Alvotech Ordinary Shares 2026 Q2 Earnings Call

Please go ahead. Thank you, and welcome to our listeners.

Yesterday evening, the company issued a press release announcing our financial results for the first half of 2026. Material accompanying today's earnings call, including a supplemental earnings report, providing additional operational details and a business update, and the presentation we will be referring to on today's call were also published on our website, alvotech.com, under Financials in the Q2 section. Our press release, earnings report, presentation, and statements that we make on the call today may include forward-looking statements. These statements do not ensure future performance and are subject to risks and uncertainties that are outlined in company filings with the Securities and Exchange Commission. Any risks and uncertainties could cause actual results to differ materially from forward-looking statements that are made.

Presenting on today's call are Róbert Wessman, Founder and Executive Chairman, Lisa Graver, Chief Executive Officer, Joseph McClellan, Chief Operating Officer, and Linda Jónsdóttir, Chief Financial Officer. Róbert will begin today's presentation with a summary of our regulatory, funding, and commercial highlights. Lisa will then present a commercial and operations update. Joseph will provide a pipeline of regulatory updates. Linda will conclude with a discussion of the financial results. Following the presentation, our team will be happy to take your questions. With that, I would like to turn the call over to Róbert Wessman.

Hello, everyone, and thank you for joining us here today. The first half has been an important period for Alvotech as we made significant investments in our manufacturing facility and quality systems. These investments allowed us to resubmit our U.S. BLAs in June, and in July, the FDA formally closed the May surveillance inspection of our Reykjavik facility with a VAI classification. Our second quarter performance reflects the associated production slowdown and the preparation for our BLA resubmissions. Manufacturing returned to planned operating levels at the end of the second quarter. Our order book is strong, which will support a strong fourth quarter as we seek to gradually rebuild sufficient safety stock for our customers. During the period, we also continued to expand our commercial portfolio, make significant progress in our R&D programs, and strengthen our financial position to support the next phase of growth.

We are optimistic about our first-mover position with our Entyvio biosimilar program. We were the first to submit a BLA in the U.S., and we have also submitted a marketing application in Europe addressing a global market of $7 billion. We believe these moves position us to be among the first wave of biosimilars to this important product. Alvotech now has five biosimilars contributing to product revenue with our biosimilars to Simponi, EYLEA, and Prolia/Xgeva beginning to add to our Humira and Stelara biosimilar sales. We have built one of the largest biosimilar pipeline in the industry, and we are now entering an important execution phase. Our focus is on preparing for multiple anticipated launches, advancing the next wave of biosimilar candidates, and continuing to build the capabilities we need to develop, manufacture, and supply those products globally. Building a company of this scale requires long-term thinking and sustained investment.

Capital is the fuel that enable us to execute. The equity financing completed in June generated approximately $165 million in gross proceeds. We were very pleased with the strong demand for the offering and, more importantly, with the composition of the demand. Alongside continued support from our existing shareholders, we welcomed 20 new specialists in healthcare from across the U.S., Europe, and the Nordics. The diversification of the shareholder base is important because it brings investors with a deep understanding of the sector and our opportunity. Linda Jónsdóttir will take you through the financing in a little bit more details. We continued also to evolve our commercial model.

Our primary route to enter global market is through our network of commercial partners in a business-to-business model. At the same time, as we look ahead, we see opportunities for Alvotech to participate more directly in the U.S. markets, including by commercializing selected pipeline products ourselves. I have always believed that strategy itself is only part of building a successful company. Ultimately, it comes down to execution. You need the right people, the right capabilities, the right partners, and the financial resources to deliver. I believe we have continued to strengthen each of those elements during the first half. With that, I will hand it over to Lisa.

Thank you, Róbert. I want to start by putting our first half performance in context. As we have previously discussed, during the first half, we made significant improvements to our manufacturing facility and quality systems in Reykjavik. These activities form the foundation of our response to FDA's inspectional observations following the July 2025 pre-license inspection and enabled us to resubmit our applications for AVT05 and AVT06. The resubmissions are a clear inflection point for the company as they pave the way for FDA approvals in the fourth quarter of 2026. In particular, it positions us to be the first, or amongst the first, biosimilars to be approved for Simponi and Simponi Aria in the U.S. Joe McClellan will provide further updates on the improvement program at our Reykjavik site and the favorable outcome of the recent GMP surveillance inspection by FDA.

While the improvement program was critical to ensuring a robust response to FDA, those activities affected manufacturing output and therefore product availability during the period. Manufacturing returned to planned operating levels at the end of the second quarter, and our focus is now on building supply in accordance with commercial requirements as we move through the second half. At the same time, the underlying commercial demand for our portfolio has remained strong. That distinction between market demand and our reported product revenue is particularly important this quarter. As a B2B company, we manufacture and supply product to our commercial partners. Our reported product revenue therefore reflects not only underlying demand, but the timing of partner orders, inventory movements, and our own product availability.

As we've explained previously, that can create variability between reporting periods, and it was particularly evident during the first half of 2026 and the second half of last year due to the slowdown in manufacturing necessitated by the facility improvement activities. Turning to our financial highlights, total revenue for the first half was $212 million, compared with $306 million in the first half of 2025. Adjusted EBITDA was $46 million, compared with $54 million last year, and gross margin was 54%, broadly consistent with 55% in the prior year period. Both revenues and EBITDA are in line with our expectations. We ended June with $143 million of cash following the successful equity financing completed during the quarter.

Based on our current expectations for product supply as well as anticipated contributions from milestone revenue in the second quarter, we are reaffirming our 2026 guidance of $650 million-$700 million in total revenue and $180 million-$220 million in adjusted EBITDA. Linda Jónsdóttir will take you through the financial performance and the key drivers in more detail later in the presentation. As Róbert Wessman outlined, the first half saw significant operational progress across the business. Rather than repeat those milestones, I want to focus on what they mean for the next phase of execution, particularly the performance of our commercial portfolio and our preparations for the next wave of launches. Let me start with the commercial portfolio and AVT02. The U.S. adalimumab market continues to demonstrate strong biosimilar conversion. Biosimilars now account for more than 60% of the market, compared with approximately 55% when we last reported.

SIMLANDI continues to hold the number 2 biosimilar position in the U.S. That is important because while our first half supply constraints affected the volume we could deliver to our partner, the underlying demand picture remained strong. Europe also provides an interesting indication of the longevity of these franchises. Hukyndra was first launched four years ago, yet we continue to see sustained demand across key European markets. Recent partner performance reinforces our view that successful biosimilars for chronic conditions do not necessarily reach a short-term peak and then decline. They can remain valuable commercial assets for many years. That is one of the reasons we think it is important to look beyond individual quarterly supply and focus on the development of these franchises over time. We are seeing a similar market transition with AVT04.

Biosimilar penetration of the U.S. ustekinumab market has developed considerably faster than we saw with adalimumab and is now around 60%. SELARSDI continues to participate in an expanding market. Our strategy here remains disciplined. We are focused on building sustainable business and attractive economics rather than merely pursuing volume. In Europe, biosimilars have also taken share rapidly from the originator, and Uzpruvo remains well-positioned in an increasingly established biosimilar market. Again, the important point is that the underlying market is developing as we anticipated. The next part of the commercial story is the expansion beyond AVT02 and AVT04. AVT05 and AVT06 are now launched across more than 10 European markets, including the major markets of Germany, France, the U.K., Spain, and Italy. For AVT05, we have seen encouraging early momentum, particularly in Germany and Spain.