• Revenue: $339 million for the first nine months of 2024, nearly nine times increase from the same period in 2023.
• Product Revenue: $128 million for the first nine months, a 330% increase from the prior year.
• Milestone Revenue: $211 million for the first nine months, compared to $8 million in the prior year.
• Third Quarter Revenue: $103 million, up from $18 million in the prior year.
• Third Quarter Product Revenue: $62 million, the highest recorded quarter by Alvotech, a 16% increase from Q2.
• Product Margin: 37% in Q3, up from 17% in Q2.
• Operating Profit: $56 million for the first nine months, compared to negative $278 million in the same period of 2023.
• Adjusted EBITDA: $87 million for the first nine months, compared to negative $226 million in the prior year.
• Cash on Hand: $118 million as of September 30, 2024.
• Borrowings: $1.28 billion as of September 30, 2024.
• Shares Outstanding: 301.7 million, including unvested earnout shares.
• Revenue Guidance: $400 million to $500 million for 2024.
• Cash Interest Payments Forecast: $45 million to $50 million for 2024.

• Warning! GuruFocus has detected 4 Warning Signs with ALVO.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Alvotech (NASDAQ:ALVO) reported a nearly ninefold increase in revenues for the first nine months of 2024 compared to the same period in 2023.
• Product revenues rose to $128 million, driven by increased product sales in the third quarter.
• The company achieved a significant improvement in product gross margins, which more than doubled in the third quarter compared to the second quarter.
• Alvotech (NASDAQ:ALVO) successfully completed an FDA inspection of its manufacturing site in Reykjavik, Iceland, with only two observations, which are easily addressable.
• The company is on track to launch its Stelara biosimilar in the US market in 2025, with all indications approved.

Negative Points

• There remains uncertainty in the timing of shipments, which could impact revenue recognition between the fourth quarter of 2024 and the first quarter of 2025.
• The company has not yet provided specific guidance for 2025, leaving some uncertainty about future financial performance.
• Alvotech (NASDAQ:ALVO) faces potential challenges in the US market due to existing formulation patents for its biosimilar products.
• The FDA inspection, although successful, resulted in two observations, indicating areas for improvement in compliance.
• There is a wide range of potential outcomes for product mix and profitability, which could affect financial results.

Q & A Highlights

Q: Can you comment on the recent FDA inspection and its implications? A: Robert Wessman, Founder, Chairman and CEO, explained that the FDA inspection was a general GMP inspection, which is expected to occur every two years. The inspection was successful with two observations that are easily addressable. These observations will not impact the launch of any products, including the Stelara biosimilar. The company remains prepared for future inspections, especially with upcoming product submissions in the US.

Q: Why hasn't the revenue guidance been tightened given the strong performance so far? A: Joel Morales, Chief Financial Officer, noted that while there has been a rapid increase in revenues, there remains a wide range of potential outcomes due to product mix and shipment timing. Some shipments might move into early 2025, which affects the ability to refine guidance further for the current year.

Q: What are your expectations for gross profit margins over the next 12 to 18 months? A: Joel Morales stated that product margins increased from 17% to 37% in the third quarter. The company expects margins to continue expanding as they exit the year, but no specific guidance for 2025 is being provided at this time.

Q: Could the FDA inspection impact the launch of the Stelara biosimilar next year? A: Robert Wessman confirmed that the FDA inspection will not delay the launch of the Stelara biosimilar. The observations from the inspection are manageable and will not hinder the product's market entry.

Q: What is Alvotech's strategy for launching the biosimilar to Eylea in the US? A: Anil Okay, Chief Commercial Officer, mentioned that the company plans to launch the biosimilar in Europe on day one in 2025. For the US, the strategy involves gaining filing acceptance and addressing IP challenges. The company is optimistic about entering the US market as soon as possible.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.