Alvotech (ALVO) Q3 2026 Earnings Call Transcript

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DATE

Nov. 12, 2026

CALL PARTICIPANTS

• VP of Investor Relations and Global Communication - Benedikt Stefansson
• Founder and Executive Chairman - Vilhelm Robert Wessman
• Chief Executive Officer - Lisa Graver
• Chief Operating Officer - Joseph E. McClellan
• Chief Financial Officer - Linda Jonsdottir

TAKEAWAYS

• Total Revenue (9 Months) -- $323.4 million, representing a 23% decrease compared to $420.0 million in the prior-year period due to production slowdowns and the timing of licensing revenues.
• Adjusted EBITDA (9 Months) -- $78.3 million, increasing 15% from $68.0 million last year despite lower total revenue.
• Q3 Product and Service Revenue -- $58.2 million, growing 78.3% year over year and 6% sequentially as manufacturing supply began to recover.
• Q3 Adjusted EBITDA -- $31.5 million, reflecting a 40% sequential increase and more than doubling the $14.4 million reported in the third quarter of 2025.
• FY 2026 Revenue Guidance -- $650 million to $700 million, with management expecting results to trend toward the lower end of the range.
• FY 2026 Adjusted EBITDA Guidance -- $180 million to $220 million, anticipated to fall toward the lower end of the stated range.
• Manufacturing Productivity -- Process 2.0 approval more than doubles drug substance output per batch compared to the prior manufacturing process.
• Manufacturing Capacity -- A second production suite in Iceland received FDA approval, doubling the available drug substance capacity for the U.S. market.
• Gross Margin -- 54% for the first nine months, down from 59% last year due to facility improvements and the timing of milestone payments.
• Cash Position -- $61.5 million as of Sept. 30, down from $172.4 million at the end of 2025.
• Operating Cash Flow -- Used $89 million during the third quarter, driven by working capital absorption of $116 million for manufacturing ramp-up.
• Inventory -- $242.3 million, an increase of $22.2 million from year-end 2025 as the company builds semi-finished product supply for upcoming launches.
• R&D Spending -- Targeted at approximately $200 million for the full year, with 50% of the cost expected to be capitalized.
• Strategic Agreement (Lotus) -- Upfront and milestone payments could reach approximately $150 million for commercialization rights to AVT34 and AVT87.
• Manufacturing Investment -- More than $500 million has been invested in the company's manufacturing facility in Iceland to date.
• Adalimumab Market Share -- Simlandi maintains its position as the number two adalimumab biosimilar in the U.S. market.
• Europe Distribution -- AVT05 is established in 13 European markets, including all five major markets, where it holds a first-mover advantage.
• Debt Profile -- Noncurrent borrowings reached $1.34 billion, with management expecting healthy deleveraging to occur in the second half of 2027.
• Upcoming Regulatory Milestones -- FDA decisions on three products, AVT05, AVT06, and AVT03, are expected in December 2026.
• Contract Assets -- $177.9 million at the end of the third quarter, representing an increase of $55.0 million from year-end 2025 due to the timing of revenue recognition.

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RISKS

• Jonsdottir stated, "manufacturing output continued to be constrained until the end of the second quarter by improvement of activities at the Reykjavik facility," reflecting the impact of the manufacturing slowdown on 2026 results.
• Graver noted that the U.S. launch of AVT05 is "subject to the necessary regulatory approval and favorable resolution of a pending patent motion filed by the brand," indicating potential legal delays.
• Jonsdottir noted that "both milestone revenue recognition and product revenues can be inherently lumpy," creating potential volatility in quarterly financial performance.

SUMMARY

Alvotech (NASDAQ:ALVO) reported a sequential recovery in product revenue as manufacturing output increased following the completion of facility improvements in Iceland. Management stated that the company expects the fourth quarter to be the strongest in its history, supported by a growing order book and three anticipated FDA decisions in December 2026. The company is expanding its global supply chain through partnerships with Lotte Biologics and Fujifilm while evolving its commercial model to include direct participation in the U.S. market. While the company maintained its annual financial targets, results are expected to fall at the lower end of the projected ranges due to the timing of product deliveries and milestones.

• CEO Graver stated, "The approvals of additional manufacturing capacity, and of our enhanced manufacturing process in DSM 2 are significant developments."
• Management reported that Process 2.0 doubles output per batch, allowing for identical quantities in fewer batches and freeing capacity for other products.
• The company indicated that the strategic agreement with Lotus Pharmaceuticals provides the first opportunity to commercialize pipeline products directly in the U.S. market.
• COO McClellan stated that the partnership with Lotte Biologics to produce drug substance in New York adds flexibility and resilience to the global supply chain.
• Management noted that the ophthalmology market is shifting toward high-dose treatments, reinforcing the importance of the high-dose Eylea biosimilar filing.
• The company expects to reach a positive operating cash flow position in the fourth quarter of 2026.

INDUSTRY GLOSSARY

• Adalimumab: The generic name for the biologic medicine Humira, used to treat various inflammatory conditions.
• Aflibercept: The generic name for the biologic medicine Eylea, used to treat age-related macular degeneration and other eye disorders.
• Biosimilar: A biologic medical product that is highly similar to an already approved biological medicine.
• BLA: Biologics License Application, a request for permission to introduce a biologic product into interstate commerce.
• DSM 1/DSM 2: Specific drug substance manufacturing suites within the Reykjavik facility.
• EMA: European Medicines Agency, the regulatory body responsible for evaluating medicinal products in Europe.
• Process 2.0: An enhanced manufacturing method developed by Alvotech that increases drug substance yield per batch.
• Ustekinumab: The generic name for the biologic medicine Stelara, used to treat Crohn's disease and plaque psoriasis.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the Alvatek Q3 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. To ask a question during the session, you will need to press star 1 on your telephone. You will then hear an automated message advising your line is raised. To withdraw your question, please press star 1 again. 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, VP of Investor Relations and Global Communication. Please go ahead.

Benedikt Stefansson: Thank you, and welcome to our listeners. Yesterday evening, the company issued a press release announcing our financial results for the first 9 months of 2026. Material accompanying today's earnings call including the presentation we will be referring to on today's call, are available on our website, alvotech.com in the Financials section. Our press release, presentations, and statements that we make on the call today may include forward looking statements. These statements do not ensure future performance, are subject to risks and uncertainties that are outlined in company filings with the Securities and Exchange Commission. Any risks and uncertainties could cause actual results to differ materially from forward looking statements that are made.

Presenting on today's call are Robert Wessman, founder and executive chairman Lisa Graver, chief executive officer Joseph E. McClellan, chief operating officer and Linda Jonsdottir, chief financial officer. Robert will begin today's presentation with a brief overview. Lisa will then present a commercial and operations update. Joseph will provide a pipeline and regulatory update, and Linda will conclude with a discussion of the financial results. Following the presentation, our team will be happy to take your questions. With that, I would like to turn the call over to Robert Wessman.

Vilhelm Robert Wessman: Good afternoon, everyone, and thank you for joining us here today. it is now just over 2 years since we entered The US market commercially, and we have come a long way in that time. Today, we have grown portfolio of commercial products across major global markets, and some of the most important opportunities in our history is directly ahead of us. We are expecting FDA approvals on 3 products before end of this year, including AVID 205, which we believe has particularly strong potential. And beyond those near term opportunities, we have built what we believe is 1 of the strongest biosimilar pipelines in the industry. Our programs for Entyvio and high dose Eylea are great examples.

We are among the first to file with Entyvio in both the US and Europe. And with a high dose Eylea, we made the first known regulatory filing anywhere in the world. These are very large markets, and we believe being early puts Alvotech in a very strong position. We have also built the infrastructure to support that growth. We have invested more than $500 million in our manufacturing capabilities in Iceland, created a world class platform at the heart of Alvotech. And while Iceland remains our home base, we are building an increasingly global and cost effective supply chain through strategic partnership with FUJIFILM Lotte Biologics, and other long term partners. Our business model is evolving too.

Our new partnership with Lotus gives us for the first time, the opportunity to commercialize 2 of our pipeline products directly in The US market alongside our partner. We continue to lead the development and production and supply At the same time, we are capturing more of the value chain. I believe Alvotechh is now at a very important inflection point. Today, we have 1 of the strongest pipeline in the industry. We have the manufacturing capabilities. And the commercial reach to support the next phase of our growth. I am very excited about what lies ahead of us at this time.

We expect the fourth quarter to be the strongest in Alvotech history and we have a strong order book as we move into the year 2027. And with that, I will hand you over to Lisa to take you through the business updates.

Lisa Graver: Thank you, Robert. I want to begin with 2 important FDA approvals we received in October for Simlandi at our Reykjavik facility. The approvals of additional manufacturing capacity, and of our enhanced manufacturing process in DSM 2 are significant developments. They follow the FDA's closure of its May inspection with a voluntary action indicated classification. And provide further evidence of the progress we have made in strengthening our manufacturing and quality systems. They also give us greater operational flexibility. As we work to supply an expanding commercial portfolio. Joe will explain the technical implications and implementation in more detail. At our half year results, we described a business with strong underlying demand, but constrained product availability.

Due to the cumulative impacts of the manufacturing slowdown related to our quality improvement programs. We explained that restoring production was the starting point, and that the cadence and commercial deliveries would build over time. The third quarter shows further progress along that path. Our focus remains on continuing to fulfill market demand, and sustaining that progress through the important final quarter of the year. Turning briefly to our financial performance, Revenue for the first 9 months was $323 million. With EBITDA of $78 million. An increase of 15% year-over-year. As previously indicated, we expect a significant proportion of our full year revenue and EBITDA to be generated in the fourth quarter.

We now expect performance to trend towards the lower end of our stated range. Linda will walk you through the financial results in more details. Turning to our commercial and operating progress. I would highlight 3 drivers of value creation. First, commercial performance. Product and service revenue increased to $58 million in Q3. up 78% year-on-year. And 6% over the second quarter. This is clear evidence of the gradual recovery we outlined in August. Our established products continue to demonstrate solid commercial traction. While newer launches are broadening the portfolio's geographic reach. Second, our pipeline. Where we have continued to achieve important regulatory milestones.

Our Entyvio biosimilar is now under review in both The US and Europe, covering both intravenous and subcutaneous presentations. And in Europe, AVT 29 became the first known regulatory submission worldwide for a biosimilar to high dose EYLEA. Together, these programs position us to participate in the first wave of biosimilar competition in 2 important markets. The agreement with Lotus announced by our partner after the half year results is an important illustration of the commercial potential of our pipeline. It gives Alvotech an opportunity to participate directly in The US commercialization of biosimilars to Hemlibra, and Imfinzi. Alongside our partner. Evolving our traditional partnership model and creating the potential to capture more value from these assets. Third, manufacturing.

Where our priority is to put our strength and capabilities to work in support of reliable commercial supply. Reykjavik remains an important part of our manufacturing capacity. Complemented over time by additional sourcing options through Lotte Biologics, and Fujifilm. Taken together, these developments strengthen our ability to meet market demand consistently. While building the portfolio and capabilities required for future growth. Turning to our established franchises, a AVT02 and AVT04 continue to provide a strong commercial base for the business. In The US, Cimlandi remains the number 2 adalimumab biosimilar. With market demand continuing to grow. The recent FDA approvals provide additional manufacturing capacity in flexibility. Which will help us address that demand as supply increases.

In Europe, Hukyndra continues to demonstrate the longevity of the franchise. With sustained demand across key markets several years after launch. For AVT04, we are seeing rapid biosimilar adoption. Selarsdi is benefiting from the expanding US market as Teva builds formulary access. While Uzpruvo remains well positioned in Europe as biosimilar conversion continues. Together, AVT02 and AVT04 provide an established commercial base as the contribution from our newer launches begins to broaden. Respect to our newer launches, we are particularly encouraged by the progress of AVT05. Our biosimilar to Symphony. Together with Advanz Pharma, we have established a commercial presence in 13 European markets, including all 5 major markets.

We are seeing encouraging momentum in Germany, Spain, The UK, and France. Supported by tender successes and expanding market access. As the only golimumab biosimilar on the market in Europe, AVT05 benefits from a strong first mover advantage. In US, we continue to prepare for commercial launch with our partner. Subject to the necessary regulatory approval and favorable resolution of a pending patent motion filed by the brand. A hearing was recently held in the Eastern District Of Virginia. Following a motion for a preliminary injunction filed by the brand in an attempt to prevent our launch. While the court is expected to rule on the motion in the coming weeks, we remain confident in our position.

And that the motion will be denied. AVT06 or aflibercept 2-milligram has established a footprint across more than 10 European markets and in Japan. The broader aflibercept market is moving rapidly toward high dose treatment. Reinforcing the importance of ABT29 as a potential first wave high-dose aflibercept biosimilar. Beyond the progress of our marketed portfolio, we also took an important step in the evolution of our commercial strategy. As noted earlier, we announced a strategic licensing and commercialization agreement with Lotus Pharmaceutical. Covering AVT34, and AVT87. Our proposed biosimilars to Imfinzi, and Hemlibra. This agreement is particularly significant because for the first time, Alvatek will have the opportunity to participate directly in the commercialization of its products in The US.

Under the agreement, LOTUS will commercialize both products through Alvogen, while Alvotechh also retains the right to commercialize them directly. This represents an evolution of our established business model. Our global partner network remains central to our strategy. But where economic supported, we now have the to participate more directly in commercialization. And capture a greater share of the value we create through our integrated development and manufacturing platform. At the same time, the agreement extends our commercial reach into 8 Asian markets, where Lotus will have exclusive commercialization rights. The agreement also provides for potential upfront and milestone payments of up to approximately $150 million. Alongside future commercial supply revenue.

We see this as an important example of how we can continue to evolve our partnership strategy, combining the strength of our established global network with more direct commercial participation where the opportunity, and the economics support it. More broadly, we continue to see interest in our development and manufacturing platform from potential partners. We are pursuing opportunities selectively. Seeking terms that meet our partners' needs and create attractive value for Alvotech. With that, I will turn it to Joe to discuss our regulatory and manufacturing achievements in more detail and The continued progress of our development pipeline.

Joseph E. McClellan: Thank you, Lisa. Let me build on the manufacturing developments Lisa highlighted and explain what they mean for our operations and future supply. In October, we received 2 FDA approvals that strengthen both capacity and productivity at our Iceland facility. These capacity enhancements had already been approved in Europe. The first approval allows us to manufacture Simlandi drug substance for The US market in both manufacturing suites DSM 1 and DSM 2. This effectively doubles the drug substance capacity available for US supply and gives us much greater flexibility in scheduling production. The second approval covers our enhanced manufacturing process, Process 2.0. This is a significant technical achievement of our process development manufacturing, quality, and regulatory teams.

Process 2.0 more than doubles drug substance output per batch compared with the previously approved process. It does so at the same upstream manufacturing scale without compromising product quality. In practical terms, we can produce the same quantity in fewer batches. That improves productivity and frees up capacity for other products in a growing portfolio. This is a step change in Simlandi manufacturing productivity and significantly strengthens our ability to meet commercial demand. We have already implemented Process 2.0 in AVT02 manufacturing, and are supplying commercial product made using this process to The US and European markets for the fourth quarter of 2026.

Turning to our US regulatory progress, At our half year results, we outlined the extensive improvements made across our manufacturing operations and quality systems. The subsequent Cemlandi approvals mark further operational progress in Iceland and demonstrate our ability to meet demanding regulatory requirements. These approvals follow our June 2026 FDA resubmissions for 2 products, AVT05, are proposed biosimilar to Symphony and Simponi ARIA and AVT06, our proposed biosimilar to 2 mg. Our partner, Dr. Reddy's, also resubmitted the application for AVT03 our proposed biosimilar to Prolia and Xgeva, during the same period. All 3 applications share the same December date, although the FDA assesses each application independently.

We continue to support the agency's review as we work towards these important milestones. Alongside our progress in Iceland, we continue to expand our global manufacturing network. In October, we announced a long term strategic partnership with Lotte Biologics to manufacture drug substance. Under this agreement, Lotte will produce drug substance for multiple biosimilar products at its Syracuse, New York facility, supplying global markets. The partnership complements our existing relationship with Fujifilm Biotechnologies, which will provide an additional source of commercial supply in The United States. Commercial production with FUJIFILM is expected to begin in the second half of 27. Together, these partnerships are progressively strengthening our network adding alternative sources of supply, and giving us greater flexibility and resilience.

This is an important part of our strategy to support a growing commercial portfolio and ensure continuity of supply over the long term. Let me now turn to our pipeline. During the quarter, we continued to advance our internally developed programs, in immunology, ophthalmology, and oncology. There are 2 particularly important programs I want to highlight. First is our vedolizumab program, which includes AVT16 and AVT80, our proposed biosimilars to Entyvio. Together, they cover both intravenous and subcutaneous administration. The FDA accepted our AVT16 application early this year. In August, it accepted our separate AVT80 application. Covering both prefilled syringe and auto injector presentations. In Europe, a single validated marketing authorization application covers both products.

Developing both presentations is central to our strategy by addressing both routes of administration, we have the potential to compete across the reference product's full range of presentations. With applications under review in both Europe and The United States, we continue to work towards the next regulatory milestones and the commercial opportunities these products represent. The second program is AVT29, our proposed biosimilar to Eylea 8 mg. As Lisa noted, the ophthalmology market is increasingly shifting towards higher-dose aflibercept. Our development strategy addresses both segments. AVT06, our biosimilar to EYLEA 2 mg and AVT29, our proposed biosimilar to 8 mg.

In October, we announced together with Advanz Pharma, what we believe is the first regulatory submission worldwide for proposed biosimilar to EYLEA 8 mg. We submitted the application to the EMA as a line extension to the existing European marketing authorization for AVT06, our aflibercept 2 mg biosimilar. The application has since been validated. This is an important achievement for our development organization as it demonstrates how we can build on our scientific and regulatory experience to advance complex biosimilar programs. At the same time, our clinical study supporting a future US regulatory submission remains on track. We believe this positions AVT29 as an important early entrant in the emerging market for a high-dose aflibercept biosimilars.

To close, our recent achievements show continued progress on 3 fronts. Strengthening our manufacturing platform, advancing regulatory approvals, and developing the next generation of biosimilars. Our focus is on turning these capabilities into reliable commercial supply and continued execution across our pipeline. Supporting Alvatek's next phase of growth. With that, I hand over to Linda for our financial review.

Linda Jonsdottir: Thank you, Joe. I will now take you briefly through some highlights of our financials for the third quarter and the first 9 months of 2026. Unless otherwise stated, the figures represent adjusted numbers. Reconciliations to the corresponding IFRS measures are included in our earnings material that we released yesterday. As we discussed on our last earnings call, facility improvements that began in the second half of 25 and continued through the first half of the year, led to a manufacturing slowdown and temporary constraints on our ability to supply. These activities were completed by the end of the second quarter.

Results from the third quarter still reflect that the ramp-up in supply is ongoing, and we expect the fourth quarter to be the strongest this year. I will begin with the third quarter highlights before covering the first 9 months as a whole. The third quarter showed improvement from the previous quarter in total revenues, gross margin, product margin, and adjusted EBITDA. Total revenues of $112 million were up 5% compared to the second quarter and down slightly by 2% compared to the same period last year. Both product revenues and license revenues rose quarter on quarter, but license revenues were down 1-third year-on-year, while product revenues were up 78%.

Our gross margin was 54%, up 3% points compared to the second quarter, representing an increase in total revenues with cost of goods remaining flat. Adjusted EBITDA was $31 million in the quarter, up 40% quarter on quarter and doubled compared to the same period last year. Turning to the financial highlights for the first 9 months of 2026, Total revenues were $323 million, down 23% compared to the same period last year, This can be attributed to the slowdown in production timing of licensing revenues and the impact from the launch in the first half of last year of the biosimilar to Stelara in The US.

Our gross margin percentage during the period was 54%, down 5 percentage points year on year with impact from facility improvements in the first half of the year and timing of licensing revenues. Adjusted EBITDA was $78 million up 15% from last year representing a margin of 24%, an improvement of 8 percentage points year on year. As noted in our last earnings call, we are expecting Q4 to be the strongest quarter of the year and that we will see continued and stronger momentum on the product revenue side. Further on revenues in the first 9 months of the year. Product revenues at $164 million contributed a little lower than 1-half to the top line.

We now have 5 end-market products in global market generating product revenues. Manufacturing output continued to be constrained until the end of the second quarter by improvement of activities at the Reykjavik facility. In Q3, our focus has been on supplying to our partners and meeting their continued demand, which remains strong. We will see an impact of these trends in Q4 and as we go into the New Year. Licensing revenues in the first 9 months were $159 million, and while the split between product revenues and licensing revenues, has trended towards 50/50 this year both milestone revenue recognition and product revenues can be inherently lumpy.

Milestone revenue recognition is driven by the timing of new agreements, progress in R&D, marketing authorizations, and other contractual milestones. Product revenues can also fluctuate from quarter to quarter, reflecting the nature of our B2B model where the timing of partner orders and shipment is a key driver. Last year, the split of total revenues by geography started to be more tilted towards Europe and the rest of the world. The split remains the same in the first 9 months of this year. Turning to cash flow. Cash on hand at the end of the period was $61 million and $143 million at the beginning of the quarter.

Cash used in operations was $89 million during the quarter, reflecting changes in working capital And as you can see from the cash flow bridge, key drivers impacting cash flow in the quarter were $27 million from operations before working capital movements, Working capital absorbed around $116 million reflecting manufacturing ramp up. Net interest payments were $37 million in line with past quarters. Investment intangibles absorbed $32 million reflecting continued investment in the advancement of our biosimilar pipeline. The impact of net borrowings, including a new loan facility in August, was $82 million Looking at the balance sheet, let me start by briefly cover key items on the asset side. And changes from year end 2025.

Intangible assets are around $93 million, which reflects the capitalization of qualifying development costs property, plant, and equipment, increased by $11 million from year end 2025 primarily reflecting investments in facility improvements during the first half of the year. Our inventory increased by $22 million, consisting of semi finished products, while raw material inventory decreased Contract assets increased by $45 million due to timing of revenue recognition and looking at the equity and liability side of the balance sheet, total equity improved by $17 million, strengthened by the June 2026 equity raise.

Noncurrent liabilities, excluding the impact of derivatives and deferred tax increased by $91 million, supporting pipeline investments and working capital Current liabilities decreased by $16 million, This includes a $20 million recognition of a commercial provision a decline in contract liabilities by $27 million as payments from our partners converted to revenue upon delivery and the decline in payables by $36 million, contributing to working capital outflows. Turning to our financial outlook for the full year.

We target revenues in the range of $650 million to $700 million Adjusted EBITDA is targeted to be in the range of $180 to $220 million As we look ahead to the last quarter of the year, and into 2027, we expect to be able to deliver year on-year growth in 2026. With an expanded product portfolio and development milestones from our expanding pipeline. Both milestone revenue recognition and revenues can be inherently lumpy. lumpy. And as we are ramping up production to meet growing demand, and fulfilling already received orders, Alvotech navigates a highly dynamic environment and remains focused on delivering results within the stated range.

We now expect performance to trend towards the lower end of our stated range. As we have noted earlier, we expect to deliver healthy deleveraging of our balance sheet in 2027 presenting further opportunities to optimize our capital structure. With that, I will hand the call back to Lisa for a closing statement.

Lisa Graver: Thank you, Linda. As you can see, Q4 remains particularly important for commercial and financial performance. And our priorities for the remainder of the year are very clear. We need to translate the progress we have made in into planned product deliveries to support growing demand, and the continued rollout of our newer products. We also need to execute on the regulatory milestones ahead of us. Finally, we need to finalize strategic partnerships for our growing pipeline of products. Especially for key markets like The US. And Europe. The progress at Reykjavik together with the additional supply options we are building through Lotte, and Fujifilm, give us a stronger platform from which to do that.

Our focus is now firmly on execution. While continuing to build the portfolio and our partnerships that will drive our longer term growth. Thank you.

Operator: We will now begin the question and answer session. We will take our first question. Your first question comes from Umer Raffat from Evercore. Please go ahead. Your line is open.

Umer Raffat: Thank you guys for taking my question. 2, if I may. First, I how are you thinking about odds of a Simponi launch next year considering we are sort of still very midway through the litigation process. there is no. Technically, no ruling in place and this is as at risk a launch as would theoretically be. And I am curious how's your partner sort of thinking about the risk profile for launch. I asked because there appears to be some numbers in for 2027 for Symphony contribution, could that take a little longer just based on litigation timelines alone?

And then secondly, I am sure you saw a lot of the stuff around Eylea in the last couple of weeks as it relates to the expert testimony. Where does that leave you now in terms of the path forward especially in light of sort of the argument that was presented by the expert which appears to agree with a case for a non obviousness and the implications for district court and path forward, or would you need a completely new filing or a new BLA? Thank you very much.

Lisa Graver: Hi, Umer. Lisa Graver. So maybe taking each of those So on Symphony, I think what we have said in the past and certainly we maintain is that we feel very strong in our position, both coming out of the preliminary injunction hearing as well as the. In total, our position against the patents that have been asserted in the underlying litigation. Nothing has changed. In fact, I would say coming out of the hearing, we are even more emboldened in terms of the likelihood of success. Around our position In terms of preparedness, we at Alvotech, obviously, are prepared and will support our partner. At the earliest possible moment to launch the product.

We are not in a position to comment on our partner's intentions in terms of precise launch timing. But, what I can say and what we have said in the past, is that we are working very closely with Teva in this case for The US launch. And that we will be prepared, at the earliest possible moment where we both have, of course, regulatory approval, but also are able to clear the preliminary injunction hearing. In terms of AVT29, I think there too, we feel very strong in the invalidity positions we put forward in the PGR. Those invalidity positions relate not only to non obviousness, but also to, lack of written description.

We think both sets of arguments are very strong. And we have maintained that since the beginning. I think we have seen some, of course, red herring positions taken by, the patent owner. In response. But I think just coming out of the pretrial or pre-hearing, pre-conference, or the conference, prehearing, which is set for December 4th. I think what we heard very clearly from the PTAB judges is that the focus here needs to be on the law and the facts. And if you apply the law and the facts, we believe very strongly that the claims of the '006 will be invalidated. Thank you very much.

Operator: Thank you. We will take our next question. Your next question comes from Glen Santangelo from Barclays. Please go ahead. Your line is open.

Glen Santangelo: Yeah. Good morning. Just 2 quick ones for me. I maybe want to follow similar line of question as it relates to Entyvio, right? there is another IP debate where, you know, most people are expecting Entyvio to run into the 20 thirties, but you seem to have a very different view. And I was kind of curious if you could maybe comment at all on sort of your IP position as it relates to that product. And then secondly, I wanted to talk about the 4Q guidance. You are basically reiterating the revenue guide, at the lower end of the range.

And I appreciate the lumpiness of sales, but I am kind of curious as we sit here in mid November with the quarter half over, how much visibility do you have on that fourth quarter expectation at this point? And could you comment at all about maybe the licensing or milestone revenues that may be attached to the approvals in December so we can maybe get a sense for the mixed contribution of revenues in Q4? Thanks so much.

Lisa Graver: Thank you. Maybe I will start with the question around Entyvio and the patent challenge that is underway. I mean, I think from our perspective, and we certainly have said that previously, we believe we have developed a strong position. The patents that have been asserted are primarily relating to method of treatment or dosing regimen patents as we refer to them. We have developed strong invalidity positions with respect to those, with the claims in those patents. We certainly believe that we will be successful in advance of any patent expiration, and we have. We have stated that multiple times. And I think in terms of likely outcome here, we do think we will be in the first wave.

You know, we filed first both in The US and Europe and we are well positioned in both regions. To protect and defend our position. And, certainly, we are preparing, for success. In both major markets.

Linda Jonsdottir: Maybe I will turn it to Linda on Yeah. Absolutely. I mean, as I cover the things like earlier, both milestone revenue and product revenues, like, can be lumpy, but. And, of course, we are a very dynamic environment. But looking at where we are sitting here today, taking everything into account, also likelihood of new deals coming in and then looking at the total picture. We are confident in the lower end of the current range that we issued yesterday.

Operator: Thank you. We will take our next question. Your next question comes from Jason Kuberski from Bank of America. Please go ahead. Your line is open.

Jason Kuberi: Hi. Thanks for taking my questions. Another 1 on Entyvio. I guess if you get timely approval and if there is freedom to operate in The US, I am just curious about how you see the opportunity. I know, like, in the past, maybe buy and build products have been healthier biosimilar markets, from a I guess, a pricing and a revenue perspective. But, you know, if you are able to secure an exclusive position in US Entyvio, I wonder if the biosimilar opportunity from a price share perspective could be perhaps healthier than some of the more heavily competitive sort of Stellara and Humira type opportunities. So just curious how you think about that.

And then my second question is just more of, you know, in the advent of, like, changes in regular. In terms of the clinical burden to develop a US biosimilar how are average program costs trending for you? Trying to think through the ability to absorb more programs over time. Thanks.

Lisa Graver: Perfect. I will take the first part on of the question. In terms. I mean, I would just say that we agree with your premise that, with respect to ENTYVIO and how it is, reimbursed in The US, we do think that we will see, especially as a first wave the ability, to do well to be able to maintain and grow volume and be able to see healthy margins. Certainly, you know, as we work with our partner on the opportunity, we will be taking every advantage of Teva's ability to contract and contract favorably in The US market.

We have seen that in past successes with our biosimilar to adalimumab, the biosimilar to STELARA, Even if more competitive, we have been able to reach very good dynamics just based on Teva's ability to commercialize and do so in a very disciplined fashion. So I think first wave entrant into Entyvio, given the size of that market, how it is reimbursed, fully aligned with your thoughts on that in terms of it likely contributing very well at both top line and at revenue or at margin.

Joseph E. McClellan: Yeah. Well, I will turn it to Joe a little bit to talk on the clinical. Yep. Thank you. Evolution. Yeah. Absolutely. So from a development perspective, there is still the requirement to develop a high quality manufacturing process demonstrate that manufacturing process at your commercial scale, and then demonstrate analytical similarity between reference product and your product that you wanna be a biosimilar approved. Plus do the PK study. So those core aspects are still there. And those have always been more than 50% of the overall cost for sure to develop a biosimilar. So the savings is on not having to do the clinical efficacy and safety study.

Yet, there still is a significant amount of work, and a timing perspective, no real change, at least the way that Valvotec does the development. Because we always drive that CMC really what is rate limiting for our success to get to a molecule approved. Yeah.

Operator: Thanks. Thank you. We will take our next question. Your next question comes from Dennis Ding from Jefferies.

Dennis Ding: Hi, guys. Good morning. Thanks for taking my questions. 2, if I may. So number 1, on guidance, maybe talk a little bit about what is driving the low end of revenue and EBITDA guidance? Is this just the timing of certain payments and orders that are being shifted into 27. And that underlying demand still remains strong in The U. S and Ex U. S? And then number 2, for 2027, you know, what are the different levers that could impact, 2027 guidance? And if you focus solely on the current base business without contributions from the new U. S. Product launches, are you confident that revenue and EBITDA should continue to grow year over year? Thanks so much.

Linda Jonsdottir: Yeah. Sure. So, like, just to touch on the 2027, like, I mean, we are very confident in that we will see substantial improvements on the upside, like, between 26 in 2027. We have not, of course, given out any more detailed guidance, but perhaps a direction I can give to you. On our current guidance and, like, why we are at the lower the lower end. I mean, I think as I refer to, like, the dynamic environment, I think it is fair to say that, like, we have been dealing with a number of factors this year. Like, we have.

We are finally now seeing that volume is ramping up on our end, and we are looking towards q '4 to be the strongest quarter of the year, which is, of course, extremely good to see. And we see the recovery taking place. But there are some timing impacts that are moving us towards the lower end of the range compared to what we saw earlier this year.

Lisa Graver: Maybe, Linda, just to add on to that and to underline the strong demand. Not only are we seeing that now through the end of the fourth quarter, but we are assuming that to continue into 2027, especially with respect to what we will call our base business in AVT02 and AVT04. Given just the general erosion and biosimilar penetration increasing in both of those molecules, I think we will see 2002 probably trending towards 2065 biosimilar by the end of the year. 2004 probably greater than 50%, and in Europe, it is even bigger.

So I think those dynamics are gonna continue to help us feel comfortable in the growth that we are gonna see in 2027 in addition to the potential for new launches. And those launches, again, are both for 2 major markets, the US and Europe. So I think there is enough to build confidence But, again, as Linda pointed out, we have not, yet guided for 2027.

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

Ash Verma: Hi, great. Thanks for taking our questions. So, yeah, I mean, I just wanted to go back to Simponi, this discussion that a lot of people have asked about. So I was trying to understand as a part of this agreement with your partner, Teva, do you have any contractual obligation from them that they will launch given that this is gonna be an at risk launch. And I know they have framed this as a 2027 potential launch yesterday as well. But, generally, we have seen Teva's not been very aggressively following generics and focusing more on brands, so not really critical for them. But a big factor for you.

So just want to understand if you have any confirmation that they will, in fact, launch while the notification is going on.

Lisa Graver: Yes, Ash. Thanks for the question. I mean, I think, certainly, what we have seen from Teva as a partner in biosimilars is a very strong and interested and engaged partner. This is an important piece not only for our business, but for theirs, and it is why we aligned and entered into our relationship in the first place, and we have only seen that grow. So I have every confidence that we will continue to with them in a very strategic way and make sure that each of the opportunities we are bringing forward in the next several years will be maximized.

And that is across the board, whether there is IP, whether it comes to the commercial dynamics and contracting, I think we work very closely, and it is very much a partnership and a joint decision making across the board. So I think the best way to underline this is that I think we are both aligned that there is real opportunity here. We have worked lockstep on our strategy both from a regulatory and a IP perspective, but also as we look forward to, the commercial event. So for us, it is important, but I can tell you just based on our partnership dynamics, it is very much important to Teva and is a focus.

Operator: Thank you. We will take our next question. Your next question comes from Arvid Røste Sekkesæter from DNB Carnegie. Please go ahead. Your line is open.

Arvid Røste Sekkesæter: Good afternoon, and thanks for taking my questions. So the first 1 on deliveries and gross margins. I guess manufacturing returned to more or less normal levels in late June. And accounting for batch release lead times and the approval of the new process 2.0. How should we think about the timing and pace of recovery and recovery in deliveries and gross margin through Q4 and into 2027. And then secondly, on the R&D spend, at the end of Q2, you indicated r and d spending of roughly $200 million, but half of that capitalized for the full year. Is that budget still holding up? Or have you had any reason to revise this? I will start there. Thanks.

Linda Jonsdottir: Mhmm. Okay. Yeah. On the, as you mentioned, gross margin, but perhaps I focus on the product margin. Because, of course, the gross market is then very reliant on the licensing. Fees. But on the product margin side, I mean, that is heavily depends on, a number of things. Both the market mix and the competition and timing. But, like, looking at, where we are today, we have started to see stabilization. You see that already in our Q3 numbers. We still expect margins to remain somewhat compressed through 2026 because of everything that has been moving this year here on the facility improvement side.

But then as we enter into 2027, that will be with a stronger product margin profile compared to where we are at now. On, like, the R&D capitalization, I would say, outlook for the year, like, remains roughly the same for total R&D spend. In the area of 200 million with 50% capitalized. Thank you so much.

Arvid Røste Sekkesæter: And just a last 1. I guess the lower end of the guidance still implies a very strong finish to the year. And you previously indicated that deleveraging should follow in 2027. So can you just give us a feeling for how much of that deleveraging that will come from profit growth versus cash generation? And do you view Q4 as the starting point for cash generation and deleveraging? Or is there a risk that 2027 could be a bit more back end loaded again due to launch dynamics and phasing of partner deliveries.

Linda Jonsdottir: On the deleveraging point, I mean, we have been indicating towards healthy deleveraging towards the later half of 2027. So I probably do not want to go into too much details there since we have not given out the guidance yet for 2027. But looking at the total picture, we should be in a totally different level in the second half of 2027 from leverage point of view. And it will be coming from a mix of things. So I cannot put it all on 1 piece there. So I probably leave it at that for now. Until we come out with more clarity. For 2027 guidance.

Operator: Perfect. Thank you so much. Those are all my questions. Thank you. We will take our next question Your next question comes from Christopher Uhde from SEB Please go ahead. Your line is open.

Christopher Uhde: Hi there. Christopher Uhde, SEB. Thanks for taking my question. Well, I guess the first 1 would just be a quick clarification. Based on what you said earlier, I wanted to confirm that licensing revenues still are not from the new approvals, are not in the low end of the guidance. And, still, then secondly, so thinking about your cash flow and your balance sheet, and interest payments, Last time you were. Had this level of cash on the balance sheet, you took in capital. what is the situation now? Obviously, a different dynamic with a strong Q4 coming into play.

What can you say about your operating cash flow for the year, the expectation there and your interest rate payments going forward, should we expect it to be at the same level as Q3 or higher or lower? Thank you.

Linda Jonsdottir: Yeah. So I will start them on the cash flow point. I mean, like, as you see in the cash flow bridge, I mean, the primary driver is working capital for I mean, it is very much related to that we are ramping up on the inventory side on the supply chain readiness ahead of our launches and increasing demand, generally speaking. So we are, of course,, preparing for the anticipated regulatory approvals, including our December milestones, and we are also seeing just overall strong demand for example, for Simponi in Europe. So I would say, we are coming out of a period where we had limitations, and now we are ramping up for what is coming towards us.

So I think that is. I explains the main trends on the cash flow side. Looking towards the remainder of the year, And the trends on the working capital side, I mean, now we will see accounts receivable building up towards the later half of the year since we are, we have quite some savings out in Q4. Then inventories will start to go down. So, like, this will even out a bit. But, like, yeah, you see clearly the dynamics of wrap up which is the. Had the first In terms of the, like, question on the guidance, we have not really been very specific about exactly what is coming from Milestone.

Revenues versus the product revenues for Q4 even though we did guide as we did the range in the beginning of the year. So I would probably just, like, want to leave it at that at this point in time. As we navigate, like, through Q4. But as I said before, like, we are confident in the range, in the lower end of the range.

Christopher Uhde: Okay. So. But just to try to clarify a couple things. So firstly, if you do not get the approvals, then do you risk missing the range? And secondly, coming back to the interest payments, what kind of rate should we be thinking about?

Linda Jonsdottir: Yeah. So, like, I would say, we will keep the range despite the approval. Again, we are confident in the approval, but we will keep the keep the lower end of the range. On the interest payments, I mean, I would say until we start deleveraging, which is somewhere in 2027, we will have around this level of interest payment. So I would say that is also why I highlight is the deleveraging point because I think towards the second half of 27, we will be in much better position to navigate optimization on that front. But it will not happen in the coming period, I would say.

Christopher Uhde: Okay. If I could just rephrase my original question. All right. Are you fully financed to cash flow positivity? Can you say it again? Are you Fully financed to cash flow positivity?

Linda Jonsdottir: So, like, I mean, I would say in general, like, we are expecting cash flow positive to be cash flow positive in Q4 of 26. What if capital is needed, like, we are confident in securing that. And we will just approach that both strategically and thoughtfully. But yeah. Thank you very much.

Operator: Thank you. Once again, if you wish to ask a question, please press 1. We will take our next question. The question comes from Aditya Venkat from Morgan Stanley. Please go ahead. Your line is open.

Aditya Venkat: Hi, there. Thanks for taking my question. I from Morgan Stanley on for Thibault. Just a couple of questions on HUMIRA and STELARA. So you have previously said that neither franchise has peaked. So where do you see further share gains in 2027? Particularly in the private label channel for HUMIRA? And to what extent do you think price erosion could offset volume growth? And in terms of the near term US launches, assuming both Eylea and Simponi launch in 2027, how should we think about their commercial potential? And particularly on Eylea, how much share can you capture given Amgen's head start? And shift to high dose? Thanks very much.

Lisa Graver: So I will take the first part. I mean, just need to ask for clarification on the second question. But in terms of Stelara in 2027. We are not predicting a peak just yet. So I think 2027 will still be a growth year. In terms of channel dynamics, in terms of channel dynamics, I do think that private label, while still present, it is going to be difficult to predict sitting here today. The ability to grow the private label channel I would say our focus has been on growing formulary, and that has been very successful for us. And our partner. And I do think from a price erosion perspective, you know, we always assume some erosion.

We have not seen significant through 2026 So I think conservatively. And, again, we have not given guidance, but to talk high level, we do think there will be some erosive pressure but nothing unanticipated. From our perspective. On your second question, could I clarify is this. Are you talking about EYLEA or Entyvio? I missed the product name. Just clarifying Eylea. Thank you. So I think from you know, the market dynamics for Eylea, obviously, HD is growing. it is why we developed the program and why we are pursuing it. We still see a healthy component in the low dose. And we are projecting obviously continued growth of HD.

In 2027, but we do still think that there is opportunity, of course, in, the low dose in our AVT06. So for us, I think, while the market is more formed, it is still not at a point where we do not think there is opportunity. So both just general market overall dynamics for the low dose remain positive for us, so we do think there will be contribution. But, certainly, we are looking forward and we will be prepared, to take every advantage of, the growth in the high dose once our product is approved and able to enter the market.

Operator: Very much. Thank you. This concludes today's question and answer session. I will now hand back for closing remarks.

Lisa Graver: Great. Thank you. So on behalf of the Alvotechh team, I wanna thank everybody who listened and everybody who was asking questions on the call today and wish you a wonderful rest of the day. Goodbye.

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

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