balaji Prasad, Chief Strategy Officer. Róbert and Balaji, thank you for being here.
Thank you for hosting us.
Yeah. Thanks for inviting.
Maybe to start, Róbert, before we get into specific programs. I know you guys had an announcement this morning. You made a big announcement last week.
Yeah.
Maybe just for those of us less familiar with Alvotech, 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 years?
Yeah. No, it's a very good question. I founded the company 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 the BLAs. We wanted also to have all the manufacturing in-house. Those two 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. We have invested in R&D and manufacturing close to $2 billion since we started 2013. The company went commercial for first time in U.S. mid-2024. The company's fairly young on the market, but we have been building all the infrastructure. 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 five products outside U.S. We have two products on the market in U.S., by later this year or late this year, we expect to launch another three products into U.S. Of course, a few of the submissions we will talk about, I'm sure. Super exciting. Our aim is always to be in the first wave or be first to market. 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 brands. Holistically, it's all coming nicely together, the company is at a massive inflection point, we believe now after we resubmitted the three BLAs into U.S.
Mm-hmm. Great. Yeah. Maybe kind of diving into those resubmissions last week. 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. Maybe this came a little earlier than we all expected. Maybe walk us through how you got here kind of how significant this is for you all?
Yeah, we are operating globally. We 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 three pipeline products. There were no comments on the BLAs themselves, but there were 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. 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 markets here. 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. We think we are in the first wave, potentially still first to market with biosimilar to Simponi in U.S. We are launching Eylea, biosimilar to Eylea, and then probably Xgeva. That will drive the growth of the business next year and going forward. More importantly, the submissions and the filing acceptance by FDA on Entyvio is really big milestone for us.
Great.
Matt, I think on the question that you asked, right? Most investors were expecting this towards the end of the month than now. It was also because we had this FDA inspection last month, which we cleared very successfully, investors were wondering if because of that, we will be pushed out beyond June 2nd. We are very happy to assure our investors that the observations that we had, few observations were manageable. More importantly, the FDA also went through a lot very comprehensively, that we are filing it on time in June, in the first week of June, signals that the inspections were really solid. That's why the market also reacted the way it did and has more confidence in us now. Today's news on AVT16 was like an icing on the cake. Really important to note that.
Great. Yeah. Could you maybe remind us a little bit of what you implemented were, can you talk about any kind of safeguards that are in place now to prevent any kind of similar issues in the future?
Yeah. Basically, when you go through an inspection, you answer the 483s, FDA sends you a PAI letter stating what they felt were missing to basically approve your new filings. There were three main issues there. First was the rubber stopper in our syringes. We have a German-made machine from Bausch+Ströbel, which I think every second sterile manufacturer has. This machine requires a pharmaceutical-grade silicone 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. This might be a new theme, we are most likely the first one to receive that one. How that ended is that we managed in the end, after stopping for a couple of weeks, to operate the machine without any lubrication. 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 the U.S. over 500, 600 auto-injectors. At that time, we had produced 5 million, which proportionally is very small. The overall FDA wanted us to tighten up the process, how we follow up to receive some of the faulty pen back. Because in the U.S., as you might know, if you dial into your pharmacy, you claim that your pen is faulty, you get a new one.
The patients are not often giving the pens back, which in the end, we need to investigate. We believe we have both internally and with the process itself so far pen as Wegovy and is from Ypsomed in Switzerland, and we have not had any mechanical issue with the pen, to be honest. 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. Still, we wanted to have fewer of them, and collectively we have implemented over 200 CAPAs to fix that. We resubmitted with three months data where we did not have any hits anywhere, even though we are looking at only below action limits.
I think we have addressed the fundamental, of course, what was pending, more important, the fundamental of this facility. 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. Your biosimilar Prolia and Xgeva, I think they were not included with this resubmission. What are your kind of expectations in terms of timelines for filing?
Sure. Prolia and Xgeva, the authorization is with Dr. Reddy's, our partner. In the U.S., for most parts, we are partnered with Teva, and this one is with Reddy's. They will be filing, which will be imminent.
Great. Maybe lastly on the Simponi and Ilaris. The FDA just completed, I think, a routine cGMP surveillance inspection at Reykjavik. I guess, how do you view the likelihood of another re-inspection?
Yeah, it's an interesting question. Basically, we believe that FDA went through all the open items from the PAI letter. We did not get any comments or outstandings on the BLA itself. Technically, they would not have to come. We know that FDA has their own agenda. 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. They could also decide not to come. It's a six-month clock. We expect that FDA generally is using the six months, so it's early December. Which allows us to launch the three 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 you 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 and as well as the U.S.?
Sure. This is something that we're really excited about. We are very happy that the submission and the acceptance of it came through. 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. It's around $7.5 billion and has a sizable market in the U.S. Right? We expect to be in not just for one of the first market, but also going to be a limited competition for quite a while. We are really happy to have this around and, of course, set the clock for a 12-month approval timeline from the date of submission. Right? It could be one of our critical launches that we'll be looking forward in the near term itself.
Yeah. I just want to underline what Balaji said. 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 subQ version of the product, which is important. All in all, we believe that for most markets, this will be a launch next year for us. I want to underline what Balaji said. 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?
Yeah. Overall, I think Simponi, us being alone, of course, outside the U.S. still today is being shown to be a good opportunity. Being either first or one of two in the U.S. will also be very exciting. Again, Simponi is around a $3 billion product. Just from 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. We know that Amgen has been super successful in the 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%. We have rolled out the product into European Union. Excited about that.
That product was one of our first one to develop. We ended finishing it. From gross profit, gross margin, I think for everyone, it will be more competitive to the other two.
Mm-hmm. Yeah. Great.
In terms of market opportunity on both of these, I think investors also tied up the fact that we didn't get to the market at the end of Q4 2025 or as we had thought. 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. The Eylea commercial opportunity, even if it had gotten approval last year, would still be very much the same and intact.
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. The commercial opportunity is something which is very much intact and which clearly the market misread or misunderstood the situation there. That's again, I think, important to highlight, Matt.
Mm-hmm. Yeah. Great. Yeah. 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 those timelines and that relative opportunity?
Yeah. I think Alvotech has been one of the pioneers to adjust to the changes of the brands. We were the first to adopt from low dose to high dose on biosimilar to Humira.
We went into Entyvio with a subQ when we saw the brand going there. We also, when we saw that Regeneron was going to launch a high dose, 8 mg, we basically internally, before the product came to market, made five, six prototypes in-house. When the product then launched, one of our formulations was a perfect formulation from both match and the IP standpoint. We always expected to be in the lead. We have seen 40% conversion in Europe, 40% conversion in the U.S., and that conversion, we believe, will continue. We saw that Amgen announced that they are starting their clinicals for U.S. in June, and we have already been working on our clinicals, we should be ahead of them in U.S. We are pretty imminently filing already into rest of the world markets with the product.
What is also interesting is that the safety device or the OcuClick, which they have been developing, we have spent two years on a similar device. I think we will be in an absolutely pole position when it comes to high dose Eylea. Super excited about that. We will be submitting in the rest of the world this year, and I would not rule out that could be a launch on approval. We are then finishing the clinicals for the U.S. market, so we will be submitting a bit later there.
Mm-hmm. In terms of launch timing for U.S., do you have any clarity on that, or is it?
I would not comment on that until our clinical is done, if you will. Yeah.
What we have said, though, is that it's one of our medium-term opportunities. Definitely think about it in that timeframe, that we are really excited about, and it's a clear differentiator for us.
Maybe moving to another kind of mega blockbuster, Keytruda. Obviously very competitive market. 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.
Yeah, 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. Knowing also how many companies were developing the product, it in many ways was not commercially as lucrative as it would be with less competition. 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. This is a co-development with Dr. Reddy's, where they will be, in the end, producing the drug substance. We are sharing the cost. We believe we will be more cost competitive than most others. That's kind of the approach we did to be in the product.
Overall, I think it will be pretty competitive molecule going forward.
Great. Maybe switching over to business development. You all recently announced a partnership with FUJIFILM to expand 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?
Yeah. It's a very good question. We have one facility in Iceland. It's state-of-the-art both drug substance, drug product. With that capacity we have set beyond 2030. We have, though, five 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 two years ago, we increased the capacity in cell line development, process development, and where we felt we had bottlenecks. We have been on the cadence starting new R&D program almost every second month for over two years. When it comes to the capacity, we are seeing three 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 the biosimilar to Humira and Stelara.
Which is nice to see. On top of that, we will be expecting to launch Entyvio into multiple markets. This will all come into a very similar timeframe. It will all happen, of course, throughout next year. Having FUJIFILM as a partner, which mainly is working with big pharma, was something very valuable to us and will allow us to be more flexible in case we gain more market share. If the order from our clients come in the same quarter, to be able to still deliver on that. It was very strategic and long-term. Of course, we will be using our own facility at the same time fully.
We should think about it will be used for both commercial and pipeline products.
FUJIFILM. Yeah. Absolutely.
Okay. Great. Maybe stepping back and looking at the biosimilar market a little more broadly. Obviously, the opportunity over the next decade is very significant, and things have been changed regulatory-wise. You touched on some of the FDA changes. We've also seen changes on the payer side private labels and things. How do you guys internally strategize and think about the category overall in that context?
I think if you start at the beginning, because it's a fairly young industry, if you will, as you know. We saw quite a few players coming in at the beginning, I was the pioneer in the generic industry since 1999.
I built Actavis, Alvogen, quite a number of generic companies. We are starting a new era with biosimilars, as we did 26 years ago in generics, if you will. It's only five, six years since really adoption in U.S. and market share gain started to happen for biosimilars. We know those products are very effective, but very costly. We are seeing the trend now that 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. 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, we have seen others which are scaling down.
One could say it's cheaper now to develop biosimilars. The answer is yes. It does cost still $60 million-$90 million per product. You need to build a facility which costs you half a billion USD at least. It's a billion-dollar venture before you get really into it, usually take 10 years. I'm not seeing necessarily, even though the regulations are changing a bit, that we will see a flood of new players coming in.
Got it.
All in all, a company like ours is really needed just to sustain healthcare systems around the world. We have the pipeline to basically grow and support markets in U.S. and Europe and where it is globally. Overall, we are extremely excited about our journey, which in many ways commercially is just starting.
I think it's also important to note that though there's the CES waiver, the FDA may say, "Okay, CES waiver," they're going to increase the scrutiny on all of the data that we submit for companies. That really plays well for companies like us with a very strong R&D track record, a very strong process and analytical data capabilities to be able to showcase that. This is not something that can be acquired by any new entrant overnight. 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.
How do you think in terms of how we'll actually see it play out with not requiring the phase IIIs? 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. Do you all imagine it will be essentially no one will be running phase IIIs in a few years, or it'll be dependent on cost?
I think it will be very exceptional if phase III will be run going forward. You need to have the analytical data to support that your product is interchangeable. 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 and this to happen, and that's why we adopted to it earlier than anyone else. Then, you asked about the market dynamics, private labels like in U.S., that's a U.S. thing. It mainly applies to retail products which are pharmacy benefits. We had Humira, of course, being the biggest one. We are not really seeing the private label necessarily playing a big role going forward. It did in Humira.
With different success between the three PBMs. 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 the promotions and providing a quality product to the market which will count.
The opportunity kind of outside of channel, you're saying.
Yeah.
Yeah. Okay. Turning to your guidance for the year. You gave 2026 guidance on the top line and then also EBITDA. Walk us through what expectations are built into those. Given the recent developments, how should we think about changes to those?
Yeah. We gave a range, and in the lower end of range, which is $650 and $180 EBITDA, we did not have any of the three products which we are launching now into December in the U.S. Because it's only one month, we took a moderate value being shipped to U.S. on the high end. That's kind of explaining the range. With the confidence we have in, of course, the U.S. market, we strongly believe that we will be launching. 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.
Yeah. That said, despite the FDA and some of the slowdowns that we had gone, we should still see, Matt, that even at the lower end of the range, we're 2026, and once the wave of launches materialize, we will be in a significant period of growth over the foreseeable next few years. We're really looking forward to that.
Mm-hmm. Yeah. Great. You highlighted several times, biggest probably in the industry with I think 30 molecules in the pipeline. Maybe in the last few minutes, walk us through what is your strategy for selecting new molecules at this point? Do you guys think of revenue ranges?
It's a good question. We have always said we want to open up access for patients.
We are doing that in Alvotech. I've been doing that in my career for 26 years. If you're going to open up an access, we need to come with a molecule which is still not widely open for biosimilars. That's why you heard us talking about first with high-dose biosimilar to Humira, first with Entyvio, first with subQ 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 five, six, seven players.
Our portfolio strategy is evolved and developed around that. As you can imagine, you start a journey with a product, then we usually take five to seven years to develop a product, we closely monitor what the brand is doing, 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 Róbert's point, he said earlier, revealed some of the secret sauce there. We have an exceptional R&D team.
That's why we have been able to get so many of these unique assets, be the first to market. Six of the next eight to nine launches that we are looking at over the next few years, near to medium term, we are going to be either the first to market or in the first wave of biosimilars. That is why earlier called out an explosive period of growth for us over the next few years. 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.
Yeah.
Great. Well, with that, Róbert and Balaji, thank you both for joining us.
Yeah. 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 Goldman Sachs for hosting us.
Great questions. Thank you.
Yeah. Thank you.