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.

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?

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…

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 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…

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…

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.

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.

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.

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.

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.

Great. Thanks. And again, congratulations.

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

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.

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.

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.

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.

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