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Cautionary Note Regarding Forward Looking Statements
contains "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 its ability to satisfy conditions precedent to close the
transaction and draw down the Term Loans under the Loan Agreement, to comply with the covenants of the Loan Agreement and to exercise
its rights under the Loan Agreement, the expected use of proceeds from the Loan Agreement, potential future financings or strategic
transactions, 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, market launches, and partnership and distribution agreements. 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 enroll and retain patients in clinical studies; (9) the ability of Alvotech or its partners to gain
approval from regulators for planned clinical studies, study plans or sites; (10) the ability of Alvotech's partners to conduct,
supervise and monitor existing and potential future clinical studies, which may impact development timelines and plans; (11) 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; (12) the success of Alvotech's current and future collaborations, joint ventures,
partnerships, distribution or licensing arrangements; (13) Alvotech's ability, and that of its commercial partners, to execute their commercialization
strategy for approved products; (14) Alvotech's ability to manufacture sufficient commercial supply of its approved products;
(15) the outcome of ongoing and future litigation regarding Alvotech's products and product candidates; (16) 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 (17) 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
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 Exhibit
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
are a vertically integrated biotech company focused solely on the development and manufacture of biosimilar medicines for patients
worldwide. Our purpose is to improve the health and quality of life of patients around the world by improving access to proven
treatments for various diseases. Since our inception, we have built our company with key characteristics we believe will help us
capture the substantial global market opportunity in biosimilars: a leadership team that has brought numerous successful biologics
and biosimilars to market around the world; a purpose-built biosimilars research and development and manufacturing platform; commercial
partnerships in global markets; and a diverse, expanding portfolio and pipeline addressing many of the biggest disease areas and
health challenges globally.
have built a portfolio and pipeline comprising two approved products and nine product candidates covering a variety of therapeutic
areas, including immunology, ophthalmology, bone disease and cancer.
| We are also developing through an in-license agreement with Kashiv Biosciences LLC, AVT23, a biosimilar candidate to Xolair (omalizumab). The agreement covers all 27 countries of the European Union, the UK, Australia, Canada, and New Zealand. | ||
| Our pre-clinical programs include AVT16, a biosimilar candidate to Entyvio (vedolizumab), AVT33, a biosimilar candidate to Keytruda (pembrolizumab), and three undisclosed programs. |
February 26, 2024, we announced that we had accepted an offer from investors to sell 10,127,132 of our ordinary shares at a $16.41
per share, for gross proceeds of approximately $166 million. The shares were delivered to the investors from the shares held in
treasury by our subsidiary, Alvotech Manco ehf., through the Nasdaq Iceland Main Market.
June 7, 2024, we entered into a secured term loan credit agreement (the "Loan Agreement"), by and among us, as borrower,
GLAS USA LLC, as administrative agent, GLAS Americas LLC, as collateral agent, and the lenders party thereto, which provides for
a term loan in an aggregate principal amount of $965.0 million (the "Term Loan"). The Term Loan is scheduled to mature
on the fifth anniversary of the closing date.
April 2024, we and our partner Teva announced a long-term agreement with Quallent Pharmaceuticals LLC ("Quallent")
to distribute AVT02 in the United States. Under a partnership agreement, we will manufacture AVT02 and Quallent will - distribute
the product under its own private label.
May 2024, we announced that we had entered into a license and supply agreement with Dr. Reddy's Laboratories SA for the commercialization
of AVT03. We will be responsible for development and manufacturing of the product. Dr. Reddy's will be responsible for registration
and commercialization of the product in the applicable markets. The license and supply agreement includes an upfront payment to
us, with additional payments upon certain regulatory and commercialization milestones as well as sales-based payments, if AVT03
is approved. Dr. Reddy's commercialization rights are exclusive for the United States, and semi-exclusive for the European
Economic Area (excluding Iceland), the United Kingdom and Switzerland.
June 2024, we announced that we had entered into an agreement with STADA to amend and strengthen our strategic partnership. Under
the terms of the agreement, we will be responsible for development and manufacturing AVT03 in Reykjavik, Iceland, and STADA will
become marketing authorization holder, upon approval of AVT03, and 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.
parallel with the commercial agreement for AVT03, we agreed to extend STADA's commercial rights to AVT02 and AVT04 to Commonwealth
of Independent States (CIS) countries in Central Asia, and we regained commercial rights from STADA to AVT06.
Financial Results for First Three Months
The following discussion and analysis of Alvotech's
financial condition and results of operations should be read in conjunction with Alvotech's unaudited condensed consolidated interim
financial statements and related notes and other financial information that are included elsewhere in this filing, as well as our audited
consolidated financial statements and the related notes for the year ended 31 December 2023 and other financial information included in
the Company's annual report on the Form 20-F filed on 20 March 2024. The following discussion is based on Alvotech's financial
information prepared in accordance with the International Financial Reporting Standards, or IFRS, as issued by the International Accounting
Standards Board, or IASB. Some of the information contained in this discussion and analysis, including information with respect to Alvotech's
plans and strategy for its business and related financing, includes forward-looking statements that involve risks and uncertainties. Alvotech's
actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following
discussion and analysis. All amounts discussed are in U.S. dollars, unless otherwise indicated.
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