Alvotech Announces Increase in Number of Own Shares
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Insights
The capital increase and subsequent share issuance by Alvotech represent a strategic financial maneuver aimed at maintaining the company's equity structure and fulfilling financial commitments. The issuance of 13 million shares at USD 15.98 per share, subscribed by its own subsidiary, is a transaction that can be seen as a preparatory step for future financial flexibility. This move allows the company to manage its treasury shares effectively, ensuring that it has a sufficient number of shares available for potential conversion of financial instruments and for fulfilling share-based employee compensation schemes.
From an investor's perspective, the dilution effect of increasing the total number of shares might raise concerns about potential earnings per share (EPS) reduction. However, this should be weighed against the company's ability to meet its financial obligations without resorting to external financing, which could be more costly. Furthermore, the fact that the subsidiary holds these shares as treasury shares means they will not have voting rights or dividend entitlement, which minimizes the impact on existing shareholders' control and profit-sharing.
Biosimilar medicines are increasingly important in the pharmaceutical industry due to their potential to reduce healthcare costs while increasing access to vital treatments. Alvotech's focus on this sector places it in a competitive position within a growing market. The capital increase can be interpreted as a signal of the company's intent to sustain its growth and market presence. It is important to monitor how Alvotech deploys the capital raised through this share issuance, as it could be invested in R&D, expanding production capabilities, or other strategic initiatives that could enhance its market position.
Moreover, the sale of over 10 million ordinary shares previously held by the subsidiary to investors indicates active market interest in Alvotech's equity. This interest could be a positive sign of market confidence in the company's long-term strategy and its pipeline of biosimilar products. Stakeholders should pay attention to the company's forthcoming financial reports and any announcements regarding product development milestones, as these will provide further insights into the efficacy of the capital utilization.
The legal implications of Alvotech's share capital increase and the handling of treasury shares require careful consideration. The structure of the transaction, where a subsidiary subscribes to the newly issued shares, is a common practice that must comply with corporate governance rules and securities regulations. The company must ensure that all actions are transparent and provide fair treatment to all shareholders.
It's also important to note that the shares held by the subsidiary are treated as treasury shares, which typically means they are not included in the calculation of earnings per share or voting rights. This arrangement should be clearly communicated to shareholders to prevent any misunderstanding. The company's adherence to these legal standards will be important in maintaining shareholder trust and avoiding regulatory scrutiny.
Alvotech (NASDAQ: ALVO) (the “Company”), a global biotech company specializing in the development and manufacture of biosimilar medicines for patients worldwide, has increased the Company´s share capital by an amount of one hundred and thirty thousand (USD 130,000) by issuing thirteen million (13,000,000) ordinary shares. The Company’s subsidiary, Alvotech Manco ehf. (the “subsidiary”), has subscribed to all of the newly issued shares for a price of USD 15.98 per share. The shares held by the subsidiary are treated as treasury shares without voting rights or dividend entitlement.
Following the above-mentioned transactions, the subsidiary will hold 23.160.596 shares in the Company, or around
On 26 February 2024, the Company announced that it had accepted an offer from investors for the sale of 10,127,132 ordinary shares, previously held by the subsidiary. The share capital increase is intended to meet the reduction in the number of treasury shares resulting from settlement of the above-mentioned sale of ordinary shares, allowing the Company to continue holding a sufficient number of shares to fulfill the Company’s commitments related to various financial obligations, including warrants, convertible financial instruments, and share-based employee compensation.
About Alvotech
Alvotech is a biotech company, founded by Robert Wessman, focused solely on the development and manufacture of biosimilar medicines for patients worldwide. Alvotech seeks to be a global leader in the biosimilar space by delivering high quality, cost-effective products, and services, enabled by a fully integrated approach and broad in-house capabilities. Alvotech’s current pipeline contains eight biosimilar candidates aimed at treating autoimmune disorders, eye disorders, osteoporosis, respiratory disease, and cancer. Alvotech has formed a network of strategic commercial partnerships to provide global reach and leverage local expertise in markets that include the United States, Europe, Japan, China, and other Asian countries and large parts of South America, Africa and the Middle East. Alvotech’s commercial partners include Teva Pharmaceuticals, a US affiliate of Teva Pharmaceutical Industries Ltd. (US), STADA Arzneimittel AG (EU), Fuji Pharma Co., Ltd (Japan), Cipla/Cipla Gulf/Cipla Med Pro (Australia, New Zealand, South Africa/Africa), JAMP Pharma Corporation (Canada), Yangtze River Pharmaceutical (Group) Co., Ltd. (China), DKSH (Taiwan, Hong Kong, Cambodia, Malaysia, Singapore, Indonesia, India, Bangladesh and Pakistan), YAS Holding LLC (Middle East and North Africa), Abdi Ibrahim (Turkey), Kamada Ltd. (Israel), Mega Labs, Stein, Libbs, Tuteur and Saval (Latin America) and Lotus Pharmaceuticals Co., Ltd. (Thailand, Vietnam, Philippines, and South Korea). Each commercial partnership covers a unique set of product(s) and territories. Except as specifically set forth therein, Alvotech disclaims responsibility
for the content of periodic filings, disclosures and other reports made available by its partners. For more information, please visit www.alvotech.com. None of the information on the Alvotech website shall be deemed part of this press release.
CONTACTS
Alvotech Investor Relations and Global Communications
Benedikt Stefansson, Senior Director
alvotech.ir@alvotech.com
FAQ
How many ordinary shares did Alvotech issue in the recent capital increase?
What is the price per share for the newly issued shares?
What percentage of issued shares does Alvotech's subsidiary hold after the transactions?
How many shares will the subsidiary hold in Alvotech after the share capital increase?
What was the purpose of the share capital increase?
