Welcome to Alvotech's Earnings Call for the First Nine Months of 2023. 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] I would now like to introduce and hand over the call to Benedikt Stefansson, Senior Director of Investor Relations and Global Communications of Alvotech. Please proceed.

Thank you, and good morning or afternoon to everyone joining this call today. Yesterday evening, the company issued a press release that can be found in the News section of our Investor portal, investors.alvotech.com. The release outlines key highlights related to our third quarter results. Additionally, presentation slides that cover our call today have been posted on our website in the Events section of investors.alvotech.com. 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's filings with the Securities and Exchange Commission, and the NASDAQ Iceland Stock Exchange. 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 CEO 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, Founder, Chairman and CEO of Alvotech. Robert?

Thank you, Benedikt. Thank you all for joining us on this earnings call today and the business update. I would like to start today's presentation by going over some key updates to the business. The company continues to prepare for the upcoming inspection with the U.S. FDA, which we now expect to start on January 11th in the new year. This inspection, if successful, could pave the way of approvals in the U.S. for both AVT02 and AVT04. These are biosimilars to Humira and Stelara. Inspection status of our manufacturing facility is the only outstanding requirement in order to gain approval for both of these applications in the U.S. While we understand that the upcoming inspection is of critical importance, we continue to receive positive confirmation to gain global regulatory approvals. Our second product in our portfolio, AVT04, a biosimilar to Stelara, has recently received approval in Japan and Canada. Additionally, we also receive confirmation of a positive CHMP opinion in Europe, which should soon lead to final approval. Finally, in U.S., the review of AVT04 has been completed and the application is deemed approvable, subject only to inspection status as noted earlier. Since our last business update, we have secured rights to a proposed biosimilar to Xolair, identified as AVT23 with Kashiv Biosciences. This transaction allows us to follow through on our commitments to our commercial business partners. AVT23 is the only program in our current pipeline and portfolio that does not originate in-house. Our global footprint of commercial partners allows us to enter strategic partnerships like we now have with Kashiv to accelerate our portfolio expansion. In our partner, Kashiv, we have found a company that has proven ability to develop approvable biosimilars in regulated markets. We look forward to provide further updates on the program. On that note, Kashiv announced in October of this year that our AVT23 entered into confirmatory clinical study. Including AVT23, Alvotech has now four different biosimilar programs that are in active patient studies. We expect in 2024 to file at least three additional products in the major global markets, including the U.S. and EU. And, with that, I would like to turn the call over to Anil Okay, our Chief Commercial Officer, to provide further updates. Over to you, Anil.

Thank you, Robert. Regarding AVT02 in the U.S., subject to a satisfactory inspection in January, we expect to gain approval of an interchangeable high concentration biosimilar to Humira on February 24, 2024 or earlier. We continue to strongly believe that, if approved, our product profile would position AVT02 well amongst current biosimilars that have yet to penetrate the existing adalimumab market. Furthermore, timing for approval could yield exclusivity for interchangeability for a period of up to 12 months post launch. If approved, ahead of competition, which makes this potential event much more attractive for Alvotech from commercial perspective. As we discussed on the last call, the story of Humira biosimilars in the U.S. is still evolving. Thus far, there has been limited uptake of biosimilars, which is a function of a number of factors in our view, which includes product profile. As a reminder, the predominant form of Humira on the market is the high concentration form. Of the crop of current biosimilars on the market, none of them have the combination of high concentration and interchangeability, and while some of the competitors are developing that form, we believe an approval in February for an interchangeable high concentration adalimumab would likely be the first. We believe this combination would be differentiated and have the ability to convert the market more efficiently. Moving to the next slide and turning our attention to AVT04, our biosimilar to Stelara, we are very pleased with our regulatory progress in number of different markets. Alvotech is the first company to gain approvals in Japan and Canada, and also the first company to receive positive CHMP opinion by the European Medicines Agency, which should pave the way for the first approval in the European Union. Per IQVIA, the market sizes for those regions collectively exceed $3…

Thanks, Anil. I'll now provide some brief financial highlights for the period ending September 30, 2023. On our last earnings call in June, we reported that we had recently completed a private placement of subordinated convertible bonds for $140 million, with the strong participation from a diverse group of Icelandic institutional investors, as well as Teva and Aztiq, which subscribed to $40 million and $30 million investments, respectively. This transaction closed and funded during the third quarter. And as of September 30th, we closed with $68.3 million of cash on hand, excluding $25.2 million of restricted cash. In terms of our operating performance, the company recorded $29.8 million in product revenue for the first nine months of 2023 versus $11.1 million during the same period in the prior year. This sharp increase is driven by the timing of our launches that started in the second quarter of 2022. Since then, our partners have continued to expand on share in existing markets throughout Europe and Canada. As we mentioned during our last quarter call, our shipments to our commercial partners have increased during the third quarter versus Q2. From a geographic mix perspective, our product is being sold into multiple countries across Europe, and this can lead to both favorable and unfavorable pricing dynamics based on how our products pull through this mix of markets during any given period. In Q3, our product was sold disproportionately in lower priced countries. We expect to see strong volume and product revenue growth and milestone revenue recognition in the fourth quarter, as indicated on our last earnings call. We recognized $8 million of milestone revenues during the third quarter, primarily driven by a development milestone for our AVT23 program. We are in active pursuit of additional licensing opportunities for our pipeline assets and continue…

Thank you, Joel. With that, we conclude our formal remarks. We now open for questions from the audience. [Operator Instructions] Our first question comes from the line of Balaji Prasad from Barclays. Please go ahead.

Hi, everyone. This is Mikaela on for Balaji. Thanks for taking our questions. Just a quick one from me. Just with the facility reinspection set for early next year, could you help us better understand more about Teva's contribution in getting the facility ready for approval? Any additional details there would be helpful? Thanks so much.

Yes. Robert Wessman here. Happy to answer that. So, basically, we have been addressing all the observation we got from the previous inspection. So, we believe that we have answered those already in our previous answers to FDA, but likely is that those answers will be reviewed once inspection happen on site, which is 10th to 19th of January. But, overall, we believe that this will be a general inspection, if you will. So, we are preparing ourselves for a general GMP inspection. We have been, of course, using the time very well since the last inspection and we believe, based on the effort and the resources we have put into the quality system and the people and training, that we are in a good place to basically receive FDA now in January.

Thank you. We'll now move on to our next question. Our next question comes from the line of Niall Alexander from Deutsche Bank. Please go ahead.

Hi, guys. It's Niall Alexander from Deutsche Bank. Two questions, please. And more -- one on just the U.S. market as a whole. So, like you said, we're seeing limited uptake of the current U.S. Humira biosimilars with 98% of the market sort of really being made up by the Humira brand still. I know you can't comment on behalf of other Humira biosimilars, but I guess it'd be good to understand from your view why we're seeing this slow uptake. You mentioned this uptake was due to product profile, but could it be anything else? I'm asking if I'm just trying to understand if AVT02 could potentially fall to the same bucket? And so, that's my first question. And then the second question on AVT02 pricing, and it'd be good if we could get any takes on pricing, since we've already seen a range of biosimilars enter the space and how that pricing can compare to the Humira brand himself? Thank you.

Thank you, Niall, for the question. Anil Okay speaking. First of all, on the adalimumab commercial for the U.S. and the conversion rates, the conversion has been relatively limited. We have believed that while AbbVie remains primary on the formulary, non-interchangeable products and particularly the low concentration forms would have a difficult time converting large pieces of the market, even despite formulary positions. We actually see this as an opportunity for Alvotech and our partner Teva. We continue to believe that a high concentration interchangeable adalimumab would be more efficient in converting market, even with AbbVie's current formulary position. Regarding pricing for AVT02, AVT04, unfortunately, I will not be able to comment neither on our strategy or the market situation. So, I would need to pass this question, but thank you very much.

That was helpful. Thank you.

Thank you. We'll now move on to our next question. Our next question comes from the line of Thibault Boutherin from Morgan Stanley. Please go ahead.

Hello. Thank you. So, my first question is on the interchangeability on Stelara. I think, you mentioned your expectations of seeing the exclusivity from Amgen expiring in April 2025. If you could just give us more details on the assumptions behind the reasoning and when the clock starts ticking? And second question on Humira. Also, the exclusivity on the high dose interchangeability. And just if you could give more details on your confidence on getting this exclusivity, because I think it's a little bit confusing and just trying to understand exactly what the situation is here? And maybe third, on the revenues in Q3, I think some elements have been mentioned, but is there any destocking impact or anything else from a seasonality perspective as well impacting the revenue in the third quarter? Thank you.

Thank you, Thibault. Anil is here again. On the interchangeability and exclusivity questions, actually, I will bundle my answer for both of the assets, because the logic is pretty much the similar. The BPCIA legislation outlines various ways to interpret the timing based on a number of earlier off closes. Here, the definition as we see it is 18 months after approval. Therefore, for AVT02 -- sorry, for AVT04, we expect that to run its course shortly after our license date. So, the same is valid for AVT02. With the same logic, we also expect the exclusivity as well, and we are expecting to be the first interchangeable and high concentration adalimumab biosimilar into the U.S. market. So, this is how we are interpreting exclusivity when it comes to AVT02 and AVT04. Over to you, Joel, for the revenue piece.

Thanks, Anil. Yes. I think, on the revenue, nothing more to add than what I mentioned in my opening remarks. Geographic mix, quarter-over-quarter, can lead to both favorable and unfavorable impacts. And in Q3, in particular, our products were shipped into -- disproportionately into lower priced markets. That said, in the fourth quarter, we do expect our shipments to continue increasing.

Thank you.

Thank you. [Operator Instructions] There are no further questions at this time. So, I'll hand the call back to Benedikt Stefansson for closing remarks.

Thank you. And on behalf of the Alvotech team here today, I would like to thank all who participated by the web stream and the participants on the Q&A, of course, and we wish you a good rest of the day and look forward to speaking to you all again. Thank you.

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