Earnings call: Alvotech sees tenfold revenue increase, bullish on biosimilars

Alvotech (ticker not provided), a prominent player in the biosimilar market, has reported a tenfold revenue increase in its financial results for the first half of 2024, with revenues soaring to $235.6 million. The company, which specializes in developing and manufacturing biosimilars, has experienced strong market traction, particularly with its Humira biosimilar in the United States.

With an order book of 1.3 million units and plans for at least 70 global launches by the end of 2025, Alvotech anticipates delivering over 80% of these orders in the latter half of the year. The company’s financial outlook remains robust, projecting revenues of $600 million to $800 million for 2025.

Key Takeaways

• Alvotech’s revenues reached $235.6 million for the first half of 2024, a significant increase from the previous year.
• The company expects to deliver over 80% of its current 1.3 million unit order book in the second half of the year.
• Alvotech has plans for at least 70 global biosimilar launches by the end of 2025.
• The company has exclusivity on its interchangeable, high concentration biosimilar version of Humira in the US until May 2025.
• Alvotech projects its 2025 revenue to be between $600 million and $800 million.

Company Outlook

• Alvotech remains confident in its 2024 guidance.
• The company’s biosimilar portfolio expansion is expected to drive future growth.
• Alvotech anticipates a favorable shift in the coverage environment in 2025.

Bearish Highlights

• The company’s cash position at the end of June 2024 was relatively modest at $11 million.
• Alvotech is carrying a significant amount of net borrowings at $1.056 billion.

Bullish Highlights

• Alvotech’s biosimilar to Humira is gaining momentum in the US market.
• The company has received replenishment orders for its biosimilar to Stelara from partners in Canada, Japan, and Europe.
• Alvotech has successfully closed a refinancing deal to improve its debt maturity profile and reduce capital costs.

Misses

• Specific details on the operating profit and adjusted EBITDA misses were not provided.

Q&A Highlights

• Discussion points included the company’s successful product mix and volume increase.
• Alvotech emphasized the exclusivity and market growth of its Humira biosimilar in the US.
• The company expressed confidence in the day-one launch of its Eylea biosimilar in the US, with European launches expected next year.

Alvotech’s impressive performance in the first half of 2024, marked by a tenfold increase in total revenues and a strong second-quarter showing with $199 million in revenues, underscores the company’s successful strategy in the biosimilar market. The growth is attributed to both milestone and product revenues, the latter of which are expected to outpace milestone revenues in the second half of the year. Alvotech’s comprehensive approach to portfolio management and its focus on biosimilars, such as those for Humira, Stelara, and upcoming drugs like Eylea, positions the company favorably in the global market. Despite a modest cash position and significant borrowings, the company’s improved operating profit, adjusted EBITDA, and proactive refinancing strategy suggest a positive trajectory for its financial health. As Alvotech continues to execute its strategic plan with confidence, the market will closely monitor its progress and the realization of its ambitious revenue projections for the coming year.

InvestingPro Insights

Alvotech’s recent financial results indicate a remarkable surge in revenue, reflecting the company’s growing presence in the biosimilar market. To provide a deeper understanding of the company’s financial health and market position, let’s look at some key metrics and insights from InvestingPro.

InvestingPro Data shows that Alvotech has a market capitalization of $3.6 billion, which underscores the company’s significant market value relative to its peers. Despite the impressive revenue growth reported for the first half of 2024, with a 14.27% increase in the last twelve months as of Q1 2024, Alvotech’s gross profit margin stands at -23.89%, indicating challenges in maintaining profitability on its sales.

One of the InvestingPro Tips that stands out is Alvotech’s stock performance over the last week, with a notable return of 9.35%. This suggests that investors may be responding positively to the company’s recent developments and future prospects. However, it is essential to note that analysts do not expect Alvotech to be profitable this year, and the company has not been profitable over the last twelve months. Additionally, Alvotech is trading at a high revenue valuation multiple, which could be a point of concern for value-focused investors.

For those interested in a more comprehensive analysis, InvestingPro offers additional tips on Alvotech, which can be found at These insights can provide valuable context for investors considering Alvotech’s stock, especially in light of the company’s ambitious plans for global biosimilar launches and projected revenue growth.

Full transcript – Alvotech SA (NASDAQ:) Q2 2024:

Operator: Good day, and thank you for standing by. Welcome to the Alvotech’s Q2 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Benedikt Stefansson. Please go ahead.

Benedikt Stefansson: Thank you, and good morning or afternoon to everyone joining us on this call today. Yesterday evening, the company issued a press release that can be found on our investor portal, investors.alvotech.com. The release reports financial results for the first half of 2024 and provides a business update. Additionally, presentation slides that cover our call today have been posted on our investor website and you’ll hear our speakers referring to this slide presentation during their comments. You’ll find all material posted for this earnings call on our Investor portal, investors.alvotech.com under the News & Events menu, Earnings Calendar, Q2 2024 Earnings. Please note that our presentation materials and some of our statements that we make today may include forward-looking statements. These statements do not ensure future performance and are subject to risks and uncertainties that are outlined in company filings with the Securities and Exchange Commission. These risks and uncertainties could cause actual results to differ materially from forward-looking statements that are made. With me on today’s call are Robert Wessman, Chairman and Chief Executive Officer of Alvotech; Anil Okay, 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 Wessman. Robert?

Robert Wessman: Thank you, Benedikt, and greetings to everyone joining us on the call here today. It’s a very exciting time at Alvotech. Alvotech is transitioning into global business, which we always intended when we started this venture 11 years ago. For the second quarter and first half of 2024, the company generated record results across the total revenues, revenues from product sales, milestone revenues and adjusted EBITDA. The total revenues for the first half of the year were $235.6 million, which represents an increase of over 10 times compared to the same period in 2023. Our first half results were driven mainly by the second quarter performance where 84% of the revenues for the period were generated. This enabled the company to deliver positive EBITDA, both for the second quarter of around $102 million and the first half of the year of around $63.5 million. This is a result which we are all very proud of here at Alvotech. Contribution to our growth and profitability came from multiple sources, including product revenues from Ex-US Stelara and US biosimilar to Humira from both private label and branded channels. At the same time, we’re seeing our focus on cost efficiencies bearing a fruit as we scale up production volumes and further utilize our facility. On our last earning call, we noted that we had received binding purchase order of approximately 1 million units for our biosimilar to Humira in the US market. We also noted that we would be supplying that inventory throughout the calendar year 2024. I’m very pleased to update that our current 2024 order book for the US market has now reached approximately 1.3 million units, which is a substantial increase from our previous call. Our result in the second quarter set the record for the company when it comes to revenues and EBITDA, which is in line with our expectations. As planned, Alvotech delivered approximately 20% of the US 1.3 million unit order book during the first half of the year. We expect to deliver approximately 80% of the order book or over 1 million units in the second half. We expect that our third quarter will show a strong volume growth over the second one and fourth quarter to be by far the strongest quarter of the year in sold volumes. We have scaled up our production capacity at Alvotech and the company is in a strong position to deliver towards our order book going forward. In addition, we are seeing strong demand for our biosimilar to Humira in US for the first quarter of 2025. At the same time, we are working with our partners to build plans for the full year of 2025, both for biosimilar to Humira and Stelara. In addition to the product revenue, we continue to show a great progress of our pipeline and new business agreements for our portfolio. This progress allowed for record revenues and milestones for the quarter, which we guided to on our first quarter call. The milestone revenues not only contribute to the current performance, but also serve as an indicator for future success as the products and partnerships come online. It’s important to know that the result is simply a function of the consistent execution that you have seen from Alvotech throughout this critical year. On the next slide of the presentation, you can see the steady accomplishments that we have been occurring throughout the year. This includes regulatory approvals, commercial launches, strategic collaborations, pipeline progress and refinancing of the company that Joel Morales will be discussing during his remarks. Looking forward to the rest of the year, we expect continued execution on both commercial and R&D fronts and we will be providing relevant updates as they occur. Moving to the next slides, I would like to mention some of my thoughts on Alvotech position today. When the IT of Alvotech was created just over a decade ago, there were two fundamental concepts that we believe are critically important. The first was a global portfolio approach to biosimilars. We thought a broad portfolio of global biosimilars would limit overall risk through diversification, but also improve the commercial opportunities for the products that we launched. That portfolio expansions and diversification is well underway today. We now have 47 unique launches across two biosimilars in many global markets and we are in the very early stage of this growth. Before end of the year 2025, we expect to have at least 70 global launches covering our first two products and that includes the launch of SELARSDI, our biosimilar to Stelara in the US markets. Furthermore, we are on the track to submit three biosimilar applications in major market by end of 2024 with anticipated revenues from specific markets and molecules starting as early as end of 2025. We estimate that it takes two to four years for any given launch, regardless of size to peak in revenue. The second fundamental part of our concept was to ensure that we built a platform that would only focus on developing and manufacturing of biosimilars. This means that we are a pure play biosimilar company. Today, we have built a world class facility where we can develop new biosimilars successfully under the fast rates. At the same time, we have a full control over the supply chain and the quality. And simply by using our development and production platform, we can leverage what we have built to drive future earnings. Between 2023 and this year, we are expecting to expand production volumes by more than threefold. We are also expecting to submit three new applications, which would be a record for the company. And we are able to do this with headcount remaining mostly flat year-on-year. We believe this leverage can continue as we continue to launch new products into new markets in the future. I would like to thank all of you for joining us here today. And at the same time, I would like to extend my gratitude to the Alvotech team for their relentless effort in driving our company’s success. And with that, I would like to pass the presentation over to Anil Okay, our Chief Commercial Officer to cover our pipeline and provide commercial update. Over to you, Anil.

Anil Okay: Thank you, Robert. I will start today with an update on biosimilar Humira in the US. As a reminder, we are addressing both channels for biosimilar Humira, which includes private label and also formulary business. With the private label, as you may know, we are partnered with Quallent, which is the private label for the Cigna (NYSE:) Group, a leading payer in the US market. Through the company’s specialty pharmacy, Accredo, the group services more than 100,000 patients that currently use Humira or one of its biosimilars. As a reminder, our BLA was approved in February 2024 and the partnership was formally announced at the end of April. However, the actual launch did not occur until June with the shipments occurring downstream later in that month. Despite the recency of the launch, we are seeing good traction in the market. In a recent call by the Cigna Group, they noted that after only five weeks, they are seeing approximately 20% of their book transitioning to biosimilars. The progress we are seeing with CVS Caremark within the Humira space and the developments within the Cigna Group, which collectively represents the two largest payers in the US, along with various public statements made by others, reinforce our confidence that the adoption of pharmacy benefit biosimilars is accelerating rapidly in the world’s largest market. We believe we are well positioned to capitalize on this momentum as we expect to have multiple pharmacy benefit products on the market by year end 2025. In addition to the private label space, we are also addressing the formulary side of the business through the brand SIMLANDI, an interchangeable, high concentration biosimilar version of Humira. As a reminder, we are the first interchangeable, high concentration biosimilar version of Humira and we have an exclusivity on our interchangeability up until May 2025. In July, formulary changes occurred in various parts of the market and we are pleased that SIMLANDI is now listed as preferred on Express Scripts, CarelonRx, Navitus and Blue Cross Blue Shield of Massachusetts and Louisiana. We expect this to evolve over time in a favorable manner and we anticipate further coverage as we move into 2025. We are very pleased with the progress of our partner Teva has made thus far. Teva is the ideal partner for us due to their extensive presence and expertise in the US specialty channels coupled with their unwavering commitment to advancing biosimilars. Teva is not only our partner on SIMLANDI, but also our partner on SELARSDI, our approved biosimilar to Stelara. AVT06 are proposed biosimilar to Eylea. AVT29 are proposed biosimilar to high dose Eylea and AVT05 are biosimilar candidate to Simponi, among others. This is a very strategic partnership for multiple products. We look forward to progress on all fronts as the partnership progresses across both channels for AVT02 in the US. And as Robert noted earlier, our order book has reached approximately 1.3 million units for 2024 alone and only for the US market. We are happy with the launch thus far and plan to deliver over 80% of our current order book in the second half of the year. Several key variations filed open approval of SIMLANDI have been approved by the FDA in late June, which allows us to easily scale up and automate key downstream activities that will start flowing through in Q3 and expand in the fourth quarter. We will carry that pace into 2025 and we look forward to providing further updates as the year progresses. We are also seeing the order book coming in well for the start of next year as mentioned earlier and expect changes in the coverage environment to accelerate going into 2025. As a business to business company, we have good visibility during our binding order period, which is five to six months in advance and we receive rolling forecasts from our partners beyond that. Further, as the B2B firm, it is important to note that we recognize revenue, open delivery of our product to the partners. This dynamic coupled with our expectations for market development, strengthens our confidence in both our 2024 guidance and our 2025 revenue projections of $600 million to $800 million. For the next topic, I will discuss our global launches of our biosimilar to Stelara. Earlier this year, we launched in Canada under the brand name Jamteki as the first biosimilar of Stelara into a very limited competition through our partner, Jamp Pharma and under their BIOJAMP umbrella, which now markets both biosimilars approved under our partnership. Shortly after the Canadian launch and through our partner Fuji Pharma, we launched AVT04 in Japan as a first biosimilar to Stelara and we see no competition on the horizon in this market. And most recently, our partner STADA launched Uzpruvo in countries across Europe as the first of its kind in the market. These launches are still in the early days, but even with that said, we have received replenishment orders from all three partners. We are very proud in our ability to execute numerous first in market launches across multiple jurisdictions, all within a five months period. This achievement showcases our production capabilities and operational excellence that will pave the way for a successful US launch in February 2025. The global launches of our biosimilar to Stelara represent a multi-product and global focus in this rapidly evolving space. We are quickly diversifying our revenue base and we should see that diversification continue to occur as these launches mature and new launches come to the market, including our expected launch of SELARSDI in the US within the next six months. We are very excited about the upcoming US Stelara biosimilar launch and we feel we are more than well positioned to be a leader in that market. We have received our approval for SELARSDI in April of this year, which provides ample time to prepare for launch in February of 2025. Moving to the next two slides, I would like to conclude my portion of the presentation with updates on our portfolio. As our commercial footprint continues to grow, it remains crucial to sustain our long-term growth by staying at the forefront of biosimilar R&D. We believe that our comprehensive R&D platform, which encompasses a full range of capabilities and a unique approach, sets Alvotech apart in the market. Our next product in the pipeline is Eylea, Regeneron (NASDAQ:)’s blockbuster biologic that targets retinal diseases. In this market, we aim to launch both the original vial presentation, as well as a pre-filled syringe that is better received by physicians that have to administer the product themselves. We are very pleased to have now partnered the product with Advanz Pharma in Europe, which was announced this June. Just yesterday, the company announced that the European Medicines Agency has accepted our AVT06 submission for review. This marks the third biosimilar candidate that Alvotech has submitted in a major market. It is important to recognize that announcements regarding submissions are made open filing acceptance, which can vary in timing after the initial filing. We look forward to providing updates as the program continues to progress in Europe and other markets, including US. The next product to discuss is the high dose version of Eylea. High dose Eylea, which offers less frequent dosing, was launched by the originator in August 2023 in the US. The conversion of the market has been steady, and based on recent quarter results for Regeneron, it appears to have captured just under 20% of sales. We aim to be the first high dose Eylea biosimilar to the global markets, which would represent tremendous opportunity for Alvotech and its alliance partners globally. AVT29 is also part of our collaboration with Teva and Advanz. We have developed a formulation and are currently manufacturing scale up batches which we believe is an advanced position. We believe this is a direct result from starting our development program well in advance of the originator launch. As we continue the development, we look forward to providing further updates on this exciting program. The next opportunity I would like to discuss is our proposed biosimilar to Simponi and Simponi Aria. Simponi has been developed using the same platform as our Stelara biosimilar, which utilizes an alternative cell line called SP20 and is manufactured using a perfusion manufacturing process. We believe that our perfusion platform, in which we have invested significantly, has facilitated the development of both programs. We also see that the complexity of development has potentially contributed to lower competition in the Stelara market compared to Humira and even more so for Simponi. In fact, only one other company has a known clinical study for a Simponi biosimilar candidate. This competitive landscape presents a unique opportunity for the company and our partners, including Teva in the US, Advanz in Europe and our global partners in rest of the world. We aim to be the first to market [indiscernible] biosimilar in global markets and expect very limited competition, if any. Our filing remains on track for later this year and we are proud to claim that we are the only company that has developed successfully biosimilars to Humira and Stelara and have a very advanced candidate for a biosimilar to Simponi in our portfolio. We believe that is a very powerful message that both our partners and Alvotech can use in the market. Our next portfolio product that we expect to submit this year is AVT03, our biosimilar to both Prolia and Xgeva. We are pleased to have recently partnered with Dr. Reddy’s Laboratories through an agreement finalized in May of this year. The agreement covers both the US and Europe with European rights granted on a semi exclusive basis. In June, we announced that we have expanded our partnership with STADA in Europe with AVT03. We are thrilled to strengthen our collaboration with such a well-respected leader in that market and showcase our partnership mindset to expand more products with our existing partners and adding new ones as needed. We have passed all of the requisite studies against both originator products and look forward to providing updates in the near term. AVT23 is a biosimilar to Xolair, which we have licensed and are supporting development in conjunction with Kashiv BioSciences. This program is in partnership with Advanz, one of our key European partner with plans for Advanz to market it across Europe. The proposed biosimilar continues to make significant progress with the recent completion of patient enrollment for the clinical study, making an important milestone. Filing time is near term, however, we have not commented yet on exact timing. What is also very appealing in that market, omalizumab remains to be also a low competition market which will benefit both Alvotech and Advanz at the time of launch. Our next pipeline product is a proposed biosimilar to Entyvio. The product is currently at $5.6 billion in total market size and we believe there is significant growth opportunity for the molecule until LOE. Our program is progressing nicely, and we expect to start our patient study in September this year. One of the exciting aspects in this market is, we see very few initiated studies and we believe that we could be in a poor position in the development of an Entyvio biosimilar. We also have some undisclosed differentiation aspects in our development. We look forward to providing updates as they occur in our program. And finally, we are also developing a biosimilar to KEYTRUDA, which is, of course, is Merck’s blockbuster oncology product, which has now surpassed Humira as the highest-grossing pharma product on record. While in an earlier stage than our previously discussed pipeline, we are making progress and expect at-scale production to occur in 2025 and are also targeting clinical study start to occur sometime next year. We continue the active discussions with multiple parties on partnership and are excited to share updates once deals become finalized. Outside of KEYTRUDA, it is worth mentioning that we have three more development programs in early stages of development, and we also maintain a robust cell line development plan to ensure we can move forward on new products quickly and efficiently. And with that, I will turn the presentation over to Joel Morales, our Chief Financial Officer. Joel?

Joel Morales: Thank you, Anil. Firstly, I would like to take a moment to reflect on last month’s announcement regarding the refinancing of our outstanding debt. We announced that we successfully closed on a senior secured first lien term loan facility for $965 million. We’re transitioning from a debt pool with fixed and higher levels of interest to a SOFR based facility. At current SOFR levels, we are able to reduce the cost of capital by approximately 100 basis points with the opportunity for further reductions as the macro environment improves over time. The refinancing of our existing outstanding debt obligations has improved our debt maturity profile by extending near-term maturities originally due starting in mid-2025 out to 2029. Additionally, the facility has favorable call features which provide us with future optionality as we continue to drive profitability, diversification, and cash flows over the near term. Also, in conjunction with this refinancing, holders of the majority of convertible bonds exercised their right to convert into ordinary shares on July 1, 2024. The balance of any remaining convertible bonds was redeemed by Alvotech with the proceeds from this refinancing. Lastly, the net impact of this transaction in July added approximately $142 million of net cash to our balance sheet and simplified our borrowing structure to only the term loan facility, the mortgage on our manufacturing facility in Iceland, and some equipment financing. All of these instruments are set to mature commencing in June 2029 or beyond. As our capital structure continues to streamline, our objective is to keep our shareholders and investors focused on the fundamental value of our business and on the future growth trajectory we are poised to deliver on. I’ll now provide financial highlights for the period ending June 30, 2024. With respect to our operating performance, total revenues for the first half of 2024 were $236 million versus $20 million in the first half of the prior year, representing over a tenfold increase. As we previously announced, this was driven by our strong Q2 performance, where total revenues for the quarter were $199 million versus $4 in the prior year. In the second quarter alone, we recognized $145 million in milestones and product revenues of $54 million. We’re pleased to report that these are the highest milestone and product revenues reported by Alvotech to date. The significant milestones recognized in Q2 were driven by a number of triggers which were achieved during the period. As a reminder, our commercial agreements provide for development and performance-based milestones, as well as an out-licensing arrangement for our commercial rights, whereby we have a revenue and/or profit sharing arrangement once our products are commercialized. In the case of milestones, we collect cash from our partners at signing and during the development phases of our programs, which helps to offset the overall costs of development for our programs. We recognize revenue as we advance our programs through the pipeline. Specifically, we recognize revenue upon the commencement of the clinical phase of development, upon achievement of positive top-line results, upon submission of marketing applications, and upon regulatory approval. Additionally, performance-based milestones are recognized upon first launch by our commercial partners and, in some cases, the achievement of cumulative net sales targets. The overwhelming majority of our expected milestones are recognized at or prior to launch. During the second quarter, we announced positive top line results for our AVT05 and AVT03 programs. Additionally, we recognized performance based milestones due to the first launches of AVT02 in the US, AVT04 in ex-US markets, and the achievement of net sales targets for ongoing ex-US commercialization of AVT02. The culmination of these events contributed to the milestone revenues recognized during the period. It’s important to note that we view milestone revenues as an ongoing part of our business model, and that they represent strategic investment from our commercial partners. Additional milestones will be recognized in the second half of this year due to our commercial launch of the biosimilar version of Stelara into European markets. And we also anticipate submitting three new marketing authorizations in major markets later this year. In terms of product revenues, as Robert and Anil have already highlighted, our commercial partners have commenced the launch of our biosimilar to Humira in the US. During the second quarter, shipments to our US partners increased, driving an overall increase in product revenues versus the prior quarter of $41 million. Additionally, during the first half of the year, our partners ex-US have also commenced the launch of our biosimilar to Stelara in Canada, Japan, and our European partner launched into select European markets in July. As these launches have only just begun, you can expect us to continue ramping up production, driving a progressive increase in product revenues throughout the year. Operating profit was $43 million for the first half of 2024, compared to negative $189 million for the same period in 2023. The increase of $233 million, or 123% was primarily attributable to the sharp increase in total revenues coupled with lower cost of product revenues due to reduced production-related charges and lower costs associated with FDA inspection readiness. Additionally, the decrease in operating expenses were driven by continuing efforts from the company to scale and optimize operations. For the first half of 2024, we reported adjusted EBITDA of $64 million versus negative $147 million during the same period in the prior year. In Q2 2024, we reported adjusted EBITDA of $102 million versus negative $81 million during the second quarter of 2023. This is largely driven by the gross margin contribution in the period, slightly tempered by higher OpEx costs, particularly higher R&D costs on an adjusted basis. Please see the table provided in the appendix for a reconciliation of our reported to adjusted results. In terms of cash and liquidity, we closed the period ending June 30 with $11 million of cash on hand and $1.056 billion in net borrowings. Giving effect to the refinancing we completed in July, we closed the period with $178 million of cash on hand, including $25 million of restricted cash and $1.35 billion in gross borrowings. With this refinancing behind us, our major product launches underway and continued advancement of our pipeline, the company has sufficient cash on hand to continue preparing for our ongoing and near-term biosimilar launches. We closed the period ending June 30 with 279.4 million shares outstanding, including unvested earn-out shares. Taking into effect the conversion of convertible bonds on July 1st, which resulted in the issuance of 22.1 million shares, we have 301.5 million pro forma shares outstanding as of June 30. In the appendix to our management presentation, you will find a summary of outstanding shares. Turning to the next slide, I will close today’s presentation with a reminder that our performance in 2024 will be driven by a number of concurrent opportunities. Our revenue guidance remains at $400 million to $500 million and is driven by a combination of our newly planned product launches and significant development and performance-based milestones that we expect to achieve throughout the year. Overall, we expect milestone revenue contributions to be in the range of $190 million to $200 million in 2024. We’re excited to demonstrate the continued advancement of our pipeline, which will propel sustainable long-term growth of the company. As previously guided, adjusted EBITDA for the year is forecasted in the range of $100 million to $150 million. Delivering our first positive EBITDA quarter and half year was a significant achievement for Alvotech and we will continue to be focused on operational execution to maximize the potential of our launches in the second half of 2024. We expect product revenues to overtake milestone revenues towards the end of 2024. As we’ve mentioned in the past, we continue to anticipate this year will be lumpy in terms of our operating results from one quarter to the next. Heading into the second half of 2024, we anticipate contributions from milestone revenues to decrease in the second half. And that product revenues will outpace milestone revenues starting in the third quarter. And while we expect Q3 to be another positive EBITDA quarter, most of our second half EBITDA will be achieved in the fourth quarter of 2024, which mirrors our supply schedule, as noted by Robert and Anil in earlier comments. And with that, I’d like to turn the call back over to our operator for Q&A.

Operator: Thank you. [Operator Instructions] We will now take the first question — one moment please. From the line of Carl Byrnes from Northland Capital Markets. Please go ahead.

Carl Byrnes: Thanks for the question and congratulations on your progress. If we look at the existing partnerships that you have in place, what is the outstanding potential milestone revenue that you could achieve from those agreements? And then I have a follow on as well. Thank you.

Joel Morales: Thanks, Carl. This is Joel. We currently have over $1 billion of milestones yet to be collected as a result of the agreements that we have in place.

Carl Byrnes: Great, excellent. And then with respect to gross profit margin on product sales, what sort of progression should we look for there? I think it was around, on adjusted base of 17%. How might that ramp as you lever off of a higher revenue base? Thanks.

Joel Morales: Yes, that’s right, Carl. So our Q2 product margins were almost 17%, really driven by the initial shipments into the US of our launch of AVT02, resupply of our ex-US partners of AVT02, as well as pre-launch stocking for our European partner. I think what I can say is that, we expect our product margins to continue to increase quarter-over-quarter, driven by the increase in volumes and product mix, particularly in the fourth quarter.

Carl Byrnes: Great. Thanks. And again, congratulations.

Operator: Thank you. [Operator Instructions] We will now take the next question from the line of Kirsty Ross Stewart from Citi. Please go ahead.

Kirsty Ross Stewart: Hi there. Kirsty Ross Stewart from Citi on behalf of [indiscernible]. Just three, if I may. On SIMLANDI, I noted your comments about visibility on the order book as we go into the second half of this year. So perhaps just a question looking into 2025. Could you elaborate a little bit more on the main puts and takes behind the success of the commercial launch in the US, specifically the importance of expanding access further versus kind of doubling down on your existing commercial agreement with QUALLENT. So, I mean, so now that you’re kind of a few months into the launch of any potential challenges that you’re keeping an eye on, competition from other brands or messaging around biosimilars versus branded products. And then just a really quick one on AVT06, your Eylea biosimilar. Can you just remind us what you’re saying at the moment about timing for a US launch? Thanks.

Robert Wessman: Thank you very much for the question. So let me start with the Humira ramp. Just to remind, as you know, we still are the only interchangeable high concentration, size rate free Humira biosimilar in the U.S. market, and we also have our exclusivity up until May 2025. So basically, we have the best product profile in the US market this year and also almost half of next year. So that’s a big advantage. Talking about the ramp, we are definitely in a very good position to drive growth and we expect the ramp to continue and expand it next year. As we have said, we have a sizable firm order book and we also have really only started our supply journey as you know. With the feedback from orders next year, starting to also look very good. The comments from Cigna are of course encouraging. The coverage extension led by Teva, which is really just a start, and is encouraging. Also the recent comments from Mickelson regarding Humira revenues are also a sign in the right direction for biosimilars. Just a reminder, we were the last adalimumab approved in the US, but we find ourselves with major coverage, private label deal, and a substantial order book with effectively a media launch. So we believe strongly that this is driven by product profile, dedicated capacity, a quality commercial partner, and portfolio-driven approach. So we feel very good about where we stand today, and we also expect to be one of the leaders in this market. Looking into your second question regarding Eylea launch timing for the U.S., the timing is to be determined, but we feel strongly that we will be there on day one. There are other markets including Europe where the timing is more clear and we expect that to be sometime next year. Thank you.

Operator: Thank you. [Operator Instructions] There are no further questions at this time. I would like to hand back over to the speakers for closing remarks.

Benedikt Stefansson: Thank you, Sandra. And on behalf of the Alvotech team, I want to thank everybody who joined us for this Q2, 2024 earnings call today. We look forward to speaking with you all again and wish you a great rest of the day.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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