Alvotech’s Wessman Sets Out Next Steps On Biosimilars Journey

As 2021 drew to a close, biosimilars specialist Alvotech revealed long-awaited plans for a public listing by announcing a deal to merge with a special purpose acquisition company in partnership with global investment giant Oaktree Capital Management.

The move is expected to provide Alvotech with around $475m in gross proceeds, with Oaktree putting around $250m into a trust under the proposed merger, which is due to close in the by the end of the first half of 2022. Meanwhile, a private investment in public equity financing round is now expected to provide $175m, on top of a $50m equity commitment from existing shareholders. (Also see "Alvotech PIPE Financing Round Overshoots By $21m" - Generics Bulletin, 20 Jan, 2022.)

Speaking to Generics Bulletin in an exclusive interview, Alvotech founder and chairman Robert Wessman detailed why now was the right time for the move, as well as setting out how the firm would approach future partnerships and in-licensing opportunities and how Alvotech would ensure that it was differentiated among its competitors in the biosimilars arena.

“Our long-term vision was always to list the company,” Wessman acknowledged, “and when you list a company, the company needs to be ready – and we started this journey back in 2012, so we have been at it for almost 10 years.”

“We knew the journey would cost us a billion dollars, and ten years later we have already invested over a billion dollars and now the first product is coming out.”

Alvotech’s AVT02 adalimumab 100mg/ml biosimilar rival to Humira has already received approvals in Europe and Canada, with launches expected imminently via local partners, as the firm also awaits action from the US Food and Drug Administration on its biologics license application for the product.

So “with the launch coming for the first product, we felt that this was the right time,” Wessman explained. “We have end-to-end R&D in-house, we have API fill-finish in-house, and we have locked in world-class marketing partners throughout the world.” (Also see "Partnerships Provide Global Foundation For Alvotech" - Generics Bulletin, 15 Dec, 2020.)

Alvotech had also been bringing in the right people to guide the company through the next phase in its evolution, Wessman underlined, pointing to the “world class leaders” that had been added to the business in recent years, many of whom “have extensive experience with the big pharma companies.” (Also see "Alvotech Gears Up For Public Listing With Fresh Leadership" - Generics Bulletin, 19 May, 2020.) (Also see "Sandoz Biopharma Head Levick To Become CEO Of Alvotech" - Generics Bulletin, 10 May, 2019.)

“So we believe that we have set ourselves up for success with a great team which has been with us long enough to have a great impact and will be driving the business going forward.”

“When we become listed and have access to substantial capital, we will be looking at co-development, potentially, or in-licensing.”

Highlighting that the proceeds from the SPAC transaction would be “critical to grow the business going forward,” Wessman said that Alvotech had “a platform which is very scalable.”

“We have seven products in the pipeline and we have both R&D and manufacturing. We have invested in sufficient capacity to serve the market until the end of 2030. So we wanted to go to market to bring in additional capital to continue to invest into our own pipeline.”

Moreover, he indicated, “we also might foresee that we would co-invest or invest into technology or intellectual property from third parties to bring in-house.”

“When we become listed and have access to substantial capital, we will be looking at co-development, potentially, or in-licensing,” Wessman elaborated. However, he emphasized, “in-licensing would not be just a typical in-licensing – we would be active in the development phase and we would want to make sure that any product coming into our portfolio would match the quality criteria we have.”

“So I think you will see some business opportunities coming from outside into the business going forward for sure.”

Network Of Partners Now Covers Most Markets

Referring to Alvotech’s existing network of marketing alliances around the world for its biosimilars, Wessman said the firm was “extremely happy and proud to have partners like Teva and Stada and many of the others we have secured.” (Also see "Alvotech And Stada Make Biosimilars Pact" - Generics Bulletin, 7 Nov, 2019.) (Also see "Teva And Alvotech Strike US Biosimilars Pact" - Generics Bulletin, 5 Aug, 2020.)

Asked whether any geographical gaps remained in this network, he indicated that “we are covering most of the world as we speak. There are of course markets here and there which are maybe still open, but all the big markets are mostly covered for the current portfolio.” However, in some markets “we may have a handful of products which maybe did not fit that particular partner which we are licensing out.”

On the question of whether existing partners would be prioritized as Alvotech looked to strike deals for new products as they were added to its pipeline and portfolio, Wessman said that “going forward, if a partnership is going well, the first stop is always with our current partners. But if for some reason it may not fit the current partners, I would not rule out finding new partners going forward.”

And touching on the firm’s partnership in China with Yangtze River Pharmaceutical – which will see the Chinese firm market several Alvotech biosimilars, to be produced at a plant in Changchun through an existing joint venture in the region (Also see "Alvotech Targets Chinese Biosimilars With Yangtze River Deal" - Generics Bulletin, 24 Nov, 2020.) – Wessman said there was “very active work going on there.”

“Our facility is more or less ready and we have started the groundwork for the technical transfer to China,” he observed. “There will be definitely more to come out of China for sure. Yangtze River is one of the top three [pharma firms] in size in China so it is great to have Yangtze River as a partner.”

“Our first launch will be the high-concentration of adalimumab, we are in pole position there.”

Asked about the key points of differentiation for Alvotech among its biosimilars peers – and how this differentiation would be maintained going forward – Wessman suggested that “it starts with the right products. And the first one, which is our adalimumab, we were the first to file that product, the high-concentration [version], with the US FDA.”

“We spotted that of course when AbbVie made the first launch into Europe over four years ago and our expectation was that they would focus on sales of the high-concentration [version] in the US. Because we know that switching between strength and dosage form is not something which is allowed in the US.”

So “our first launch will be the high-concentration of adalimumab, [and] we are in pole position there.”

Further outlining points of differentiation for Alvotech as a biosimilars developer, Wessman said “we can both work with CHO cell lines and Sp2/0, and produce under perfusion and fed beds. Most companies are focusing on CHO cells, so they are not investing in both technologies.”

“There are a number of products where we believe that you have to develop the products under Sp2/0 [cell lines] to be successful,” he elaborated. “Our second product in our pipeline, ustekinumab, is basically one of those, which we think might be a challenge to pass the full clinical package needed if you do it in CHO cells – that at least is our opinion. That’s why we developed that product in Sp2/0 and there are other products in our pipeline which require Sp2/0, we believe.”

Wessman also talked about Alvotech’s exacting development standards and how he expected these to help the firm to secure a prized US interchangeability designation for the AVT02 higher-strength adalimumab biosimilar.

“When it comes to R&D, you have to have in our opinion in-house from end-to-end, from cell line to analytics to API fill-finish, to be able to match the brands,” he said. “We want to do that for the products which are basically dispensed through the retail channel – that’s why we conducted an interchangeability study on the high-concentration adalimumab which we passed, and we were the first to pass.”

“We are super focused on getting those products to match the brands, so whenever we feel that interchangeability studies would add value, we would do that.”

US Interchangeability A Key Advantage On Humira

Asked for more details on why the company chose to pursue interchangeability for its adalimumab biosimilar, and how this same decision would be gauged for other products in its portfolio, Wessman said the move was tied to his larger goals for the Alvotech business.

“When I started the company in 2012-2013, it was clear in my mind that having everything from cell line, all the analytical work in-house was critical, because I wanted to get to something which would be, at the end of the day – even though [the US interchangeability] legislation was not yet out yet – close to the brand and interchangeable.”

“The Humira brand is about $16bn in the US now, 85% is now the high concentration, and being able to first of all enter into that market with very limited competition, but secondly, based on the interchangeability study which we have – which is passing and positive – the brand can be substituted for our product at the retail level. And this is the first time that you will see an autoimmune product in the biologics space being interchangeable.”

“So we think this is of course going to bring a lot of benefit to payers and patients in the US, because this product is extremely expensive.”

More broadly, Wessman indicated, the decision on whether to pursue an interchangeability designation for a given product would mainly be dictated by whether the product was present in the retail channel.

“If it’s not in that channel then it makes much less sense,” Wessman acknowledged. “Still the concept of matching the brand is there, but we might not invest another $40m-$50m in the study itself.”

Complexity And IP Barriers Make A Biologic Target More Attractive

Turning to Alvotech’s wider pipeline of in-development biosimilars, Wessman explained how the company selected its targets. “We are covering a number of therapeutics in our portfolio,” he noted, “and the key element is how complex are the products, how is the IP landscape, and which kinds of production technology do you need.”

“We tend to select more complex products with a complex IP landscape like the high-concentration of Humira,” he indicated, “which was of course a big challenge and we are still litigating, we are still in court with this product [in the US]. But this of course gives us more benefit once we manage to get through it.”

“So it all starts with development complications, production complications, IP complications, because if the product is really straightforward – even though it is hard to say that any biologics are straightforward – the less of interest that is to us.”

And in terms of the pace of new developments, Wessman pointed out, “we are putting a new product in our pipeline every 18 months.”

Biosimilars ‘Here To Stay’ After Gaining Ground In Recent Years

Asked whether the onset of competition to Humira in the US would mark a tipping point for biosimilars, he said “yes, I think you have the biggest product in the world, you have never seen as big a product going off-patent as this one. So it will impact.”

“But we have [already] seen a great change over the last two years in the US; we are seeing market share in some of the products for the biosimilars going up to 60%-65%.”

“So I think the change is already happening,” Wessman suggested. “But of course, more products coming in will reaffirm that the biosimilar market is here to stay.”

“As you can imagine, 40% of the sales of pharmaceuticals in the US is biologics, so the only way forward is to use biosimilars once the patent is off.”

“But of course you need that acceptance of payers and doctors, and as you know the US in many ways is almost 10 years behind Europe in legislation and adoption. So it has been years when there has been pushback on biosimilars. But as I see it, since 2019 and 2020, basically the change is happening already and biosimilars are here to stay.”

“When it comes to biosimilars, the technology is totally different, you need a totally different mindset and skillset.”

Finally, asked for his thoughts on how the biosimilars market would evolve – and whether it would by nature remain a much more exclusive and hard-to-enter market than the small-molecule generics or even complex generics markets – Wessman was clear that biosimilars were in a class of their own.

“As we know, a generic can be developed for a few million, or even less. So we have hundreds of generic companies and we still have 200 different labels in the US fighting over mainly three key buying groups.”

“But when it comes to biosimilars, the technology is totally different, you need a totally different mindset and skillset, because the fundamental technology of fermentation and cell line and everything from R&D to production is different.”

“When I started Alvotech,” Wessman recalled, “I immediately started to hire people that had experience in biologics only. Then when you talk about the financial and time barriers, if you want to build a company like ours, it takes ten years – six-to-seven years to develop a product and two-to-three years to build a facility and get those approved – and if you want to be taken seriously you need to have five, six, seven products in the pipeline.”

“So it’s a ten-year journey, with over $1bn invested, and that’s not a journey that that we see many taking.”

Noting that “we saw in the early days quite a number of biosimilar companies with one product where everything was outsourced and co-developed,” Wessman observed that “those products didn’t always get to market, because after outsourcing to different players you could not even get it to comply with regulatory requirements. So many of the smaller [players] have left the scene.”

At the same time, many large originator companies who had dipped their toe in the water of biosimilars had also later withdrawn from the market, he noted, citing the likes of Merck & Co. spinning off its biosimilars interests into Organon. (Also see "Organon Completes Spin-Out From Merck With Five Biosimilars" - Generics Bulletin, 4 Jun, 2021.)

“Pfizer has been one of the more successful in biosimilars,” he added, “but they have stated that biosimilars will not be a priority.” (Also see "Pfizer Takes ‘Opportunistic’ Approach To Future Biosimilars" - Generics Bulletin, 29 Jul, 2021.)

“So we don’t really see much of the big pharma necessarily entering into the space, and we don’t see many of the generics companies willing to invest such an amount of money to get into the space.”

But “we know that everyone needs these products – the payer needs it and the patient needs it – so we are in a very comfortable spot and we are very happy with it.”

“You can imagine that longer-term, if [biologics make up] 50% of the global sales and there is only a handful of companies which are able to develop consistently like us and launch products throughout the globe,” he reflected, “we have exciting times ahead of us.”

In the second part of this interview, Wessman discusses in detail the opportunities Alvotech sees for its AVT02 higher-strength adalimumab biosimilar, as well as other highlights of the company’s pipeline.  (Also see "Alvotech Could Upend Expectations For US Humira Biosimilars" - Generics Bulletin, 3 Feb, 2022.)