Alvotech(ALVO) - 2024 Q4 - Annual Report

Executive Summary and 2024 Highlights Company Overview and Strategic Achievements Alvotech reported record financial results for full year 2024, achieving positive EBITDA for the first time, driven by substantial investments in R&D and manufacturing - Alvotech achieved record revenue from product sales and development milestones, along with positive EBITDA for the first time in its history, demonstrating strong R&D and manufacturing capabilities[3] - The company successfully diversified revenue across products and geographies, with product margins improving quarter-over-quarter due to higher utilization, greater scale, and process efficiencies[3] - Alvotech completed a record year in development, filing three new biosimilar submissions in major global markets, and is poised for rapid pipeline expansion with 18 additional cell lines developed[3] Recent Business Highlights Alvotech announced several key business developments and regulatory milestones from December 2024 to March 2025, including stock index inclusion, multiple BLA/MAA acceptances for biosimilar candidates (AVT05, AVT06, AVT03, AVT23), the launch of SELARSDI™ (AVT04) in the U.S., the acquisition of Xbrane's R&D operations, and a key executive appointment - Total Revenues in 2024 reached $492 million, representing a 427% increase over prior year[6] - Product Revenues in 2024 reached $273 million, representing a 462% increase over prior year[6] - Adjusted EBITDA in 2024 was $108.3 million compared to negative $291 million in 2023[6] December 2024 Highlights - Alvotech's stock was added to the Nasdaq Biotechnology Index (NASDAQ:NBI)[4] January 2025 Highlights - U.S. Biologics License Applications (BLAs) for AVT05 (biosimilar to Simponi and Simponi Aria) were accepted, following EMA acceptance in November 2024[5] February 2025 Highlights - U.S. Biologics License Application for AVT06 (biosimilar to Eylea) LD was accepted, following EMA acceptance in August 2024[6][7] - Launch of SELARSDI™ (ustekinumab-aekn), a biosimilar to Stelara, in the U.S. market, determined interchangeable with Stelara after April 30, 2025[8] March 2025 Highlights - U.S. Biologics License Application for AVT03 (biosimilar to Prolia and Xgeva) was accepted, following EMA acceptance in October 2024[9] - UK MHRA accepted a marketing application for AVT23 (biosimilar to Xolair)[10] - Acquisition of Xbrane's R&D operations and a biosimilar candidate referencing Cimzia (certolizumab pegol), enhancing pipeline and R&D capabilities[11] - Uri Hillel was appointed Chief Quality Officer (CQO) for Alvotech[12] Financial Performance for Full Year 2024 Overview of Financial Results As of December 31, 2024, Alvotech reported cash and cash equivalents of $51.4 million and total borrowings of $1,068.6 million Cash Position and Borrowings (as of December 31, 2024) | Metric | Amount (USD millions) | | :----------------------- | :-------------------- | | Cash and cash equivalents | 51.4 | | Total borrowings | 1,068.6 | | Current portion of borrowings | 32.7 | Revenue Analysis Alvotech experienced substantial revenue growth in 2024, with product revenue increasing by 462% and license and other revenue by 406% Product Revenue Product Revenue (YoY Change) | Year | Product Revenue (USD millions) | YoY Change | | :--- | :----------------------------- | :--------- | | 2024 | 273.5 | +462% | | 2023 | 48.7 | | - Revenue growth was attributed to sales of AVT02 in Europe, Canada, and the U.S., and launches of AVT04 in Canada, Japan, and select European markets[14] License and Other Revenue License and Other Revenue (YoY Change) | Year | License and Other Revenue (USD millions) | YoY Change | | :--- | :------------------------------------- | :--------- | | 2024 | 216.2 | +406% | | 2023 | 42.7 | | - Primarily driven by R&D milestones: $6.6M for AVT04 Europe approval, $16.8M for AVT16 CTA submission, $34.4M for EMA MAA submissions (AVT03, AVT05, AVT06), $39.1M for AVT03 CES completion, and $56.4M for AVT05 CES completion[15] - Also included performance milestones: $6.9M for AVT02 sales target, $15.4M for AVT04 launches, $18.8M for AVT02 U.S. launch, and $20.4M net for out-license contracts[15] Cost and Expense Analysis While the cost of product revenue increased due to higher sales volumes, Alvotech successfully reduced R&D and G&A expenses in 2024 through program advancements, cost rationalization, and lower share-based payments Cost of Product Revenue Cost of Product Revenue (YoY Change) | Year | Cost of Product Revenue (USD millions) | YoY Change | | :--- | :----------------------------------- | :--------- | | 2024 | 185.3 | +15.2% | | 2023 | 160.9 | | - Increase driven by higher sale volumes from new product launches, partially offset by lower production-related charges and reduced costs for FDA inspection readiness[16] Research and Development (R&D) Expenses R&D Expenses (YoY Change) | Year | R&D Expenses (USD millions) | YoY Change | | :--- | :-------------------------- | :--------- | | 2024 | 171.3 | -18.7% | | 2023 | 210.8 | | - Decrease primarily due to a one-time charge in 2023 ($18.5M) for AVT23 co-development termination, reduced costs for commercialized programs (AVT02, AVT04) and programs with substantially completed clinical phases (AVT03, AVT05, AVT06), and lower headcount/other R&D expenses[17] - Partially offset by a $20.0 million increase in direct program expenses, mainly for AVT16 advancing through its clinical phase[17] General and Administrative (G&A) Expenses G&A Expenses (YoY Change) | Year | G&A Expenses (USD millions) | YoY Change | | :--- | :-------------------------- | :--------- | | 2024 | 65.7 | -14.3% | | 2023 | 76.6 | | - Decrease mainly from $4.5 million lower third-party services, reduced insurance premiums and headcount, and a $6.0 million decrease in share-based payment expenses[18] Profitability and Other Income/Loss Alvotech significantly improved its operating profit in 2024, moving from a substantial loss to a positive figure, driven by revenue growth and expense management Operating Profit Operating Profit (YoY Change) | Year | Operating Profit (USD millions) | YoY Change | | :--- | :------------------------------ | :--------- | | 2024 | 69.6 | +$424.5M | | 2023 | (354.9) | | - Increase primarily due to sharp rise in total revenues from product commercialization expansion and milestone recognition, coupled with decreased operating expenses from scaling and rationalizing operations[19] Share of Net Loss of Joint Venture and Loss on Sale - Company sold its share in a joint venture for $18.0 million (gross proceeds), resulting in a net loss of $3.0 million in 2024[20] Finance Income Finance Income (YoY Change) | Year | Finance Income (USD millions) | YoY Change | | :--- | :---------------------------- | :--------- | | 2024 | 80.1 | +$75.3M | | 2023 | 4.8 | | - Primarily attributable to the change in fair value of derivatives, driven by bondholders exercising conversion rights into ordinary shares[21] Finance Costs Finance Costs (YoY Change) | Year | Finance Costs (USD millions) | YoY Change | | :--- | :--------------------------- | :--------- | | 2024 | 303.2 | +13.5% | | 2023 | 267.2 | | - Comprised of $130.5 million reflecting the fair value of Predecessors Earn Out shares (negatively impacted by share price increase) and $147.4 million in interest charges on outstanding debts[22] Loss on Extinguishment of Financial Liabilities - A loss of $69.0 million was recorded due to the refinancing of existing debt obligations, including the conversion of 2022 Convertible Bonds and Aztiq Convertible Bonds into ordinary shares[23] - The company entered into a $965.0 million Senior Loan Facility in June 2024, maturing in July 2029, which required settling existing debt[23] Income Tax (Expense) / Benefit Income Tax (Expense) / Benefit (YoY Change) | Year | Income Tax (Expense) / Benefit (USD millions) | YoY Change | | :--- | :------------------------------------------ | :--------- | | 2024 | (14.3) (expense) | -$113.6M | | 2023 | 99.3 (benefit) | | - Shift from tax benefit to expense driven by a $94.9 million increase in deferred tax expense due to positive operating results and a $16.8 million increase in foreign currency impact from weakening Icelandic krona[24] Loss for the Year Net Loss and EPS (YoY Change) | Year | Net Loss (USD millions) | EPS (USD) | YoY Change (Net Loss) | | :--- | :---------------------- | :-------- | :-------------------- | | 2024 | (231.9) | (0.87) | +$319.9M | | 2023 | (551.8) | (2.42) | | - Net loss heavily impacted by fair value costs associated with derivative liabilities and the refinancing of existing debt obligations[26] Product Pipeline and Company Information Business Update Conference Call Alvotech will host a business update conference call and live webcast on March 27, 2025, at 8:00 am ET, with registration and replay available on their investor relations website - A business update conference call and live webcast is scheduled for Thursday, March 27, 2025, at 8:00 am ET (12:00 noon GMT)[27] Product Candidate Descriptions Alvotech provides detailed descriptions of its key biosimilar candidates, including their reference biologics, mechanisms of action, and current regulatory/commercial status AVT02 (adalimumab) - A biosimilar to Humira (adalimumab), approved in over 50 countries globally, including the U.S., Europe, and Canada[28] - Marketed as SIMLANDI in the U.S. and Canada, HUKYNDRA in Europe, and ADALACIP in Australia[28] AVT04 (ustekinumab) - A biosimilar to Stelara (ustekinumab), launched in Canada as JAMTEKI, in the EEA as UZPRUVO, in Japan as USTEKINUMAB BS (F), and in the U.S. as SELARSDI (ustekinumab-aekn)[29] - Binds to IL-12 and IL-23 cytokines involved in inflammatory and immune responses[29] AVT03 (denosumab) - A biosimilar candidate to Prolia and Xgeva (denosumab), targeting the RANK ligand to reduce osteoclast numbers and bone resorption[30] - Currently an investigational product, not yet received regulatory approval[30] AVT06/AVT29 (aflibercept) - A biosimilar candidate to Eylea (aflibercept) 2 mg and 8 mg dose, inhibiting vascular endothelial growth factors (VEGF)[31] - Currently an investigational product, not yet received regulatory approval[31] AVT16 (vedolizumab) - A biosimilar candidate to Entyvio (vedolizumab), targeting the alpha-4-beta-7 protein to reduce inflammation in the gastrointestinal tract[32] - Currently an investigational product, not yet received regulatory approval[32] AVT23 (omalizumab) - A proposed biosimilar to Xolair (omalizumab), targeting free immunoglobulin E (IgE) for severe persistent allergic asthma and chronic rhinosinusitis with nasal polyps[33] - Currently an investigational product, not yet received regulatory approval[33] Company Profile and Partnerships Alvotech is a global biotech company focused on developing and manufacturing biosimilar medicines, aiming to be a leader in the space through an integrated approach and broad in-house capabilities - Alvotech is a biotech company focused solely on the development and manufacture of biosimilar medicines, aiming to be a global leader by delivering high quality, cost-effective products[36] - The company has launched two biosimilars and has a current development pipeline of nine disclosed biosimilar candidates targeting autoimmune disorders, eye disorders, osteoporosis, respiratory disease, and cancer[36] - Alvotech has established a network of strategic commercial partnerships for global reach, including Teva Pharmaceuticals (US), STADA Arzneimittel AG (EU), Fuji Pharma Co., Ltd (Japan), and many others across various regions[36] Forward-Looking Statements This section outlines the inherent risks and uncertainties associated with Alvotech's forward-looking statements, including those related to funding, regulatory approvals, commercialization, litigation, and macroeconomic conditions - Forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially, including the ability to raise funding, maintain stock exchange listings, changes in regulations, and competitive factors[38] - Risks also include the ability to develop, manufacture, and commercialize products, actions of regulatory authorities, success of collaborations, and the impact of macroeconomic conditions[38][39] Unaudited Condensed Consolidated Interim Financial Statements Statements of Profit or Loss and Other Comprehensive Income or Loss The statement of profit or loss shows a significant improvement in operating profit for 2024, reaching $69.6 million compared to a loss of $354.9 million in 2023 Key Profit or Loss Figures (USD thousands) | Metric | 2024 | 2023 | | :------------------------------------ | :------- | :------- | | Product revenue | 273,472 | 48,699 | | License and other revenue | 216,210 | 42,735 | | Cost of product revenue | (185,309) | (160,856) | | Research and development expenses | (171,312) | (210,827) | | General and administrative expenses | (65,713) | (76,559) | | Operating profit / (loss) | 69,644 | (354,860) | | Finance income | 80,145 | 4,823 | | Finance costs | (303,165) | (267,157) | | Loss on extinguishment of financial liabilities | (69,378) | — | | Income tax (expense) / benefit | (14,301) | 99,318 | | Loss for the year | (231,864) | (551,731) | | Loss per share | (0.87) | (2.42) | Statements of Financial Position As of December 31, 2024, total assets increased to $1,221.4 million from $950.1 million in 2023, driven by increases in property, plant and equipment, and current assets like inventories and trade receivables Key Financial Position Figures (USD thousands) | Metric | 31 December 2024 | 31 December 2023 | | :-------------------------- | :--------------- | :--------------- | | Total non-current assets | 766,380 | 755,248 | | Total current assets | 455,020 | 194,842 | | Total assets | 1,221,400 | 950,090 | | Total equity | (412,771) | (932,493) | | Total non-current liabilities | 1,440,775 | 1,621,633 | | Total current liabilities | 193,396 | 260,950 | | Total liabilities | 1,634,171 | 1,882,583 | | Total equity and liabilities | 1,221,400 | 950,090 | - Derivative financial liabilities significantly decreased from $520.6 million in 2023 to $210.2 million in 2024[43] - Cash and cash equivalents increased from $11.2 million in 2023 to $51.4 million in 2024[42] Statements of Cash Flows Net cash used in operating activities decreased to $236.8 million in 2024 from $312.2 million in 2023, reflecting improved operational efficiency Key Cash Flow Figures (USD thousands) | Metric | 2024 | 2023 | 2022 | | :------------------------------------ | :------- | :------- | :------- | | Net cash used in operating activities | (236,843) | (312,185) | (312,389) | | Net cash generated from (used in) investing activities | (18,868) | (46,340) | (63,537) | | Net cash generated from financing activities | 297,306 | 301,319 | 424,910 | | Increase / (decrease) in cash and cash equivalents | 41,595 | (57,206) | 48,984 | | Cash and cash equivalents at the end of the period | 51,428 | 11,157 | 66,427 | - Proceeds from new borrowings amounted to $896.3 million in 2024, contributing significantly to financing activities[46] - Gross proceeds from equity offering were $150.5 million in 2024[46]