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spk07: Welcome to the first quarter 2023 earnings call for Alvatec. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 and 1 again. please be advised that today's conference is being recorded. I would now like to introduce and hand over the call to Benedikt Steffensen, Director of Investor Relations and Global Communications at Alvatech.
spk09: Please proceed.
spk20: Thank you and good morning or afternoon to everyone joining us on this call today. The company has issued a press release that can be found on our website, www.avotech.com. The release reports financial results for the first quarter of 2023 and provides a business update. Additionally, presentation slides that cover our call today have been posted on our investor websites. You'll find all materials posted for the Q1 2023 earnings call under news and events in the events and presentation section on investors.albotech.com. Our presentation materials and some of our statements that we make 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. These risks and uncertainties could cause actual results that differ materially from forward-looking statements that are made. And with me on today's call are Robert Westman, Chairman and Chief Executive Officer of Alvotek, Anil Oke, Chief Commercial Officer, Joel Morales, Chief Financial Officer, and Ming Li, Chief Strategy Officer. And with that, I would like to turn the call over to Robert Westman.
spk18: Thank you, Benedikt, and greetings to everyone joining us on the call today. 2023 marks an important year for our tech as we celebrate the company's 10-year anniversary. A significant amount of investment over the last decade has allowed us to build a company that includes a vertically integrated by a similar platform, a vast commercial network, and a portfolio of attractive biosimilars and biosimilar candidates that is targeted for global markets. The company is committed to the promise of biosimilars, which we believe will provide a long-term benefit to healthcare systems and patients globally by providing low-cost access to important biologic medicines. In addition to celebrating our 10 years as a company, we are also approaching our first year anniversary as a publicly listed entity. We are listed on NASDAQ in both the U.S. and in our domestic market of Iceland. And since that time, and as laid out on page four of our presentation, we have continued to drive towards our goal to advance the cause of global biosimilars by progressing a global portfolio of biosimilar candidates through the development process, expanding our commercial footprint and partnerships, and by driving a number of corporate initiatives that have allowed us to continue to invest in the platform and the pipeline. Algotech stands as one of the few large pure-play biosimilar companies. Before we discuss the status of AVTO2, our proposed high concentration and interchangeable biosimilar to QMira sold in the US market, I'd like to briefly touch upon sustainability of AlvoTech. Our ESG program, which is led by our board, is a crucial component of our company. We firmly believe that biosimilars are an essential element of global healthcare sustainability. Biosimilars not only widen access to biologic medicines, but also stimulate innovation in the life science sector by introducing more cost-effective competition to medicines that account now over 40% of pharmaceutical spending in the US and Europe. Further, in any market, the introduction of biosimilars can expand access to many patients that would otherwise not receive biologic treatment, which have become the standard of care across numerous therapies. In alignment with our commitment to sustainability, we have recently disclosed a number of ESG indicators for 2022 that align with well-recognized frameworks such as NASDAQ and GRI. The updated disclosures are made available on our website through our sustainability portal. And now I would like to spend some time providing the status of our ongoing efforts to gain approval for AV202 in the U.S. market. AV202 is seeking to be the first interchangeable on high concentration by similar to Humira. The high concentration form of Atalimumab currently constitute over 85% of the U.S. market today. As many of you know, we have two separate applications for the same biosimilar candidate. The first BLA has data supporting biosimilarity of AVTO2 to Humira, and the second BLA has the data supporting biosimilarity as well as additional data seeking interchangeability. Both BLA have been reviewed and are deemed approvable, with the only outstanding requirement being a satisfactory site inspection. AlgoTech hosted an inspection that concluded on March 17 of this year, and the company provided substantive response to the 483s on April 3rd. The biosimilar BLA received a complete response letter from FDA on April 13 of this year, noting only the deficiency from the recent inspection needed to be resolved. The interchangeable BLA has a goal date of June 28 of this year. Meanwhile, as we continue to pursue further clarity on potential approval of ABT02 in the U.S., we continue to supply other markets. We have launched ABT02 into 70 markets, including Canada and across Europe, without any negative safety signal to date. However, before we can provide specific guidance around our potential U.S. launch timing, we need additional clarity around our application. The first is to understand the status of deficiencies noted in the recently issued STA-483s and whether our responses satisfactorily addresses the observations. The second point of clarification needed, and it is related to the first, is whether a re-inspection would be required to gain approval of ABT02, and if such inspection would be virtual or onsite. Looking forward, in addition to continuing to implement a culture of continuous improvement at our manufacturing sites, we have some tangible next steps that we would be undertaking that we believe will allow us to gain further clarity and move forward our goal of bringing abto2 to the u.s market the first is a request to fda office of pharmaceutical manufacturing assessment to seek further clarity regarding the status of our deficiencies and clarity regarding our responses, which are intended to address the deficiencies. Further, our responses to the 483 included certain commitments, and we agreed to provide FDA with monthly updates on the progress of these commitments. This was done May 1st of this year, and we intend to provide another one on June 1st, which in our view will complete outstanding corrective and preventive actions that we were committed to. Subsequent to that, the company intends, as a matter of procedure, to resubmit the biosimilar BLA, which would trigger a six-month review career that would be needed in case approval is not granted on June 28, which again is the goal date for the interchangeable BLA. The company remains committed to bringing AVTO2 to patients in the U.S. as soon as possible, and we believe that our product profile matches the current needs of the market. We believe that high concentration combined with interchangeability for a Humira biosimilar is necessary to convert the market effectively, especially during a time where the originator remains on formulary. And with that, I would like to pass the presentation over to Anni Lokai, our chief commercial officer, to cover our pipeline and provide commercial updates. Over to you, Anni.
spk02: Thank you, Robert. I will start by providing a broader update on our disclosed pipeline. Of course, as a company that develops products from scratch, we do maintain an active list of early development targets within R&D. And we do expect to add more products over time as our disclosed pipeline continues to progress. Firstly, we are pleased to announce that we have initiated patient studies for ABT05. a biosimilar candidate to Sympony and Sympony Aria. AVT05 was developed using a marine cell line and utilizes a perfusion production process. This is similar to AVT04, our proposed biosimilar to Stellar. For AVT05, we are currently aware of only one other company that has a clinical stage asset for a biosimilar to Sympony. And we are the only company with a clinical stage asset for Goluma that has launched biosimilars in multiple global markets. Worldwide revenues of Symfony and Symfony Aria exceeded $2 billion in 2022. Initiation of patient studies for EVT05 represents the fifth product to reach this stage in our portfolio, which demonstrates the development capabilities of our biosimilar platform. Included in this group of products is, of course, AVTO2, which has begun commercialization in a number of markets, including Canada and Europe, and AVTO4, a biosimilar candidate to Stellara, which is filed in major markets globally, including Japan, US, Europe, and Canada. On this call, we would also like to provide updates and unveil two previously undisclosed pipeline opportunities. The first of which is AVT16, a biosimilar candidate to Enfield, which is a leading immunology product with over $5 billion in global sales in 2022, and has shown significant growth since the product's launch. Current analyst estimates view the growth potential for the brand to exceed $8 billion, We have developed our biosimilar to the stage of at-scale manufacturing and hope to provide further updates as the development program progresses. The next previously undisclosed biosimilar candidate is ABT33, which is a proposed biosimilar to KTRULA, a leading oncology product. With worldwide sales in 2022 of over 20 billion US dollars, Keytruda is in the top five products globally in terms of revenue. ABT33 is our first disclosed product in the oncology space, which is an area we intend to expand further into as we continue to build our pipeline. The program has completed our clone selection phase, and again, we look forward to providing updates on this exciting opportunity going forward. As mentioned in our press release yesterday evening, and in accordance with our contractual rights, we have provided BioSana Pharma a notice of termination for the global licensing agreement between the two companies, covering ABT23, our proposed biosimilar to Zolaire. We are currently evaluating alternative options for the program and intend to provide further updates as we finalize the strategy. AVT23 was our first proposed biosimilar that was not developed in-house, and it is also important to note that, based on the timing of the licensing agreement, potential revenues from AVT23 were not included in the long-term forecasts provided during Allotech's first analyst day as part of the company's SPAC process. On the commercial front, Allotech continues to make strides in our partnership network and our launches. As a reminder, AlvoTech is a B2B model that generates revenues through substantial milestone payments from our commercial partners, as well as revenue sharing after launch that provides us with approximately 40% of net sales in any particular region. Since the start of the year, we have expanded or added partnerships in various markets around the world, including Japan and Turkey. And we continue to maintain a robust pipeline of business development opportunities similar to our existing arrangements for unlicensed pipeline candidates that are both disclosed and undisclosed. We truly believe in this model for the long term as the best way to leverage our platform and to create value and growth going forward. As of today, we have 18 distinct partners covering over 90 markets for our portfolio and pipeline. We continue to work with our partners to progress launches for ABT02, our biosimilar to Himira, in Canada and in Europe, where we have launched in 17 markets to date. In 2023, we are planning for an additional seven launches in various markets for ABT02 where we are already in the pricing and reimbursement stage in various geographies. This number at the moment excludes U.S. markets until we have further clarity on regulatory timing. Additionally, we are already making commercial preparations and have received purchase orders for ABT04, our biosimilar candidate for Stellara, for various markets. We believe we were the first to submit this product in a number of key markets and anticipate being in a strong position to compete globally in Uzbekistan, which has an addressable market approaching 10 billion U.S. dollars. We are working with our partners to launch our proposed biosimilar at the earliest possible date. And with that, I would like to hand the presentation over to our CFO, Joel Morales. Thanks, Enil.
spk19: I'll now provide some brief financial highlights for the period ending March 31st, 2023. In our previous earnings call in March, we reported that during the first quarter, we had closed on a private placement with Icelandic investors of approximately 137 million in gross proceeds. In addition, during the quarter, we collected the remaining proceeds of approximately 14 million from our convertible bond issuance, which we initiated last December. With this financing activity now completed, we ended the first quarter with approximately $116 million cash on hand as of March 31st, excluding restricted cash of $25 million. In terms of our operating performance, the company recorded $16 million in total revenue for the first quarter of 2023 versus $1 million during the same period in the prior year. This sharp increase is driven by our first launch in the prior year, which meaningfully commenced in the second quarter of 2022. There were no milestone revenues recognized in the period given the timing of our performance-based licensing and R&D milestones. We expect to recognize most of our milestone and licensing revenue in the second half of 2023. A point worthwhile noting is that cost of product revenue for the quarter 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. We do expect this to normalize as we increase scale of manufacturing and expand our launches. We anticipate that this increase in volumes will have a favorable impact on cost of product revenues, particularly as we increase absorption of our fixed costs. As a reminder, at this juncture, we are planning to wait to provide our 2023 financial guidance until after we have further clarity from the FDA on the potential approval of ABT02 and the impact on the timing of commercial contracting. In terms of near-term liquidity, Given the lack of clarity regarding the exact timing of the potential approval of ABT02, we have begun to explore options to raise further capital so that we can continue advancing our pipeline over the near term with the goal of obtaining approval for and launching all of our programs in the U.S. and rest of the world over time. While we remain focused on driving towards a positive outcome with the FDA, we are preparing for potential scenarios that may impact our previously communicated timelines. We will keep you updated on any developments at the appropriate time. Until then, you can expect that we will continue to expand our launch of ABT02 into more markets and expect shipments to our commercial partners to increase in the second half of the year. As highlighted to you in the past, we are currently increasing scale for our ADT02 manufacturing process to support these launches, as well as new launches that we are anticipating later this year, including in the U.S. Our pre-launch preparations will result in a build of inventory, which we expect to continue through the first half of this year. And finally, we closed the period with 263.5 million shares outstanding, including unvested or not shares. And with that, I'd like to turn the call back over to the operator for Q&A.
spk07: Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster.
spk10: This will take a few moments. We will take our first question.
spk09: And the question comes from the line of Andrew Bourne from Citigroup.
spk07: Please go ahead. Your line is open.
spk17: Thank you. A couple of questions. First, in light of the FDA's inspection and the measures you've put in place to address their concerns, I'm assuming Stellara is manufactured at the same site. Is there any need to amend your filing or put in place additional remediation measures to ensure the U.S. approval? And then second, I'd be curious if you have any thoughts on the impact for your future developments, given the denial of Teva's addition to the Supreme Court in relation to Corrig v. Avandia. It would seem that skinny labels... are going to be somewhat more problematic in future, and I can envisage cases with your existing portfolio that may make prosecution of these in the U.S. more difficult. Thank you.
spk10: Thank you, Andrew.
spk18: Robert Tresma here. We have a besufa date in 11th of October for our AVTO4. And we have, as we said, even though it's produced at the same manufacturing facility, we still believe we have a pretty good and sufficient time to resolve that. Coming to AVTO2, there is not a clarity yet, and that has been confirmed by FDA. but they have not taken a decision whether a re-inspection is needed or not. And that's why, as I said in my intro, we are seeking a meeting with OCMA, which basically is by a recommendation from FDA to seek a clarity if they have finalized to review our responses. If they are adequate and if inspection or re-inspection is needed and in which kind of a form that would be. The second question.
spk02: Hi, Andrew. I can take the second question. We are aware of the Supreme Court decision. We do not believe that this impacts neither our portfolio or launch decisions in the U.S. market.
spk09: Thank you. We will take our next question. Your next question comes from the line of T-Bolt Potheren from Morgan Stanley.
spk07: Please go ahead. Your line is open.
spk06: Yes. Thank you for taking my questions. A couple on eumira biosimilar. First, can you give any indication on your expected timing for the meeting with the FDA? And second question, just to clarify, if you have to actually resubmit a BLA after the 28th of June, will it necessarily be a resubmission of the original BLA, or could you potentially at that time already resubmit a BLA with interchangeability?
spk10: Thank you.
spk18: Professor Ashma here. Basically, we would assume, as we have done in the past, that we will resubmit our biosimilar BLA. We will do that once we have completed the commitments towards FTA, towards the manufacturing and supply deficiencies, and we assume to close them all 1st of June. We would then resubmit, and we would then go for a six-month clock, which most likely would then give us a PESUFA date six months later. And within that timeframe, of course, FDA would then decide if a re-inspection is needed or not, if that is not already clear at that time. So that's the framework. And the second part of the question was?
spk04: Well, the first part of the question I think was, Tipo, was about the potential meeting timing. I think unlike a type 1, there's no defined process, but we are engaging and already working on the scheduling process for that. So we don't have a defined date, but we believe it'll be 30 days or less. That's our assumption. Yeah.
spk13: Thank you.
spk07: Thank you. Once again, if you wish to ask a question, please press star 1 and 1 on your telephone.
spk09: We will take our next question. And the question comes from the line of Ash Verma from UBS. Please go ahead.
spk07: Your line is open.
spk05: Hi. Good morning. Thank you for taking my questions. I have a few. First one, just on Biosimilar Humira, I wanted to understand a little bit like what is the nature of observations that you receive from the FDA this time? Are the previous observations, I think you mentioned in previous conversation that there were no repeat observations. So are the previous observations completely resolved? Second one, on Stellara, do you have freedom to operate in this market or does it still need to go through litigation with J&J? And just curious, I think from the perspective of interchangeability, do you think this matters for Stellara and your reason for not pursuing it at this stage? And then finally, the third one that I had was on Ketruda by a similar – This can be a huge market. I think what I wanted to understand was that is there anything unique or fundamentally unique to the PD-1 design of the PEMBRO molecule that may not lend itself well to a biosimilar market? We've seen competing PD-1 or PEO not able to show the same level of clinical results as Keytruda. So is there something unique about K2 that a bisimilar in studies might not be able to replicate the same level of clinical efficacy? Thanks.
spk08: Hey, Ash. This is Ming. Thank you for the question.
spk04: Maybe I'll answer in a different order, and I'll pass it over to Anil. From the previous inspection, which of course was in March of 22, there were no repeat observations. I think that's a good question and an important thing to note. So the observations that were provided in the March 23 inspection, you asked about the nature of them. I would say that most of them were around the quality system and the quality units. The nature of the observations I would describe as as more pointing to upstream, call them upstream observations rather than downstream problems. I think that 43 is public. We have, but the responses to those are not public and the way we approached them was to try to address those specifically but also do it at a macro level in changes in our overall organization and things of that nature. as well as where applicable to do retrospective analysis to ensure that these downstream problems didn't exist historically. As you know, we currently manufacture commercially, of course, not for the U.S., but for other places, so there is a history there.
spk03: On the O4 questions, let me pass that to Anil. Thanks, Ming. Hi, Ash. Good to hear from you.
spk02: When it comes to your FTE, Of course, we cannot comment on that, we cannot give guidance on that, so I will pass that question. But when it comes to interchangeability, we have not made a final decision on cursing interchangeability for ADTO4 as of yet. The reason of that is actually related with the product profile. The product does not have the same retail profile as Primera, and it is sold infrequently compared to Primera. And the level of competition in comparison is much more low. Because of those reasons, we have not initiated yet, but we also still potentially can consider if we want. On your third question regarding K-truda, let me start with the efficacy part. Of course, this is no different than rituximab or trastuzumab biosimilars, which has seen over 70% penetration across the world, so we expect the same with the K-truda biosimilars when it comes So that's point one. When it comes to study design, we are working with the authorities globally, both in the US, Europe, Japan, the global authorities. In the design phase of our studies, of course, we get their advice and consult with them and jointly design our clinical trials. Thank you.
spk09: Thank you. We will take our next question.
spk07: Your next question comes from the line of Carl Burns from Northland Capital Markets. Please go ahead. Your line is open.
spk13: Thanks for the question. Apologies if I missed this. But if the FDA does not require re-inspection of the facility, when would be the earliest that you'd be made aware of that? And conversely, if they do require re-inspection, when would be the earliest that you'd be made aware of that? Thanks so much.
spk18: Yeah, thank you for that question. Robert Vesma here. So we are working, of course, with the FDA. They have said that they are not going to take any earlier action, which means that 28 is the day which we would either understand that we got approval, potentially would be the day we understand then that the inspection is needed. We would then still want to highlight that we are still hopeful with the meeting with OCMA, which we are scheduling as Mink mentioned earlier, and we are in interaction with FDA on specific questions we have. And we hope to get the clarity out of that meeting, if you will. So I would say in the worst case, we would learn this 28. But of course, we are still hopeful that we can understand this sooner than not.
spk11: Great. Thanks so much. Yeah.
spk07: Thank you. There seems to be no further questions, so I would like to hand back to Robert Fessman for closing remarks.
spk20: Actually, Benedict Stensland here. Thank you, Heidi. On behalf of the Avotech team, I would like to thank everybody who participated today, and we wish you a good rest of the day. I look forward to speaking to you all again. Thanks.
spk07: This concludes today's conference call. Thank you for participating.
spk10: You may now disconnect. Thank you. Thank you. Thank you. Thank you. Thank you.
spk20: Thank you and good morning or afternoon to everyone joining us on this call today. The company has issued a press release that can be found on our website, www.avotech.com. The release reports financial results for the first quarter of 2023 and provides a business update. Additionally, presentation slides that cover our call today have been posted on our investor websites. You'll find all materials posted for the Q1 2023 earnings call under news and events in the events and presentation section on investors.albotech.com. Our presentation materials and some of our statements that we make 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. These risks and uncertainties could cause actual results that differ materially from forward-looking statements that are made. And with me on today's call are Robert Westman, Chairman and Chief Executive Officer of Alvotek, Anil Oke, Chief Commercial Officer, Joel Morales, Chief Financial Officer, and Ming Li, Chief Strategy Officer. And with that, I would like to turn the call over to Robert Westman.
spk18: Thank you, Benedikt, and greetings to everyone joining us on the call today. 2023 marks an important year for our tech as we celebrate the company's 10-year anniversary. A significant amount of investment over the last decade has allowed us to build a company that includes a vertically integrated by a similar platform, a vast commercial network, and a portfolio of attractive biosimilars and biosimilar candidates that is targeted for global markets. The company is committed to the promise of biosimilars, which we believe will provide a long-term benefit to healthcare systems and patients globally by providing low-cost access to important biologic medicines. In addition to celebrating our 10 years as a company, we are also approaching our first year anniversary as a publicly listed entity. We are listed on NASDAQ in both the U.S. and in our domestic market of Iceland. And since that time, and that's laid out on page four of our presentation, we have continued to drive towards our goal to advance the cause of global biosimilars by progressing a global portfolio of biosimilar candidates through the development process, expanding our commercial footprint and partnerships, and by driving a number of corporate initiatives that have allowed us to continue to invest in the platform and the pipeline. Algotech stands as one of the few large pure-play biosimilar companies. Before we discuss the status of AVTO2, our proposed high concentration and interchangeable biosimilar to QMira sold in the U.S. market, I'd like to briefly touch upon sustainability of AlvoTech. Our ESG program, which is led by our board, is a crucial component of our company. We firmly believe that biosimilars are an essential element of global healthcare sustainability. By similar, not only widen access to biologic medicines, but also stimulate innovation in the life science sector by introducing more cost effective competition to medicines that account now over 40% of pharmaceutical spending in the US and Europe. Further, in any market, the introduction of biosimilars can expand access to many patients that would otherwise not receive biologic treatment, which have become the standard of care across numerous therapies. In alignment with our commitment to sustainability, we have recently disclosed a number of ESG indicators for 2022 that align with well-recognized frameworks such as NASDAQ and GRI. The updated disclosures are made available on our website through our sustainability portal. And now I would like to spend some time providing the status of our ongoing efforts to gain approval for AV-202 in the U.S. market. AV-202 is seeking to be the first interchangeable and high concentration biosimilar to Humira. The high concentration form of Atalimumab currently constitute over 85% of the U.S. market today. As many of you know, we have two separate applications for the same biosimilar candidate. The first BLA has data supporting biosimilarity of AVTO2 to Humira, and the second BLA has the data supporting biosimilarity as well as additional data seeking interchangeability. Both BLA have been reviewed and are deemed approval, with the only outstanding requirement being a satisfactory site inspection. Alvatech hosted an inspection that concluded on March 17 of this year, and the company provided substantive response to the 483s on April 3rd. The biosimilar BLA received a complete response letter from FDA on April 13 of this year, noting only that the efficiency from the recent inspection needed to be resolved. The interchangeable BLA has a goal date of June 28 of this year. Meanwhile, as we continue to pursue further clarity on potential approval of AVT02 in the U.S., we continue to supply other markets. We have launched AVT02 into 70 markets, including Canada and across Europe, without any negative safety signal to date. However, before we can provide specific guidance around our potential US launch timing, we need additional clarity around our application. The first is to understand the status of deficiencies noted in the recently issued FDA 483s and whether our responses satisfactorily addresses the observations. The second point of clarification needed, and it is related to the first, is whether a re-inspection would be required to gain approval of ABT02, and if such inspection would be virtual or onsite. Looking forward, in addition to continuing to implement a culture of continuous improvement at our manufacturing sites, we have some tangible next steps that we would be undertaking that we believe will allow us to gain further clarity and move forward our goal of bringing abto2 to the u.s market the first is a request to fda office of pharmaceutical manufacturing assessment to seek further clarity regarding the status of our deficiencies and clarity regarding our responses, which are intended to address the deficiencies. Further, our responses to the 483 included certain commitments, and we agreed to provide FDA with monthly updates on the progress of these commitments. This was done May 1st of this year, and we intend to provide another one on June 1st, which in our view will complete outstanding corrective and preventive actions that we were committed to. Subsequent to that, the company intends, as a matter of procedure, to resubmit the biosimilar BLA, which would trigger a six-month review career that would be needed in case approval is not granted on June 28, which again is the goal date for the interchangeable BLA. The company remains committed to bringing AVTO2 to patients in the U.S. as soon as possible, and we believe that our product profile matches the current needs of the market. We believe that high concentration combined with interchangeability for a Humira biosimilar is necessary to convert the market effectively, especially during a time where the originator remains on formulary. And with that, I would like to pass the presentation over to Anil Okai, our Chief Commercial Officer, to cover our pipeline and provide commercial updates. Over to you, Anil.
spk02: Thank you, Robert. I will start by providing a broader update on our disclosed pipeline. Of course, as a company that develops products from scratch, we do maintain an active list of early development targets within R&D. And we do expect to add more products over time as our disclosed pipeline continues to progress. Firstly, we are pleased to announce that we have initiated patient studies for ABT05. a biosimilar candidate to Sympony and Sympony Aria. AVT05 was developed using a marine cell line and utilizes a perfusion production process. This is similar to AVT04, our proposed biosimilar to Stellar. For AVT05, we are currently aware of only one other company that has a clinical stage asset for a biosimilar to Sympony. And we are the only company with a clinical stage asset for Goluma that has launched biosimilars in multiple global markets. Worldwide revenues of Symfony and Symfony Aria exceeded $2 billion in 2022. Initiation of patient studies for EVT05 represents the fifth product to reach this stage in our portfolio, which demonstrates the development capabilities of our biosimilar platform. Included in this group of products is, of course, AVTO2, which has begun commercialization in a number of markets, including Canada and Europe, and AVTO4, a biosimilar candidate to Stellara, which is filed in major markets globally, including Japan, US, Europe, and Canada. On this call, we would also like to provide updates and unveil two previously undisclosed pipeline opportunities. The first of which is AVT16, a biosimilar candidate to Entheo, which is a leading immunology product with over 5 billion US dollars in global sales in 2022, and has shown significant growth since the product's launch. Current analyst estimates view the growth potential for the brand to exceed 8 billion US dollars We have developed our biosimilar to the stage of at-scale manufacturing and hope to provide further updates as the development program progresses. The next previously undisclosed biosimilar candidate is ABT33, which is a proposed biosimilar to KTRULA, a leading oncology product. With worldwide sales in 2022 of over 20 billion U.S. dollars, Keytruda is in the top five products globally in terms of revenue. ABT33 is our first disclosed product in the oncology space, which is an area we intend to expand further into as we continue to build our pipeline. The program has completed our clone selection phase, and again, we look forward to providing updates on this exciting opportunity going forward. As mentioned in our press release yesterday evening, and in accordance with our contractual rights, we have provided BioSana Pharma a notice of termination for the global licensing agreement between the two companies, covering ABT23, our proposed biosimilar to Zolaire. We are currently evaluating alternative options for the program and intend to provide further updates as we finalize the strategy. AVT23 was our first proposed biosimilar that was not developed in-house, and it is also important to note that, based on the timing of the licensing agreement, potential revenues from AVT23 were not included in the long-term forecasts provided during AvloTech's first analyst day as part of the company's SPAC process. On the commercial front, AvloTech continues to make strides in our partnership network and our launches. As a reminder, AlvoTech is a B2B model that generates revenues through substantial milestone payments from our commercial partners, as well as revenue sharing after launch that provides us with approximately 40% of net sales in any particular region. Since the start of the year, we have expanded or added partnerships in various markets around the world, including Japan and Turkey. And we continue to maintain a robust pipeline of business development opportunities similar to our existing arrangements for unlicensed pipeline candidates that are both disclosed and undisclosed. We truly believe in this model for the long term as the best way to leverage our platform and to create value and growth going forward. As of today, we have 18 distinct partners covering over 90 markets for our portfolio and pipeline. We continue to work with our partners to progress launches for ADT02, our biosimilar to Humira, in Canada and in Europe, where we have launched in 17 markets to date. In 2023, we are planning for an additional seven launches in various markets for ADT02 where we are already in the pricing and reimbursement stage in various geographies. This number at the moment excludes U.S. markets until we have further clarity on regulatory timing. Additionally, we are already making commercial preparations and have received purchase orders for ABT04, our biosimilar candidate for Stellara, for various markets. We believe we were the first to submit this product in a number of key markets and anticipate being in a strong position to compete globally in Ustekinimog, which has an addressable market approaching 10 billion U.S. dollars. We are working with our partners to launch our proposed biosimilar at the earliest possible date. And with that, I would like to hand the presentation over to our CFO, Joel Morales.
spk19: Thanks, Enil. I'll now provide some brief financial highlights for the period ending March 31st, 2023. In our previous earnings call in March, we reported that during the first quarter, we had closed on a private placement with Icelandic investors of approximately 137 million in gross proceeds. In addition, during the quarter, we collected the remaining proceeds of approximately 14 million from our convertible bond issuance, which we initiated last December. With this financing activity now completed, we ended the first quarter with approximately $116 million cash on hand as of March 31st, excluding restricted cash of $25 million. In terms of our operating performance, the company recorded $16 million in total revenue for the first quarter of 2023 versus $1 million during the same period in the prior year. This sharp increase is driven by our first launch in the prior year, which meaningfully commenced in the second quarter of 2022. There were no milestone revenues recognized in the period given the timing of our performance-based licensing and R&D milestones. We expect to recognize most of our milestone and licensing revenue in the second half of 2023. A point worthwhile noting is that cost of product revenue for the quarter 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. We do expect this to normalize as we increase scale of manufacturing and expand our launches. We anticipate that this increase in volumes will have a favorable impact on cost of product revenues, particularly as we increase absorption of our fixed costs. As a reminder, at this juncture, we are planning to wait to provide our 2023 financial guidance until after we have further clarity from the FDA on the potential approval of ABT02 and the impact on the timing of commercial contracting. In terms of near-term liquidity, Given the lack of clarity regarding the exact timing of the potential approval of ABT02, we have begun to explore options to raise further capital so that we can continue advancing our pipeline over the near term with the goal of obtaining approval for and launching all of our programs in the U.S. and rest of the world over time. While we remain focused on driving towards a positive outcome with the FDA, we are preparing for potential scenarios that may impact our previously communicated timelines. We will keep you updated on any developments at the appropriate time. Until then, you can expect that we will continue to expand our launch of ABT02 into more markets and expect shipments to our commercial partners to increase in the second half of the year. As highlighted to you in the past, we are currently increasing scale for our ABT02 manufacturing process to support these launches, as well as new launches that we are anticipating later this year, including in the U.S. Our pre-launch preparations will result in a build of inventory, which we expect to continue through the first half of this year. And finally, we closed the period with 263.5 million shares outstanding, including unvested or non-shares. And with that, I'd like to turn the call back over to the operator for Q&A.
spk07: Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster.
spk10: This will take a few moments. We will take our first question.
spk09: And the question comes from the line of Andrew Bourne from Citigroup.
spk07: Please go ahead. Your line is open.
spk17: Thank you. A couple of questions. First, in light of the FDA's inspection and the measures you've put in place to address their concerns, I'm assuming Stellara is manufactured at the same site. Is there any need to amend your filing or put in place additional remediation measures to ensure the U.S. approval? And then second, I'd be curious if you have any thoughts on the impact for your future developments, given the denial of Teva's addition to the Supreme Court in relation to Corrig v. Avandia. It would seem that skinny labels... are going to be somewhat more problematic in future, and I can envisage cases with your existing portfolio that may make prosecution of these in the US more difficult. Thank you.
spk10: Thank you, Andrew. Robert Tresma here.
spk18: We have a BESUFA date in 11th of October for our ABT04. And we have, as we said, even though it's produced at the same manufacturing facility, we still believe we have a pretty good and sufficient time to resolve that. Coming to every CO2, there is not a clarity yet and that has been confirmed by FDA, but they have not taken a decision whether a re-inspection is needed or not. And that's why, as I said in my intro, we are seeking a meeting with OBMA, which basically is by a recommendation from FDA to seek a clarity if they have finalized the review, our responses, if they are adequate and if inspection or re-inspection is needed and in which kind of a form that would be. The second question.
spk02: Hi, Andrew. I can take the second question. We are aware of the Supreme Court decision. We do not believe that this impacts neither our portfolio or launch decisions in the US market.
spk09: Thank you. We will take our next question. Your next question comes from the line of Thibault Potheren from Morgan Stanley.
spk07: Please go ahead. Your line is open.
spk06: Yes. Thank you for taking my questions. A couple on eumira biosimilar. First, can you give any indication on your expected timing for the meeting with the FDA? And second question, just to clarify, if you have to actually resubmit a BLA after the 28th of June, will it necessarily be a resubmission of the original BLA, or could you potentially at that time already resubmit a BLA with interchangeability?
spk10: Thank you.
spk18: Professor Ashma here. Basically, we would assume, as we have done in the past, that we will resubmit out by a similar PLA. We will do that once we have completed the commitments towards FTA, towards the manufacturing and supply deficiencies, and we assume to close them all 1st of June. We would then resubmit, and we would then go for a six-month clock, which most likely would then give us a PSUFA date six months later. And within that timeframe, of course, FDA would then decide if a re-inspection is needed or not, if that is not already clear at that time. So that's the framework. And the second part of the question was?
spk04: Well, the first part of the question I think was, Tipo, was about the potential meeting timing. I think unlike a type 1, there's no defined process, but we are engaging and already working on the scheduling process for that. So we don't have a defined date, but we believe it'll be 30 days or less. That's our assumption. Yeah.
spk13: Thank you.
spk07: Thank you.
spk09: Once again, if you wish to ask a question, please press star 1 and 1 on your telephone. We will take our next question. And the question comes from the line of Ash Verma from UBS. Please go ahead.
spk07: Your line is open.
spk05: Hi. Good morning. Thank you for taking my questions. I have a few. First one, just on Biosimilar Humira, I wanted to understand a little bit, like, what is the nature of observations that you receive from the FDA this time? Are the previous observations, I think you mentioned in a previous conversation that there were no repeat observations. So are the previous observations completely resolved? Second one, on Stellara, do you have freedom to operate in this market or does it still need to go through litigation with J&J? And just curious, I think from the perspective of interchangeability, do you think this matters for Stellara and your reason for not pursuing it at this stage? And then finally, the third one that I had was on Ketruda by a similar – So this can be a huge market. I think what I wanted to understand was that is there anything unique or fundamentally unique to the PD-1 design of the PEMBRO molecule that may not lend itself well to a biosimilar market? Like we've seen competing PD-1 or Bivo not able to show the same level of clinical results as Keytruda. So, is there something unique about K2 that a bisimilar in studies might not be able to replicate the same level of clinical efficacy? Thanks.
spk08: Hey, Ash. This is Ming. Thank you for the question.
spk04: Maybe I'll answer in a different order, and I'll pass it over to Anil. From the previous inspection, which of course was in March of 22, there were no repeat observations. I think that's a good question and an important thing to note. So the observations that were provided in the March 23 inspection, you asked about the nature of them. I would say that most of them were around the quality system and the quality units. The nature of the observations I would describe as as more pointing to upstream, call them upstream observations rather than downstream problems. I think that 43 is public. We have, but the responses to those are not public and the way we approached them was to try to address those specifically but also do it at a macro level in changes in our overall organization and things of that nature. as well as where applicable to do retrospective analysis to ensure that these downstream problems didn't exist historically. As you know, we currently manufacture commercially, of course, not for the U.S., but for other places, so there is a history there.
spk03: On the 04 questions, let me pass that to Emile. Thanks, Ming. Hi, Ash. Good to hear from you.
spk02: When it comes to your FTE, of course we cannot comment on that, we cannot give guidance on that, so I will pass that question. But when it comes to interchangeability, we have not made a final decision on cursing interchangeability for ETO4 as of yet. The reason of that is actually related with the product profile. The product does not have the same retail profile as Primera, and it is sold infrequently compared to Primera. And the level of competition in comparison is much more low. Because of those reasons, we have not initiated yet, but we also still potentially can consider if we want. On your third question regarding K-TRUDA, let me start with the efficacy part. Of course, this is no different than the Rituximab or Trastuzumab biosimilars, which has seen over 70% penetration across the world. So we expect the same with the K-TRUDA biosimilars when it comes to So that's point one. When it comes to study design, we are working with the authorities globally, both in the US, Europe, Japan, with the global authorities. In the design phase of our studies, of course, we get their advice and consult with them and jointly design our clinical trials. Thank you.
spk09: Thank you. We will take our next question.
spk07: Your next question comes from the line of Carl Burns from Northland Capital Markets. Please go ahead. Your line is open.
spk13: Thanks for the question. Apologies if I missed this. But if the FDA does not require re-inspection of the facility, when would be the earliest that you'd be made aware of that? And conversely, if they do require re-inspection, when would be the earliest that you'd be made aware of that? Thanks so much.
spk18: Yeah, thank you for that question, Robert Vesma here. So we are working, of course, with the FDA. They have said that they are not going to take any earlier action, which means that the 28th is the day which we would either understand that we got approval, potentially would be the day we understand then that the inspection is needed. We would then still want to highlight that we are still hopeful with the meeting with OCMA, which we are scheduling as Mink mentioned earlier, and we are in interaction with FDA on specific questions we have. And we hope to get the clarity out of that meeting, if you will. So I would say in the worst case, we would learn this 28. But of course, we are still hopeful that we can understand this sooner than not.
spk11: Great. Thanks so much. Yeah.
spk07: Thank you. There seems to be no further questions, so I would like to hand back to Robert Fessman for closing remarks.
spk20: Actually, Benedict Felsen here. Thank you, Heidi. On behalf of the Alvotek team, I would like to thank everybody who participated today, and we wish you a good rest of the day. I look forward to speaking to you all again. Thanks.
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