Business Context and Reporting Period
This Shell Company Report on Form 20-F covers the consummation of the Business Combination between Oaktree Acquisition Corp. II (OACB), Alvotech Holdings S.A., and TopCo (Alvotech Lux Holdings S.A.S.), which closed on June 15, 2022. Following the closing, TopCo is the surviving entity, renamed Alvotech, and conducts its business through its subsidiary, Alvotech hf. The company is incorporated in the Grand Duchy of Luxembourg and its ordinary shares and warrants are listed on the Nasdaq Stock Market under the symbols ALVO and ALVOW, respectively.
Key Financial Metrics
The filing provides unaudited pro forma combined financial information as of December 31, 2021, reflecting the Business Combination and PIPE Financing. Specific revenue, profit, or cash flow figures for the period ended June 15, 2022, are not provided in this text; the company is a pre-commercial biopharmaceutical entity with an accumulated deficit.
| Metric (Pro Forma as of Dec 31, 2021) | Amount (in thousands) |
|---|---|
| Cash and cash equivalents | $252,699 |
| Restricted cash | $25,000 |
| Total Cash and restricted cash | $277,699 |
| Total Borrowings and other financial liabilities | $511,909 |
| Accumulated deficit | $(1,249,201) |
| Total Equity | $(213,127) |
Capitalization: As of June 15, 2022, there were 243,649,505 ordinary shares outstanding and 10,916,667 warrants outstanding (exercise price $11.50). The PIPE Financing raised aggregate gross proceeds of $174,930,000 through the issuance of 17,493,000 shares at $10.00 per share.
Material Changes and Transactions
- Business Combination: OACB merged with TopCo, and Alvotech merged with TopCo. OACB shares were exchanged one-for-one for TopCo ordinary shares.
- Redemptions: Prior to closing, 24,023,495 OACB Class A ordinary shares were redeemed for an aggregate payment of $240,234,950.
- Related Party Loans: Alvotech entered into bridge loans with Alvogen Lux Holdings S.à r.l. totaling $40.0 million ($20.0 million on May 9, 2022, and $20.0 million on June 1, 2022) at 10% interest, due within 30 days of closing.
- Legal Settlement: On June 17, 2022, Alvotech executed a Settlement and License Agreement with AbbVie, resolving intellectual property disputes regarding AVT02 in multiple territories (excluding Canada), enabling commercialization subject to regulatory approval.
- Product Launch: Commercial partner STADA launched AVT02 (Hukyndra) in selected European countries on June 9, 2022.
Outlook, Risks, and Management Commentary
Outlook and Strategy: The company intends to retain earnings for future operations and expansion. It has no plan to declare or pay cash dividends in the foreseeable future. The company expects to market AVT02 in territories covered by the AbbVie settlement, pending regulatory approvals.
Risks and Contingencies:
- Profitability: The company has an accumulated deficit and may never achieve or sustain profitability.
- Capital Needs: There is a risk that Alvotech will need to raise additional capital to execute its business plan, which may not be available on acceptable terms.
- Internal Controls: The company has identified a material weakness in its internal control over financial reporting.
- Regulatory and Litigation: Risks include the outcome of pending Canadian litigation with AbbVie, the ability to obtain regulatory approvals for product candidates, and the impact of the COVID-19 pandemic.
- Going Concern: The ability to continue as a going concern is dependent on successful product development, commercialization, and access to capital.
Investor Verification Checklist
- Verify the status of the pending Canadian litigation with AbbVie regarding AVT02.
- Confirm the repayment status of the $40.0 million related-party bridge loans from Alvogen.
- Review the unaudited pro forma financial statements (Exhibit 15.1) for detailed capitalization and debt structure.
- Monitor the progress of regulatory approvals for AVT02 in the territories covered by the AbbVie settlement.
- Assess the timeline and impact of the material weakness in internal controls over financial reporting.
- Check for updates on the commercial performance of Hukyndra (AVT02) following its European launch.