Alvotech

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.alvotech.com. The release outlines key highlights related to our first quarter results. Additionally, we have posted with the call-in information for today's event, a slide presentation, which we will be referring to during today's call. Please go to the events section of our investor site to download the slide deck if you haven't already done so. 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 that differ materially from forward-looking statements that are made. 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. Robert?

Thank you, Benedikt, and thank you to everyone for joining us here today. On our last earnings call, we laid out a list of ambitious goals that we aim to accomplish this year. Today, I will briefly cover each of those goals and our progress towards achieving them. Our team will then provide further details throughout today's presentation, which we hope can give you a sense of the tremendous progress which we have made thus far. Our first initiative is commercializing our biosimilar to Humira in the US market. Our product is interchangeable with the reference product, and we were the first to achieve interchangeability with the high concentration form of Humira, which currently holds the dominant market share in the U.S. market. As a reminder, we have received exclusivity for our approved strengths and expect to maintain that exclusivity into May of next year. Much progress has been made since our last public update. Late last month, we updated the market on our agreement with Qualand, the private label unit for the Cigna Group in the U.S. Evinorth, a wholly owned subsidiary of Cigna, announced that Alvotek product would be offered with a zero out-of-pocket cost and noted that there are over 100,000 patients currently using Humira through Cigna, a critical specialty pharmacy. This partnership is a win for Alvotek, the Cigna Group, and for patients across the country. What we are witnessing today is a rapid evolution of pharmacy benefit biosimilars in the U.S., and we welcome that change. The introduction of private label as a method of commercializing AVTO2 and the increase in conversion from Humira to biosimilars strengthens further our view of the Humira biosimilar opportunity. Furthermore, this evolution speaks to further potential when it comes to other products in our portfolio, including CellArts D, our biosimilar to Stellara, AVT03, our proposed biosimilar to Prolia, and AVT05, our biosimilar candidate to Symfony. In addition to the private label contract, our commercial partner Teva is making great progress on formulary discussion, and we believe we will be well positioned this year with our interchangeable product. Contracting on the formulary business is well advanced, and details on final formulary position will likely be announced by the PBMs themselves on or around July the 1st. As of today, I'm happy to say that we have received binding purchase orders for over a million units to support our launch of the biosimilar to Humira in the US market. And we have announced that we have already started to supply our partners with our interchangeable high concentration biosimilar in the US market. As excited as we are for our launch of Biosimilar to Humira, we are equally excited at the opportunity for our second product. Keep in mind, Alvotek's strategy is to have a broad portfolio of products offered in almost every market in the world. The global launch of our second product helps demonstrate to the market our long view of Biosimilar as we establish ourselves as a preferred partner in this rapidly growing and evolving space. With AVT04, we have received approvals in all major markets. We have already launched or are actively preparing to launch this product across all major markets within the next 10 months. We have now launched our Buy Similar to Stellara in Canada. We just recently did in Japan. In Europe, we start in July this year, and in the US, we are starting to launch in February 2025. Although we are focused on the near-term commercial opportunities, we must also continue to advance the pipeline to make sure that we have consistent year-over-year growth in mid- and long-term. And 2024 is set to be busiest year in the history of Alvatech for our pipeline. We expect at least three additional filings in major market this year. This pipeline success brings near-term revenues to the business, but more importantly, it allows us to drive further growth and diversification in the business. And looking forward, we continue to work on business development deals for remaining licenses. We are happy to have announced recently that we partnered with Dr. Reggie's laboratories on AVTO3 for the U.S. and European markets. AVTO3 is our proposed biosimilar to ProLi and Xtiva, and we expect to file the application later this year. The transaction will generate significant milestone revenues this year due to the advanced status of the development and also secures a key partner in a critical market for our mid-term portfolio. I want to welcome Dr. Redis to our family of partners, which now stands at 19 globally and which covers over 90 markets around the world. And finally, on our year-end call, we provided guidance for 2024 and 2025. Based on the progress we are seeing on the commercial front and in our pipeline, We are in the position to raise the top-line guidance for 2024 to $400 to $500 million. And furthermore, we are tightening our EBITDA guidance from $50 to $150 million to $100 million to $150 million for the year 2024. With our multiple launches and more clarity on commercial and regulatory, Alvotek currently sits at an inflection point. where we are transitioning the company from R&D company into full-scale global commercial biologic company that we have always hoped to be. We could not be more excited at the opportunity that BioSimula presents, and I would like to pass the presentation over to Anil Oke, our Chief Commercial Officer, to provide further details on progress that we have made.

Thank you, Robert, and thank you for those joining today's call. I would like to start by providing further details on our exciting launch of biosimilar to Humira in the US market. As we have said on previous calls, our product profile has allowed us and our partner Teva to have broad engagement with the US market. That engagement is starting to bear fruit. Having interchangeability with exclusivity to the dominant firms on the market, combining that with a premium auto injector that is also deemed as interchangeable, and having dedicated manufacturing capacity for biosimilars has put us in a position to address both private label and non-private label business. On the private label part of the market, we are very excited to have teamed up with Qualand, which is the private label arm for the Cigna network. In late April, Evernote, a wholly-owned subsidiary of Cigna, announced that they will be making available Humira biosimilars at zero out-of-pocket costs through their Acrido speciality pharmacy, which supports over 100,000 patients currently utilizing Humira. It goes without saying that we are very excited about this partnership with Qualent and the Cigna Group. The changing environment in pharmacy benefit biosimilars is, in our view, a positive development not only for Humira, but also for future pharmacy benefit products, of which we have a number in our portfolio. Because of the unique nature of the arrangements, which was not contemplated in our original partnership with Teva, we have mutually agreed to change the economics from a revenue share model to a cost plus profit share model, which makes more sense for this type of arrangement where the payer is actually taking ownership of the product itself. The program kicks off in June and we have begun supplying our partner with products. On the non-private label side, we are excited to introduce with our partner Teva Simlandi, which is an interchangeable high concentration biosimilar to Himira. While I cannot provide specific updates on today's call, what I can say is there is positive momentum and we expect substantial coverage in the market to include at least one large payer These changes, once finalized, will take place on 1st of July and we expect that an interchangeable biosimilar to the high concentration form can drive uptake in the second half of the year. The product is now formally launched as of Monday by our partner Teva and we look forward to providing updates as we move through the year. As Robert noted, we have exceeded 1 million units in binding purchase orders for our Humira biosimilars in the US market, which shows the commitment by our partners to drive biosimilar uptake within the Humira market. Moving to the second objective that Robert mentioned earlier, we are very pleased at the continued progress with our biosimilar to Stellara. First, in the U.S. market, Celarsdi has been approved, which marks the second approval in the U.S. market for Allotec and the second product to gain approval under our partnership with Teva. Currently, only Amgen has secured approval for a Stellara biosimilar in the U.S. We have a license date of February 21st of next year, and our commercial supply production has already begun. We expect to initiate supply of Celarsity to our partner in Q4, which is the trigger for our revenue recognition. We also expect to gain interchangeability for Celarsity and expect to get designation either at the end of this year, which would be in time for our launch date or shortly after launch. Timing of interchangeability designation hinges on the FDA's interpretation of the BPCIA and provisions that determine exclusivity timelines. In either case, we believe we are in a strong position to address this high-value market on a product that costs over $150,000 per patient per year in the U.S. And of course, as excited as we are with StellarCity, we view StellarO opportunity through a global lens. We have launched our StellarO biosimilar in Canada, March of this year, under the brand name Jumpteki. Our partner in Canada is Jump and currently Enjin is the only other approval. In Japan, we have launched AVT04 this month through our partnership with Fuji Pharma. In Europe, We are approved in all markets and have planned launches commencing in Q3 of this year under the brand name of Usprova. We believe we are well positioned in all of those markets to be on the leading edge of the market formation, which puts us in a good position to compete broadly. We also feel, particularly in Europe, that the introduction of biosimilars can have a meaningful positive impact in overall growth of the molecule, as Stellara is a particularly high-priced product. Please keep in mind that Humira biosimilars helped contribute to four years of double-digit volume growth, and we see that biosimilars may have a similar, if not more significant impact in ex-US volumes for ustekinumab. Moving to the next slide, I would like to discuss the progress expected within our pipeline for 2024. AlvoTec is a young company, and for the first time in our history, we have a visible schedule of multiple high-value launches across multiple products and markets. This is truly an exciting time for the company. But while these launches are crucial, the ongoing advancement of our pipeline is essential to ensuring our continued success in the years to come. And 2024 is shaping up to be a banner year for our R&D team that has already demonstrated their ability to navigate the global regulatory environment with efficiency and purpose. This year, we are expecting three additional filings in major markets, starting with AVT06, our biosimilar to Eylea, a leading product in the ophthalmology space, Unlike Humira and Stellara, which are primarily pharmacy benefit products, Eylea is a medical benefit medicine in the U.S. The recent success of the Lucentis biosimilar in accessing the U.S. market, we think, is an important precursor to Eylea biosimilar adoption. We also expect to gain interchangeability for Eylea in a similar fashion as biosimilar Lucentis. Finally, it is important to note that we are also developing the high-dose form of Eylea. While we are not expecting submission this year, it is again validation to the market that Alvotec remains nimble in our development programs and dedicated to biosimilars broadly. We believe having high-dose form of Eylea will differentiate Alvotec in the marketplace. This forward-looking message and commitment to future biosimilars we believe impacts our current discussions in the market and that applies to all global markets. We are also expecting to file AVT03, our biosimilar to Prolia and Xgeva. While it is the same development program, there are two distinct market segments here as both a pharmacy benefit product and a medical benefit product as well. On Tuesday, we announced jointly with Dr. Reddy's laboratories that we have finalized a licensing agreement for the US market and the EU market. Dr. Reddy's is a multinational pharmaceutical company with a substantial presence in the US and in Europe. We are excited to welcome Dr. Reddy's as our partner for AVT03 in the US and in Europe. and look forward to further updates on the program. Moving on to AVT05, we recently announced positive top-line results on our patient trial, which provides us significant confidence in the finalization of this program in 2024. AVT05 is a proposed biosimilar to both Sympony and Sympony Aria, which also makes it a combination pharmacy benefit and medical benefit product. Again, we intend to seek interchangeability for our biosimilar candidates. For this program, I would like to highlight a couple of very important points. First of all, there is only one other company that we are aware of that has registered a patient trial. Secondly, only a handful of companies can boast having Humira and Stellara biosimilars in their portfolio. Moreover, no company can claim to have a portfolio that includes Humira, Stellara, and Symfony. This is yet another example of our portfolio approach to the market, which we believe fosters a welcoming environment in discussions with customers, by both ourselves and our partners. Finally, I would like to add that all of the progress you see in our pipeline will lead to substantial revenue for the company, and we expect significant impact from the milestones in 2024 with a sharp increase expected in the second quarter. Moving to the next slide, I would like to briefly touch on our longer-term portfolio. With regards to AVT16, our proposed biosimilarity NVO, we remain on track to initiate patient trials this year. There is currently only one other registered patient trial that we are aware of, and this is for a brand that has been rapidly beating market expectations year over year. Initiation of patient trials for AVT16 should also generate milestone revenue in 2024. Looking longer term, we continue advancing a number of programs, including AVT33, or by a similar candidate to Kate Ruda. As a reminder, AlvoTech aims to add one to two products every 12 months, which we believe is the optimal pace to sustain long-term growth for the company. Finally, I would like to close my portion of our prepared remarks by covering the fourth key priority that Robert mentioned in his opening statement, and that's regarding our ongoing business development efforts. I'm very proud of the fact that we have been able to build a global commercial presence through a network of sophisticated and knowledgeable partners that allow our portfolio access in nearly every market around the world. This has continued recently, as I have just mentioned, with the addition of Dr. Reddy's partnership into our network of various partners. We are extremely proud of our pipeline, which we consider one of the most extensive in the industry. Our next major target is to continue to partner our future pipeline programs, including AVT33, which is our K2 biosimilar candidate. We remain in ongoing conversations with multiple parties for global commercialization rights and hope to provide updates when progress is finalized. Outside of Keytruda, we continue engaging potential or existing partners for our long-term portfolio in markets, both large and small. And with that, I would like to turn the call over to Joel Morales for a financial update.

Thank you, Anil. I'll now provide some brief financial highlights for the quarter ending March 31st, 2024. In terms of liquidity, we previously announced that we accepted offers for the sale of shares from Icelandic and other European investors totaling 166 million. As of March 31st, we closed the period with 65 million of cash on hand, excluding 25 million of restricted cash. Regarding our operating performance, Total revenues for Q1 2024 were $36.9 million versus $15.9 million in the prior year, an increase of 132%. This sharp increase is driven by milestone revenues generated from our CTA submission for the ABT16 program, our biosimilar candidate to Antivio, and as a result of our achievement of European approval to market ABT04, our biosimilar to Stellara, under the brand UseProvo. Product revenues in Q1 were 12.4 million, down 3.4 million versus prior year. This decrease was expected due to focus and resource allocation for remediation and inspection readiness for the FDA, which has ultimately led to the approval of two separate applications in the U.S. market. This was also partially driven by a heightened amount of production to support R&D that will support three submissions in major markets this year. Already in Q2, we have ramped up production and expect a progressive increase in product revenue throughout the year, in particular as our commercial partners launch AVT02 into the U.S. market. We are also pleased to report that our commercialization partner in Canada launched AVT04 under the brand name Jamteki in late Q1, so our product revenues include some contribution from initial shipments to our partner. We expect revenues from ADT04 to increase throughout 2024 as we continue to launch into additional markets globally, such as Japan, Europe, and potentially from initial pre-launch shipments into the US. Our gross margin increased from negative 23 million in Q1 2023 to positive 17 million in Q1 2024, an increase of 40 million versus prior year. This was driven by the timing of milestone revenues, ABT04 shipments into Canada, and lower production-related charges and other costs associated with FDA inspection readiness. We do expect our gross margin to continue to increase as we realize increased scale of manufacturing while expanding on our launches. We anticipate that higher volumes will have a favorable impact on our margins, particularly as we increase absorption of our fixed costs. In Q1, 2024, we reported adjusted EBITDA of negative 38 million, which represents an improvement of 27 million versus the same period in the prior year. This is largely driven by the gross margin contribution in the period, coupled with overall lower R&D and G&A costs on an adjusted basis. Please see the table provided in the appendix for a reconciliation of our reported to adjusted results. We closed the period with 277.9 million shares outstanding, including unvested earn out shares. I'd like to highlight that during the quarter, 19.8 million earn out shares vested, reducing the unvested portion to 19.2 million predecessor earn out shares. This was the result of the performance of our stock during the quarter. Turning to the next slide, you will find our revised outlook for 2024. Given the positive commercial contracting updates for AVT02 provided by Anil earlier and the recently signed licensing agreements we've executed with new and existing commercial partners, we are raising our revenue guidance to between $400 and $500 million. We are also revising EBITDA guidance to $100 to $150 million, which is the upper end of our previously provided range. We expect EBITDA contribution for the full year to be relatively balanced between the first and second half of 2024. As mentioned on our last call, we expect this year to be lumpy in terms of our operating results. We previously guided Q1 total revenues to be lower than Q4 2023. And that adjusted EBITDA would be negative for reasons I described earlier. That said, we did significantly reduce our negative adjusted EBITDA year on year, signaling the beginning of our transition to profitability. We will continue building on this momentum in Q2, where we expect to deliver the strongest quarter yet for the company in terms of revenue and for the first time in the history of our company, positive adjusted EBITDA. This will be driven partially by an increase in product revenues due to the initial launch of ABT02 in the U.S. and ABT04 globally. Milestone revenues will disproportionately contribute to total revenues in Q2 as we have good visibility in achieving a number of milestone recognition triggers in the quarter, such as positive top line results for ABT03 and ABT05. Teva's first launch of AVT02 into the U.S. market and Fuji's first launch of AVT04 into the Japanese market and initial 04 launch quantities to our European partner in preparation for their commercial launch in Q3. Delivering our first positive EBITDA quarter and half year is a significant milestone for Alvatech and we will continue to be focused on operational execution to maximize the potential of our launches in the second half of 2024, where we expect product revenue to overtake milestone revenues towards the end of 2024, driving overall revenues and positive adjusted EBITDA. As I mentioned, adjusted EBITDA for the year is forecasted in the range of $100 million to $150 million. This includes continued R&D investment behind our pipeline as we advance three of our programs through final stages of clinical and transition our ABT16 program into the clinical phase. Turning to the next slide, you'll see that this guidance is driven by a combination of our newly planned product launches and significant development and performance-based milestones we expect to achieve throughout the year. We have begun to take all the necessary steps to successfully enable our planned launches in 2024. Upon approval of ABT02, 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 this scale for our rest of world markets as of the end of last year and expect to be manufacturing at the same scale for the U.S. by mid-year 2024. In the meantime, we have supplied our U.S. commercial partner, Teva, with initial pre-launch stock for commercialization, which has now started, as we recently announced. Our revenue guidance assumes successful contracting on formulary with key payers with modest penetration, making a significant contribution to our top line. 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 ADT04, our biosimilar to Stelara, we have already launched in Canada in Q1 and in Japan this month, followed by Europe in the third quarter of this year. All requisite regulatory approvals have been secured for these markets. With FDA approval already achieved, our launch of SELARSDI for the U.S. is planned for February of 2025. However, our forecast assumes modest revenues in late fourth quarter of this year as we start shipping pre-launch inventory. These launches are not only driving growth in product revenues, but also providing greater diversification in terms of our commercial product offering and geographic concentration. There are thus important cornerstones of our strategy to drive growth and profitability over the mid to long term. In terms of milestone revenues, as mentioned earlier, we are anticipating completing clinical development and submitting marketing applications for three additional biosimilar candidates in major markets this year. Namely, biosimilar candidates for Prolia Xgeva, Symfony, Symfony Aria, and ILEA. Additionally, we plan to commence clinical studies for our AVT16 program, our proposed biosimilar to Intivio. Commencing and successfully completing clinical phases of development and regulatory submissions of our biosimilar programs are key events that will continue to drive milestone revenue recognition. We're also expecting to recognize milestone revenues based on the achievement of certain performance-based targets, such as first launch of our biosimilar to Humira and Stellara into new markets globally, as well as the achievement of cumulative net sales targets for these launched products. overall we expect milestone revenue contributions to be significant this year as they could range up to 35 to 45 percent of total revenues in 2024. we're excited to demonstrate the continued advancement of our pipeline which will propel sustainable long-term growth for the company the last point i'd like to make is with respect to licensing as noted earlier in the presentation by anil we have an active bd pipeline which includes our avto3 program in bone disease Just yesterday, we announced a new deal for commercialization of ADT03 in the U.S. and Europe, including the U.K., with related upfront payment and near-term milestones. Our BD activity has also focused on our oncology and early phased assets, and we are actively pursuing licensing deals for these programs with a strategic partner or partners providing upfront cash and milestones over time. As we wrap up today's earnings call, I want to take a moment to reflect on the positive developments we've shared. Our recent successes highlight the strength of our strategy and the dedication of our team. In light of this positive momentum, I'm pleased to inform you that we have begun to proactively explore refinancing options for our current debt. Our objective is to reduce the cost of capital and extend any near-term maturities. This initiative aligns with our commitment to enhancing financial flexibility and sustaining long-term growth. We believe these efforts will position us even more favorably for the future.

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

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. We will take our first question. And your first question comes from the line of Balaji Prasad from Barclays. Please go ahead. Your line is open.

Hi. Good morning, everyone. Great to see the progress achieved till now and also the guidance raised. Quite a few questions, but we'll stick it to and come back later on. Firstly, on the guidance. Is it fair to say that the majority of the guidance revision owes to the private label deal with Collent? And also maybe I think I'm being reasonable in assuming that the 1 million purchase orders that you commented upon is all going to be booked in 2024? Lastly, on the question on guidance itself, did Telara play any part in your guidance revision? Second question is on gross margins. Similar to what I asked last quarter, I understand that your revenue recognition and incurred COGS can vary. also based on our milestones hit, but it looks like ConsenSys is struggling to model gross margins accurately. So can you help us understand better the gross margin for 1Q itself, as ConsenSys has missed it by nearly 25%? Thanks.

To answer your first question, hi Balaji, it's Joel. Thank you so much for your question. To answer your first question, I think you are correct. I think the guidance change was really driven by the contracting outcomes in the U.S., in particular driven by O2. And also to answer your question, O4, there was no change in our assumptions around Stellara in the U.S. in changing that. Another 1 million units, Joe? Yes, and it does include the 1 million units, and yes, confirmed the 1 million units are expected to be sold this year in 2024. Further to your question on margin, we haven't provided any guidance on margin just given the number of variables that we have. In particular, having significant swings in margin, we have multiple product launches into multiple markets. We also have a number of milestones which also drop through at 100% margin in our outlook, meaning a dollar of milestone revenue drops down to margin. But I will say that Q1 has a lower margin than we are expecting full year, in particular because you haven't seen the full impact of the milestone contributions. You saw in our prepared remarks that we are expecting more significant step-up in milestone revenues in the second quarter, which are going to drive our margins higher as we start inching towards the second quarter as well as the second half of the year. I will say in terms of our spend in Q1, you can maybe to provide a little bit more clarity, you can expect our Q1 run rate to temper in the second half of the year, in particular on R&D spend by about 20%. So those are the remarks that I can make maybe first half versus second half as it relates to margins. But surely you can appreciate the number of variables here that we're trying to be transparent on.

I appreciate it. Thank you.

Thank you. We will take our next question. Your next question comes from the line of Vinit Agraw from Citi. Please go ahead. Your line is open.

Oh, hi there. Vinit from Citi. Thanks for taking my question. First on guidance for 2025, do you continue to expect twice the growth based on the revised guidance as you did previously? And just wanted to check on AVT06, your biosimilar for IDEA. Just wanted to understand what are the launch timelines you're working on in the U.S. given the IP litigation. And maybe if I can just ask one question on GLP-1. I wanted to understand if you have any GLP-1 capabilities or ambitions given such an attractive market developing there. Thank you.

Hi, thank you for your question. This is Joel, just on the first part of this.

We have not changed our guidance as it relates to 2025, in particular in light of our change to 2024 guidance. I would say that we're still targeting in the $600 to $800 million range of revenues for 2025. I'll hand it over to Anil.

Thank you very much, Joel. Hi, Vinit. Nice to hear your questions. Regarding ABT06, as we announced, we are filing our program within this year. So we will have the approval already within next year. In terms of launch timing, we have not guided the market on a specific launch timing. But what you are aware, of course, AVT02 and AVT04, we have made very strategic attempts on the IP litigations and securing early market entries in various geographies. So for AVT06 also, we have a strategy in play. And we will, of course, deploy our strategy after the filing. On your last question, when it comes to GLP-1s, as a company, we have capabilities to develop all these products. And also, we have a full play in motion here when it comes to different therapeutic areas, the technologies and everything. As of today, we do not have a GLP-1 in our portfolio.

However, in the similar domain, we have multiple ideas in our long-term pipelines.

Thank you.

Thank you. Once again, if you wish to ask a question, please press star 1 and 1 on your telephone. We will take our next question. Your next question comes from the line of Balaji Prasad from Barkas. Please go ahead. Your line is open.

All right. Thanks for the questions again. Following up on your Redis collaboration, While Ready is a company I've followed for nearly 20 years, I still thought it was an atypical choice. Help us understand what you saw Ready is bringing to the table, and how different or similar are the economics for Alvatech in this? Are you getting better or favorable terms? And lastly, just some of the expectations around the formulary changes expected on the 1st of July, and what do you think would be an optimal scenario for Alvatech? Thanks.

Thank you Balaji for the question. So let me start with Dr. Redis. First of all, we are very proud to have a longstanding partner like Dr. Redis for the US and for the European market. A couple of things to point out here. First of all, in Europe, it's a semi-exclusive arrangement. So we do have still one right available for the European market to strengthen our coverage. And we are working on that coverage as we speak. We will announce that in due time. When it comes to the authorities as a partner, as you very well know, especially in the U.S., they have been one of the fastest growing companies lately. Their capabilities on the injectable space and the hospital space is very strong, and they have big vision for the U.S. market. And as you also know that Denosumab, among all other pipeline assets, is one of the probably the most competitive space. So having a partner like Dr. Edis who knows how to play the branded as well as the generic game is a significant advantage. Last but not least on AVT03 specifically we have an innovative highly productive cell line. which will also position us competitively in the market space when it comes to cost of goods leadership. So we have multiple fronts here, including Alvotek product profile and the doctorate capabilities that are really strengthening the market position of Alvotek in the marketplace. When it comes to your next question on the formularies, so what I can in summary say, we will be definitely having a formulary coverage in one of the large formularies. Of course, we will and our partner Teva would announce that when the time is right. But what I can say is that all the conversations we are doing right now is very positive towards our product. And as you have heard, we reinforce that by disclosing having over 1 million units of purchase orders just for the U.S. market. I think these two information should already give a comfort to the market that we are going to be the

one of the leading other lima biosimilars in the U.S. market.

Thank you.

Thank you. We will take our next question. Your next question comes from the line of Ashwani Verma from UBS. Please go ahead. Your line is open.

Congrats on the progress. Thanks for taking our question. Just a clarification on the 1 million units that you mentioned about biosimilar Humira. Is that unit pens or is it PRA? I just wanted to get this clarification on that. Thanks.

Thank you, Ashwani, for the question. So, yes, it is in units per pen.

So we basically have POs over 1 million pens.

Thanks.

Thank you. Once again, if you wish to ask a question, please press star 1 and 1 on your telephone.

There seems to be no further questions at this time.

I will hand back for closing remarks. Apologies, we do have a question that's come through. Please stand by. Your question comes from the line of Vineet Agrawal from Citi. Please go ahead. Your line is open.

Yeah, thanks for taking my follow-up. I just wanted to check on the interchangeability. I just wanted to understand how significant that is in terms of gaining market share because One of your competitors seems pretty relaxed not having that interchangeable designation and also given that there is a push from FDA for more sort of general labeling. So I just wanted to understand this sort of two different views in the market from two different players, how significant that is in terms of getting market share. Thank you.

Thank you for the question. We believe it's a significant advantage. not only from interchangeability perspective but also the exclusivity that comes with the interchangeability as we have announced we also have exclusivity on the leading presentation up until minimum may 2025 which we believe is a significant competitive advantage we also believe that interchangeability is very helpful in reducing the friction of conversion So, of course, our competition might have different ideas and different positions, but in our view, having an interchangeability versus not having an interchangeability is a better position to be in the marketplace. Thank you.

There seems to be no further questions. I will hand back to Benedikt Steffensen for closing remarks.

Thank you, Hadi, and thanks to all our participants in the call today and on the webcast. On behalf of the AdvoTech team, I just wish you a productive rest of the day. I look forward to speaking to you all again. Thank you.