Alvotech ($ALVO). I think the market is sleeping on this one...
Alvotech developes and manufactures biosimilars, cheaper copies of expensive drugs. They handle everything in house from cell line development through to final manufacturing, which gives them a cost advantage. Five biosimilars already approved and selling across 90 countries: copies of Humira, Stelara, Simponi, Eylea and Prolia/Xgeva. Teva handles US distribution, STADA covers Europe, Dr. Reddy's is a development partner on multiple programs, and they recently signed Sandoz for Canada, Australia and New Zealand.
TLDR: $593M revenue last year up 21% YoY. Stock is near all time lows at $3.59 after the FDA rejected three US drug applications over manufacturing concerns. Yesterday the FDA came back for a follow-up inspection and found no major issues, resubmissions on track for this quarter. Also building a US manufacturing facility. Debt is ~$1.3B, the main risk. I think the market is massively undervaluing what happened yesterday.
To understand the opportunity you need to know the markets they're in. Humira was a $10.3B market in 2024, Stelara did $9.1B and Eylea $9.2B. Then there's the Keytruda biosimilar they're co-developing with Dr. Reddy's, Keytruda did $29.5B in worldwide sales in 2024, the best selling drug on the planet. That one is years away but the optionality is huge. Just the three pending US approvals alone represent a combined addressable market of around $5B.
Q1 2026 came in light at $106M versus $133M the prior year but that was because they slowed production at their Reykjavik (Icelandic) facility to complete manufacturing upgrades. Separate to that they signed a deal with FUJIFILM to build out a manufacturing unit in the US, which costs money now but reduces dependency on Iceland and sets them up for the wave of US launches coming. Full year 2026 guidance is still $650-700M revenue and $180-220M EBITDA.
The reason the stock is at $3.59 from a high of $16? Last year the FDA inspected the Reykjavik plant and issued formal rejections for three US drug applications covering their Prolia/Xgeva, Simponi and Eylea biosimilars, all citing the facility. The company spent months overhauling the plant since then.
Yesterday is why I'm posting this. The FDA came back for a new surveillance inspection, finished May 8th, and issued only a Form 483 with minor observations the company says can be addressed quickly and don't raise any substantial issues. A 483 with minor observations is basically routine, almost every inspection ends with one. The fact that the same facility that got formally rejected last year passed a follow up without major findings is huge. And this isn't just good news for the three pending resubmissions, every biosimilar they want to bring to the US runs through that plant. The FDA validating that facility is a green light for their entire future US pipeline, and I don't think the market is pricing that in at all. Resubmissions are still on track for this quarter with approvals expected in 2026.
Risks: total debt is $1.3B, net debt to EBITDA is 9.3x. Year is also back-half loaded after the Q1 miss so they need to deliver in H2.
Not saying this is risk free but at their current price with $593M in trailing revenue and the FDA overhang from last year now largely cleared, I think it's severely undervalued.
*Will be watching this one closely in regards to how they handle their debts.
lmk what you guys think!