Alvotech

Good day and thank you for standing by. Welcome to the AlvoTech Q4 and full year 2023 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star 11 on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question, please press star 11 again. Please be advised that today's conference has been recorded. I would now like to hand the conference over to a speaker today, Benedikt Stefansson. Please go ahead.

Thank you, and good morning or afternoon to everyone joining this call today. Yesterday evening, the company issued a press release that can be found in the news section of our investor portal, investors.avotech.com. The release outlines key highlights related to our full year 2023 results. Additionally, we will, throughout today's call, refer to a slide presentation, which is available on our investor website in the events section. If you have not already accessed the slides, please go to investors.avotec.com and select events. 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 and the Nasdaq Iceland Stock Exchange. These risks and uncertainties could cause actual results to differ materially from forward-looking statements that we make. With me on today's call are Robert Westman, Chairman and CEO of Alvotek, Anil Oke, Chief Commercial Officer, Joel Morales, Chief Financial Officer, and Ming Li, Chief Strategy Officer. With that, I would like to turn the call over to Robert Westman, Founder, Chairman and CEO of Alvotek.

Thank you, Benedikt, and thank you all for joining us on today's earnings call and business update for the full year 2023. We are very excited about the position that we find ourselves in today. Alvotek has successfully cleared our inspection status with the US FDA. This puts Alva Tech in a position to access the largest pharma market in the world. This result has led to approval of Simlandi in the U.S. and also clears the way for our biosimilar to Stellara, which we expect will be approved by FDA next month. Additionally, our pipeline has been steadily progressing and we are in a position to file at least three applications for new biosimilar candidates this year. And those are just a few of the events that are driving excitement and anticipation here at DalvoTech. But before we discuss in more details regarding 2023 and take a look into 2024, I would like to take a step back for a moment to recap our strategy and positioning. Alvatech is proud to be focused entirely on biosimilars, which position us amongst a small group of companies dedicated to meet the global need driven by the high-cost biologic medicines. Further, we are vertically integrated with end-to-end capabilities and have established a comprehensive infrastructure platform from where we can develop our manufactured biosimilars. Having this dedicated infrastructure will further differentiate us from other biosimilar developers. We also have a multi-product portfolio-based strategy. With our recent launch of Gemtechie, our biosimilar to Stellara in Canada, we have two different molecules now on the market. We continue to grow and advance our overall pipeline and portfolio, which has 11 disclosed assets today. And finally, we have a global regulatory and commercial strategy, as we see biosimilars as both a global opportunity and necessity. A global strategy allows us to maximize the return of our development investment and provides diversification and longer-term durability to our portfolio assets. The hard work and investment that has been put into Alvatech over the past decade has now positioned us at an inflection point where we expect growth in revenues based on multiple launches in major markets, while concurrently advancing a pipeline of attractive biosimilar candidates. 2023 was a year that can be defined as laying the foundation for the future growth. The first element of that foundation is reflected in our global regulatory approvals, which enables a steady schedule of commercial launches for 2024, 2025 and beyond. SymLanti was approved as the first interchangeable high concentration biosimilar to Humira in the US market. And while the approval occurred in 2024, The hard work and dedication from the team to secure inspection readiness in 2023 have to pave the way for this approval. Approval of our Stellera via similar in Canada, Japan and Europe further demonstrates and validates the platform's ability to gain global regulatory approvals on multiple products in major markets. And thus, importantly, these approvals will enable near-term diversification of revenue. For the US, our ABT04 application was reviewed and deemed approvable by FTA. The outstanding issue for approval was a successful site inspection, which was the same as with Zimlandi. The recent approval of Simlan-D provides us significant confidence that AVT-04 will gain final approval in the US in April of this year. Of course, what has enabled these approvals is the dedication of Alvetech team to compliance and inspection readiness. And that is not only for the USFTA, but for all regulatory bodies around the world where we have or intend to launch our products. I would like to thank our entire team at AlvoTech for the efforts made to ensure our positive inspection outcome. In 2023, we also continue to expand and enhance our commercial network through existing and new strategic partnerships. This included an expanded partnership with EVA in the US, as well as with Fuji Pharma in Japan. We also added to our network Advanced Pharma with a strategic partnership covering five proposed biosimilars in Europe. Our strategic partnership with well-established and well-recognized companies are fundamental to our ability to ensure that our products find the right home all over the world. Finally, 2023 was another year of significant advancement for our pipeline. Alvotek started as a development company, and we aim to maintain that scientific resolve as we mature into global commercial phase as an organization. We have received positive clinical results for AVTO6, our proposed biosimilar to ILEA, thus paving the way to a submission later this year. Additionally, we have three other programs in addition to AVTO6 that have demonstrated positive PK results and are currently in ongoing patient trials. Please note that, as a general rule, passing PK results are more informative to potential approval than results from patient trials, and we are highly confident in our ability to bring these products to the submission phase. The proposed biosimilar currently in ongoing patient studies are AVT05, a proposed biosimilar to Symfony and Symfony Haria, AVT03, a biosimilar candidate to Prolia and DexGiva, and also AVT23, a biosimilar candidate to Solar, a product advancing in partnership with CASEID. And finally, we advanced our AVT16 program into one of the leading positions in the fast-growing NTVO market. Looking back at 2023, I can say with great confidence that it has positioned us well to drive growth on both the top line and bottom line in 2024 and beyond. And we are very proud of our achievements in AlgoTech. Now looking ahead, we see 2024 as a transformational year for the company. It starts with launches of major products into large markets. Our launch of Simulanti in the US will occur in early second quarter. And as the only high concentration interchangeable product on the market, we have high competence in this launch. Earlier this year, together with our partner Jump Pharma, we launched our biosimilar to Stellara in Canada with the brand name of Jump Techie. This represents the first launch of Stellara biosimilar in the Canadian market. We aim to launch our Stellara biosimilar in Japan in second quarter of this year and then in Europe beginning of third quarter this year. These multiple launches will bring material revenues into AlvoTech and create diversification of the top line from both markets and products. In addition to the commercial launches just mentioned, we will also be preparing for our launch of AVT04, our Stellara by a similar candidate in the US. While the commercial launch is in early 2025, We will be supplying later in 2024 launch quantities, and we may generate additional revenues depending on supply timing in 2024. But as important as commercial launches are, it is equally important that we continue to drive advancement in our pipelines. 2024 is set to be a busy year in our portfolio as we expect at least three additional submissions in major markets this year. Additionally, in our pipeline, we intend to advance our AVT16 program to the clinical trial phase. Finally, we continue pursuing more business development transactions and remain in active negotiation for available assets in our portfolio. In 2024, we expect to see multiple launches and significant growth in milestone revenues coming from highly visible and de-risked programs. We are now in a position to guide the market for 2024 and 2025 on top line and where we expect to land on EBITDA in 2024. Later in this presentation, our CFO, Joel Morales, will cover guidance in greater detail. I would, with those words, like to turn now the call over to Anil Oke, our Chief Commercial Officer, to dive deeper into our upcoming launches and portfolio updates. Anil, over to you.

Thank you, Robert, and thank you to everyone on the call today. I would like to start with our recent approval of Simnandi. Simlandi is the first interchangeable high concentration biosimilar to Humira in the U.S. market. We view this approval as a victory for patients in the U.S. as we believe the product profile that combines interchangeability with the high concentration strengths will help expand conversion in the U.S. market where we have seen minimal usage of biosimilar Humira to date. Moreover, we know that we have exclusivity for our interchangeable designation in our approved presentations. While we always expected exclusivity, the confirmed nature of that exclusivity is a very helpful point in the outreach to the market, where we have coordinated closely with our partners. And as a reminder, the high concentration form of Femira is the dominant form used by patients today. Moving to slide 10 in today's presentation, I would like to dive a bit deeper in the commercial approach for Simlanli in the US, which we divide into four pillars. The first was just discussed regarding our unique product profile and the exclusivity that helps protect against others seeking interchangeable designation. On the pricing front, Teva's plan will be a two-tier pricing strategy that will enable us to serve patients more broadly across both commercial and government-insured patients. Currently, our partners supported by us are in active discussions with the PBMs to secure formulary placements. As part of that, the finalization of these negotiations will provide us better clarity on final net pricing. The next key part of our commercial strategy is to ensure consistent and uninterrupted supply. AlvoTech has a manufacturing site that's 100% dedicated to our products. We have in the past hosted our major potential customers at our site so they could get a firsthand look at our production capabilities. Our supply plan remains on track, and the launch is expected imminently after first ship. Finally, I would like to comment on our autoinjector platform. Some of our products in the pipeline require an autoinjector. Humira, as an example, is a treatment for many chronic indications. It is also taken often 26 times per year. Patients and physicians develop a relationship with their commonly used device. And as a developer, we wanted to ensure that we brought to market a device that bears the patient's experience in mind. As a result, we formed collaboration with Ypsilat, a leading company in the device sector, to create a proprietary autoinjector platform. That device was supported by two separate design-focused clinical trials, including a trial conducted in adult patients with moderate to severe active rheumatoid arthritis, which assessed real-life patient handling experience of the autoinjector. In closing, we are in active discussions with the market in the U.S., and we believe that our overall strategy for Simlandi has put us in a good position to gain broad coverage in the U.S. and help drive expanded use of biosimilars in the mirror market. Moving to our second product in our portfolio, our biosimilar to Stellar. We are elated at the regulatory progress to date and are set up to have multiple launches across major geographies in 2024 and 2025. And unlike our ex-US launches of ADT02, we aim to be first to launch in many of these markets for Stellara biosimilar. Let me start in Canada, where our partner, Jump Pharma, has recently launched Jump Techie. We were the first to launch in Canada And as of today, there is only one other approval, and that's helped by Enjin. Next quarter, we expect to launch in Japan through our partner, Fuji Pharma. In Japan, we are currently the only company approved with a Stellara biosimilar. In Europe, we are expecting launches beginning in Q3 of this year. And in that market, we see only Samsung with a current approval for a Stellara biosimilar. These markets are both substantial in value and growing in volume. Stellara is a higher-priced product, and our view is that the availability of biosimilar Stellara can help increase access and therefore volume in a number of markets around the world. As a precedent, when Humira biosimilars were made available in Europe in 2018, the usage of adenumab as a molecule increased by double digit percentages several years in a row. We see a similar opportunity in Stellara. In the US, we expect approval of our Stellara biosimilar candidate in April of this year, which allows for plenty of time to prepare for February 2025 launch. Shifting focus to our broader pipeline, as previously mentioned, It's essential to keep advancing and expanding our portfolio to secure long-term growth. Furthermore, our organization's ongoing success in obtaining global approvals underscores a powerful message to every market we enter or intend to enter. Algotech not only is, but also aims to be a lasting influence in the biosimilars industry. Earlier in today's presentation, we provided detailed updates on a number of our near-term pipeline assets. Looking forward, we do expect to continue to submit AVT04 in jurisdictions around the world now that we have an EU CPP and soon an approval in the US, which can be requirements in certain markets in order to file. With respect to partnership opportunities, The focus of our business development activities around partnership discussions are tied to AVT03 and AVT33, where both assets are not partnered in both the US and EU markets. Finding the right partner for these products is a key initiative for 2024. Alnotech, along with our partners around the world, are extremely excited at the opportunity to bring these products to market. And with that, I would like to turn the call over to Joel Morales, our Chief Financial Officer, to provide an update on 2023 financial performance, as well as an outlook update for the business. Joel.

Thanks, Anil. I'll now provide some brief financial highlights for the year-ended December 31, 2023. In terms of liquidity, we recently announced in February that we completed a private placement with Icelandic and other European investors worth 166 million in gross proceeds. Giving effect to this financing, our pro forma cash balance as of December 31st would have been 172 million, excluding 25.2 million of restricted cash. In terms of our operating performance, Total revenues for 2023 were 93.3 million versus 85 million in the prior year, an increase of around 10%. The company recorded 48.7 million in product revenues for 2023, almost doubling revenues from the same period in the prior year. This sharp increase is driven by the timing of launches that started in the second quarter of 2022. Since then, our partners have continued to expand on share in existing markets throughout Europe and Canada, and we have also launched into Australia in late Q4 of 2023. In particular, we recognized $18.9 million of revenue in the fourth quarter, which proved to be our strongest quarter of 2023, driving full-year revenues consistent with the expectations we communicated during our last earnings call. the company also recorded 42.7 million in milestone revenues in 2023 largely driven by the recognition of 31.6 million of milestone revenues in the fourth quarter as a result of the positive top line results we achieved on the clinical efficacy and safety study for our abt06 program a biosimilar candidate to ilea another point worthwhile noting is that the cost of product revenue for the year ended December 31, 2023 is disproportionate relative to product revenue due to timing of new launches, scale-up manufacturing activities, production-related charges, and costs associated with FDA inspection readiness. We do expect this to normalize as we've obtained FDA approval and are able to realize increased scale of manufacturing while expanding on 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. We closed the period with 266 million shares outstanding, including unvested earn out shares. Turning to the next slide, you will find our outlook for 2024 and 2025. We are forecasting revenues between 300 and 400 million in 2024. This three to four times growth year on year is driven by a combination of our newly planned product launches of ABT02 and ABT04 and significant development in performance-based milestones we expect to achieve throughout the year. With approvals now secured across multiple products and markets, we have begun to take all the necessary steps to enable our planned launches in 2024. Upon approval of Synlandi, our high concentration and interchangeable version of Humira We filed variations with the FDA that will enable us to manufacture at an optimized scale. We have, in fact, already begun to manufacture at that scale for our rest of world markets as of the end of last year and expect to be able to manufacture at the same scale for the U.S. by mid-year 2024. We expect to begin supplying the U.S. market with pre-launch inventory in the very near term. Concurrently, our commercial partnership is in advanced stages of contracting with key payers in the U.S., and based on our product profile that includes the combination of high concentration and interchangeability, we are highly optimistic that we will gain broad market coverage. This year, we also expect to launch our biosimilar to Humira into several additional global markets, including Latin America and the Middle East. With respect to AVTO4, our biosimilar to Stellara, We have already launched in Canada and expect to expand our launches into Japan and Europe in the second and third quarters of this year, respectively. All requisite approvals have been secured in these markets, and we expect to receive FDA approval in the U.S. by next month's BESUFA date. Our launch for the U.S. is planned for February of 2025. However, our forecast assumes we commence recognizing revenues late in the fourth quarter of this year as we ship initial prelaunch inventory into the U.S. Detailed planning for our U.S. launch is underway. These launches are not only driving growth in product revenues, but also providing greater diversification in terms of commercial product offering and geographic concentration. They are thus important cornerstones of our strategy to drive growth and profitability over the mid to long term. In terms of milestone revenue, as mentioned earlier, we are anticipating the submission of at least three additional filings in major markets throughout the year for our pipeline. Additionally, we plan to commence clinical trials for our proposed biosimilar to NTVO AVT16. Commencing and successfully completing clinical phases of development and regulatory submissions are key events that drive milestone revenue recognition for the company. We're also expecting to recognize milestone revenues for the achievement of certain performance-based targets, such as the first launch of our biosimilars to Humira and Stellara into new markets globally, as well as the achievement of cumulative net sales targets for these launched products. The last point I'd like to make regarding milestone revenues is with respect to licensing. As noted earlier in the presentation by Anil, we have an active BD pipeline that has more recently been focused on partnering with our oncology and oncology-related assets. Accordingly, the company is actively pursuing licensing deals for early phase programs with a strategic partner or partners, providing potential upfront cash and milestones over time. We expect milestone revenue contributions to be significant this year and could range up to 40% to 50% of total revenues in 2024. The advancement of our pipeline not only provides a basis for longer-term growth, but generates near-term milestone revenue, which is another core part of our business model. Based on the commercial assumptions I just described, adjusted EBITDA for the year is forecasted in the range of $50 to $150 million. This includes continued R&D investments behind our pipeline as we advance three of our programs through final stages of clinical and the commencement of our AVT16 program into the clinical phase. I'd like to make a few points with respect to phasing in 2024. Firstly, you can expect this year to be lumpy in terms of our operating results. We expect Q1 total revenues to be lower than Q4 2023. This is driven by a slowdown in production to prepare for the FDA inspection in Q1 and prioritization of development batches to enable our planned submissions in 2024. Also, the timing of milestone triggers have an impact. Accordingly, we expect Q1 to be the lowest quarter of the year in terms of revenue and negative adjusted EBITDA. In Q2, however, we are expecting to see some initial uptake in product revenues due to our planned launches, and we anticipate achieving a number of milestone recognition triggers in the quarter, which will drive a significant increase in total revenues, and we expect to achieve positive adjusted EBITDA. Finally, we expect product revenues to overtake milestone revenues towards the end of 2024, driving overall revenues and adjusted EBITDA. With respect to our liquidity, we are pleased with the proceeds raised during our last financing round in February. Based on our current operating plans, we believe this provides the company with sufficient cash flows to continue investing behind our planned launches and pipeline throughout the year. We will, of course, continue to monitor the dynamic timing assumptions behind our plan and ensure we are prepared to address any incremental liquidity needs should they arise. We expect our capital structure to simplify throughout 2024. Given the recent increase in our share price, the sponsor earn-out shares have vested and one-half of the predecessor earn-out shares have also vested during the first quarter of 2024. We have also seen increased exercise of public warrants, which were issued during the D-SPAC transaction that we closed back in 2022. Additionally, approximately $300 million of our outstanding borrowings are in the form of convertible instruments, which have a conversion feature that comes available in June of 2024. These activities are expected to reduce the derivative financial liabilities and outstanding borrowings on our balance sheet in the second half of the year. Ultimately, this will also reduce the large swings in finance costs that currently drive volatility in our non-operating results, as well as reducing overall interest expense on the P&L. finally as we look forward to 2025 we expect to be able to double our total revenues year over year as we intend to continue expanding upon our launches within existing and new markets with the additional launches and scaling mentioned earlier product revenue will be the primary driver of growth year on year with contributions from milestone revenues being proportionally smaller as a share of total revenue given that we have just secured approvals for our lead assets in the u.s and around the world and contracting is ongoing, we believe that this is the best direction that we can provide at the current time. We anticipate an exciting year ahead as we continue the transition into a global, full-scale commercial operation, launching multiple products into markets worldwide, while at the same time advancing our pipeline. We look forward to updating you as the year progresses as more information becomes available. And with that, I'd like to turn the call back over to the operator for Q&A.

Thank you, dear participants. As a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 11 again. Please stand by, we'll compile the Q&A roster. This will take a few moments.

And now we're going to take our first question.

Just give us a moment. And the first question comes from the line of Balaji Prasad from Barclays. Your line is open. Please ask your question.

Good morning, everyone, and good afternoon, everyone, and congratulations on the results and what seems to be a compelling outlook for 2024 and 2025. I also appreciate the color on this because I know you have multiple moving parts to the business between milestones and revenues. A couple of questions on this. Firstly, with regard to the revenue cadence that you've provided in the milestones, could you summarize the key milestone-based events that you're looking forward to during the course of the year, especially in 2Q? And second, I think where I'm struggling to model is clearly on the gross margins. Can you help us understand how should we think about gross margins and typically as as inventory builds up before the launch. It looks like you'll have to book the COGS before the revenues get booked. Is that right? Thanks.

I'll take that. Hi, Balaji, and thank you for your question. I'll do my best to address all of those questions. I think, firstly, in terms of the revenue cadence, you're right. So the milestones that we're expecting to recognize this year in particular are driven by the submissions, as well as BLA filings. I should say BLA filings, as well as the completion of clinical. We're expecting completion of clinical in the second quarter. We're also expecting key launches. We receive milestones upon key launches, and we have several planned in. Obviously, we have one in the U.S. and throughout the world. But in the second quarter in particular, I think you have some key clinical completions that we're expecting to report out on, as well as the key launch in the U.S. With respect to your last question on COGS, we do not recognize COGS before we recognize revenue. Just as a reminder, when we ship our product to our partners worldwide, at that point, we're recognizing our share of revenue. And it's at that point that we recognize our cost of sales. And I think there was... Yep, go ahead.

Sorry, that's very helpful. Maybe just a quick follow-up on Biosmiling Myra. if you can help us frame your expectations of the product and the revenue outlook that you're seeing in the U.S. market and maybe provide greater details around the two-tier pricing strategy from Teva and what this means. Thanks.

Thank you, Balaji. Anul is speaking. Good to hear your voice again. Regarding granularity on the US market, we will not be able to give you exact numbers. But what I can tell you is that, as we said during the prepared remarks, that our partner is leading active discussions with the payers. Then the nature of those discussions, I can say, are very positive. And we believe strongly that we will gain broad formulary access. I would say that the official results will no later than July 1st will be available. But we also hope to provide you more color even earlier. On the two-tier pricing, that's a very strategic decision that our partner, Teva, took. I will not be able to provide you the details of that. But anyway, you will be seeing this in the public domain very soon as we aim to launch the product in Q2 latest.

Thank you.

Thank you. Now we're going to take our next question. Just a moment.

And the next question comes from the line of Carl Burns from Northland Capital Markets. Your line is open. Please ask your question.

Thanks for the question, and congratulations on the progress in the approval of similarity. With respect to similarity and in addition to your prepared comments, how can TEVA increase awareness of the interchangeable designation to foster conversion of, you know, branded eMERA and other biosimilars, particularly during the exclusivity period?

Thanks.

Thank you very much for the question.

First of all, the wind is changing when it comes to interchangeability. We, in our active discussions, we see that the payers are more and more appreciating interchangeability. That was a really very positive recognition. from our perspective. And secondly, having exclusivity is, of course, giving us a natural advantage in the market space. I know that Teva is very well reminding that to the relevant industry stakeholders. And I think it's also a good opportunity for me to really remind why interchangeability matter. Just as a reminder, we are the first and only high concentration interchangeable, quite similar to Himira. where approximately 90% of the market still today on high concentration. And secondly, we in the market use this as a differentiation point because this will really be the one of the fundamental advantage of our text product profile to move the market in 2024. And we also showed you more details on our device platform that we believe is another advantage connected to interchangeability because we believe interchangeability matters even more with our device platform, because our device is really unique and very patient-friendly. So all in all, we think that interchangeability is highly appreciated in the market as of now, and we believe this is going to really make Alvotex and Tavos products hopefully the leading biosimilar in the U.S.

market. Great.

Thanks. That's very helpful. Thank you. Now we're going to take our next question.

And the question comes to the line of Kirsty Ross-Stewart from CTO. The line is open. Please ask your question.

Hi, thank you. This is Kirsty Ross-Stewart, CTO, on for Andrew Bowne. Just two questions, please. First, a quick one regarding the pending FDA approval of ABT-04. Just trying to understand your confidence in approval on the 16th of April TOG action date in the U.S. Specifically, are there any remaining questions on the resolution of the CRL or can we assume that the issues have all been addressed given the approval of Simlandi? And second, regarding your future Cotruda biosimilar candidate, do you think Merck's move to a continuous perfusion manufacturing process could result in any regulatory delays to biosimilar launch in light of their recent patent applications, which is suggesting improved shelf life linked to lower oxidation of the product? Thank you.

Yeah, thank you for the question. This is Ming, and Anil can take the second part. As far as our ABT04 application, we have high confidence. Really, the only outstanding hurdle was the inspection. And of course, as Robert said earlier, this is the same with Simlandi. So we have very high confidence that approval will happen as the inspection status should be clear at this stage.

Anil? Thank you, Ming. On Keytruda's question, of course, that's a very strategic asset for us. And we are very carefully analyzing all the lifecycle moves from the brand company. As you very well know, we have been very successful in doing that in the Umira case and a few other assets. So when it comes to continuous perfusion, as you know, Alvotic is one of the few companies that has this technology in-house. We had strategically invested into that technology eight years ago, even if there is a process change of the product, we would be prepared to do that still in-house. Even if not, we are very carefully monitoring all the lifecycle moves from the brand company on that specific asset.

Thank you. Thank you.

Dear participants, as a reminder, if you wish to ask a question, please press star 11 on the telephone keypad. And now we're going to take our next question. And the question comes from the line of Thibaut Botherin from Morgan Stanley. Your line is open. Please ask your question.

Hello. Hi. Thank you for taking my questions. Just the first one on the mirror in the U.S. Thanks for the color that you provided. My question is more personal. specifically on the timeline of inclusion on formularies. Are you confident there is a window of opportunity to get on formularies this year in 2024 with an optimal position, or is it more likely to potentially happen from January 2025? Second question is on Alia Biosimilar. I'm not sure I heard correctly, but just wanted to know if you could confirm you think the approval could potentially happen this year. And then if you have any thoughts on the IP situation, because we saw some setbacks from other biosimilar makers on the legal side for ILEA. And then the last question is on Stellara interchangeability status. If you could provide us an update on when you think we could see the study results for interchangeability, and is it your base case that Amgen could have an exclusivity on this one, and if you could help us on the timeline for exclusivity potentially as well.

Thank you.

Thank you, Thibault. Nice to hear from you. So I will take the question one and two. We'll hand over the number three to Ming. When it comes to US formulary timing, as per our dialogue, we believe that we will be in the formularies by 1st of July. So we don't see any reason to wait up until 1st of January. So this is the one. When it comes to second question regarding Eylea Biosimilar, we will be filing the product within this year. And of course, we expect the approval before the LOE date in 2025. We are very well aware of the ongoing litigation and various settlement events in global markets. For us, this is an area that we are very active. TAVA is very active, as you know, when it comes to litigation and First, the market opportunities, so we are working on a strategy for that asset to be on market when the LOE happens.

Thank you for the question. With respect to interchangeability on Stellara, we are seeking interchangeability with Stellara, and I think there's a couple of potential ranges. potential outcomes. One is that we may have the ability to launch with interchangeable designation, and one we may be able to or would launch shortly after our launch, so in April. And that interpretation is tied to part of your question, which was Amgen's exclusivity. It'll depend on how the FDA, you know, views the earlier of clauses in the BPCIA. One would be 18 months after approval or one 18 months after the settlement, if they tie the litigation and the settlement to to the application, which is certainly plausible. I think in our last call we said shortly after, which is the more conservative date, but obviously we're watching that closely and would know, of course, before our launch whether or not it could be the more optimistic version, which is launching with interchangeability. Thank you.

Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad and wait for your name to be announced. And now we're going to take our next question. And the next question comes from Patrick Ling from D&B Markets. Your line is open. Please ask your question.

Thank you.

Good afternoon. Could I just get a little bit more clarity on your sort of walk us through from the revenue line down to your guidance for the objective EBITDA given that It's 100 million difference from low to high in both cases. And your milestone indications list from the low to the high is around 80 million. Could you elaborate a little bit on how you see your cost development in the different scenarios, whether you will end up at 50 million in EBITDA or 150 million in EBITDA?

Thank you, Patrick. So I'll try my best to describe some of the drivers maybe in arriving at the upper and lower end of our revenue range and guidance range overall. So first of all, you know that our revenues are generated from two sources. You have your product revenues, obviously, as we supply our partners. And then you have our milestone revenues as well, which I described. We have several planned for this year in particular in the second quarter. This is the first time, obviously, that we've had multiple revenue opportunities for launches in multiple markets across the world. In terms of our launches, we used a range on share and price based on our understanding of where the market is today, as well as feedback from the market overall. On the milestone front, and as we mentioned in the prepared remarks, we have multiple programs. We typically are recognizing milestones when we commence clinical, when we complete clinical, clinical successfully when we submit. Also, you have performance-based milestones when we launch. And we also have, as I mentioned earlier, several net sales, cumulative net sales targets as well that we can also achieve. And so we're planning on achieving several of those. And we see several actually happening in the second quarter, which is creating some of the lumpiness that you see in our overall P&L. So we do have good visibility into our milestones, right? But there's ultimately still a range of outcomes. And I think you're seeing we're providing our EBITDA range of 50 to 150. We're not providing any more clarity at this point in time. Obviously, this is the first time that we've provided guidance since our listing, but as our business matures, Patrick, we will offer more details with time.

Would you say that the majority of the difference here is mostly tied to differences in milestones or are there any other differences in your expectation when it comes to costs for R&D or COGS or what have you?

I think you have a range both at milestones and you also have a range at product revenue throughout the year that you're seeing there. So it's a combination of events.

But it's mostly revenue driven rather than cost driven. Is that a fair assumption?

That is a fair assumption.

Okay, great.

Good, thank you.

Thank you. And now we're going to take our next question. Just give us a moment. And the question comes from the line of Niall Alexander from Deutsche Bank. Your line is open. Please ask your question.

Hi, it's Niall from Deutsche Bank. Thanks for taking my questions. The guidance given. Is it fair to assume that for the likes of ABT02 and ABT04, you're implying for FY24 sales of the total revenue? So that's, in other words, into $240 million. Fair math is correct there. Can you just clarify what sort of sales split we're going to see between ABT04 and ABT02 FY24 guidance? And then for Again, can you just be more specific on what sort of split we could potentially see between milestone revenue and actual product sales revenue? Thank you.

Sure. Yeah. So at the top, thank you so much for your question. Thank you. So first of all, with respect to milestone revenues, the split that we've indicated is anywhere between 40 to 50% of the total revenues that we've guided in the period. So that should be insightful for you both on the high and low end as to how we're thinking about the potential range there. To answer your second question, at this point in time, we're not offering detailed level guidance in terms of the splits between 02 and 04 in 2024.

Excuse me now, do you have any further questions?

That was helpful, thank you.

Thank you. There are speakers that have further questions, and I would like now to hand the conference over to Benedikt Stefansson for any closing remarks.

Yes, thank you, Nadia. And on behalf of the AlboTech team, I'd like to thank all the participants in today's call. I'd like to remind our listeners also that we're tomorrow hosting a live webcast from our Capital Markets Day, and you can find further details on our website, investors.albotech.com. So this ends today's Q4 and full year 2023 earnings call from Albotech. Have a nice day.

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day. you Thank you. Thank you. Thank you. Bye. Thank you. you

Good morning or afternoon to everyone joining this call today. Yesterday evening, the company issued a press release that can be found in the news section of our investor portal, investors.avotech.com. The release outlines key highlights related to our full year 2023 results. Additionally, we will, throughout today's call, refer to a slide presentation, which is available on our investor website in the events section. If you have not already accessed the slides, please go to investors.avotech.com and select events. 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 and the NASDAQ Iceland Stock Exchange. These risks and uncertainties could cause actual results to differ materially from forward-looking statements that we make. With me on today's call are Robert Westman, Chairman and CEO of Alvotek, Anil Oke, Chief Commercial Officer, Joel Morales, Chief Financial Officer, and Ming Li, Chief Strategy Officer. With that, I would like to turn the call over to Robert Westman, Founder, Chairman, and CEO of Alvotek.

Thank you, Benedikt. And thank you all for joining us on today's earnings call and business update for the full year 2023. We are very excited about the position that we find ourselves in today. Alwatek has successfully cleared our inspection status with the USFDA. This puts Alwatek in a position to access the largest pharma market in the world. This result has led to approval of Simlandi in US and also clears the way for our biosimilar to Stellara, which we expect will be approved by FDA next month. Additionally, our pipeline has been steadily progressing and we are in a position to file at least three applications for new biosimilar candidates this year. And those are just a few of the events that are driving excitement and anticipation here at Alvatech. But before we discuss in more details regarding 2023 and take a look into 2024, I would like to take a step back for a moment to recap our strategy and positioning. Alvatech is proud to be focused entirely on biosimilars, which position us amongst a small group of companies dedicated to meet the global need driven by the high-cost biologic medicines. Further, we are vertically integrated with end-to-end capabilities and have established a comprehensive infrastructure platform from where we can develop our manufactured biosimilars. Having this dedicated infrastructure will further differentiate us from other biosimilar developers. We also have a multi-product portfolio-based strategy, With our recent launch of Gemtech, our biosimilar to Stellara in Canada, we have two different molecules now on the market. We continue to grow and advance our overall pipeline and portfolio, which has 11 disclosed assets today. And finally, we have a global regulatory and commercial strategy, as we see biosimilars as both a global opportunity and necessity. A global strategy allows us to maximize the return of our development investment and provides diversification and longer-term durability to our portfolio assets. The hard work and investment that has been put into Alvatech over the past decade has now positioned us at an inflection point where we expect growth in revenues based on multiple launches in major markets, while concurrently advancing a pipeline of attractive biosimilar candidates. 2023 was a year that can be defined as laying the foundation for the future growth. The first element of that foundation is reflected in our global regulatory approvals, which enables a steady schedule of commercial launches for 2024, 2025 and beyond. SymLanti was approved as the first interchangeable high concentration biosimilar to Humira in the US market. And while the approval occurred in 2024, The hard work and dedication from the team to secure inspection readiness in 2023 have to pave the way for this approval. Approval of our Stellera via similar in Canada, Japan and Europe further demonstrates and validates the platform's ability to gain global regulatory approvals on multiple products in major markets. And thus, importantly, these approvals will enable near-term diversification of revenue. For the US, our ABT04 application was reviewed and deemed approvable by the FDA. The outstanding issue for approval was a successful site inspection, which was the same as with Zimlandi. The recent approval of Simlan-D provides us significant confidence that AVT-04 will gain final approval in the U.S. in April of this year. Of course, what has enabled these approvals is the dedication of Alvatec team to compliance and inspection readiness. And that is not only for the USFTA, but for all regulatory bodies around the world where we have or intend to launch our products. I would like to thank our entire team at AlvoTech for the efforts made to ensure our positive inspection outcome. In 2023, we also continue to expand and enhance our commercial network through existing and new strategic partnerships. This included an expanded partnership with Teva in the US, as well as with Fuji Pharma in Japan. We also added to our network Advanced Pharma with a strategic partnership covering five proposed biosimilars in Europe. Our strategic partnership with well-established and well-recognized companies are fundamental to our ability to ensure that our products find the right home all over the world. Finally, 2023 was another year of significant advancement for our pipeline. Alvotek started as a development company, and we aim to maintain that scientific resolve as we mature into global commercial phase as an organization. We have received positive clinical results for AVTO6, our proposed biosimilar to ILEA, thus paving the way to a submission later this year. Additionally, we have three other programs in addition to ABT-06 that have demonstrated positive PK results and are currently in ongoing patient trials. Please note that as a general rule, passing PK results are more informative to potential approval than results from patient trials, and we are highly confident in our ability to bring these products to the submission phase. The proposed biosimilar currently in ongoing patient studies are AVT05, a proposed biosimilar to Symfony and Symfony ARIA, AVT03, a biosimilar candidate to Prolia and DexGiva, and also AVT23, a biosimilar candidate to Solar, a product advancing in partnership with CASEID. And finally, we advanced our AVT16 program into one of the leading positions in the fast-growing NTVO market. Looking back at 2023, I can say with great confidence that it has positioned us well to drive growth on both the top line and bottom line in 2024 and beyond. And we are very proud of our achievements in AlgoTech. Now looking ahead, we see 2024 as a transformational year for the company. It starts with launches of major products into large markets. Our launch of Simulanti in the US will occur in early second quarter. And as the only high concentration interchangeable product on the market, we have high confidence in this launch. Earlier this year, together with our partner Jump Pharma, we launched our biosimilar to Stellara in Canada with the brand name of Jump Techie. This represents the first launch of Stellara biosimilar in the Canadian market. We aim to launch our Stellara biosimilar in Japan in second quarter of this year and then in Europe beginning of third quarter this year. These multiple launches will bring material revenues into AlvoTech and create the diversification of the top line from both markets and products. In addition to the commercial launches just mentioned, we will also be preparing for our launch of AVT04, our Stellara by a similar candidate in the US. While the commercial launch is in early 2025, We will be supplying later in 2024 allowance quantities, and we may generate additional revenues depending on supply timing in 2024. But as important as commercial launches are, it is equally important that we continue to drive advancement in our pipelines. 2024 is set to be a busy year in our portfolio as we expect at least three additional submissions in major markets this year. Additionally, in our pipeline, we intend to advance our AVT16 program to the clinical trial phase. Finally, we continue pursuing more business development transactions and remain in active negotiation for available assets in our portfolio. In 2024, we expect to see multiple lances and significant growth in milestone revenues coming from highly visible and de-risked programs. We are now in a position to guide the market for 2024 and 2025 on top line and where we expect to land on EBITDA in 2024. later in this presentation our cfo joel morales will cover guidance in greater detail i would with those words like to turn now the call over to anil okay our chief commercial officer to dive deeper into our upcoming glances and portfolio updates anil over to you thank you robert and thank you to everyone on the call today i would like to start with our recent approval of simnandi

Simlandi is the first interchangeable high concentration biosimilar to Humira in the U.S. market. We view this approval as a victory for patients in the U.S. as we believe the product profile that combines interchangeability with the high concentration strengths will help expand conversion in the U.S. market, where we have seen minimal usage of biosimilar Humira to date. Moreover, we know that we have exclusivity for our interchangeable designation in our approved presentations. While we always expected exclusivity, the confirmed nature of that exclusivity is a very helpful point in the outreach to the market, where we have coordinated closely with our partner Teva. And as a reminder, the high concentration form of Femira is the dominant form used by patients today. Moving to slide 10 in today's presentation, I would like to dive a bit deeper in the commercial approach for Simlanli in the US, which we divide into four pillars. The first was just discussed regarding our unique product profile and the exclusivity that helps protect against others seeking interchangeable designation. On the pricing front, Teva's plan will be a two-tier pricing strategy that will enable us to serve patients more broadly across both commercial and government-insured patients. Currently, our partners supported by us are in active discussions with the PBMs to secure formulary placements. As part of that, the finalization of these negotiations will provide us better clarity on final net pricing. The next key part of our commercial strategy is to ensure consistent and uninterrupted supply. Alvotech has a manufacturing site that's 100% dedicated to our products. We have in the past hosted our major potential customers at our site so they could get a first-hand look at our production capabilities. Our supply plan remains on track, and the launch is expected imminently after first ship. Finally, I would like to comment on our autoinjector platform. Some of our products in the pipeline require an autoinjector. Humira, as an example, is a treatment for many chronic indications. It is also taken often 26 times per year. Patients and physicians develop a relationship with their commonly used device. And as a developer, we wanted to ensure that we brought to market a device that bears the patient's experience in mind. As a result, we formed collaboration with Ypsilat, a leading company in the device sector, to create a proprietary autoinjector platform. That device was supported by two separate design-focused clinical trials, including a trial conducted in adult patients with moderate to severe active rheumatoid arthritis, which assessed real-life patient handling experience of the autoinjector. in closing we are in active discussions with the market in the us and we believe that our overall strategy for simlandi has put us in a good position to gain broad coverage in the us and help drive expanded use of biosimilars in the mirror market moving to our second product in our portfolio our biosimilar to stellar We are elated at the regulatory progress to date and are set up to have multiple launches across major geographies in 2024 and 2025. And unlike our ex-US launches of ADT02, we aim to be first to launch in many of these markets for Stellara biosimilar. Let me start in Canada, where our partner, Jump Pharma, has recently launched Jump Techie. We were the first to launch in Canada, And as of today, there is only one other approval, and that's helped by Enjin. Next quarter, we expect to launch in Japan through our partner, Fuji Pharma. In Japan, we are currently the only company approved with a Stellara biosimilar. In Europe, we are expecting launches beginning in Q3 of this year. And in that market, we see only Samsung with a current approval for a Stellara biosimilar. These markets are both substantial in value and growing in volume. Stellara is a higher-priced product, and our view is that the availability of biosimilar Stellara can help increase access and therefore volume in a number of markets around the world. As a precedent, when Humira biosimilars were made available in Europe in 2018, the usage of adenivimab as a molecule increased by double-digit percentages several years in a row. We see a similar opportunity in Stellara. In the US, we expect approval of our Stellara biosimilar candidate in April of this year, which allows for plenty of time to prepare for February 2025 launch. Shifting focus to our broader pipeline, as previously mentioned, It's essential to keep advancing and expanding our portfolio to secure long-term growth. Furthermore, our organization's ongoing success in obtaining global approvals underscores a powerful message to every market we enter or intend to enter. AlgoTech not only is, but also aims to be a lasting influence in the biosimilars industry. Earlier in today's presentation, we provided detailed updates on a number of our near-term pipeline assets. Looking forward, we do expect to continue to submit AVT04 in jurisdictions around the world now that we have an EU CPP and soon an approval in the US, which can be requirements in certain markets in order to file. With respect to partnership opportunities, The focus of our business development activities around partnership discussions are tied to AVT03 and AVT33, where both assets are not partnered in both the US and EU markets. Finding the right partner for these products is a key initiative for 2024. Alvotec, along with our partners around the world, are extremely excited at the opportunity to bring these products to market. And with that, I would like to turn the call over to Joel Morales, our Chief Financial Officer, to provide an update on 2023 financial performance, as well as an outlook update for the business. Joel.

Thanks, Anil. I'll now provide some brief financial highlights for the year-ended December 31, 2023. In terms of liquidity, we recently announced in February that we completed a private placement with Icelandic and other European investors worth 166 million in gross proceeds. Giving effect to this financing, our pro forma cash balance as of December 31st would have been 172 million, excluding 25.2 million of restricted cash. In terms of our operating performance, Total revenues for 2023 were 93.3 million versus 85 million in the prior year, an increase of around 10%. The company recorded 48.7 million in product revenues for 2023, almost doubling revenues from the same period in the prior year. This sharp increase is driven by the timing of launches that started in the second quarter of 2022. Since then, our partners have continued to expand on share in existing markets throughout Europe and Canada, and we have also launched into Australia in late Q4 of 2023. In particular, we recognized $18.9 million of revenue in the fourth quarter, which proved to be our strongest quarter of 2023, driving full-year revenues consistent with the expectations we communicated during our last earnings call. the company also recorded 42.7 million in milestone revenues in 2023 largely driven by the recognition of 31.6 million of milestone revenues in the fourth quarter as a result of the positive top line results we achieved on the clinical efficacy and safety study for our abt06 program a biosimilar candidate to ilea another point worthwhile noting is that the cost of product revenue for the year ended December 31st, 2023 is disproportionate relative to product revenue due to timing of new launches, scale-up manufacturing activities, production-related charges, and costs associated with FDA inspection readiness. We do expect this to normalize as we've obtained FDA approval and are able to realize increased scale of manufacturing while expanding on 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. We closed the period with 266 million shares outstanding, including unvested earn out shares. Turning to the next slide, you will find our outlook for 2024 and 2025. We are forecasting revenues between 300 and 400 million in 2024. This three to four times growth year on year is driven by a combination of our newly planned product launches of ABT02 and ABT04 and significant development in performance-based milestones we expect to achieve throughout the year. With approvals now secured across multiple products and markets, we have begun to take all the necessary steps to enable our planned launches in 2024. Upon approval of Symlandi, our high concentration and interchangeable version of Humira We filed variations with the FDA that will enable us to manufacture at an optimized scale. We have in fact already begun to manufacture at that scale for our rest of world markets as of the end of last year and expect to be able to manufacture at the same scale for the U.S. by mid-year 2024. We expect to begin supplying the U.S. market with pre-launch inventory in the very near term. Concurrently, our commercial partnership is in advanced stages of contracting with key payers in the U.S., and based on our product profile that includes the combination of high concentration and interchangeability, we are highly optimistic that we will gain broad market coverage. This year, we also expect to launch our biosimilar to Humira into several additional global markets, including Latin America and the Middle East. With respect to AVTO4, our biosimilar to Stellara, We have already launched in Canada and expect to expand our launches into Japan and Europe in the second and third quarters of this year respectively. All requisite approvals have been secured in these markets and we expect to receive FDA approval in the U.S. by next month's BESUFA date. Our launch for the U.S. is planned for February of 2025. However, our forecast assumes we commence recognizing revenues late in the fourth quarter of this year as we ship initial prelaunch inventory into the U.S. Detailed planning for our U.S. launch is underway. These launches are not only driving growth in product revenues, but also providing greater diversification in terms of commercial product offering and geographic concentration. They are thus important cornerstones of our strategy to drive growth and profitability over the mid to long term. In terms of milestone revenue, as mentioned earlier, we are anticipating the submission of at least three additional filings in major markets throughout the year for our pipeline. Additionally, we plan to commence clinical trials for our proposed biosimilar to NTVO AVT16. Commencing and successfully completing clinical phases of development and regulatory submissions are key events that drive milestone revenue recognition for the company. We're also expecting to recognize milestone revenues for the achievement of certain performance-based targets, such as the first launch of our biosimilars to Humira and Stellara into new markets globally, as well as the achievement of cumulative net sales targets for these launched products. The last point I'd like to make regarding milestone revenues is with respect to licensing. As noted earlier in the presentation by Anil, we have an active BD pipeline that has more recently been focused on partnering with our oncology and oncology-related assets. Accordingly, the company is actively pursuing licensing deals for early phase programs with a strategic partner or partners, providing potential upfront cash and milestones over time. We expect milestone revenue contributions to be significant this year and could range up to 40% to 50% of total revenues in 2024. The advancement of our pipeline not only provides a basis for longer-term growth, but generates near-term milestone revenue, which is another core part of our business model. Based on the commercial assumptions I just described, adjusted EBITDA for the year is forecasted in the range of $50 to $150 million. This includes continued R&D investments behind our pipeline as we advance three of our programs through final stages of clinical and the commencement of our ABT16 program into the clinical phase. I'd like to make a few points with respect to phasing in 2024. Firstly, you can expect this year to be lumpy in terms of our operating results. We expect Q1 total revenues to be lower than Q4 2023. This is driven by a slowdown in production to prepare for the FDA inspection in Q1 and prioritization of development batches to enable our planned submissions in 2024. Also, the timing of milestone triggers have an impact. Accordingly, we expect Q1 to be the lowest quarter of the year in terms of revenue and negative adjusted EBITDA. In Q2, however, we are expecting to see some initial uptake in product revenues due to our planned launches, and we anticipate achieving a number of milestone recognition triggers in the quarter, which will drive a significant increase in total revenues, and we expect to achieve positive adjusted EBITDA. Finally, we expect product revenues to overtake milestone revenues towards the end of 2024, driving overall revenues and adjusted EBITDA. With respect to our liquidity, we are pleased with the proceeds raised during our last financing round in February. Based on our current operating plans, we believe this provides the company with sufficient cash flows to continue investing behind our planned launches and pipeline throughout the year. We will, of course, continue to monitor the dynamic timing assumptions behind our plan and ensure we are prepared to address any incremental liquidity needs should they arise. We expect our capital structure to simplify throughout 2024. Given the recent increase in our share price, the sponsor earn-out shares have vested and one-half of the predecessor earn-out shares have also vested during the first quarter of 2024. We have also seen increased exercise of public warrants, which were issued during the D-SPAC transaction that we closed back in 2022. Additionally, approximately $300 million of our outstanding borrowings are in the form of convertible instruments, which have a conversion feature that comes available in June of 2024. These activities are expected to reduce the derivative financial liabilities and outstanding borrowings on our balance sheet in the second half of the year. Ultimately, this will also reduce the large swings in finance costs that currently drive volatility in our non-operating results as well as reducing overall interest expense on the P&L. Finally, as we look forward to 2025, we expect to be able to double our total revenues year over year as we intend to continue expanding upon our launches within existing and new markets. With the additional launches and scaling mentioned earlier, product revenue will be the primary driver of growth year on year, with contributions from milestone revenues being proportionally smaller as a share of total revenue. Given that we have just secured approvals for our lead assets in the U.S. and around the world, and contracting is ongoing, we believe that this is the best direction that we can provide at the current time. We anticipate an exciting year ahead as we continue the transition into a global, full-scale commercial operation, launching multiple products into markets worldwide, while at the same time advancing our pipeline. We look forward to updating you as the year progresses, as more information becomes available.

And with that, I'd like to turn the call back over to the operator for Q&A.

Thank you, dear participants. As a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 11 again. Please stand by, we'll compile the Q&A roster. This will take a few moments.

And now we're going to take our first question.

Just give us a moment. And the first question comes from the line of Balaji Prasad from Barclays. Your line is open. Please ask your question.

Good morning, everyone, and good afternoon, everyone, and congratulations on the results and what seems to be a compelling outlook for 2024 and 2025. Also, I appreciate the color on this because I know you have multiple moving parts to the business between milestones and revenues. A couple of questions on this. Firstly, with regard to the revenue cadence that you've provided in the milestones, could you summarize the key milestone-based events that you're looking forward to during the course of the year, especially in 2Q? And second, I think where I'm struggling to model is clearly on the gross margins. Can you help us understand how should we think about gross margins and typically as as inventory builds up before the launch. It looks like you'll have to book the COGS before the revenues get booked. Is that right? Thanks.

I'll take that. Hi, Balaji, and thank you for your question. I'll do my best to address all of those questions. I think, firstly, in terms of the revenue cadence, you're right. So the milestones that we're expecting to recognize this year in particular are driven by the submissions, as well as BLA filings. I should say BLA filings, as well as the completion of clinical. We're expecting completion of clinical in the second quarter. We're also expecting key launches. We receive milestones upon key launches, and we have several planned in. Obviously, we have one in the U.S. and throughout the world. But in the second quarter in particular, I think you have some key clinical completions that we're expecting to report out on, as well as the key launch in the U.S., With respect to your last question on COGS, we do not recognize COGS before we recognize revenue. Just as a reminder, when we ship our product to our partners worldwide, at that point, we're recognizing our share of revenue. And it's at that point that we recognize our cost of sales. And I think there was... Yep, go ahead.

Sorry, that's very helpful. Maybe just a quick follow-up on Bias Milling MyRAW. if you can help us frame your expectations of the product and the revenue outlook that you're seeing in the U.S. market, and maybe provide greater details around the two-tier pricing strategy from Teva and what this means. Thanks.

Thank you, Balaji. Anul is speaking. Good to hear your voice again. Regarding granularity on the US market, we will not be able to give you exact numbers. But what I can tell you is that, as we said during the prepared remarks, that our partner is leading active discussions with the payers. Then the nature of those discussions, I can say, are very positive. And we believe strongly that we will gain broad formulary access. I would say that the official results will no later than July 1st will be available. But we also hope to provide you more color even earlier. On the two-tier pricing, that's a very strategic decision that our partner, Teva, took. I will not be able to provide you the details of that. But anyway, you will be seeing this in the public domain very soon as we aim to launch the product in Q2 latest.

Thank you.

Thank you.

Now we're going to take our next question. Just a moment.

And the next question comes from the line of Carl Burns from Northland Capital Markets. Your line is open. Please ask your question.

Thanks for the question, and congratulations on the progress in the approval of similarity. With respect to similarity and in addition to your prepared comments, how can TEVA increase awareness of the interchangeable designation to foster conversion of branded eMERA and other biosimilars, particularly during the exclusivity period?

Thanks.

Thank you very much for the question.

First of all, the wind is changing when it comes to interchangeability. In our active discussions, we see that the payers are more and more appreciating interchangeability. That was a really very positive recognition. from our perspective. And secondly, having exclusivity is, of course, giving us a natural advantage in the market space. I know that Teva is very well reminding that to the relevant industry stakeholders. And I think it's also a good opportunity for me to really remind why interchangeability matter. Just as a reminder, we are the first and only high concentration interchangeable, quite similar to Himira. where approximately 90% of the market still today on high concentration. And secondly, we in the market use this as a differentiation point because this will really be one of the fundamental advantage of our low-tech product profile to move the market in 2024. And we also showed you more details on our device platform that we believe is another advantage connected to interchangeability because we believe interchangeability matters even more with our device platform, because our device is really unique and very patient-friendly. So all in all, we think that interchangeability is highly appreciated in the market as of now, and we believe this is going to really make Alvotex and Tavos products hopefully the leading biosimilar in the U.S.

market. Great. Thanks.

That's very helpful. Thank you. Now we're going to take our next question.

And the question comes to the line of Kirsty Ross-Stewart from CTO. The line is open. Please ask your question.

Hi, thank you. This is Kirsty Ross-Stewart, CTO on for Andrew Bowne. Just two questions, please. First, a quick one regarding the pending FDA approval of ABT-04. Just trying to understand your confidence in approval on the 16th of April TOG action date in the U.S. Specifically, are there any remaining questions on the resolution of the CRL, or can we assume that the issues have all been addressed given the approval of Simlandi? And second, regarding your future Cotruda biosimilar candidate, do you think Merck's move to a continuous perfusion manufacturing process could result in any regulatory delays to biosimilar launch in light of their recent patent applications, which is suggesting improved shelf life linked to lower oxidation of the product? Thank you.

Yeah, thank you for the question. This is Ming, and Anil can take the second part. As far as our ABT04 application, we have high confidence. Really, the only outstanding hurdle was the inspection. And of course, as Robert said earlier, this is the same with Simlandi. So we have very high confidence that approval will happen as the inspection status should be clear at this stage.

Anil? Thank you, Ming. On Keytruda question, of course, that's a very strategic asset for us. And we are very carefully analyzing all the lifecycle moves from the brand company. As you very well know, we have been very successful in doing that in Umira case and few other assets. So when it comes to continuous perfusion, as you know, Alvotic is one of the few companies has this technology in-house. We had strategically invested into that technology eight years ago. Even if there is a process change of the product, we would be prepared to do that still in-house. Even if not, we are very carefully monitoring all the lifecycle moves from the brand company on that specific asset.

Thank you. Thank you.

Dear participants, as a reminder, if you wish to ask a question, please press star 11 on the telephone keypad. And now we're going to take our next question. And the question comes from the line of Thibaut Botherin from Morgan Stanley. Your line is open. Please ask your question.

Hello. Hi. Thank you for taking my questions. Just the first one on the mirror in the US. Thanks for the color that you provided. My question is more personal. specifically on the timeline of inclusion on formularies. Are you confident there is a window of opportunity to get on formulary this year, in 2024, with an optimal position, or is it more likely to potentially happen from January 2025? Second question is on Alia Biosimilar. I'm not sure I heard correctly, but just wanted to know if you could confirm you think the approval could potentially happen this year. And then if you have any thoughts on the IP situation, because we saw some setbacks from other biosimilar makers on the legal side for ILEA. And then the last question is on Stellara interchangeability status. If you could provide us an update on when you think we could see the study results for interchangeability, and is it your base case that Amgen could have an exclusivity on this one, and if you could help us on the timeline for exclusivity potentially as well.

Thank you.

Thank you, Thibault. Nice to hear from you. So I will take the question one and two. We'll hand over the number three to Ming. When it comes to US formulary timing, as per our dialogue, we believe that we will be in the formularies by 1st of July. So we don't see any reason to wait up until 1st of January. So this is the one. When it comes to second question regarding Eylea Biosimilar, we will be filing the product within this year. And of course, we expect the approval before the LOE date in 2025. We are very well aware of the ongoing litigation and various settlement events in global markets. For us, this is an area that we are very active. TAVA is very active, as you know, when it comes to litigation and First, the market opportunities, so we are working on a strategy for that asset to be on market when the LOE happens.

Hi, Tebo. It's Ming. Thank you for the question. With respect to interchangeability on Stellara, we are seeking interchangeability with Stellara, and I think there's a couple of potential ranges. potential outcomes. One is that we may have the ability to launch with interchangeable designation, and one we may be able to or would launch shortly after our launch, so in April. And that interpretation is tied to part of your question, which was Amgen's exclusivity. It'll depend on how the FDA, you know, views the earlier of clauses in the BPCIA. One would be 18 months after approval or one 18 months after the settlement, if they tie the litigation and the settlement to to the application, which is certainly plausible. I think in our last call we said shortly after, which is the more conservative date, but obviously we're watching that closely and would know, of course, before our launch whether or not it could be the more optimistic version, which is launching with interchangeability. Thank you.

Thank you. Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad and wait for your name to be announced. And now we're going to take our next question. And the next question comes from Patrick Ling from D&B Markets. Your line is open. Please ask your question.

Thank you. Good afternoon. Could I just get a little bit more clarity on your sort of walk us through from the revenue line down to your guidance for the objective EBITDA given that It's 100 million difference from low to high in both cases. And your milestone indications list from the low to the high is around 80 million. Could you elaborate a little bit on how you see your cost development in the different scenarios, whether you will end up at 50 million in EBITDA or 150 million in EBITDA?

Thank you, Patrick. So I'll try my best to describe some of the drivers maybe in arriving at the upper and lower end of our revenue range and guidance range overall. So first of all, you know that our revenues are generated from two sources. You have your product revenues, obviously, as we supply our partners. And then you have our milestone revenues as well, which I described. We have several planned for this year in particular in the second quarter. This is the first time, obviously, that we've had multiple revenue opportunities for launches in multiple markets across the world. In terms of our launches, we used a range on share and price based on our understanding of where the market is today, as well as feedback from the market overall. On the milestone front, and as we mentioned in the prepared remarks, we have multiple programs. We typically are recognizing milestones when we commence clinical, when we complete clinical, clinical successfully when we submit. Also, you have performance-based milestones when we launch. And we also have, as I mentioned earlier, several net sales, cumulative net sales targets as well that we can also achieve. And so we're planning on achieving several of those, and we see several actually happening in the second quarter, which is creating some of the lumpiness that you see in our overall P&L. So we do have good visibility into our milestones, right? But there's ultimately still a range of outcomes. I think you're seeing we're providing our EBITDA range of 50 to 150. We're not providing any more clarity at this point in time. Obviously, this is the first time that we've provided guidance since our listing. But as our business matures, Patrick, we will offer more details with time.

Would you say that the majority of the difference here is mostly tied to differences in milestones or are there any other differences in your expectation when it comes to costs for R&D or COGS or what have you?

I think you have a range both at milestones and you also have a range at product revenue throughout the year that you're seeing there. So it's a combination of events.

But it's mostly revenue driven rather than cost driven. Is that a fair assumption?

That is a fair assumption.

Okay, great. Good, thank you.

Thank you. And now we're going to take our next question. Just give us a moment. And the question comes from the line of Niall Alexander from Deutsche Bank. Your line is open. Please ask your question.

Hi, it's Niall from Deutsche Bank. Thanks for taking my questions. The guidance given. Is it fair to assume that for the likes of ABT02 and ABT04, you're implying for FY24 sales of the total revenue? So that's, in other words, into 240 million. Fair math is correct there. Can you just clarify what sort of sales split we're going to see between ABT04 and ABT02 FY24 guidance? And then for Again, can you just be more specific on what sort of split we could potentially see between milestone revenue and actual product sale revenue? Thank you.

Sure. Yeah. So at the top, thank you so much for your question. Thank you. So first of all, with respect to milestone revenues, the split that we've indicated is anywhere between 40% to 50% of the total revenues that we've guided in the period. So that should be insightful for you both on the high and low end as to how we're thinking about the potential range there. To answer your second question, at this point in time, we're not offering detailed level guidance in terms of the splits between 2002 and 2004 in 2024.

Excuse me now, do you have any further questions?

No, that was helpful.

Thank you.

Thank you. There are speakers that have further questions, and I would like now to hand the conference over to Benedikt Stefansson for any closing remarks.

Yes, thank you, Nadia. And on behalf of the AlboTech team, I'd like to thank all the participants in today's call. I'd like to remind our listeners also that we're tomorrow hosting a live webcast from our Capital Markets Day, and you can find further details on our website, investors.albotech.com. So this ends today's Q4 and full year 2023 earnings call from Albotech. Have a nice day.