Alvotech (ALVO) Q4 2025 earnings call transcript

With that, I would like to turn the call over to Robert Westman. Hello everyone, and thank you for joining us today. 2025 was an important year for Alvotech. We continued to strengthen our position as one of the leading global developers of biosimilars. We expanded our commercial footprint, advanced several pipeline programs, and strengthened the financial position of the company through successful capital market transactions and our listing on Nasdaq stockhold. At the same time, we have addressed the regulatory observation of the FDA inspection of our radioactive manufacturing facility, and we implemented a comprehensive quality improvement program.

Based on the progress made so far, we expect to resubmit the affected applications to the FDA during the second quarter of 2026. We will, of course, update the market once those submissions have been accepted. We have addressed regulatory observation before in the industry, and we know how to solve them. Our focus has been on strengthening the operational platform so that we can continue to scale the business globally going forward.

Alvotech has 30 biosimilars in development today. We are advancing plans to have a second source manufacturing site for some of our key products going forward. This includes manufacturing of drug substance and drug product at a strategic CMO partner based in the United States. This will give us greater operational flexibility and over time reduce operational dependence on a single manufacturing site. Lisa will provide more details on the progress we are making with this initiative. Stepping back for a moment, the long term drivers of the biosimilar market remains very strong. Across the pharmaceutical industry, we are seeing a continued shift towards biologic medicines. Today, around 40% of global pharmaceutical sales come from biologics. But if you look at the development pipeline, this shift is even more pronounced.

Around 60% of phase two and phase three pharmaceutical development today involves biologics. This tells us that the reliance on biologics will only increase over time as more targeted therapies are developed. At the same time, more than 100 biologics are expected to lose patent protection over the next decade. While healthcare systems around the world are under increasing pressure to reduce costs, this creates a very significant opportunity for biosimilars. Another important development for the industry was that FDA draft guidance related to biosimilar development. In practice, it means that large, expensive efficacy trials will increasingly not be required. Some studies in the past have costed around $100 million per program and added one to two years to development timelines.

Reducing that requirement substantially lower the development cost and time needed to bring buyers to market. At Alvotech, we anticipated those changes, and we adopted our development strategy already several years ago. The new FDA guidance, therefore, does not change our strategy, but rather validates the approach we have already taken. Importantly, we are now well positioned to benefit from those changes compared to many of the other companies that are still set up for the older model. Joseph will discuss this in more details and explain how these changes may benefit our pipeline.

Turning to the next slide, our ongoing investment into our platform means that today we can initiate development of a new biosimilar program roughly every two months. This has enabled us to build one of the most comprehensive biosimilar pipeline in the industry. We now have 30 biosimilars in development, representing more than $185 billion in global sales. This pipeline is what will drive Alvotech's future growth, and we will continue to, of course, expand it.

Before handing over, I would also briefly highlight our financial performance for the year. In 2025, total revenues increased by 20% to $591 million, while adjusted debita increased by 27% to $137 million. Linda will discuss the financial results in more details shortly.

Finally, as we have announced earlier this year, Lisa Greiver has joined Alvotech as a chief executive officer. From the beginning, I saw my role as a CEO to be a time-defined appointment focused on building the company's platform and global partnerships. Lisa and I have worked together over 20 years, and she has served as an Alvotech board member since 2022. Two, Lisa brings a wealth of experience in commercial, R&D, manufacturing, and quality compliance.

With Lisa's appointment as a CEO, Linda's appointment as a CEO, and Joseph and Anthony stepping into expanded roles, the key management positions are now all based on site in Iceland, and the senior leadership has been strengthened. With the platform and people now firmly in place, the company is entering into a new phase focused on operational execution and commercial scale.

I will continue to serve as executive chairman and be actively engaged in the business, and I'm very much looking forward to work closely with Lisa and the leadership team. We, as a team, will, of course, continue to build Alvotech into a leading global by a similar company. And with that, I will hand the call over to Lisa.

Thank you, Robert, and hello, everyone. In addition to continuing my collaboration with Robert, I'm excited to help maximize the full potential of the robust pipeline Alvotech has built and is continuing to build. Before going into an overview of 2025 achievements, I want to address up front a key priority of the team and myself. The team has been executing on an extensive improvement plan to address all outstanding issues related to the FDA inspection in July 2025 to ensure we receive FDA approval for all pending applications for ABT-03, O5, and O6 this year. Despite continuing to commercialize our existing products in the U. S. and receiving approval for and commercializing ABT-03, 05, and 06 in markets outside the U. S. , we are committed to addressing all areas where improvement is required.

To that end, I want to highlight an initiative that we have been advancing since last year that looks to dual-source the manufacturing of some of our key products. As part of strengthening the long-term resilience and scalability of our platform, we are also evaluating opportunities to broaden our manufacturing footprint for selected products. Importantly, any future expansion would build on the strong manufacturing platform we have established in Iceland, which remains the cornerstone of our global production network and a critical source of our technical expertise at operational scale. As we evaluate options to broaden our manufacturing footprint, the United States is a natural area of focus given the importance of the U. S. market for biosimilars and the increasing emphasis on supply resilience within the U. S. healthcare system.

Expanding our manufacturing base for selected products would support several important objectives. First, it would strengthen supply resilience by reducing alliance on a single manufacturing site. Second, it would support future launches and increasing commercial volumes across global markets.

Third, a more diversified manufacturing platform strengthens our value proposition to commercial partners who prioritize supply, reliability, alongside product quality and economics. And finally, it provides greater strategic flexibility in a more complex external environment, including evolving healthcare policy environments, as well as broader supply chain dynamics. Taken together, these steps will further strengthen the resilience and scalability of our manufacturing platform as we support future launches and increasing global demand.

Turning to our 2025 achievements, over the past year, we have continued to expand the commercial footprint of our biosimilars portfolio, while strengthening the operational foundation that supports long-term growth. Our focus has been on three priorities.

First, continuing the rollout of our approved biosimilars across global markets through our commercial partners. Second, ensuring reliable and scalable supply as volume increases. And third, positioning the company to capture the next phase of biosimilar market evolution, particularly in the United States. During 2025, we achieved several important milestones across the company. Our commercial partner, Teva, launched SolarC in the United States, marking our second biosimilar launch in the U. S. market, and demonstrating the strength of our global partnership model. We also received geographic expansion with approvals and first launches for Golimumab, Dendusumab, and Aflircept across Europe, the United Kingdom, and Japan, targeting some of the largest biologic franchises in medicine. As we continue to build our pipeline, we formed new commercial partnership agreements with Advanced Pharma, which included our Cydinthea program, and with Dr. Reddy's for our Keytruda program.

We further expanded our global commercial partnership network with the addition of send-outs to broaden our reach across major pharmaceutical markets. As part of our efforts to further strengthen our technical and regulatory capabilities, we continue to expand our process development organization. Integrating Xbrain's R&D team in Stockholm has added highly experienced scientists with deep expertise in biosimilar development and enhanced our ability to advance multiple programs in parallel. The acquisition of Iver's Lee assembly and packaging business gave us greater flexibility and added capacity to meet increasing global demand for our biosimilars.

It establishes a centralized assembly and packaging hub from which we can serve multiple global markets from a single location. From a corporate perspective, we further strengthened our financial position during the year, raising close to $300 million from the capital markets to support continued investment in our development programs and manufacturing platform. We also broadened our investor base through the listing of Alvotech shares on NASDAQ's stock home, providing greater access to Nordic and European investors and further strengthening our presence in the region.

These transactions are a testament to the strength of our platform, our strategy, and our execution capabilities. Turning to our on-market portfolio, Humira remains one of the largest biologics markets globally, and biosimilars continue to gain share. At the beginning of 2025, the originator held roughly 70% of the U. S. market. By the end of the year, that share had declined to around 45% and continues to fall as patients switched to biosimilars.

This continued shift toward biosimilars in the Humira market reflects strong payer support and growing physician confidence. In the United States, Simlandi saw continued volume growth between the third and fourth quarters, and we are expecting further growth in 2026. Finlandia now holds approximately 9% of the market in the U. S. , making it the second largest and one of the fastest-growing biosimilars in the segment. In Europe, Q-Kindra continues to demonstrate a consistent performance despite entering a crowded market.

Elsewhere, our partners continue to extend access across Latin America and Middle East markets. In 2026, we anticipate further launches in rest of world markets, and that ABTO2 will remain an important contributor to our commercial portfolio. Stellara represents another large and attractive biologics market with significant biosimilar opportunity, and we continue to see strong rollout of ABTO4 across key regions. In the United States, where biosimilars now account for approximately 40% of the market, TEVA continues to expand formulary coverage for Stellarticy, holding a strong and growing market position. In Europe, MuseProvo has established a leading position with more than 20% share of the biosimilar segment. We expect continued biosimilar adoption across this market in 2026.

Turning to AVT05, our biosimilar to Symfony, which currently faces very limited competition in markets where it has been approved. We expect to be first to launch in several key markets and potentially the only biosimilar option for a period of time. Being first to market in a highly attractive biologic segment with limited competition represents a significant commercial opportunity for Alvotech, and we expect commercial momentum to build across launched markets through 2026. In Europe, ABT05 was the first biosimilar to Symfony to be approved by both the EMA and the MHRA. Marketed under the Goviva brand our partner Advanced Pharma began launch activities following shipment of product in December and a successful National Health Service Tender Award in the UK In Japan ABT05 is also the first and only approved biosimilar to Symfony Our partner, Fujifarma, has announced a market entry date of May 2026, and we anticipate being the first to launch a Symfony biosimilar in this market, and for there to be limited competition for some considerable time.

Elsewhere, we have filed for approval in several additional rest-of-world markets. In Canada, we are the only company to have filed to date based on available information, and we expect a decision in the first half of 2026. Following approval of the ABTO6 in Europe, the United Kingdom, and Japan in the second half of 2025, we announced a licensing and settlement agreement that resolves all remaining patent disputes related to Afliracet 2 mg worldwide. The agreement provides clear pathways for market entry of ABTO6 across key global markets and allows our partners to prepare for launches with confidence.

In the U. S. , we have a licensed entry date in the fourth quarter of 2026, or earlier under certain circumstances, which positions Alvotech and our commercial partner Teva for a potential launch in the U. S. market this year, pending SDA approval. Following shipment of product to Japan, our partner Fuji Pharma launched in February this year with the first and only AfliverSept biosimilar in that market, and they are reporting strong early demand.

Product has also been shipped to Europe. While we expect this market to be more competitive, our partners expect to gain a strong market share. Together with our commercial partners, we believe this positions Alvotech well to compete in the global Aflibraset market, which is evolving toward longer-acting dosing regimens that reduce the burden on both patients and physicians. The high-dose version of Aflibraset supports extended dosing intervals compared with the original formulation and is expected to represent an important part of the future market.

In anticipation of this shift, we have been developing a biosimilar candidate for ILEA HD. We are targeting a first regulatory submission in 2026, which would potentially put us in the first wave of biosimilar launches for the high-dose product. Having both low-dose and high-dose of Flibercep programs allows Alvotech to participate across the full evolution of the global Flibercep market, which remains one of the largest for ophthalmology globally.

Following approval of ABTO3 in Europe in November 2025, first-wave launch supplies were shipped to our commercial partners in December. However, our partners STADA and DRL have successfully launched in Germany and select European markets. As we anticipated, early pricing dynamics have been competitive, particularly in tender-driven segments. Despite the competitive environment, we believe that ABTO3 represents an important addition to the denusimab biosimilar landscape, and we expect commercial momentum to build gradually through 2026 as launches expand and biosimilar adoption increases. In Japan, ABTO3 remains the first and only biosimilar to have secured approval, with our partner Fujifarma preparing for market entry in 2026. I want to emphasize that the continued expansion of our commercial portfolio is closely linked to the strength of our development pipeline, the investments therein, and the licensing revenue from that portfolio.

The performance of our business going forward is also reliant upon our focus on cost optimization across all aspects of the company, which Linda will address later. I will now pass it to Joseph, who will provide an update on our R&D programs and our continued success in building that pipeline.

Thank you, Lisa. I will briefly cover three areas today. First, the status of our U. S. regulatory submissions. Second, progress across our development pipeline. And third, recent regulatory communications impacting biosimilar development.

Last year, Alvotech had four active U. S. Biologics licensed applications with the FDA for proposed biosimilars to Simpani, Simpani Aria, the dual products Polia Xtiva, and ILEA.

In the fourth quarter of 2025, we received complete response letters from the FDA for these applications. Further, after receiving the CRLs, we received a post-application action letter, or PALL, detailing the remaining open items with the FDA after review of our 42-year response. The CRLs were related to issues identified following the FDA's inspection of our Reykjavik facility in July of 2025. No issues were raised regarding the analytical, pharmacokinetic, or clinical efficacy and safety data submitted in the applications. The dossiers themselves were considered complete. Following the inspection, we initiated a comprehensive remediation program addressing the FDA's observations. By the end of 2025, we had implemented most of the required corrective actions. Our focus since then has been on demonstrating that these improvements are effective and sustainable over time, which is a normal part of the quality process to ensure that improvements are durable before resubmission.

Based on current progress, we remain on track to resubmit the VLA's in the second quarter of this year, which would position us for FDA decisions before the end of the year. Importantly, our Reykjavik facility remains an FDA-approved manufacturing site, and we continue to manufacture our on-market products for both U. S. and the rest of the world markets.

Turning to the pipeline, over the next decade, more than 100 biological medicines are expected to lose exclusivity. Against that backdrop, Alvotech continues to build one of the largest biosimilar pipelines in the industry, with more than 30 candidates currently in development. When selecting new programs, we focus on biologics where we see a combination of multiple factors, including significant market opportunity, durable mechanism of action, high scientific barriers to entry where Alvotech can be successful, and opportunities where Alvotech's integrated development and manufacturing platform can create meaningful differentiation. Consistent with our strategy, we are excited with the progress we are making with our biosimilar candidates to both the intravenous and high-concentration subcutaneous nuisance forms of Intivio. Earlier this year, we announced positive pipeline results from a pivotal pharmacokinetic study, which allows us to move forward with regulatory submissions in major markets with all docious forms and strength currently approved for Intivio.

Intivio is an important therapy for This is a great opportunity for inflammatory bowel disease and represents a multi-billion dollar opportunity in the immunology market. Based on current plans, we expect to submit regulatory applications later in 2026. Importantly, we anticipate being among the first companies to launch a biosimilar to Antibio, including both the intravenous and subcutaneous use presentations. Another important program in development is our biosimilar candidate for Cotruda, one of the highest selling medicines in the world with annual sales excluding 30 billion US dollars. Cotruda has transformed treatment across multiple oncology indications and continues to expand into new therapeutic areas.

Through our collaboration with Dr. Reddy's laboratories, we are combining development expertise with global commercial capabilities to pursue this opportunity, Sharing development costs and marketing rights for Coutrida Biosimilar targeting global markets. We are anticipating submitting a therapeutic pharmacogenetic study for our proposed Biosimilar Coutrida and are on track to submit a marketing application in 2028. This would position us for a launch upon Merck's loss of exclusivity.

More broadly, we continue to expand the capabilities of our integrated Biosimilars platform. Last year, we increased our R&D capacity through the acquisition of a new center of excellence in Stockholm. In manufacturing, we strengthened our downstream integration through the acquisition of Ivers Lee, which adds capabilities into device assembly, packaging, and logistics. In Iceland, we've added to our perfusion capacity, which supports production of our Spillara and Symphony biosimilars, and we continue to implement improvements for both perfusion and fed batch production. Also, we are adding new drug substance and new drug production suites in our existing regular facility, expanding our manufacturing capacity. This additional capacity will enable us to support demand for approved products, as well as our development pipeline.

These investments further strengthen our end-to-end development and manufacturing platform. Before closing, I would like to briefly comment on the recent FDA draft guidance related to The Biosimilar's development. Up until now, to support the approval of a biosimilar application in both the EU and the US, developers may have been expected to conduct a three-way pharmacokinetic similarity study and a comparative clinical efficacy and safety study, in addition to a comprehensive analytical similarity assessment. The draft guidance reflects a move toward more efficient and science-based development pathway.

In particular, it reduces the need for a large comparative efficacy and safety clinical study, as well as providing flexibility in the use of reference products. In practical terms, this means that in most cases, companies will be able to support the demonstration of biosimilarity with a two-arm pharmacokinetic study, either in a healthy subject population or a therapeutic setting.

Further, it gives study sponsors flexibility in the selection of reference products for the study and forgoes the need of a three-way pharmacokinetic bridging study. Importantly, Alvotech anticipated this regulatory evolution. Over the past years, we proactively aligned our development strategies with both the FDA and the EMA, engaging early and often across multiple programs to obtain scientific advice. Notably, the FDA provided early recommendations for our early-stage products, even prior to issuing the draft guidance, encouraging streamlined development and clarifying when a two-armed PK study without a U. S. -sourced comparator is acceptable. This foresight by Alvotech and proactive regulatory engagement uniquely positions us to capitalize immediately on the streamlined framework, reducing costs, and strengthening our leadership in global biosimilar development.

To summarize, Alvotech continues to make progress across its late-stage pipeline and its research, development, and platform capabilities. With a broad pipeline and fully integrated development and manufacturing platform, we believe we are well positioned to address the growing global demand for lower cost biologic medicines.

With that, I will hand the call over to Linda, who will provide an overview of our financial results.

Thank you, Joe. Indeed, it has been an impactful year for Alvotech. Since joining in July last year, I've had the privilege of witnessing firsthand just how much this team can accomplish in a short period of time. Despite a challenging operating environment, the company delivered important operational, financial, and commercial milestones, advancing major launches, expanding our global footprint, and strengthening our financial position.

What has stood out most for me since day one is the strong belief in delivering on our mission, not just at the leadership level, but across the organization. With that context, let me walk you through the fourth quarter and full year financial results. And as otherwise stated, the figures discussed today are adjusted numbers. Reconciliations to the corresponding IFRS measures are included in our earnings materials.

Starting with the highlights from Q4 2025, performance landed within our guidance with a strong close to the year. Growth was primarily driven by licensing revenues on the back of continued development progress and successful achievement of several performance milestones related to our new longsets outside the U. S. , The total revenue in the quarter were up 13% compared to the same quarter last year at 173 million, with licensing revenues making up 75% of the total and being the key driver of the quarter. This mix lifted gross margin to 66% and adjusted EBITDA to 69 million, or a 40% margin. On the product site, revenues was 43 million and product margin negative by 37%, reflecting timing of orders and planned facility upgrades to support off-grid nuances.

As noted last quarter, we did expect product margin to be impacted by facility improvement and lower throughput in the second half of 2025. Looking towards 2026, we are expecting operating performance back and loaded in Q4, in line with trends in 2025 and previous years.

Operating cash flow was negative at $28 million, mainly impacted by lower revenue collections from soft product revenues in the second half of 25, and inventory build-up related to outcome analysis. Our year-end cash balance was $172 million, supported by the financing transactions completed in Q4, the $108 million conversable bond and the $100 million senior term loan. These transactions strengthen the balance sheet, provide more operational flexibility, and support the launch program heading into 2026.

So overall, we closed the year with a strong rush margin driven by licensing revenues while we continue to invest in product launches and market expansion. Turning now to the full year of 2025, this slide summarizes the highlights for a year that delivered solid top-line growth, strong licensing contributions, and positive operational cash flow for the first time. Total revenues for the year were 593 million, up to 21% year on year. The mix was split evenly between product revenues and licensing revenues, demonstrating the continued strength of our licensing model and its important role in funding R&D activity and pipeline progression. Product revenues were driven by commercial momentum for our senior biosimilar AVTO2 and for our stellar biosimilar AVTO4, which launched in the US in Q125.

In addition to the three new approved products, we delivered statements for those products to our commercial partners in December, and these new products will continue to deepen our commercial footprint.

Gross margin finished at 61 showing the benefit of licensing revenues within the mix As we convert our R pipeline into commercialized products we expect product revenues to become a larger share of the mix over time with licensing milestones revenues at similar levels as now Adjusted EBITDA for the year was $137 million, up 27% over the year. That represents a margin of 23%, reflecting strong licensing income translating directly to EBITDA. Operating cash flow for the year was positive for the first time at 7 million and reflects the company's commercial inflection points in 2024 to 2025.

Turning to cash flow, the main impact on our cash flow is around our inventory build-up related to launch preparation or acquisitions alongside the impact of our financing actions in the fourth quarter. The full year bridge shows the movement from 51 million in opening cash to 172 million in cash balance at the end. Looking at the three first bars together, we see positive operating cash flow before interest and tax of 7 million. Working capital outflows is largely tied to industry build for multiple upcoming losses. K-PACs and M&A investments, including the Boston acquisitions of Irishly and Axspring, we've left it under K-PACs and acquisitions. And you also see a significant step up from new equity in NAF borrowings in 2025.

In Q4 specifically, operating cash flow was negative by 28 million, mainly driven by timing of collections in the quarter, CAPEX and income pools totaling 16 million, reflecting ongoing investments in manufacturing capacity and pipeline investments. NAF interest payments were 35 million, following the transition from PIC to cash interest on the existing term loans. And that borrowings were $207 million given by the completion of the financing package in Q4, which strengthened liquidity and enhanced our financial flexibility heading into 2026. The next slide summarizes the financing activities completed in Q4 and how they enhanced our liquidity and financial flexibility heading into 2026.

The capital structure is no balance between term debt, senior secured facilities, and the new convertible bond. While NASDAB increased with the Q4 financing inflows, our leverage ratio being NASDAB to adjusted EBITDA lowered to 9.3 times and is expected to improve meaningfully, in line with our 2026 outlook, with double-digit revenue growth and expanding EBITDA. And on the topic of revenue growth, the next slide summarizes how we continue building a diversified resilient revenue base, supported by more products on the market, broader geographical reach, and sustained progress across the R&D pipeline and future product launches. With an R&D pipeline of around 30 products, licensing milestone revenues are expected to continue on an annual basis, consistent with prior years.

Additionally, each incremental launch adds diversification and improves visibility into future revenues and strengthens quality of earnings. Turning to the 2056 financial outlook, we are reaffirming the outlook for 2056 with revenues in the range of 650 to 700 million dollars, which reflects continued double-digit sales growth as we expand our commercial portfolio and bring additional products to market across approved geographies. A Dioffi EBITDA is expected to increase 280 to 220 million, so profit by portfolio expansion and increased operating scale.

The lower end of the range assumes no U. S. launches in 2026. Just to briefly summarize key items on the asset side of our balancing. Our asset base increased during the year, so profit by strategic acquisitions and ongoing pipeline investments. Total non-current assets increased by 19%, driven primarily by the bottom acquisitions of Irishly and Axpray, capacity extensions, capitalized pipeline investments, and higher contract assets due to timing of revenue recognition and payments. The third tax offset adjusted downwards by $130 million, inventory increased by $92 million over the year as we built the hat of upcoming product launches across the road markets, trade receivables decreased by $70 million, lastly due to the timing of product statements and improved collection cycles.

Next, a few comments on the key moments across equity and liabilities. Our equity position improved by $128 million, mainly driven by profits for the period and capital contributions linked to our Swedish listing. The movement then derivative financial liabilities decreased by 156 million, mainly reflecting fair value chances on earned shares. Forums increased primarily due to the convertible bonds and 100 million senior term loan facility completed in Q4 2025.

And to summarize, this is the last slide I want to leave you with here today. Q4 landed in line with our outlook for the full year. A very strong business driven primarily by licensing revenues, while product sales were softer, reflecting timing of orders and planned facility upgrades to support up-colleances.

The avenue diversification continues to strengthen as more of the portfolio is launched across Europe, Japan, and other regions. This diversification reduces concentration risk and supports long-term sustainable growth. As stated before, there is high focus on reaching cash flow positivity by the year end of 2026. Operating cash flow was positive in Q4 2025 for the first time at $7 million.

The average is trending down, and we expect that to continue in line with our reaffirmed 2026 outlook for double-fifth revenue growth and margin expansion. And with that, I'd like to hand over to Lisa.

Thank you, Linda. Before we open the call for questions, I would like to briefly summarize where we are today. Alvotech has built a fully integrated biosimilars platform supported by a broad pipeline, Global manufacturing capabilities and strong commercial partnerships. During 2025, we continue to expand that platform while also strengthening our operational foundation through significant investments in quality systems and compliance.

Looking ahead, our priorities remain clear. We will continue advancing our biosimilar portfolio toward approval and commercialization in all markets, including the U. S. We will maintain strong focus on operational excellence, efficiency, and regulatory compliance. Which includes expanding our manufacturing footprint with key dual sourcing initiatives. And we will continue expanding our pipeline in the most cost effective way and strengthening our global partnerships.

The biosimilars opportunity remains large and durable, and we believe Alvotech is well positioned to capture that opportunity. With that, operator, we would be happy to take questions.

Joseph McClellan, thank you for the question. I'll take the first part and then I'll hand it over to Linda for the second. So we, as we said, completed our remediation efforts. We are now gathering the information showing that our changes are effective. And so we're compiling that information and putting that forth. So that is why we're in the final stretches of being ready to submit. We're working really hard to do it by the end of the first quarter, but we're also We're prepared that it could be in the second, but definitely in the first half of this year. The approval process has been a six-month clock based on the Basufa guidelines. And then, yes, there is an opportunity for them to inspect the FDA again.

However, we are working to have as comprehensive as a response as possible that would potentially could not require them to come and inspect again. Linda?

Yes, and on the guidance question, like on the outlook for 2026, like in the lower end of the range, we are not including revenues from our US launches. So yeah, I think that's the answer to that one. I mean, I just think about the upper end as like, I mean, I would just think about the lower end as no revenues from the U. S. , and then the upper end is what we're striving for.

All right. Okay. Thank you so much. Thank you.

Linda? Yeah, on the guidance question, like what we're building in there is just the momentum on the launches we've already gotten approval on. So looking at Europe and the rest of the world.

And then, as I stated before, what we are firmly targeting is to get before year-end and getting to the upper end of the range. The approvals in the U. S. Okay.

Thank you for the question, it's Lisa. So regarding the dual sourcing and the capacity, so it's something that we've been evolving. It's certainly something that, as Joe has detailed in the past, as we look at our expanding portfolio and pipeline, that certainly is needed in order for us to capitalize and maximize on commercial potential. So from a timing point of view, I think this is a first half event in terms of being able to secure that. We're not in a position today to sort of name the party or parties we're talking about, but we will, certainly once we've secured that.

I think from a cost and a CapEx perspective, I mean, this does somewhat dovetail with the changes that we had been anticipating in terms of R&D expenditure. You know, for us, this allows us to do more for the same cost base that we've been anticipating over the last few years. So it allows us to do more in terms of actual programs, but it also allows us to be able to build into that the anticipation around capacity building. So I think, you know, what we'll see as we unfold the year is it's very much within scope of our expectations in terms of spend, both CapEx and I include in that R&D spend as well.

Okay, thanks for the comments. Thank you. Thank you.

So I think it's very much evolution, not revolution. I think the team has certainly built a solid platform, as I've said in my remarks, and as you've heard from Joe and others. So I think it's really ensuring that we execute truly on the pipeline that we're building and continue to make sure that we launch those programs through our partners, of course. But that partnership model really is very heavily reliant on our performance, not only on R&D, but ultimately approval and being able to supply. So, from a priority perspective, there is no question, and I think that was outlined as well in our remarks, that is sort of number one, two, and three across the board.

And I think working alongside on the compliance piece I mean the U market obviously continues to be important to us Europe and other markets continue to perform very well for us as you saw through our 25 and we anticipate that continuing in 26 So, we do need to make sure, and it's certainly my intent to work with the team, that we continue to build upon the scaling that we've done so far from a commercial production perspective. Okay, great. Thanks. If I could ask just a little bit more of a specific question, could you talk a little bit about Iran war disruption risk to your supply chain and logistics? I mean, where's there more exposure, you know, manufacturing like disposables, tissue culture, media, other items, or shipping costs?

Yeah, I think from our point of view right now, I mean, we do have markets that we're expanding to in the Middle East, but those are still early days in terms of expansion. Most of what we're anticipating, you know, from a contribution point of view continue to come from the key markets, US, EU, Japan. So right now, we are not seeing that as an immediate direct impact on procurement or supply.

Okay, great. Thanks. And if I could just ask one more bigger picture question before getting back into the queue. The big concern we hear back from investors is around the competitive landscape. So would you please just walk us through, let's say, an update on your thinking around how you can mitigate competitive exposure, whether that be development strategy or niches or, you know, some other things. I think we anticipated some of the changes on the regulatory front, particularly in the U. S. I think we started early, which allowed us to do a larger subset of programs. I think being first and forming in the first wave, but ultimately being first to market is our goal. So that comes from, you know, the speed of our development, which I think has been fantastic, and we have a good track record with.

I think it then comes to approval and our IP positioning, which again, I think we're very strategic in terms of how we design our products, both from an IP perspective in the U. S. as well as other markets. So it's very complementary from that perspective. And so for us, we try and choose programs where we can enable that first mover advantage, and that comes from both the complexity of the program, our investment in it, as well as our strategy ultimately commercially, both from an IP entry point of view, as well as how we tackle contracting in the U. S. and the partnerships we have with very, you know, players that have the ability to penetrate quickly, like Shada and Advanse.

Thanks. Thank you. Once again, if you wish to ask a question, please press star 1, 1 on your telephone.

We will take our next question, and the question comes from the line of Arvid Nassander from DNB Carnegie. Please go ahead, your line is open. Thank you, and good afternoon. And so first off, a question, just trying to understand the underlying momentum of the established portfolio here. So product sales have been a bit on the softer side over the past two quarters. Data that we can track is incomplete, but it seems like TRX growth for O2 seems to be moderating into 2026 and PBM dynamics are, of course, intensifying. So just wondering if the sort of script and sales trends represent the true signal here, or if it's just noise, and if you can say anything on the revenue growth trajectory that you're expecting for O2 and how it will evolve through the year.

And then secondly, on R&D spend, which steps down quite significantly in Q4, while your guidance, I guess, implies an increase on a total spend basis for 2026. So how should we think about the sequencing of R&D through 2026? Is this more likely to be back-end loaded? Yeah, I'll stop there. Thanks.

Maybe I'll start just on some of the performance pieces on our commercialized programs. So when we look at 25, I think we're certainly exiting the year from a sales out into the market perspective in the U. S. We've seen growth in O2 and O4. We are continuing and expect to see that growth in 26. A lot of that growth is through, certainly in the U. S. , our partnership with Teva. In rest of world markets, we do have shot up for O2 and O4. I think O2 in Europe, a little more challenging from a growth perspective, but we're still anticipating it. We did form that market last, but we have been able to secure leading positions in some of the European markets like Austria and Sweden.

So we are still anticipating top line growth on O2, certainly on O4. However, there is, we believe, continued to be opportunity in 26, especially when we look at our exit position in 25. I think we were sitting at around a 5% share in the U. S. , about a 9% share on O2 in the U. S. So we do think that there's continued momentum, certainly in the very near term, and we're positioned well, I think, with our partners, even given some of the PBM pressures, our formulary business continues to contribute.

Our unbranded business as well is also contributing to that overall growth perspective. And maybe finally, just to say it, these markets are still evolving in terms of generic erosion of the branded base. So I think we're going to continue to see AbbVie get excluded in 26, which will help, obviously, our additional ability to secure new business, but just to maintain and grow just through volume the business we've secured today.

Maybe I'll turn it to Amanda.

Yes, thank you. So perhaps also just to comment a bit on the revenue piece and like with quarterly fluctuations, I think it's also good to keep in mind like we are a B2B company, so you can always expect to see some fluctuations between quarters, depending on like timing of orders. But if I move into the R&D spend, I would say it's going to be fairly balanced throughout next year. We continue to invest in our R&D efforts, which have been paying off a lot, looking at our pipeline. Perhaps also to mention that, as I mentioned in the call itself, we are expecting 26 to be back and loaded towards the end of Q4.

So just also keep that one in mind. Great. I'll jump back in the queue. Thank you, guys. Thank you.

Yeah, so I do think that, you know, what we've seen through the end of 25 has been, you know, that continued growth. I think that a lot of that is truly coming from the continued loss of business for the innovative product. So I think the exit was a biosimilar sitting at a roughly 55% share. So I think there's still that continued opportunity amongst the subset of players that are out there today, and we're sitting at a decent spot in terms of that 9% share in terms of ABTO2. So we do think there's more continued growth on that formulary business just as a factor of that erosion of the branded space. In terms of private label for O2, I do think we continue to seek opportunity there.

I'll never say that there's no opportunity, but I think the formulary business will continue to be a focus for us, certainly in 26 and beyond. O4, as I mentioned, we are seeing decent growth. I mean, that's a more recent launch, and certainly we're still young in terms of the overall erosion. I think the exit was about 41% and 25% for biosimilar share. So there's still opportunity there. And, you know, Teva has been a very good commercial partner in terms of how they're growing the market and partnering on the unbranded space as well as on the formulary piece. So we're optimistic still that we will continue to see growth over the next few years. For us, we're not ready to say this is plateaued by any stretch, just given the fact that we're still seeing that brand erosion continue to happen.

Great, thanks. And if I could then ask about whether you could quantify the sum of sales for the three new launches that happened in 2025, so product sales, that is.

We don't quantify it specifically, but it is like, I mean, it is definitely a part of our contribution in Q4. Okay, thanks. And then I guess for the guidance high end, well taken on the revenue of new products of the U. S. launches not being part of the low end, but at the high end, would it be licensing revenues only or also product sales?

It will be both, like on the high end.

The high end, Robert, the high end is mainly reflecting growth in supply revenues. Okay, great.

It is both. Okay. Okay. And then, so, is it still fair to say that, just, you know, with respect to the cadence that you discussed, is it still fair to say that, you know, your six-month visibility remains extremely high? I mean, essentially, that the orders have been placed?

Yes, we have good visibility into the next six months. Okay, great. And then I guess the last thing I wanted to ask about was just in terms of the product gross margin, and I might have missed this. I didn't quite catch it in your comments. Obviously negative to the past two quarters. When do you expect the portfolio to deliver leverage again there? So I would say, like, I mean, we are definitely seeing impact from our facility improvements, both in Q3 and Q4, and that's in line with what we also commented on in Q3, that it would flow into Q4. I mean, I think things are moving well on that front, so we should be seeing this trending up now in 26.

Yeah, maybe to add to that, Robert, here, if you look at our gross margin, because we need to look at the gross margin, which includes then, of course, both licensing and supply revenues, because there is always a tradeoff. I mean, if you have a lower milestones, you would get a higher margin and vice versa. So we are basically seeing 62% gross margin in our business 2025.

And if you look at the comparable companies like Samsung and Celtrion, we are delivering today a gross margin which is higher than those two. But as mentioned by Linda, those revenues can be lumpy, both the license one and of course how we ship. But just to underline that, we have of course been in a shutdown due to FDA remediation few times this year. And that's also, yeah, and that is of course reflecting a bit how we ship also. That's all for me. Thanks. Thank you.

Thank you. On behalf of the team presenting today and all of us at Alvotech, I want to thank everyone who joined us for this webcast. We look forward to talking to you again and wish you a wonderful day.