Rosen Law Firm Investigates Alvotech Over Potential Securities Misrepresentations

What happened

The Rosen Law Firm has announced an investigation into potential securities claims against Alvotech, alleging the company issued materially misleading business information to investors. This move follows Alvotech's November 2025 FDA complete response letter for AVT05, which forced a sharp guidance cut and contributed to a ~65% share price decline over the past year. The DeepValue report details persistent manufacturing deficiencies at Alvotech's single Icelandic facility, leading to recurring regulatory setbacks and raising questions about management's prior assurances. Internal control weaknesses and existing investor-rights scrutiny, as noted in filings, have already highlighted governance concerns. The law firm's action formalizes legal risks that could compound the company's challenges amid high leverage and negative equity.

Implication

The investigation underscores severe governance and disclosure issues, potentially leading to shareholder lawsuits that could drain financial resources and distract management from critical operational fixes. Legal scrutiny compounds existing operational risks, such as the single-site manufacturing vulnerabilities and persistent FDA deficiencies highlighted in the DeepValue report. With Alvotech's high secured debt of ~$1.1 billion and negative equity, any additional legal liabilities or reputational damage could pressure liquidity and refinancing options. The market's current valuation at 17-20x adjusted EBITDA does not adequately price in these compounded risks, suggesting further downside if legal or regulatory outcomes worsen. Consequently, the investment thesis remains firmly in 'wait' mode, with capital better deployed elsewhere until clear evidence of regulatory compliance and sustainable free cash flow materializes.

Thesis delta

The law firm investigation adds a tangible legal dimension to the governance risks already identified in the DeepValue report, but does not alter the core thesis that Alvotech's equity is overvalued given its operational and financial vulnerabilities. It reinforces the negative narrative around management credibility and disclosure, slightly increasing the downside risk profile without changing the overall recommendation to avoid the stock until key uncertainties like FDA remediation and positive cash flow are resolved.