Alvotech (NASDAQ:ALVO) Q4 2023 Earnings Conference Call March 21, 2024 8:00 AM ET

Company Participants

Benedikt Stefansson - Senior Director of Investor Relations & Global Communications
Robert Wessman - Chairman & Chief Executive Officer
Anil Okay - Chief Commercial Officer
Joel Morales - Chief Financial Officer
Ming Li - Chief Strategy Officer

Conference Call Participants

Balaji Prasad - Barclays
Carl Byrnes - Northland Capital Markets
Kirsty Ross Stewart - Citi
Thibault Boutherin - Morgan Stanley
Patrik Ling - DNB Markets
Niall Alexander - Deutsche Bank

Operator

Good day and thank you for standing by. Welcome to the Alvotech Q4 and Full Year 2023 Earnings Conference Call. [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.

Benedikt Stefansson

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 full year 2023 results. Additionally, we will, throughout today's call, refer to a slide presentation which is available on our investor website in the Events section. If you have not already accessed the slides, please go to investors.alvotech.com and select Events.

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 and the NASDAQ Iceland Stock Exchange. These risks and uncertainties could cause actual results to differ materially from forward-looking statements that we make.

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 Wessman

Thank you, Benedikt. And thank you all for joining us on today's earnings call and business update for the full year 2023. We are very excited about the position that we find ourselves in today. Alvotech has successfully cleared our inspection status with the U.S. FDA. This puts Alvotech in a position to access the largest pharma market in the world. This result has led to approval of SIMLANDI in U.S. and also clears the way for our biosimilar to STELARA which we expect will be approved by FDA next month.

Additionally, our pipeline has been steadily progressing and we are in a position to file at least three applications for new biosimilar candidates this year. And those are just a few of the events that are driving excitement and anticipation here at Alvotech. But before we discuss in more details regarding 2023 and take a look into 2024, I would like to take a step back for a moment to recap our strategy and positioning.

Alvotech is proud to be focused entirely on biosimilars which position us amongst a small group of companies dedicated to meet the global need driven by the high-cost biologic medicines. Further, we are vertically integrated with end-to-end capabilities and have established a comprehensive infrastructure platform from where we can develop and manufacture biosimilars. Having this dedicated infrastructure will further differentiate us from other biosimilar developers.

We also have a multi-product portfolio-based strategy. With our recent launch of Jamteki or biosimilar to STELARA in Canada, we have two different molecules now on the market. We continue to grow and advance our overall pipeline and portfolio which has 11 disclosed assets today.

And finally, we have a global regulatory and commercial strategy as we see biosimilars as both a global opportunity and necessity.

A global strategy allows us to maximize the return of our development investment and provides diversification and longer-term durability to our portfolio assets. The hard work and investment that has been put into Alvotech over the past decade has now positioned us at an inflection point where we expect growth in revenues based on multiple launches in major markets, while concurrently advancing a pipeline of attractive biosimilar candidates.

2023 was a year that can be defined as laying the foundation for the future growth. First element of that foundation is reflected in our global regulatory approvals which enables a steady schedule of commercial launches for 2024, 2025 and beyond. SIMLANDI was approved as first interchangeable high concentration biosimilar to HUMIRA in the U.S. market. And while the approval occurred in 2024, the hard work and dedication from the team to secure inspection readiness in 2023 have to pave the way for this approval.

Approval of our STELARA biosimilar in Canada, Japan and Europe further demonstrates and validates the platform's ability to gain global regulatory approvals on multiple products in major markets. And thus, importantly, these approvals will enable near-term diversification of revenue.

For the U.S., our AVT04 application was reviewed and deemed approvable by FDA. The outstanding issue for approval was a successful site inspection which was the same as with SIMLANDI. The recent approval of SIMLANDI provides us significant confidence that AVT04 will gain final approval in U.S. in April of this year. Of course, what has enabled these approvals is the dedication of Alvotech team to compliance and inspection readiness. And that is not only for the U.S. FDA but for all regulatory bodies around the world where we have or intend to launch our products. I would like to thank our entire team at Alvotech for the efforts made to ensure our positive inspection outcome.

In 2023, we also continue to expand and enhance our commercial network through existing and new strategic partnership. This included an expanded partnership with Teva in the U.S. as well as with Fuji Pharma in Japan. We also added to our network ADVANZ Pharma with a strategic partnership covering five proposed biosimilars in Europe. Our strategic partnership with well-established and well recognized companies are fundamental to our ability to ensure that our products find the right home all over the world.

Finally, 2023 was another year of significant advancement for our pipeline. Alvotech started as a development company and we aim to maintain that scientific resolve as we mature into global commercial phase as an organization. We have received positive clinical results for AVT06, our proposed biosimilar to EYLEA, thus paving the way towards submission later this year. Additionally, we have three other programs in addition to AVT06, as have demonstrated positive PK results and are currently in ongoing patient trials.

Please note that as a general rule, passing PK results are more informative to potential approval than results from patient trials. And we are highly confident in our ability to bring these products to the submission phase. The proposed biosimilar currently in ongoing patient studies are AVT05, a proposed biosimilar to SIMPONI and SIMPONI ARIA, AVT03, biosimilar candidate to Prolia and XGEVA and also AVT23, a biosimilar candidate to XOLAIR, a product advancing the partnership with Kashiv. And finally, we advanced our AVT16 program into one of the leading positions in the fast-growing Entyvio market.

Looking back at 2023, I can say with great confidence that it has positioned us well to drive growth on both the top line and bottom line in 2024 and beyond. And we are very proud of our achievements in Alvotech.

Now looking ahead, we see 2024 as a transformational year for the company. It starts with launches of major products into large markets. Our launch of SIMLANDI in the U.S. will occur in early second quarter. And as the only high concentration interchangeable product on the market, we have high confidence in this launch.

Earlier this year, together with our partner JAMP Pharma, we launched our biosimilar to STELARA in Canada with the brand name of Jamteki. This represents the first launch of STELARA biosimilar in the Canadian market. We aim to launch our STELARA biosimilar in Japan in the second quarter of this year and then in Europe beginning of third quarter this year. These multiple launches will bring material revenues into Alvotech and create a diversification of the top line from both markets and products.

In addition to the commercial launches just mentioned, we will also be preparing for our launch of AVT04, our STELARA biosimilar candidates in the U.S. While the commercial launch is in early 2025, we will be supplying later in 2024 launch quantities and we may generate additional revenues depending on secular [ph] timing in 2024. But as important as commercial launches are, it is equally important that we continue to drive advancement in our pipeline.

2024 is set to be a busy year in our portfolio as we expect at least three additional submissions in major markets this year. Additionally, in our pipeline, we intend to advance our AVT16 program to that clinical trial phase.

Finally, we continue pursuing more business development transactions and remain in active negotiation for available assets in our portfolio.

In 2024, we expect to see multiple launches and significant growth in milestone revenues coming from highly visible and derisked programs. We are now in a position to guide the market for 2024 and 2025 on top line and where we expect to land on EBITDA in 2024.

Later in this presentation, our CFO, Joel Morales, will cover guidance in greater detail. I would, with those words, like to turn now the call over to Anil Okay, our Chief Commercial Officer, to dive deeper into our upcoming launches and portfolio updates. Anil, over to you.

Anil Okay

Thank you, Robert and thank you to everyone on the call today. I would like to start with our recent approval of SIMLANDI. SIMLANDI is the first interchangeable high concentration biosimilar to HUMIRA in the U.S. market. We view this approval as a victory for patients in the U.S. as we believe the product profile that combines interchangeability with the high concentration strengths will help expand conversion in the U.S. market, where we have seen minimal usage of biosimilar HUMIRA to date. Moreover, we know that we have exclusivity for our interchangeable designation in our approved presentations.

While we always expect the exclusivity, the confirmed nature of that exclusivity is a very helpful point in the outreach to the market, where we have coordinated closely with our partner channel. And as a reminder, the high concentration form of HUMIRA is the dominant form used by patients today.

Moving to Slide 10, in today's presentation, I would like to dive a bit deeper in the commercial approach for SIMLANDI in the U.S. which we divide into four pillars. The first was just discussed regarding our unique product profile and the exclusivity that helps protect against others seeking interchangeable designation.

On the pricing front, Teva's [ph] plan will be a 2-tier pricing strategy that will enable us to serve patients more broadly across both commercial and government insured patients. Currently, our partner supported by us are in active discussions with the PBMs to secure formulary placements. As part of that, the finalization of these negotiations will provide us better clarity on final net pricing.

The next key part of our commercial strategy is to ensure consistent and uninterrupted supply. Alvotech has a manufacturing site that's 100% dedicated to our products. We have in the past hosted our major potential customers at our site, so they could get a first-hand look at our production capabilities. Our supply plan remains on track and the launch is expected imminently after first shipments.

Finally, I would like to comment on our auto-injector platform. Some of our products in the pipeline require an auto-injector. HUMIRA as an example is a treatment for many chronic indications. It is also taken often 26x per year. Patients and physicians develop a relationship with their commonly used device. And as a developer, we wanted to ensure that we brought to market a device that bears the patient's experience in mind.

As a result, we formed collaboration with [indiscernible] a leading company in the device sector to create a proprietary auto-injector platform. That device was supported by two separate design-focused clinical trials, including a trial conducted in adult patients with moderate to severe active rheumatoid arthritis which assess the real-life patient handling experience of the auto-injector.

In closing, we are in active discussions with the market in the U.S. and we believe that our overall strategy for SIMLANDI has put us in a good position to gain broad coverage in the U.S. and help drive expanded use of biosimilars in the HUMIRA market.

Moving to our second product in our portfolio, our biosimilar to STELARA. We are elated at the regulatory progress to date and are set up to have multiple launches across major geographies in 2024 and 2025. And unlike our ex U.S. launches of AVT02, we aim to be first to launch in many of these markets for STELARA biosimilar.

Let me start in Canada where our partner, JAMP Pharma, has recently launched Jamteki. We were the first to launch in Canada and as of today, there is only one other approval and that's held by engine [ph]. Next quarter, we expect to launch in Japan through our partner, Fuji Pharma. In Japan, we are currently the only company approved with a STELARA biosimilar. In Europe, we are expecting launches beginning in Q3 of this year. And in that market, we see only Samsung [ph] with the current approval for a STELARA biosimilar. These markets are both substantial in value and growing in volume.

STELARA is a higher-priced product and our view is that the availability of biosimilar STELARA can help increase access and, therefore, volume in a number of markets around the world.

As a precedent, when HUMIRA biosimilars were made available in Europe in 2018, the usage of adalimumab as a molecule, increased by double-digit percentages several years in a row. We see a similar opportunity in STELARA. In the U.S., we expect approval of our STELARA biosimilar candidate in April of this year which allows for plenty of time to prepare for February 2025 launch.

Shifting focus to our broader pipeline. As previously mentioned, it's essential to keep advancing and expanding our portfolio to secure long-term growth. Furthermore, our organization's ongoing success in obtaining global approvals underscores a powerful message to every market we enter or intend to enter. Alvotech not only is but also aims to be a lasting influence in the biosimilars industry.

Earlier in today's presentation, we provided detailed updates on a number of our near-term pipeline assets. Looking forward, we do expect to continue to submit AVT04 in jurisdictions around the world now that we have an UCPP [ph] and soon an approval in the U.S. which can be requirements in certain markets in order to file.

With respect to partnership opportunities, the focus of our business development activities around partnership discussions are tied to AVT03 and AVT33, where both assets are not partnered in both the U.S. and EU markets. Finding the right partner for these products is a key initiative for 2024. Alvotech, along with our partners around the world, are extremely excited at the opportunity to bring these products to market.

And with that, I would like to turn the call over to Joel Morales, our Chief Financial Officer, to provide an update on 2023 financial performance as well as an outlook update for the business. Joel?

Joel Morales

Thanks, Anil. I'll now provide some brief financial highlights for year ended December 31, 2023.

In terms of liquidity, we recently announced in February that we completed a private placement with Icelandic and other European investors worth $166 million in gross proceeds. Giving effect to this financing, our pro forma cash balance as of December 31 would have been $172 million, excluding $25.2 million of restricted cash.

In terms of our operating performance, total revenues for 2023 were $93.3 million versus $85 million in the prior year, an increase of around 10%. The company recorded $48.7 million in product revenues for 2023, almost doubling revenues from the same period in the prior year. This sharp increase is driven by the timing of 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 and we have also launched into Australia in late Q4 of 2023.

In particular, we recognized $18.9 million of revenue in the fourth quarter which proved to be our strongest quarter of 2023, driving full year revenues, consistent with the expectations we communicated during our last earnings call. The company also recorded $42.7 million in milestone revenues in 2023, largely driven by the recognition of $31.6 million of milestone revenues in the fourth quarter as a result of the positive top line results we achieved on the clinical efficacy and safety study for our AVT06 program, a biosimilar candidate to EYLEA.

Another point worthwhile noting is that the cost of product revenue for the year ended December 31, 2023, is disproportionate relative to product revenue due to timing of new launches, scale-up manufacturing activities, production-related charges and costs associated with FDA inspection readiness. We do expect this to normalize as we've obtained FDA approval and are able to realize increased scale of manufacturing while expanding on our launches. We anticipate that this increase in volumes will have a favorable impact on cost of product revenues, particularly as we increase absorption of our fixed costs. We closed the period with 266 million shares outstanding, including unvested earn-out shares.

Turning to the next slide, you will find our outlook for 2024 and 2025. We are forecasting revenues between $300 million and $400 million in 2024. This 3 to 4x growth year-on-year is driven by a combination of our newly planned product launches of AVT02 and AVT04 and significant development and performance-based milestones we expect to achieve throughout the year.

With approvals now secured across multiple products and markets, we have begun to take all the necessary steps to enable our planned launches in 2024. Upon approval of SIMLANDI, our high concentration and interchangeable version of HUMIRA, we filed variations with the FDA that will enable us to manufacture at an optimized scale. We have, in fact, already begun to manufacture at that scale for our rest of world markets as of the end of last year and expect to be able to manufacture at the same scale for the U.S. by midyear 2024. We expect to begin supplying the U.S. market with prelaunch inventory in the very near term.

Concurrently, our commercial partnership is in advanced stages of contracting with key payers in the U.S. And based on our product profile that includes the combination of high concentration and interchangeability, we are highly optimistic that we will gain broad market coverage. This year, we also expect to launch our biosimilar to HUMIRA into several additional global markets, including Latin America and the Middle East.

With respect to AVT04, our biosimilar to STELARA, we have already launched in Canada and expect to expand our launches in Japan and Europe in the second and third quarters of this year, respectively. All requisite approvals have been secured in these markets and we expect to receive FDA approval in the U.S. by next month's BsUFA date. The launch for the U.S. is planned for February of 2025. However, our forecast assumes we commenced recognizing revenues late in the fourth quarter of this year as we ship initial prelaunch inventory into the U.S. Detailed planning for our U.S. launch is underway.

These launches are not only driving growth in product revenues but also providing greater diversification in terms of commercial product offering and geographic concentration. They are thus important cornerstones of our strategy to drive growth and profitability over the mid- to long term.

In terms of milestone revenue, as I mentioned earlier, we are anticipating the submission of at least three additional filings in major markets throughout the year for our pipeline. Additionally, we plan to commence clinical trials for our proposed biosimilar to Entyvio, AVT16.

Commencing and successfully completing clinical phases of development and regulatory submissions are key events that drive milestone revenue recognition for the company. We're also expecting to recognize milestone revenues for the achievement of certain performance-based targets, such as the first launch of our biosimilars to HUMIRA and STELARA into new markets globally, as well as the achievement of cumulative net sales targets for these launched products.

The last point I'd like to make regarding milestone revenues is with respect to licensing. As noted earlier in the presentation by Anil, we have active BD pipeline that has more recently been focused on partnering with our oncology and oncology-related assets. Accordingly, the company is actively pursuing licensing deals for early phase programs with a strategic partner or partners, providing potential upfront cash and milestones over time. We expect milestone revenue contributions to be significant this year and could range up to 40% to 50% of total revenues in 2024.

The enhancement of our pipeline not only provides a basis for longer-term growth but generates near-term milestone revenue which is another core part of our business model. Based on the commercial assumptions I just described, adjusted EBITDA for the year is forecasted in the range of $50 million to $150 million. This includes continued R&D investments behind our pipeline as we advance three of our programs through final stages of clinical and the commencement of our AVT16 program into the clinical phase.

I'd like to make a few points with respect to phasing in 2024. Firstly, you can expect this year to be lumpy in terms of our operating results. We expect Q1 total revenues to be lower than Q4 2023. This is driven by a slowdown in production to prepare for the FDA inspection in Q1 and prioritization of development batches to enable our planned submissions in 2024. Also, the timing of milestone triggers have an impact. Accordingly, we expect Q1 to be the lowest quarter of the year in terms of revenue and negative adjusted EBITDA.

In Q2, however, we are expecting to see some initial uptake in product revenues due to our planned launches and we anticipate achieving a number of milestone recognition triggers in the quarter which will drive a significant increase in total revenues and we expect to achieve positive adjusted EBITDA. Finally, we expect product revenues to overtake milestone revenues towards the end of 2024, driving overall revenues and adjusted EBITDA.

With respect to our liquidity, we are pleased with the proceeds raised during our last financing round in February. Based on our current operating plans, we believe this provides the company with sufficient cash flows to continue investing behind our planned launches and pipeline throughout the year. We will, of course, continue to monitor the dynamic timing assumptions behind our plan and ensure we are prepared to address any incremental liquidity needs should they arise.

We expect our capital structure to simplify throughout 2024. Given the recent increase in our share price, the sponsor earnout shares have vested and 1/2 of the predecessor earnout shares have also vested during the first quarter of 2024. We have also seen increased exercise of public warrants which were issued during the de-SPAC transaction that we closed back in 2022.

Additionally, approximately $300 million of our outstanding borrowings are in the form of convertible instruments which have a conversion feature that comes available in June of 2024. These activities are expected to reduce the derivative financial liabilities and outstanding borrowings on our balance sheet in the second half of the year. Ultimately, this will also reduce the large swings in finance costs that currently drive volatility in our non-operating results as well as reducing overall interest expense on the P&L.

Finally, as we look forward to 2025, we expect to be able to double our total revenues year-over-year as we intend to continue expanding upon our launches within existing and new markets. With the additional launches and scaling mentioned earlier, product revenue will be the primary driver of growth year-on-year with contributions from milestone revenues being proportionately smaller as a share of total revenue.

Given that we have just secured approvals for our lead assets in the U.S. and around the world and contracting is ongoing, we believe that this is the best direction that we can provide at the current time. We anticipate an exciting year ahead as we continue to transition into a global full-scale commercial operation launching multiple products into markets worldwide, while at the same time, advancing our pipeline. We look forward to updating you as the year progresses as more information becomes available.

And with that, I'd like to turn the call back over to the operator for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] The first question comes from the line of Balaji Prasad from Barclays.

Balaji Prasad

Congratulations on the results and what seems to be a compelling outlook for 2024 and 2025. Also, appreciate the color on this because I know you have multiple moving parts to the business between milestones and revenues. A couple of questions on this. Firstly, with regard to the revenue cadence that you have provided in the milestones which are -- could you summarize the key milestone-based events that you're looking forward to during the course of the year, especially in 2Q?

And second, I think with the -- where I'm struggling to model is clearly on the gross margins. Can you help us understand how should we think about gross margins? And typically, as inventory builds up before the launch, it looks like you're booking the -- or you have booked the COGS before the revenues get booked. Is that right?

Joel Morales

I'll take that. Thank you for your question. I'll do my best to address all of those questions. I think, firstly, in terms of the revenue cadence, you're right. So the milestones that we're expecting to recognize this year and particularly -- in particular, were driven by the submissions as well as BLA filings. I should say, BLA filings as well as the completion of clinical. We're expecting completion of clinical in the second quarter. We're also expecting key launches. We received milestones upon key launches and we have several planned in -- obviously, we have one in the U.S. and throughout the world. But in the second quarter, in particular, I think you have some key clinical completions that we're expecting to report out on as well as the key launch in the U.S.

With respect to your last question on COGS, we do not recognize COGS before we recognize revenue. Just as a reminder, when we ship our product to our partners worldwide at that point, we're recognizing our share of revenue. And it's at that point that we recognize our cost of sales. And I think the -- yes, go ahead.

Balaji Prasad

Sorry, that's very helpful. Maybe just a quick follow-up on biosimilar, HUMIRA. If you can help us frame your expectations of the product and the revenue outlook that you're seeing in the U.S. market and maybe provide greater details around the 2-tier pricing strategy from Teva and what this means.

Anil Okay

Thank you, Balaji. Anil speaking. Regarding granularity on the U.S. market, we will not be able to give you exact numbers. But what I can tell you is that, as we said during the prepared remarks that our partner is leading active discussions with the payers. Then the nature of those discussions, I can say, are very positive and we believe strongly that we will gain broad formulary access. I would say that the official results will no later than July 1 will be available but we also hope to provide you more color even earlier.

On the 2-tier pricing, that's a very strategic decision that our partner, Teva, took. I will not be able to provide you the details of that. But anyway, you will be seeing this in the public domain very soon as we aim to launch the product in Q2 later.

Operator

[Operator Instructions] The next question comes from the line of Carl Byrnes from Northland Capital Markets.

Carl Byrnes

Congratulations on the progress in the approval to SIMLANDI. With respect to SIMLANDI and in addition to your prepared comments, how can Teva increase awareness of the interchangeable designation to faster conversion of branded HUMIRA and other biosimilars, particularly during the exclusivity period?

Robert Wessman

Thank you very much for the question. First of all, the wind is changing when it comes to interchangeability. We -- in our active discussions, we see that the payers are more and more appreciating interchangeability, that was a really very positive recognition from our perspective. And secondly, having exclusivity is, of course, giving us a natural advantage in the market space. Teva is -- I know that Teva is very well reminding that to the relevant industry stakeholders. And I think it's also a good opportunity for me to really remind why interchangeability matter.

Just as a reminder, we are the first and only high concentration interchangeable biosimilar to HUMIRA, where approximately 90% of the market still today on high concentration. And secondly, we, in the market, use this as a differentiation point because this will really be the one of the fundamental advantage of our [indiscernible] product profile to move the market in 2024. And we also showed you more details on our device platform that we believe is another advantage, connected to interchangeability because we believe interchangeability matters even more with our device platform because our device is really unique and very patient-friendly.

So all in all, we think that interchangeability is highly appreciated in the market as of now. And we believe this is going to really make Alvotech's and Teva's products, hopefully, the leading biosimilar in the U.S. markets.

Operator

[Operator Instructions] The question comes from the line of Kirsty Ross Stewart from Citi.

Kirsty RossStewart

This is Kirsty Ross Stewart of Citi on for Andrew Baum. Just two questions, please. First, a quick one regarding the pending FDA approval of AVT04. Just trying to understand your confidence in approval on the 16th of April target action date in U.S.? Specifically, are there any remaining questions on the resolution of the CRL? Or can we assume that the issues have all been addressed given the approval of SIMLANDI?

And second, regarding your future KEYTRUDA biosimilar candidate. Do you think Merck move to continuous perfusion manufacturing process could result in any regulatory delays biosimilar launch in light of their recent patent applications which is suggesting improved shelf life linked to lower oxidation of the product?

Ming Li

Yes. Thank you for the question. This is Ming and Anil can take the second part. As far as our AVT04 application, we have high confidence the -- really, the only outstanding hurdle was the inspection. And of course, that's -- as Robert said earlier, it's the same with SIMLANDI. So we have very high confidence that approval will happen as the inspection status should be clear at this stage. Anil?

Anil Okay

Thank you, Ming. On KEYTRUDA question, of course, that's a very strategic asset for us and we are very carefully analyzing all the life cycle moves from the brand company. As you very well know, we have been very successful in doing that in HUMIRA case and a few other assets. So when it comes to continuous perfusion, as you know, Alvotech is one of the few companies has this technology in-house. We had strategically invested into that technology 8 years ago. Even if there is a process change of the product, we would be prepared to do that still in-house. Even if not, we are very carefully monitoring all the life cycle moves from the [indiscernible] company on that specific asset.

Operator

[Operator Instructions] The question comes from the line of Thibault Boutherin from Morgan Stanley.

Thibault Boutherin

Just the first one on the HUMIRA in the U.S. Thanks for the color that you provided. My question is specifically on the time line of inclusion on formularies. Are you confident with the window of opportunity to get on formulary this year in 2024 with an optimal position? Or is it more likely to potentially happen from January 2025? Second question is on EYLEA biosimilar. I'm not sure I heard correctly but I just wanted to know if you could continue to think the approval could potentially happen this year? And then if you have any thoughts on the IP situation because we saw some setback from other biosimilar makers on the legal side for EYLEA.

And then the last question is on STELARA transferability status. If you could provide us an update on when you think we could see steady results for transferability? And is it your base case that Amgen could have an exclusivity on this one? And if you could help us on the time line [indiscernible] production as well?

Anil Okay

Thank you, Thibault. Nice to hear from you. I will take the question one and two. I will hand over the number three to Ming. When it comes to U.S. formulary timing. As per our dialogue, we believe that we will be in the formularies by 1st of July. So I don't see any reason to wait up until 1st of January; so this is the one.

When it comes to second question regarding EYLEA biosimilar, we will be filing the product within this year. And of course, we expect the approval before the LOE date in 2025. We are very well aware of the ongoing litigation and various settlement events in global markets. For us, this is an area that we are very active. Teva is very active, as you know, when it comes to litigation and first-to-market opportunities. So we are working on a strategy for that asset to be on market when the LOE happens.

Ming Li

Thibault, it's Ming. Thank you for the question. With respect to interchangeability on STELARA, we are seeking interchangeability with STELARA. And I think there's a couple of potential ranges or potential outcomes.

One is that we may have the ability to launch with interchangeable designation and one we may be able to -- or would launch shortly after our launch, so in April. And that interpretation is tied to a part of your question which was Amgen's exclusivity. It will depend on how the FDA views the earlier of clauses in the BPCIA. One would be 18 months after approval or one 18 months after the settlement, if they tie the litigation and the settlement to the application which is certainly plausible.

Again, our last call, we said shortly after which is a more conservative date. But obviously, we're watching that closely and would know but, of course, before our launch, whether or not it could be the more optimistic version which is launching with interchangeability.

Operator

[Operator Instructions] The next question comes from the line of Patrik Ling from DNB Markets.

Patrik Ling

Could I just get a little bit more clarity on your sort of -- if you could walk us through -- from revenue line down to your guidance for the adjusted EBITDA, given that it's $100 million difference from high -- from low to high in both cases and your milestone indications, at least from the low to the highest around $80 million. Could you elaborate a little bit on how you see your cost development in the different scenarios, whether you will end up at $50 million in EBITDA or $150 million in EBITDA?

Joel Morales

Thank you, Patrik. So I'll try my best to describe some of the drivers maybe in arriving at the upper and lower end of our revenue range and guidance range overall. So first of all, you know that our revenues are generated from two sources. You have your product revenues, obviously, as we supply our partners and then you have our milestone revenues as well which I described. We have several planned for this year, in particular in the second quarter. This is the first time, obviously, that we've had multiple revenue opportunities for launches in multiple markets across the world. In terms of our launches, we used a range on share and price based on our understanding of where the market is today as well as feedback from the market overall.

On the milestone front and as we mentioned in the prepared remarks, we have multiple programs. We typically are recognizing milestones when we commence clinical, when we complete clinical successfully, when we submit. Also, you have performance-based milestones when we launch. And we also have, as I mentioned earlier, several net sales -- cumulative net sales targets as well that we can also achieve. And so we're planning on achieving several of those and we see several actually happening in the second quarter which is creating some of the lumpiness that you see in our overall P&L.

So we do have good visibility into our milestones, right but there's ultimately still a range of outcomes. And I think you're seeing we're providing our EBITDA range of $50 million to $150 million. We're not providing any more clarity at this point in time. Obviously, this is the first time that we've provided guidance since our listing. But as our business matures, Patrik, we will offer more details with time.

Patrik Ling

But would you say that the majority of the difference here is mostly tied to differences in milestones? Or are there any other differences in your expectation when it comes to costs for R&D or COGS or...

Joel Morales

I think you have a range, both at milestones and you also have a range at product revenue throughout the year that you're seeing there. So it's a combination of events.

Patrik Ling

But it's mostly revenue driven rather than cost driven. Is that a fair assumption?

Joel Morales

That is a fair assumption.

Operator

[Operator Instructions] The question comes from the line of Niall Alexander from Deutsche Bank.

Niall Alexander

It's Niall from Deutsche Bank. Guidance given. So is it fair to assume that for the likes of AVT02 and AVT04, you're implying for FY '24 sales of the total revenue. So that's, in other words, into $240 million, my math is correct here. Can you just clarify what sort of sales split we're going to see between AVT04 and AVT02, FY '24 guidance? And then for FY guidance, again, can you just be more specific on what sort of split we could potentially see between milestone revenue and actual product sales revenue?

Joel Morales

Sure. Yes. So at the top, thank you so much for your question. Thank you. So first of all, with respect to milestone revenues, the split that we've indicated is anywhere between 40% to 50% of the total revenues that we've guided in the period. So that should be insightful for you both on the high and low end as to how we're thinking about the potential range there.

To answer your second question, at this point in time, we're not offering a detailed level of guidance in terms of the splits between 02 and 04 in 2024.

Operator

[Operator Instructions] Dear speakers, there are no further questions. I would like now to hand the conference over to Benedikt Stefansson for any closing remarks.

Benedikt Stefansson

Yes. Thank you, Nadia. And on behalf of the Alvotech team, I'd like to thank all the participants in today's call. I'd like to remind our listeners also that we're tomorrow, hosting a live webcast from our Capital Markets Day and you can find further details on our website, investors.alvotech.com. So this ends today's Q4 and full year 2023 earnings call from Alvotech, have a nice day.

Operator

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.