Alvotech Faces Securities Investigation Amid Ongoing FDA and Financial Challenges

What happened

Alvotech's recurring FDA manufacturing deficiencies at its single Icelandic facility led to a complete response letter for AVT05 in November 2025, forcing a material guidance cut and a 65% share price decline over the past year. This regulatory setback highlighted persistent operational weaknesses and raised questions about management's prior assurances on revenue and EBITDA targets. Now, the Rosen Law Firm is investigating potential securities claims, alleging that Alvotech may have issued materially misleading business information to the public. This legal scrutiny compounds existing governance issues, including disclosed material weaknesses in internal controls and investor-rights concerns. The confluence of regulatory delays, high leverage, negative equity, and new legal risks intensifies the overall uncertainty for equity holders.

Implication

Investors must now factor in the possibility of costly legal settlements or judgments, which could strain Alvotech's already tight liquidity and balance sheet. This overhang may deter new investment and increase volatility, especially if the investigation uncovers further disclosure failures. Management's credibility is further compromised, making it harder to regain market confidence even if regulatory issues are resolved. The 'WAIT' rating is reinforced, as capital should remain on the sidelines until clearer evidence of remediation, positive cash flow, and resolution of legal uncertainties emerge. Monitoring should include updates on the investigation, FY 2025 results with new guidance, and progress on AVT05 resubmission and European launches.

Thesis delta

The initiation of a securities investigation shifts the thesis by introducing a tangible legal overhang that could impair financial flexibility and delay recovery. It underscores the governance risks previously noted and adds a layer of potential liability that wasn't fully priced in, reinforcing the 'WAIT' stance until these multifaceted risks are clarified.