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United States securities and exchange commission logo
January 18, 2022
Robert Wessman
Executive Chairman
Alvotech Lux Holdings S.A.S.
9, Rue de Bitbourg
L-1273 Luxembourg
Grand Duchy of Luxembourg
Re: Alvotech Lux
Holdings S.A.S.
Registration
Statement on Form F-4
Filed December 20,
2021
File No. 333-261773
Dear Mr. Wessman:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form F-4 filed December 20, 2021
Cover Page
1. Disclose if the SPAC
s sponsors, directors, officers or their affiliates will participate in the
PIPE Financing.
2. We note your disclosure
here that the Sponsor has agreed to, among other things, waive its
anti-dilution rights
with respect to its OACB Class B Ordinary Shares in connection with
the consummation of the
Business Combination. We also note a reference on page F-47 to
an anti-dilution
adjustment with respect to the OACB private placement warrants, which
are also held by the
Sponsor. Please clarify whether the sponsor also has anti-dilution
rights with respect to
its OACB private placement warrants and whether any financing
Robert Wessman
Alvotech Lux Holdings S.A.S.
January 18, 2022
Page 2
affiliated with the business combination would trigger this
anti-dilution adjustment for the
benefit of the sponsor.
Questions and Answers about the Business Combination
What equity stake will current OACB shareholders and Alvotech Shareholders have
in TopCo
after the Closing, page 10
3. We note that the table illustrating the ownership levels in TopCo
excludes the impact of
the shares underlying the TopCo warrants. Please disclose the sponsor
and its affiliates'
total potential ownership interest in the combined company, assuming
exercise and
conversion of all securities.
4. Revise your disclosure here and throughout the prospectus to show the
potential impact of
redemptions on the per share value of the shares owned by
non-redeeming shareholders by
including a tabular presentation in relation to redemptions showing a
range of redemption
scenarios, including an interim redemption level in addition to the
minimum and
maximum interim redemption levels that you currently present.
5. Please revise to disclose all possible sources and extent of dilution
that shareholders who
elect not to redeem their shares may experience in connection with the
business
combination. Provide disclosure of the impact of each significant
source of dilution,
including the amount of equity held by founders, convertible
securities, including warrants
retained by redeeming shareholders, at each of the redemption levels
detailed in your
sensitivity analysis, including any needed assumptions.
What interests do OACB s current officers and directors have in the Business
Combination, page
12
6. We note your disclosure here and on page 25 concerning the interests
of the sponsor and
OACB's officers and directors in the business combination. Please
expand your disclosure
to quantify the aggregate dollar amount of what the sponsor, the
company's officers and
directors or any of their affiliates have at risk that depends on
completion of a business
combination. Include the current value of securities held, loans
extended, fees due, and
out-of-pocket expenses for which the sponsor, OACB's officers and
directors or any of
their respective affiliates are awaiting reimbursement. For example,
we note your
disclosure in a risk factor on page 112 stating that at the close of
the business
combination, the sponsor and OACB's executive officers and directors,
and any of their
respective affiliates, will be reimbursed for out-of-pocket expenses.
7. Please also clarify in your discussion of the interests of the sponsor
and OACB's officers
FirstName LastNameRobert Wessman
and directors whether the sponsor and its affiliates can earn a positive
rate of return on
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investment, evenLux
if Holdings S.A.S.
other SPAC shareholders experience a
negative rate of return in
Januarythe
18,post-business
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FirstName LastName
Robert Wessman
FirstName LastNameRobert Wessman
Alvotech Lux Holdings S.A.S.
Comapany
January 18,NameAlvotech
2022 Lux Holdings S.A.S.
January
Page 3 18, 2022 Page 3
FirstName LastName
8. We note your disclosure that certain affiliates of the sponsor have an
ownership interest in
the target company. Please provide that interest as an approximate
dollar value based on
the transaction value and recent trading prices as compared to the
price paid.
9. It appears that OACB's articles of association waived the corporate
opportunities doctrine.
Please address this potential conflict of interest and whether it
impacted your search for an
acquisition target.
10. We note your disclosure here and elsewhere throughout the prospectus,
including on page
261, that certain shareholders agreed to waive their redemption
rights. Please describe any
consideration provided in exchange for this agreement. Please also
revise your disclosure
summarizing the background of the business combination beginning on
page 143 to
discuss the negotiation of this agreement.
Do I have redemption rights, page 13
11. We note your disclosure here that holders of public warrants do not
have redemption
rights with respect to such warrants in connection with the business
combination. Quantify
the value of warrants, based on recent trading prices, that may be
retained by redeeming
stockholders assuming maximum redemptions and identify any material
resulting risks.
12. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions. Revise your disclosure to disclose the effective
underwriting fee on a
percentage basis for shares at each redemption level presented in your
sensitivity analysis
related to dilution.
Risk Factors
Risks Related to OACB and the Business Combination, page 104
13. Please include risk factor disclosure that highlights the material
risks to public warrant
holders, including those arising from differences between private and
public warrants.
Clarify whether recent common stock trading prices exceed the
threshold that would allow
the company to redeem public warrants. Clearly explain the steps, if
any, the company
will take to notify all shareholders, including beneficial owners,
regarding when the
warrants become eligible for redemption.
14. Disclose the material risks to unaffiliated investors presented by
taking the company
public through a merger rather than an underwritten offering. These
risks could include
the absence of due diligence conducted by an underwriter that would be
subject to liability
for any material misstatements or omissions in a registration
statement.
Since Sponsor and OACB executive officers and directors will not be eligible to
be reimbursed
for their out-of-pocket expenses, page 112
15. Please revise this risk factor to more clearly state that because the
sponsor will benefit
from the completion of a business combination and may be incentivized
to complete an
acquisition of a less favorable target company or on terms less
favorable to shareholders
Robert Wessman
FirstName LastNameRobert Wessman
Alvotech Lux Holdings S.A.S.
Comapany
January 18,NameAlvotech
2022 Lux Holdings S.A.S.
January
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rather than liquidate. Please also highlight this risk in the Summary
of the Proxy
Statement/Prospectus.
The Business Combination
The Background of the Business Combination, page 143
16. Substantially revise the Background section to detail the negotiations
concerning key
aspects of the Business Combination and related transactions,
including without
limitation, the scope and valuation of the target's business, the
merger
consideration, and the structure of the transaction (including the
negotiation and
marketing processes for the PIPE transaction). Each proposal
(preliminary or otherwise)
and counterproposal concerning a material transaction term made
between April 9 and
December 7 should be described and the proposing party identified. In
this regard, we
note that the Background section as written discusses in general terms
the topical areas
discussed by the parties during the eight month negotiations and some
of the final terms
they mutually agreed upon but does so without any indication of how
those terms evolved
during the course of the discussions/negotiations.
17. Please expand your disclosure on page 143 to describe how Alvotech was
identified as a
target and by whom.
18. We note that Deutsche Bank Securities Inc. and Citibank Global Markets
Inc. are serving
as financial and capital markets advisors to you and also served as
underwriters in the IPO
and are eligible to receive deferred underwriting compensation. Please
revise to disclose
these conflicts of interest in the Summary and throughout your
registration statement, as
appropriate.
19. Please clarify whether any discussions took place with the target
about the potential loss
of clients in the near future or other events that may materially
affect the target s prospects
or its financial projections for future performance of the business.
20. Please clarify whether there were any valuations or other material
information about the
SPAC, the target, or the de-SPAC transaction provided to potential
PIPE investors that
have not been disclosed publicly.
21. Please revise your disclosure to include any discussions about
continuing employment or
involvement for any persons affiliated with the SPAC before the
merger, any formal or
informal commitment to retain the financial advisors after the merger,
and any pre-
existing relationships between SPAC sponsors and additional investors.
Certain Engagements in Connection with the Business Combination and Related
Transactions,
page 152
22. We note your disclosure that with respect to the transaction, Morgan
Stanley and Credit
Suisse were engaged as financial advisors to Alvotech and Deutsche
Bank was engaged as
a financial advisor and capital markets advisor to OACB. We also note
your disclosure on
Robert Wessman
FirstName LastNameRobert Wessman
Alvotech Lux Holdings S.A.S.
Comapany
January 18,NameAlvotech
2022 Lux Holdings S.A.S.
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page 144 that Citibank was also involved in discussions with the other
three banks as early
as May 11, 2021. Please expand your disclosure in the Background
section to further
describe the role of these financial advisors in the transaction. In
particular, please
disclose when each financial advisor was engaged and the level of
diligence they
performed in connection with the transaction.
The Business Combination
Comparable Public Companies, page 152
23. Please revise to explain the basis for including each of the
comparable public companies
shown or excluding any public companies.
24. Please explain how you determined Alvotech s TAM--Current
Pipeline as based on
reports provided by Evaluate Pharma and the following Alvotech growth
projections as
based on reports provided by CapIQ and Refinitiv: 2021-2025 Revenue
CAGR, 2025E
Gross Margin and 2025E Adj. EBITDA Margin. If these reports
were not used, explain
how you determined these amounts. Revise your presentation
accordingly.
Certain Unaudited Alvotech Prospective Financial Information, page 154
25. Please provide us an analysis by year demonstrating the growth in
total Alvotech revenue
from $30 to $60 million for FY 2021 to an amount greater than $800
million for FY 2025
and the improvement in Adjusted EBITDA from ($150) million to ($200)
million for FY
2021 to an amount greater than $460 million for FY 2025 and revise
your presentation
accordingly. In this regard, quantify EBITDA and reconcile it to
Adjusted EBITDA for
each year. Also, provide us the following information.
Describe and quantify the key assumptions underlying these
financial
projections, how they were developed and the factors considered by
OACB's Board
in concluding that they were reasonable.
Describe alternative financial projections that were considered
and (if any) and the
basis for their rejection.
Describe how these financial projections were used in your $2.3
billion valuation of
Alvotech, as indicated on page 153.
Provide a breakdown of future revenue by commercialization partner
and type of
payment for each year during 2021-2025.
Provide a breakdown of Adjusted EBITDA by source for each year
during 2021-
2025.
Describe and quantify the key factors underlying significant
year-to-year changes in
revenues by partner and Adjusted EBITDA by source during
2021-2025.
26. Please provide a list of your strategic commercialization
partnerships with leading
pharmaceutical companies, as discussed in the sixth bullet on page
156, and summarize
key terms governing each partnership. In this regard, demonstrate how
you determined
their future remittances under these partnerships is expected to be
on average
approximately 40% of in-market sales" and provide a milestone
breakdown by partner and
Robert Wessman
FirstName LastNameRobert Wessman
Alvotech Lux Holdings S.A.S.
Comapany
January 18,NameAlvotech
2022 Lux Holdings S.A.S.
January
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year for the $150 million received to date and the $950 million to be
received in the
future.
27. Please explain the likely impact on the future prospects of AVT02
resulting from the
recent FDA deferral of approval, as discussed on page 230, and
associated litigation
initiated by AbbVie, as discussed on pages F-125 to F-127. Revise the
third bullet on page
156 accordingly.
28. Please explain the qualitative and quantitative factors that you
considered in establishing a
75% or higher probability of success for your clinical and
pre-clinical programs and the
related launch of 5 products in more than 50 markets by 2025. Revise
the seventh bullet
on page 156 accordingly.
The Business Combination Agreement
Conditions to Closing the Business Combination, page 164
29. Please clarify which conditions are subject to waiver.
U.S. Federal Income Tax Considerations, page 176
30. We note your disclosure that the transaction "generally should qualify
as an F
Reorganization" and that a U.S. Holder should not recognize any gain
or loss. A tax
opinion must be filed whenever the tax consequences of a transaction
are material to an
investor and a representation as to tax consequences is set forth in
the filing. Please file a
tax opinion as an exhibit to the filing or provide us your analysis as
to why you do not
believe such an opinion is required. Refer to Item 601(b)(8) of
Regulation S-K and, for
guidance, Section III.A.2 of Staff Legal Bulletin No. 19.
Additionally, please also refer to
Sections III.C.3 and 4 of Staff Legal Bulletin No. 19 concerning
assumptions and opinions
subject to uncertainty. In this regard, we note the disclosure that
the transaction "generally
should qualify as an F Reorganization." If there is uncertainty
regarding the tax treatment,
counsel s opinion should discuss the degree of uncertainty.
Business of Alvotech
Third Party Suppliers and Manufacturers, page 201
31. Please expand your disclosure to include a description of the sources
and availability of
your raw materials, including a description of whether prices of
principal raw materials
are volatile. Refer to Item 4.B.4. of Form 20-F.
Commercial partnerships, page 202
32. We note your disclosure here concerning your principal partners and
partnerships by
region. Please expand your disclosure to discuss the agreements in
place with your
partners, including all material provisions such as payment
provisions, royalty provisions,
term and termination provisions. To the extent you are substantially
dependent on any
such agreement, file the agreement as an exhibit. Alternatively,
provide an analysis
Robert Wessman
FirstName LastNameRobert Wessman
Alvotech Lux Holdings S.A.S.
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January 18,NameAlvotech
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supporting your determination the agreements are not required to be
filed pursuant to Item
601(b)(10)(B)(ii) of Regulation S-K.
33. We note your disclosure on pages 149 and 197 that you also have a
strategic commercial
partnership with Yangzte River Pharmaceutical Group in China. To the
extent that this is a
material partnership to your business, please discuss any agreement
you have in place,
including all material provisions such as payment provisions, royalty
provisions, term and
termination provisions. Please also file the agreement as an exhibit
or explain to us why it
is not required to be filed.
Our Pipeline, page 204
34. Please revise your disclosure here to include the material assumptions
underlying your
market estimate for each of your seven programs as shown in the
graphic on page 205 and
the risks associated with these assumptions. Please also provide your
materiality analysis
for why you have included your undisclosed programs, AVT16 and AVT33,
as part of this
overall market estimate, given their early phase development.
Our Programs, page 205
35. In your discussion of the preclinical and clinical development of your
material programs,
please revise your disclosure to specify the following information
with respect to the trials
that you have conducted, are currently conducting or plan to conduct:
the indication;
the number of participants in the trial;
the primary and secondary endpoints as well as the results as
they relate to those
endpoints;
any statistical analysis performed; and
the occurrence of any serious adverse events.
AVT02, our high-concentration biosimilar to Humira, page 206
36. Please update this graphic such that all text, including that
contained in the legend,
is clearly legible.
Material Agreements, Partnerships and Suppliers, page 208
37. We note your discussion of your various licensing, development and
supply agreements
with STADA and Teva. We also note your disclosure beginning on page
253 concerning
various agreements you have in place with Alvogen and Adalvo, Lotus
Pharmaceuticals
and Fuji Pharma. Please expand your disclosure to ensure that you
describe the material
terms of each agreement including, as applicable:
the nature and scope of any intellectual property transferred;
each parties' rights and obligations;
quantification of all up-front or execution payments received
or paid to date;
Robert Wessman
FirstName LastNameRobert Wessman
Alvotech Lux Holdings S.A.S.
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aggregate amounts paid or received to date under the agreement;
aggregate amounts of all potential development, regulatory and
commercial
milestone payments;
quantification of the royalty rate, or a range no greater than
10 percentage points per
tier;
disclosure of the duration of the agreement and when royalty
provisions expire; and
disclosure of termination provisions.
To the extent you are substantially dependent on any agreement, file
the agreement as an
exhibit. Alternatively, provide an analysis supporting your
determination the agreements
are not required to be filed pursuant to Item 601(b)(10)(B)(ii) of
Regulation S-K.
China Joint Venture, page 209
38. We note your disclosure here as well as in a risk factor on page 64
concerning your joint
venture in China with Changchun High & New Technology Industries
(Group) Inc. Please
expand your disclosure here to discuss the joint venture agreement in
greater detail,
providing all material provisions such as each party's rights and
obligations, payment
provisions, royalty provisions, term and termination provisions. To
the extent you are
substantially dependent on this agreement, file the agreement as an
exhibit. Alternatively,
provide an analysis supporting your determination the agreements are
not required to be
filed pursuant to Item 601(b)(10)(B)(ii) of Regulation S-K.
Intellectual Property, page 210
39. Please expand your disclosure to provide a description of your patent
portfolio. For
each material patent and patent application, please disclose the
specific product(s) to
which such patent or patent application relates, whether the patents
are owned or licensed,
the type of patent protection, the expiration dates, and applicable
material jurisdictions,
including any foreign jurisdiction.
Facilities, page 221
40. Please expand your disclosure here to include a description of the
size and uses of each
property as well as each property's productive capacity and extent of
utilization. Please
also describe any environmental issues that may affect the company's
utilization of these
assets. Refer to Item 4.D. of Form 20-F.
Alvotech Managements Discussion and Analysis of Financial Condition and Results
of
Operations
Results of Operations
Research and development expenses, page 240
41. Please disclose your research and development expenses by product
candidate for each
period presented. To the extent that you do not track expenses by
product candidate,
please disclose as such, and provide a breakdown by nature of type of
expense.
Robert Wessman
FirstName LastNameRobert Wessman
Alvotech Lux Holdings S.A.S.
Comapany
January 18,NameAlvotech
2022 Lux Holdings S.A.S.
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Certain Alvotech Relationships and Related Person Transactions
Shareholder Convertible Loans, page 255
42. We note your discussion of the various loan and financing agreements
that you have in
place. Please update your discussion of these various agreements to
include additional
disclosure regarding the basic terms of these agreement including
tranches (if any),
restrictive covenants on the conduct of your business (if any), the
interest rate and
maturity of the loan granted pursuant to the agreement and termination
provisions. Please
also file the agreements as exhibits or, alternatively, please explain
why this disclosure
and the filing of the agreements are not required.
Management of Topco after the Business Combination, page 282
43. Please clarify whether any person referred to here was selected as a
director or member of
senior management pursuant to any arrangement or understanding with
major
shareholders, customers, suppliers or others. Refer to Item 6.A.5. of
Form 20-F.
Beneficial Ownership of Securities, page 310
44. Please disclose the natural person or persons who exercise voting
and/or dispositive
control with respect to the securities owned by the entities listed in
the table.
Notes to the Consolidated Financial Statements
5. Revenue and other income
Out-license agreements, page F-79
45. Please expand your disclosure to separately quantify upfront payments,
milestone payments by type (e.g. development and regulatory) and the
profit sharing
range for each out-licensing agreement. Also, explain why your
agreements with Fuji, as
discussed on page 254, were omitted from this disclosure and explain
how this out-
licensing activity is consistent with your statement on page F-82 that
"the increase in
forecasted profit as per the 2020 ten-year forecast (was) largely
driven by a significant
number of new contracts with customers that were executed in 2020 with
known
milestone payments due at fixed times over the next ten years." In
this regard, explain the
key terms governing these new contracts with your customers,
particularly the nature of
fixed timing for the associated milestone payments.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Robert Wessman
Alvotech Lux Holdings S.A.S.
January 18, 2022
Page 10
You may contact Franklin Wyman at (202) 551-3660 or Vanessa Robertson
at (202) 551-
3649 if you have questions regarding comments on the financial statements and
related
matters. Please contact Jessica Ansart at (202) 551-4511 or Jeffrey Gabor at
(202) 551-2544
with any other questions.
Sincerely,
FirstName LastNameRobert Wessman
Division of Corporation
Finance
Comapany NameAlvotech Lux Holdings S.A.S.
Office of Life Sciences
January 18, 2022 Page 10
cc: Nicolas Dumont
FirstName LastName