We're gonna get going here with our next company presenter here at the B of A Annual Healthcare Conference. I'm pleased to be introducing Alvotech. Joining us from Alvotech, we have Balaji Prasad, Chief Strategy Officer, and Benedikt Stefansson, VP, IR, and Global Communications. So, gentlemen, thanks for joining us here at the conference. Thank you. Jason, thank you very much for hosting us. Really appreciate the opportunity to present Alvotech and to have this discussion with you. Great. Great. Thank you. Maybe, just big picture, if you can kind a outline kind a where you see the company. It's a dedicated biosimilar play. You've invested a lot as a company in manufacturing, to have that, strategy-wise. Do you see the partnership model as sort of the model that you'll pursue, at least in the near to medium term? Is there any strategic ambitions to vertically integrate at all and to take biosimilars to market, you know, as a company one day as you grow and get more, I guess, gross profits in the door? Maybe just kind of outline kind a where the company is. I know that biosimilars as a category has not been for the faint of heart. Some companies have come and gone in this space, but I think you guys believe you're positioned well to be one of the sustainable entities in the space. Thank you, Jason. A few questions within that. Let me break up each one of those. Starting with our focus, right? When the company was incorporated and set up, 10-plus years ago, our focus was really to be a pure-play biosimilars company, have a comprehensive pipeline, which we have achieved, which we achieved very well, rather successfully. There was a specific reason why we went off to the partnership model because that let us have flexibility in multiple ways, which is have a broad pipeline, have multiple development projects. Also, the company's stated mission of providing affordable biologic drugs globally, that is something that we can do with this partnership model, where we can be present in 90-plus countries. Not just this, not just a U.S. story. It is a global biosimilar story for Alvotech. Which is what we have been able to execute successfully till date. Having this pure-play focus really let us work on our developmental projects. We were able to get and launch multiple biosimilar projects in it. What that meant is that today we have the largest biosimilars pipeline that we know of compared to any of our peers. Yeah? We have close to around 30 projects. As far as we know, this is the largest. It also lets us be present in most of the key opportunities which are coming up, having partners who successfully execute the commercial front. This is a strategy that has worked very well for us. Benedikt? Yeah. If I just look a little bit more inward, you know, what makes us really different from the competition is that this focus that we have on biosimilars. Mm-hmm. Our ability to both develop and manufacture, which you do not see basically in most of the other players, means we can basically specialize on the subject of biosimilars, find the best targets, select them, create this massive pipeline. We have a development group that is fairly unique. We can go all the way from cell line development down to, of course, approval. For example, in cell line development, what we have done over the past few months is that we have developed 15 different cell lines, choosing the best targets from the different molecules that are going to come off patent in the next few years. Yep. These are ready to go. This year, we're putting five into the development pipeline or the early stage, so process development. We're gonna be doing this at this cadence going forward, so four to six per year. Mm-hmm. Going forward. When you move to manufacturing, manufacturing works hand in hand with development from the very beginning. If you are a company that specializes either in development or manufacturing, you do not have this synergy between the two groups. You have to have this technology transfer from the development stage to the manufacturing stage, which is often error-prone and can also slow you down. Or you are relying on CDMOs to manufacture, and you have to wait for their capacity, both for the clinical stage and plus, of course, when you want to launch. All of this we can control. It is all under one roof. Therefore, our execution is going to be much faster and more efficient. Yep. Coming to the last part of your question about if we would see or consider vertically integrating, I would not say never. Say never is a big thing, but I do not think with the way this model has been successful for us till now, that is something under consideration right now. If in the future, if there is demand and changes in the environment which dictates it, we will consider it. For the near to medium term, as far as I can see from here, I do not think there is a model that we are looking to change. Talk about, maybe the key success-based metrics that you focus on for the business. You know, as I think about biosimilars, you obviously need a steady cadence of launches, right? At some point, products start to face some pricing pressure years three through five, you know, at post-launch. It is important to kind a have a steady momentum of products launching through your partners. Not all launches are created equal, so. Absolutely. They need to be high-value launches within that. What are some of the guideposts that drive your strategy? What are some of the things that you guys focus on that you wanna deliver on? Yeah. Absolutely. I think, Benny alluded to it in his earlier comments, but obviously, the total addressable market is going to be something which is a key determinant. And then we'll also look at what is the competitive landscape. Is this going to be a limited opportunity for us? Is this going to be something which we can take globally and not just be leveraged or tied to one or two markets? So multiple factors, regulatory, technological barriers, the market size itself determines that. Yep. Yeah, looking beyond this, of course, what are the success factors? Ultimately, again, how fast and quick are we able to take it to the market once we get approval? And how well we choose our commercial partners who can take this to the broadest extent and be able to leverage this? You commented about pricing, so I want to spend a minute on it. Ultimately, biosimilars, three to five years, I think that's a pretty good span that you gave out that we'll see this improvement in market and at that point at some point will plateau. Biosimilars will not see the steep cliffs that generics have seen on day 181 or when we have, like, 5, 6, 10 players in the market. We will not see that, multiple reasons, right? The cost of development is prohibitive, so your investments are high, and you have limited, with the exception of some companies, some products like Humira or Stelara, most will still be limited co-opportunity opportunity, or limited competition opportunities. There is going to be this cadence to it. What we have done to offset or navigate this cadence is that we have a steady stream of launches coming through, which is where our broadest pipeline in the industry really makes a difference. We started with Humira last year, Stelara this year. By the early next year, we'll have six products in total with three to four more products coming out by the end of this quarter in Q4. We'll have a substantial number of launches coming through. What it means is that we are able to navigate the pricing pressure in any one product, in any one market effectively. Having ex-U.S., a significant portion of our revenues ex-U.S. also helps us navigate this. We have set out our 2028 guidance, and you'll see that EBITDA is ramping up substantially to 2028, which offsets any kind of pricing pressure in a particular or two particular products. Okay. So when I think about your criteria for what to go after, it makes me wonder what would not you go after? On the one hand, you have something massive like the PD-1s, which you probably just have to go after, even though you know there will be 15 players probably, and it will look like Humira. And you, you have a view on how you win there, right? Mm-hmm. You have something like Simponi, right, which is smaller. Yep. I imagine you don't wanna go sub a billion dollars in revenue unless the FDA changes the requirements and the costs tied to a program. Is that a fair way to kind of think about the range of, at least the wide ends of the spectrum in terms of opportunity sets? I think that's a pretty good way to look at it. I'm sure you and as well as everyone in this room know that there's still numerous biologic drugs, which IQVIA had called out earlier in its February report, that do not have biosimilars in development. Most of these tend to be between the $500 million-$1 billion range. I think once we see this cost of development go down, which we have reasonable belief to think that that's something likely in the near to medium term, we'll probably see greater development for programs on this. I think that that's a good metric to look at in terms of the time, size, and what we think is achievable. Yeah. And, and you, I mean, Balaji, I think you covered it very well in your earlier answer that we, we look at these other criteria than the total addressable markets. Yeah. You know, barriers to entry, our ability to differentiate, and so on. We have done some of that. For example, in the Humira market, we're differentiated by our auto injector design, which is something we developed very early on and proprietary. We'll be using that for other products in a similar space, arthritis and such. Of course, it's also like actually our developers like to look at products that are difficult to develop. Where there are technical difficulties in the development, that also means that we can leverage this expertise of this almost 500 people that we have in R&D already, you know, to develop very important. Yeah. Products. When you think about a steady state, EBITDA margin for your business, is that something that, irrespective of what the partnership economics, how they flex, right? If it is private label, if it is, you know, a partner like Teva selling more through its commercial formulary type of business as opposed to private label, in the end, that is all gonna be kind a captured in your EBITDA margin, up below the EBITDA margin dynamics, if I understand it right. How do you, maybe correct me if I am wrong, and then. Yeah. Then sort of what do you see as sort of a steady state EBITDA margin for the business? I think we can take our 2028 target as a good proxy for a steady state business, right? We have our 2028 target, which is like around $1.5 billion in revenues, out of which around $1.1 billion-$1.2 billion is product revenues. And we're looking at net margin, EBITDA margin of around 40%-45%. That factors in upcoming launches that we anticipate in the next few quarters. Mm-hmm. I think that's a good metric to go with. We also have put out our product margin ranges that we expect product margins to be around the 60-65% range. This is a function, of course, of our revenue share agreements, right? We have clearly stated that we like this partnership model. It's been very successful for us. We're happy to split revenue 60/40. That, in general, has been the broad threshold that we have worked with, be it on the formulary side or on even private label deals. That's kind of where the ultimate EBITDA economics comes to almost the same. Yeah. Okay. Maybe shifting gears to Simlandi or biosimilar Stelara, you know, I'd love to get early impressions so far. You know, when I listen to J&J talk about, year one's gonna look like the Humira year one, right? Mm-hmm. I take that to mean we're gonna get the majority of the volume. We're gonna compress price. That's how to think about our year one. For the biosimilar side of the equation, that means low volume share, low dollars in the door. Maybe it becomes like more of a 2026 plus opportunity. Yep. I don't know if you'd agree with that sort of logic. I think there's clearly a ramp to any biosimilar launch. We should not, of course, be expecting peak biosimilar sales in 2025. Would it ramp up in 2026, and would it also ramp up in 2027? That is possible. That's 2027. Definitely, there's going to be a biosimilar conversion and biosimilar sales ramp up into 2026. Mm-hmm. For sure. So beyond that, I again, just to reiterate a point, not to do it to death, Stelara for us is not just a U.S. opportunity. It is an ex-U.S. opportunity too. For us, Europe, Stelara has been significantly better than what we anticipated, what we expected. These dynamics continue to carry through. In the U.S., the market's still forming. We'll see how the competition shapes up and how the market evolves. I think there's going to be a conversion ramp up, or at least over the next five to six quarters. In terms of guidance, what we have said is that by the end of this year, I think with biosimilar Stelara, we would expect to have around the low double-digit market share, which I think is a reasonable metric to go with. Anything else, Benny? Yeah. I just wanted to reaffirm basically that, some of what you just said and what Balaji described in terms of the dynamics of the market, especially in the U.S., this is already baked into our expectations. None of this has actually been a surprise to us. Yeah. And so, you know, when you think about ramp curves for these immunology drugs that are dosed chronically, par I guess they're like, PBM drugs, right? There's a rebating dynamic. When we saw maybe the first wave of biosimilars in the U.S., they were a lot of oncology drugs. They were like part B drugs. And they actually launched pretty fast. You think about Coherus with Udenyca, some of the Amgen biosimilars. I mean, they were getting to $300 million-$400 million in sales pretty quick, for companies that were disclosing revenue. So is the answer really, well, this channel has rebates. It's a chronically dosed. There's grandfathering. There's some of these just legacy issues that really slow the adoption curve in, say, the U.S. market, whereas maybe in European or ex-U.S. markets, there's more forceful mechanisms in play that help you get a faster uptake. I'm just kind of curious if you can sort some of those dynamics out. Sure. Parsing it first within the European market and again, and then the U.S. market. The European market, clearly, I think, having multiple countries have different models. Ultimately, what it boils down to is single-player mechanics or, or limited-player mechanics, right? Clearly, that adoption curve is going to be much faster. We saw that from 2012, 2013 onwards. While the U.S. still struggled between 2015 to 2019 to achieve biosimilar adoption, Europe was substantially at a 70% market conversion in most markets. It was only post-2019 that the US really saw steeper biosimilar conversion, for example, with the rather successful launch of Humira in 2019, right, with the pegfilgrastim markets. Clearly, the oncology institutional sales model helped there. Whereas on the formulary side, it's a different metric because there are multiple things which play, market gauging each other's competitive moves. The adoption curve has been lower. That said, overall, in general, the U.S. is definitely seeing faster biosimilar launches and adoption than what we saw in the period between 2015 to 2019 when innovators were still focusing on and successfully deploying patent tickets and rebate mechanisms to prevent biosimilar offtake. Yeah, I mean, I think, as you described, the dynamics in the U.S. market have been a little bit different, you know, compared to previous history with the biosimilars entry in the U.S., and plus, you know, compared to Europe. I would think that the U.S. market will, in the near future, start behaving a little bit more like Europe. The ramp-up will be faster. We'll also have products now coming on in our portfolio that are stronger ex-U.S. than they are in the U.S. Mm-hmm. That's also gonna be an interesting dynamic to see play out. Yeah. I think in general, just, you know, we will see. Okay. For Simlandi, at least in the U.S., do you see sort of the adoption curve for biosimilars looking somewhat like Humira, at least in year one, two? How do you see the private label mechanism, which seemed like it got a lot of traction with Humira? Is that sort of the, do you see that having a meaningful slug of the market, that effectively payers are gonna wanna have some aspect of the economics in control with private label product? Do you see that as an important trend to think about? When you say similarity in Humira, do you mean Stelara and Humira or s-s? Yeah. Sorry. Stelara, Humira, just adoption curves, year one and year two. And does that look a lot like Humira? The adoption curves are likely to look similar, taking around, I would say, two years, give or take, two years to achieve like a biosimilar conversion of around 50%. The competitive dynamics also rather similar with both seeing fairly high number of companies launching. We will see what our expectation is and that it communicated is 50% market conversion by the end of 2026. We would expect to have low double-digit market share with Stelara too. With as regards to private label deal, again, we saw that being fairly meaningful with biosimilar Humira. With Stelara, it is still a marketing evolution. We are still in the early days of market formation. We will have to see how private label deals or unbranded deals will play out. Yep. And then if you juxtapose that with sort of the expectation for Europe or, or U.S. markets broadly, however you wanna define that for biosimilar Stelara? As I said, biosimilar Stelara in Europe especially has been significantly better than what we expected. I think in the near term, that will still likely be a stronger driver of growth for us. We will see a more gradual ramp up in the US market. Okay. Yeah. And then maybe just, some of the early pricing action, in the U.S. on, biosimilar Stelara, seems like they're maybe coming in at $500-$600 a month, which is maybe similar to like the price discounts that ultimately got implemented for, Humira. Was this like a surprising level of discounting to you? I know you, you had some comments on your recent earnings call about sort of, we do not wanna go to this race to the bottom with other entrants who are, who are compressing pricing. And so I'm just kind a curious how you how you guys think about that. It's a great question. I address that in two points. As tied up to my response with the first question as to what makes Alvotech different is we see ourselves as being a very dominant, sustainable, long-term player in the biosimilars field, not just in the U.S. but globally, which means that there is a threshold below which we will not go because we do not think that is sustainable. We may have one or two companies come and take pricing down for a particular product, but we do not see that as a sustainable competitive dynamic for those companies, nor see them as serious competitors in the long run. That is one. Specifically with Stelara and our playground, this was something we anticipated and that we baked into our guidance. Our guidance, which was very well received, and we recently raised it upwards, already factored this pricing dynamic with Stelara into our thoughts and our guidance. Okay. Maybe can you address, you know, I think that I don't know. This is a misperception with investors 'cause we oftentimes think of like, "O US pricing is way worse than OUS," right? What you're suggesting is perhaps that maybe the OUS pricing is as good or better OUS And so these are better maybe markets to play in. Yeah. Than the early experience maybe seen vis-a-vis, Humira or Stelara. I think that's a pretty fair observation. Being analysts in this space over the last 20 years that I've been covering the space, clearly that has come as a surprising or a positive revelation for me over the last couple of years where the European pricing mechanism has been very profitable. That was unlike, let's say, pre-2010s or 2010s when the US was always the more profitable market. Mm-hmm. We have seen that play out. Not just being more profitable, but it is also very stable and sustainable. Again, that really helps us with our focus on the European market and the ex-U.S. markets. It really helps us. I do not expect the dynamic to change anytime in the near future. Yeah. And then as it pertains to, you know, OUS markets are more fragmented, but your partnerships with OUS entities are as a% of gross profit. So if there is added SG&A cost tied to commercializing that in, in a fragmented revenue base, that doesn't impact your bottom line ultimately. No. Typically, our partnership models focus on revenues, and it's a revenue split. Really, the SG&A cost and all does not really come down to us, and we're not implicated in it. Our partners decide how much they want to spend and what they want to do. For us, it's a revenue split with most partnerships. Really, no bidding there in terms of how they decide to tackle the market. Again, having this partnership model really helps us capitalize on numerous markets across the globe effectively. Yeah. So I realize, like, you know, it sounds like there's a lot more enthusiasm for what's going on O.US as opposed to U.S. Yeah. With respect to U.S., though, you are getting some momentum with Humira from a volume share perspective. I think AbbVie likes to make a lot of, like, the category shifting to innovative brands like Skyrizi and Rinvoq. Mm-hmm. When we look at the IQVIA data, only down mid-single digits. That may not account for private label biosimilars as well. Just wondering if you can speak to the dynamics. Do you see the market is still pretty large and there is, you know, incremental value capture there for you? Absolutely. You hit the nail on the head, especially with the stable market trends. What we have seen, two points to it, right? When our biosimilars enter a market, especially in Europe, we have seen the volumes, overall volumes expand substantially, as market, there is greater option and greater prescription of biosimilars. Lower affordable biologics clearly have expanded the volumes. Coming to the U.S. and your question around Humira, I mean, it is still an extremely relevant drug. Having this dynamic of lower-cost biologic drug for Humira clearly, again, gives us some volume advantages. That is in net what we are seeing here. Anything else, Benny? Yeah. Absolutely. I think, you know, as you alluded to, we saw, for example, the Stelara market in Europe increased by 10% last year. That is because of biosimilar entry and. Volumes. Say volumes, sorry. Yeah, and that, that was actually, you know, we were the first to enter, so we probably played a pretty big part in that. You know, you will see similar dynamics also playing out, I think, for these products in the U.S. and the Humira mark. Humira is certainly still a biologic that a lot of people are. Yeah. Using and have had great benefits from. I see that market having the potential to expand even further. How should investors think about Alvotech and CapEx investment? You know, the manufacturing facility that you have as you take on more volume, I do not know if you have characterized, you know, what proportion of your capacity is being utilized, you know, as you take on more, how well you are positioned to do that, or is there an incremental CapEx investment that needs to be made? Great. Two things. Firstly, our current capacity that we have installed. This is, again, I would say I would chalk it up to the foresight of the management with sort of the company and established. We are good for capacity, not just up to 2030 but beyond 2032. We do not need any substantial incremental CapEx. Our CapEx requirement for this year is around $60 million-$70 million. This is not going to increase substantially. We are really good on current capacity. What it means, of course, is that as we have more products in the market, as we get more products commercial, we will see the benefits of this capacity translate into a substantial operating leverage advantage, as we start to expand further and our revenues go from $600 million at the end of this year to, let's say, $1.5 billion by the end of 2028. Mm-hmm. We'll see the operating leverage impact come through with no incremental capacity, no incremental or no substantial investments needed. Yeah. And remind us, I mean, you have one dedicated facility, right? So how do you sort of approach the idea of having some redundancy manufacturing-wise in the event of if there were ever any sort of FDA inspection issues that maybe emerge? How reliant are you, you know, on single facility and those dynamics? Yeah. This is, of course, not something, you know, where we can very publicly talk about all the different aspects of it, but we do have some contingency planning for this. Yeah. Sure. We have already, yeah, put in place some contracting. I mean, it's inevitable, right, when we have business like this, and you rightly called out, because ultimately, having these Humira setback two years ago was really a lesson for us also, right? We have multiple partnerships, multiple discussions in place. Mm-hmm. We have MSAs in place with partners as a contingency plan, as a business contingency plan. Not something where our revenues or target should be threatened if something happens. Yeah. Okay. Maybe shifting gears to another product-specific question, biosimilar Eylea, which is an interesting target. Amgen recently launched. It looks like they're having pretty good early momentum with, I believe they have a low-dose version of Eylea, which I think makes up 70% of the dollars for the innovator company. You have a low-dose product that's pretty far along, you know, maybe just level set in terms of timing there and kind a how you're seeing that market evolve. Yeah. This is a very interesting space to launch into right now. Most of our competitors are either injunctive or are in litigation. We see that unless that is settled, they will not be able to launch until 2027. Mm-hmm. We will have the ability probably to launch, you know, very soon after we get approved. We have also, you know, basically been working on the formulation as Amgen did. So that is another factor in with why, why we are in this position that we are in right now. Yeah. Rather than what the others are facing. We expect to be in market next year. Yeah. For the yeah. Yeah. Is it important, do you feel like based on what you're seeing with Amgen and where the market splits, that a low-dose alternative to Eylea can be highly competitive in the space? I know you have a high dose that's earlier back in development, but just trying to understand the importance of does the high dose enable you to more fully compete maybe in a smaller subsegment of the market and with the value of each of those presentations? Yeah. We see the dynamics in the Eylea markets. I'm talking about the originator, you know, with respect to the high dose versus the low-dose version is still playing out. And as you pointed to, actually, in value terms, they are already, it's a significant share of their revenues from this segment. Mm-hmm. From this Eylea molecule. We think that is still evolving. There are certain dynamics of, for example, the delivery mechanism is still being approved, and that could also increase or ramp up the adoption of the high-dose version. We certainly wanna be ready for that, and we are ahead of the competition. Yeah. With our development of the high-dose version. Is there any, you know, we oftentimes hear about this space in the buy-and-bill dynamics as something that, will, the eye care professionals that do these intravitreal injections have a bias to the brand. I guess we have one example with the Lucentis launch to point to and how these behaviors evolve when you have a low-cost alternative available to you. I'm just kind a curious if you see that as a barrier to the biosimilar adoption curve or you see this as a, and where this kind of fits in the spectrum of you have oncology launches and biosimilars, you have these PBM immunology type drugs, and now you have the ophthalmology products. I'll address that in general, and then Benny will have some more specific comments around Eylea itself. I think overall with the buy-and-bill segment, what we have seen, and I'll go back to the earlier example that we discussed of Udenyca, clearly there are incentives for prescribers to move to biologics, to biosimilars by the pattern. Having this ASP plus 8% reimbursement is a substantial incentive to them. We saw one of the reasons why Udenyca had such a rapid conversion, right? We would expect similar dynamics here. Anything on Eylea that you wanna share? Yeah. I mean, I think we've seen some data from surveys of ophthalmologists and so on that show that, you know, they are certainly open to this, to prescribe biosimilars to their patients. Mm-hmm. I think this is just something where, you know, this is gonna be sort of one of the first markets to evolve in this way in the ophthalmology segment. We'll see how that plays out, but we still see that the biosimilars have. Yeah. Have an entry. Your current last question here. Yeah. Your current mix of partners, do you see these as partners that are committed to the space and partners that you wanna continue to, like, sort of do business with and simplify, you know, your business dealings versus having a disparate set of partnerships? I'm kind a curious how you think about that. It is a great question, and probably a good one to leave with too. I mean, we have gone through extensive search before, ultimately landing on these partners, right? We take, for example, Teva, has been a phenomenal partner for us. The partnership has been great for us. They, even going back as far as helping with the regulatory approval, as we all know, two years ago. Then there is Dr. Reddy's and Advanz Pharma or STADA. These are all very, very dominant players in their respective geographies. Reddy's has been a phenomenal competitor in the U.S. Company's been present for three decades and has a great brand and reputation in Europe too. Likewise with Advanz or STADA. Clearly, we would think that any partner that we chose will be similar in terms of commercial strength and reputation as these partners. The current existing partnerships, again, have been holding us in very good stead. Again, do not see any substantial changes to that. Okay. We're out of time, so gentlemen, thanks for joining us. Justin, thank you so much for inviting us, and have a great conference. Thank you. Thank you very much.