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"value": "1.1 Capital ReorganizationOn 15 June 2022 (the \u201cClosing Date\u201d), the Company consummated the capital reorganization with Alvotech Holdings S.A. andOACB (the \u201cBusiness Combination\u201d or \u201cCapital Reorganization\u201d) pursuant to the business combination agreement, dated as of 7December 2021, as amended by an amendment agreement dated 18 April 2022 and 7 June 2022 (the \u201cBusiness CombinationAgreement\u201d), by and among the Company, Oaktree Acquisition Corp. II (\u201cOACB\u201d) and the Predecessor. The closing of theBusiness Combination resulted in the following transactions:\u25cf OACB merged with and into the Company, whereby (i) all of the outstanding ordinary shares of OACB (\u201cOACB OrdinaryShares\u201d) were exchanged for ordinary shares of Alvotech (\u201cOrdinary Shares\u201d) on a one-for-one basis, pursuant to a share capitalincrease of Alvotech and (ii) all of the outstanding warrants of OACB ceased to represent a right to acquire OACB OrdinaryShares and now represent a right to be issued one Ordinary Share, with Alvotech as the surviving company in the merger. Prior tothe merger OACB shares were redeemed, resulting in $9.8 million of cash proceeds from the OACB trust account;\u25cf Alvotech redeemed and canceled the initial shares held by the initial sole shareholder of Alvotech pursuant to a share capitalreduction of Alvotech;\u25cf The legal form of Alvotech changed from a simplified joint stock company (soci\u00e9t\u00e9 par actions simplifi\u00e9e) to a public limitedliability company (soci\u00e9t\u00e9 anonyme) under Luxembourg law; and\u25cf The Predecessor merged with and into the Parent, whereby all outstanding ordinary shares of the Predecessor (\u201cPredecessorOrdinary Shares\u201d) were exchanged for Ordinary Shares, pursuant to a share capital increase of Alvotech, with Alvotech as thesurviving company in the merger.Concurrently with the execution of the Business Combination Agreement, OACB and Alvotech entered into subscriptionagreements (\u201cSubscription Agreements\u201d) with certain investors (the \u201cPIPE Financing\u201d). On 15 June 2022, immediately prior to theclosing of the Business Combination, the PIPE Financing was closed, pursuant to the Subscription Agreements, in whichsubscribers collectively subscribed for 17,493,000 Ordinary Shares at $10.00 per share for an aggregate subscription price equal to$174.9 million.As part of the Business Combination, Predecessor shareholders were granted a total of 38,330,000 Ordinary Shares subject tocertain vesting conditions (\u201cPredecessor Earn Out Shares\u201d). Former OACB shareholders were granted a total of 1,250,000Ordinary Shares subject to certain vesting conditions (\u201cOACB Earn Out Shares\u201d). Additionally, as part of the BusinessCombination the Company assumed the 10,916,647 outstanding warrants (\u201cOACB Warrants\u201d), on substantially the samecontractual terms and conditions as were in effect immediately prior to the Business Combination. See Note 27 for further details. The Business Combination was accounted for as a capital reorganization. Under this method of accounting, OACB was treated asthe \u201cacquired\u201d company for financial reporting purposes, with Alvotech Holdings S.A. being the accounting acquirer andaccounting predecessor. Accordingly, the capital reorganization was treated as the equivalent of Alvotech issuing shares at theclosing of the Business Combination for the net assets of OACB as of the Closing Date, accompanied by a recapitalization. Thecapital reorganization, which was not within the scope of IFRS 3 since OACB did not meet the definition of a business inaccordance with that guidance, was accounted for within the scope of IFRS 2. In accordance with IFRS 2, Alvotech recorded a one-time non-cash share listing expense of $83.4 million, recognized as a general and administrative expense, based on the excess of thefair value of Alvotech shares issued, at the Closing Date, over the fair value of OACB's identifiable net assets acquired. The fairvalue of shares issued was estimated based on a market price of $9.38 per share as of 15 June 2022. Shares (in 000s)OACB Shareholders Class A Shareholders..................................................................................................................................976,505 Class B Shareholders..................................................................................................................................5,000,000 OACB Earn Out Shares............................................................................................................................1,250,000 Total Alvotech Shares issued to OACB shareholders.........................................................................7,226,505 Fair value of Shares issued to OACB as of 15 June 2022..................................................................56,060$ Fair value of OACB Earn Out Shares issued to OACB as of 15 June 2022..................................9,100 Estimated fair market value......................................................................................................................65,160 Adjusted net liabilities of OACB as of 15 June 2022..........................................................................(18,251)Difference - being the share listing expense..............................................................................................83,411 In connection with the Business Combination and PIPE Financing, the Company incurred $28.5 million of transaction costs,which represent legal, financial advisory, and other professional fees in connection with the Business Combination and PIPEFinancing, during the year ended 31 December 2022. Of this amount, $5.6 million represented equity issuance costs related toPIPE Financing that were capitalized in share premium. The remaining $22.9 million was recognized as general and administrativeexpense.1.2 Information about subsidiaries and joint venturesIssued and paid capital Principal (presented in Place ofProportion of ownership and Entity name establishmentactivitywhole shares) voting power held by Alvotech31.12.2022 31.12.2021Alvotech hf...................................................... Biopharm. 3,885,102 Iceland 100.00% 100.00%Alvotech Germany GmbH........................... Biopharm. 31,182 Germany 100.00% 100.00%Alvotech Swiss AG........................................ Biopharm. 153,930 Switzerland 100.00% 100.00%Alvotech Hannover GmbH......................... Biopharm. 29,983 Germany 100.00% 100.00%Alvotech Malta Ltd........................................ Group Serv. 80,450 Malta 100.00% 100.00%Alvotech USA Inc.......................................... Biopharm. 10 USA 100.00% 100.00%Alvotech UK Ltd............................................ Group Serv. 135 UK 100.00% 100.00%Alvotech Manco ehf...................................... Group Serv. 203,046 Iceland 100.00% -Alvotech Biosciences India Pvt Ltd............ Biopharm. 96,113 India 100.00% -Fasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf..................... Real Estate 12,965,337 Iceland 100.00% -Alvotech & CCHN Bioph.. Co. Ltd*......... Biopharm. 110,000,021 China 50.00% 50.00%* Alvotech & CCHN Biopharmaceutical Co. Ltd. is an unconsolidated joint venture (see Note 26). 1.3 Information about shareholdersSignificant shareholders of the Company are Aztiq Pharma Partners S.\u00e0 r.l. (Aztiq) and Alvogen Lux Holdings S.\u00e0 r.l. (Alvogen),with 40.7% and 35.8% ownership interest as of 31 December 2022, respectively. The remaining 23.5% ownership interest is heldby various entities, with no single shareholder holding more than 2.4% ownership interest as of 31 December 2022.Aztiq and Alvogen held 45.1% and 39.5% ownership interest as of 31 December 2021, respectively. The remaining 15.4%ownership interest was held by various entities, with no single shareholder holding more than 2.4% ownership interest as of 31December 2021.1.4 Impact of COVID-19, the Russia and Ukraine Conflict, and Economic ConditionsWith the ongoing COVID-19 pandemic, the Group created a COVID-19 task force which implemented a business continuity planto address and mitigate the impact of the pandemic on the Group\u2019s business and operations across sites. As a result, in the short-term, the pandemic has not had a material impact on the Group\u2019s financial condition, results of operations, the timelines forbiosimilar product development, expansion efforts or the Group\u2019s operations as a whole. However, the extent to which thepandemic will impact the Group\u2019s business, biosimilar product development and expansion efforts, corporate developmentobjectives and the value of and market for the Ordinary Shares will depend on future developments that are highly uncertain andcannot be predicted with confidence at this time, such as the ultimate direction of the pandemic, emergence and spread of newvariants of the disease, travel restrictions, quarantines, social distancing, business closure requirements and the effectiveness ofother actions taken globally to contain and treat the disease. The global economic slowdown, the overall disruption of global supply chains and distribution systems, the effects of this on the work of appropriate regulatory authorities in different regions and theother risks and uncertainties associated with the pandemic could have a material adverse effect on the Group\u2019s business, financialcondition, results of operations and growth prospects.In February 2022, Russia began a military invasion of Ukraine. The global response to this invasion could have an adverse impacton the Group\u2019s business, including the effects of relocating clinical trials and the Group\u2019s ability to market and sell products inEurope, by creating disruptions in global supply chain, and potentially having an adverse impact on the global economy, Europeaneconomy, financial markets, energy markets, currency rates, and otherwise. Currently, the conflict has not had a material impact onthe Group\u2019s financial condition, results of operations, the timelines for biosimilar product development, expansion efforts or theGroup\u2019s operations as a whole.The Company believes that inflation will have a general impact on the business in line with overall price increases, increases in thecost of borrowing, and operating in an inflationary economy. We cannot predict the timing, strength, or duration of anyinflationary period or economic slowdown or its ultimate impact on the Company. If the conditions in the general economysignificantly deviate from present levels and continue to deteriorate it could have a material adverse effect on the Group\u2019s business,financial condition, results of operations and growth prospects.2.2 Basis of consolidationThe consolidated financial statements incorporate the financial statements of the Company and entities controlled by theCompany and its subsidiaries. Control is achieved when the Company:\u2022 has power over the investee;\u2022 is exposed, or has rights, to variable returns from its involvement with the investee; and \u2022 has the ability to use its power to affect its returns. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the votingrights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considersall relevant facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give itpower, including:\u2022 the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders; \u2022 potential voting rights held by the Company, other vote holders or other parties; \u2022 rights arising from other contractual arrangements; and \u2022 any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct therelevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company losescontrol of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included inthe consolidated statements of profit or loss and other comprehensive income or loss from the date the Company gains controluntil the date when the Company ceases to control the subsidiary. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.All intra-group transactions, balances, income and expenses are eliminated in full in consolidation. 2.3 Investments in joint venturesTo the extent the Group concludes that it does not control, and thus consolidate, a joint venture, the Group accounts for itsinterest in joint ventures using the equity method of accounting. As such, investments in a joint venture are initially recognized atcost and the carrying amount is subsequently adjusted for the Group\u2019s share of the profit or loss of the joint venture, as well as anydistributions received from the joint venture. The Group carries its ownership interest in a joint venture as \u201cInvestment in jointventure\u201d on the consolidated statements of financial position. The Group\u2019s profit or loss includes its share of the profit or loss ofthe joint venture and, to the extent applicable, other comprehensive income or loss for the Group includes its share of othercomprehensive income or loss of the joint venture. The Group\u2019s share of a joint venture\u2019s profit or loss in a particular year ispresented as \u201cShare of net loss of joint venture\u201d in the consolidated statements of profit or loss and other comprehensive incomeor loss. The carrying amount of equity-accounted investments is assessed for impairment as a single asset. Impairment losses are incurredonly if there is objective evidence of impairment as a result of loss events that have an impact on estimated future cash flows andthat can be reliably estimated. Losses expected as a result of future events are not recognized. The Group did not recognize anyimpairment losses related to its investment in the joint venture for the years ended 31 December 2022 and 2021.Refer to Note 26 for additional information regarding the Group\u2019s joint venture as of 31 December 2022 and 2021 and for theyears ended 31 December 2022 and 2021.2.5 Segment reportingThe Group operates and manages its business as one operating segment based on the manner in which the Chief ExecutiveOfficer, the Group\u2019s chief operating decision maker, assesses performance and allocates resources across the Group.2.6 Revenue recognitionProduct revenueThe Company recognizes revenue from the sale of its biosimilar product to commercial partners, identified as the customer, whencontrol is transferred, and the performance obligations have been satisfied. This is when the title passes to the customer, which isupon shipment of the product. At that point, the commercial partner has full discretion over the channel and price to sell theproducts. Revenue is recognized based on the net selling price from the commercial partners, which is considered to be thetransaction price and includes estimated rebates, returns and chargebacks, and other forms of variable consideration recognized bythe Customer. Variable consideration is accounted for by the Company only to the extent that it is highly probable that asignificant reversal in the revenue recognized will not occur. Variable consideration, which includes any adjustments to the netselling price, is estimated based on the most likely amount method on a contract-by-contract basis.Out-licensing revenueThe majority of the Group\u2019s revenue is generated from long-term out-license contracts which provide the customer with anexclusive right to market and sell products in a particular territory once such products are approved for commercialization. Thesecontracts typically include the Group\u2019s promises to continue development of the underlying compound and to provide supply ofthe product to the customer upon commercialization. The Group concludes that the license, development services and commercialsupply are separate performance obligations. This is because customers generally have the capabilities to perform the necessarydevelopment, manufacturing and commercialization activities on their own or with readily available resources and have therequisite expertise in the industry and the territory for which the license has been granted. Further, the intellectual property isgenerally in a later phase of development at the time the license is granted such that any subsequent development activitiesperformed by the Group are not expected to significantly modify or transform the intellectual property. The fact that the Group iscontractually obligated to perform development activities for and provide commercial supply to the customer does not impact thisconclusion. The Group\u2019s promise to provide commercial supply to its customers is contingent upon the achievement of regulatoryapproval in the particular territory for which the license has been granted.The consideration to which the Group is entitled pursuant to these contracts generally includes upfront payments and paymentsbased upon the achievement of development and regulatory milestones. All contracts include a potential refund obligation wherebythe Group must refund the consideration paid by the customer in the event of a technical failure or the occurrence of certain othermatters that result in partial or full cancellation of the contract. As such, the entire transaction price is comprised of variableconsideration, which is estimated using the most likely amount method due to the binary nature of the outcomes under thesecontracts. Such variable consideration is included in the transaction price only when it is highly probable that doing so will notresult in a significant reversal of cumulative revenue recognized when the underlying uncertainty associated with the variableconsideration is subsequently resolved. The Group does not account for a significant financing component since a substantialamount of consideration promised by the customer is variable and the amount or timing of that consideration varies on the basisof a future event that is not substantially within the control of either party. Certain contracts also include commercializationmilestones upon the first commercial sale of a product in a particular territory, as well as royalties. Commercialization milestonesand royalties are accounted for as sales-based royalties; therefore, such amounts are not included in the transaction price andrecognized as revenue until the underlying sale that triggers the milestone or royalty occurs.Upfront payments, when applicable, are received in advance of transferring control of all goods and services. Therefore, a portionof upfront payments is recorded as a contract liability upon receipt. Due to the existence of refund provisions, upfront paymentsand certain development milestone payments are generally included in the transaction price upon submission of the first clinicaltrial application to the respective regulatory agency, since it is at this point in time that a significant reversal of cumulative revenuerecognized related to such payments is no longer highly probable. Other development and regulatory milestones may not beincluded in the transaction price until such milestones are achieved due to the degree of uncertainty associated with achieving thesemilestones. Contract liabilities are presented on the consolidated statements of financial position as either current or non-currentbased upon forecasted performance. In certain contracts, the Group may transfer control of goods and services, and thusrecognize revenue, prior to having the right to invoice the customer. In these circumstances, the Group recognizes contract assetsfor revenue recognized, and subsequently reclasses the contract asset to trade receivables upon issuing an invoice and the right toconsideration is only conditional on the passage of time. Contract assets are presented on the consolidated statements of financialposition as either current or non-current based upon the expected timing of settlement.The standalone selling prices of the development services and the license to intellectual property are not directly observable and,therefore, are estimated. The standalone selling price of the development services is estimated based on the expected costs to beincurred during the development period, using various data points such as the underlying development budget, contractualmilestones and performance completed at the time of entering into the contract with a customer. The standalone selling price ofthe license is estimated using the residual approach on the basis that the Group licenses intellectual property for a broad range ofamounts and has not previously licensed intellectual property on a standalone basis. Therefore, the Group first allocates thetransaction price to the development services and subsequently allocates the remainder of the transaction price to the license. Ifproduct is still in early phase development and the constraint on variable consideration has not been resolved, all the transactionprice is allocated to the development service. The standalone selling price of the commercial supply is directly observable and the stated prices in the Group\u2019s supply contractsreflect the standalone selling price of such goods.The licenses to intellectual property are right of use licenses on the basis that the ongoing development work performed by theGroup does not significantly affect the intellectual property to which the customer has rights. Therefore, control of the licensetransfers to the customer at the point in time when the right to use the license is granted to the customer. The license is generallygranted to the customer at the time the contract is executed with the customer.The Group satisfies its performance obligation related to the development services over time as the Group\u2019s performanceenhances the value of the licensed intellectual property controlled by the customer throughout the performance period. The Grouprecognizes revenue using a cost-based input measure since this measure best reflects the progress of the development services and,therefore, the pattern of transfer of control of the services to the customer. In certain instances, the Group may subcontractservices to other parties for which the Group is ultimately responsible. Costs incurred for such subcontracted services are includedin the Group\u2019s measure of progress for satisfying its performance obligation. Changes in the total estimated costs to be incurred inmeasuring the Group\u2019s progress toward satisfying its performance obligation may result in adjustments to cumulative revenuerecognized at the time the change in estimate occurs.Upon the achievement of regulatory approval and the commencement of commercial sale of its products, the Group will satisfy itsperformance obligation related to commercial supply at the point in time when control of the manufactured product is transferredto the customer. Transfer of control for such goods will occur in accordance with the stated shipping terms.The Group does not incur incremental costs of obtaining a contract with a customer that would require capitalization. Costs tofulfill performance obligations are not incurred in advance of performance and, as such, are expensed when incurred.Other revenueOther revenue primarily consists of clinical trial support services rendered by the Group for its customers, which is recognized asthe service is provided. Revenue for such services is presented in the consolidated statements of profit or loss and othercomprehensive income or loss net of any discounts.2.7 Cost of product revenueCost of product revenue includes the cost of inventory sold, labor costs, manufacturing overhead expenses and reserves forexpected scrap, as well as shipping and freight costs and royalty costs related to in-license agreements. 2.8 Research and development expensesResearch and development expenses primarily consist of personnel costs, material and other lab supply costs, facility costs andinternal and external costs related to the execution of studies and other development program advancement initiatives. Suchexpenses also include costs incurred in preparation for commercial launch, such as designing and developing commercial-scalemanufacturing capabilities and processes, quality control processes, production asset validation and other related activities. Thecosts also include amortization, depreciation and impairment losses related to software, property, plant and equipment, and right-of-use assets used in research and development activities and pre-commercial manufacturing and quality control activities.An internally generated intangible asset arising from the Group\u2019s development is recognized only if the Group can demonstrate:the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intent to complete theintangible asset and use or sell it; how the intangible asset will generate probable future economic benefits; the availability ofadequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and the abilityto measure reliably the expenditure attributable to the intangible asset during its development.The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the datewhen the intangible asset first meets the aforementioned recognition criteria. If an internally-generated intangible asset cannot berecognized, the related development expenditure is charged to profit or loss in the period in which it is incurred.Expenditures related to research and development activities are generally recognized as an expense in the period in which they areincurred. Due to significant regulatory uncertainties and other uncertainties inherent in the development of pharmaceuticalproducts, the Group did not capitalize any research and development expenses as internally-developed intangible assets during theyears ended 31 December 2022 and 2021.2.9 General and administrative expensesGeneral and administration expenses primarily consist of personnel-related costs, including salaries and other related compensationexpense, for corporate and other administrative and operational functions including finance, human resources, informationtechnology and legal, as well as facility-related costs. These costs relate to the operation of the business and are not related toresearch and development initiatives.Expenditures related to general and administration activities are recognized as an expense in the period in which they are incurred.2.10 Finance income and finance costFinance income consists of changes in the fair value of derivative financial liabilities and interest income. Interest income from afinancial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income canbe measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effectiveinterest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of thefinancial asset to that asset's net carrying amount on initial recognition.Finance cost consists of changes in the fair value of derivative financial liabilities, interest expense related to lease liabilities andborrowings, accretion of borrowings and amortization of deferred debt issue costs. 2.11 Foreign currency translationThe consolidated financial statements are presented in U.S. Dollars, which is the Group\u2019s presentation currency. The Groupmaintains the financial statements of each entity within the Group in its respective functional currency. The majority of theGroup\u2019s expenses are incurred in U.S. Dollar and Icelandic Krona, and the majority of the Company\u2019s cash and cash equivalentsare held in a combination of U.S. Dollars and Euros. Transactions in currencies other than the Group\u2019s presentation currency(foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reportingperiod, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary itemscarried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair valuewas determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.Exchange differences on monetary items are recognized in profit or loss in the period in which they arise.Exchange differences arising on translation of a foreign controlled subsidiary are recognized in other comprehensive income orloss and accumulated in a translation reserve within equity. The cumulative translation amount is reclassified to profit or loss if andwhen the net investment in the foreign controlled subsidiary is disposed.2.12 Fair value measurementsThe Group measures certain financial liabilities at fair value through profit or loss (FVTPL) each reporting period. Fair value is theprice that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants atthe measurement date.The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available tomeasure the fair values of such financial liabilities, maximizing the use of relevant observable inputs and minimizing the use ofunobservable inputs.Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques, asfollows:\u2022 Level 1: quoted prices in active markets for identical assets and liabilities;\u2022 Level 2: inputs other than quoted prices that are observable for the asset or liability, either directly (e.g., prices) or indirectly (e.g.,derived from prices); and \u2022 Level 3: inputs for the asset or liability that are unobservable.The carrying amounts of cash and cash equivalents, restricted cash, trade receivables, other current assets, contract assets, trade andother payables and accrued and other liabilities in the Group\u2019s consolidated statements of financial position approximate their fairvalue because of the short maturities and nature of these instruments.For liabilities that are measured at fair value on a recurring basis, the Group determines whether transfers have occurred betweenlevels in the fair value hierarchy by reassessing the inputs used in determining fair value at the end of each reporting period. 2.13 Goodwill and other intangible assetsGoodwillAcquisitions are first reviewed to determine whether a set of assets acquired constitute a business and should be accounted for as abusiness combination. If the assets acquired do not meet the definition of a business, the Group will account for the transaction asan asset acquisition. If the definition of a business combination is met, the Group will account for the transaction using theacquisition method of accounting. The consideration transferred in a business combination is measured at fair value, which iscalculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group tothe former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in the consolidated statements of profit or loss and other comprehensive income or loss as incurred.Goodwill represents the excess of the purchase price of the business combination over the Group's interest in the net fair value ofthe identifiable assets, liabilities, contingent liabilities, the amount of any noncontrolling interests in the acquiree and the fair valueof the acquirer's previously held equity interest in the acquiree. Goodwill is reviewed for impairment at least annually, andwhenever there is an indication that the asset may be impaired. An impairment loss is recognized for the amount by which theasset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs ofdisposal and value in use. The value in use calculation is performed using discounted expected future cash flows. The discount rateapplied to these cash flows is based on the weighted average cost of capital and reflects current market assessments of the timevalue of money. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the businesscombination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Thoseprovisional amounts are adjusted during the measurement period, or as additional assets or liabilities are recognized, to reflect newinformation obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected theamounts recognized at that date.The Group did not complete any business combinations during the year ended 31 December 2021. Refer to Note 1.1 for theBusiness Combination completed during the year ended 31 December 2022. Other intangible assetsOther intangible assets consist of software, customer relationships, and intellectual property rights licensed from Biosana (see Note2.18). Intangible assets acquired in a business combination are identified and recognized separately from goodwill if they satisfy thedefinition of an intangible asset and their fair values can be reliably measured. The cost of intangible assets is their fair value at theacquisition date.Intangible assets with finite useful lives are reported at cost less accumulated amortization and accumulated impairment losses.Amortization is recognized on a straight-line basis over an asset\u2019s estimated useful life. The estimated useful life and amortizationmethod are reviewed at each balance sheet date, with the effect of any changes in estimate being accounted for on a prospectivebasis. Intangible assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. The following useful lives are used in the calculation of amortization:Software 3-5 yearsCustomer relationships 7 yearsIntangible assets with indefinite useful lives are reviewed for impairment at least annually, and whenever there is an indication thatthe asset may be impaired. An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and value in use. The valuein use calculation is performed using discounted expected future cash flows. The discount rate applied to these cash flows is basedon the weighted average cost of capital and reflects current market assessments of the time value of money.2.14 Income taxIncome tax includes the current tax and deferred tax charge recorded in the consolidated statements of profit or loss and othercomprehensive income or loss.Current taxThe current tax expense is based on taxable profit for the year. Taxable profit differs from \u2018profit before tax\u2019 as reported in theconsolidated statement of profit or loss and other comprehensive income or loss because it excludes items of income or expensethat are taxable or deductible in other years and items that are never taxable or deductible. The Group's current tax expense iscalculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.Accruals for tax contingencies are made when it is not probable that a tax authority will accept the tax position, based uponmanagement\u2019s interpretation of applicable laws and regulations and the expectation of how the tax authority will resolve the matter.Accruals for tax contingencies are measured using either the most likely amount or the expected value amount depending on whichmethod the entity expects to better predict the resolution of the uncertainty.Deferred taxDeferred tax is provided in full for all temporary differences between the carrying amounts of assets and liabilities in theconsolidated financial statements and the corresponding tax bases used in the computation of taxable profit, except to the extentthe temporary difference arises from:\u2022 The initial recognition of an asset or a liability in a transaction that is not a business combination and that affects neither thetaxable profit nor accounting profit;\u2022 The initial recognition of residual goodwill (for deferred tax liabilities only); or\u2022 Investments in subsidiaries, branches, associates and joint ventures, where the Group is able to control the timing of the reversalof the temporary difference and it is not probable that it will reverse in the foreseeable future.Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability issettled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of thereporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that wouldfollow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amount of theassets and liabilities.Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognizedfor all deductible temporary differences to the extent that it is probable that taxable profits will be available against which thosedeductible temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at the end of eachreporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all orpart of the asset to be recovered.Deferred tax is charged or credited to the consolidated statement of profit or loss and other comprehensive income or loss, exceptwhen the tax arises from a business combination or it relates to items charged or credited directly to equity, in which case thedeferred tax is also taken directly to equity.Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Groupintends to settle its current tax assets and liabilities on a net basis in that taxation authority.2.15 Property, plant and equipmentProperty, plant and equipment is recognized as an asset when it is probable that future economic benefits associated with the assetwill flow to the Group and the cost of the asset can be measured in a reliable manner. Property, plant and equipment whichqualifies for recognition as an asset are initially measured at cost.The cost of property, plant and equipment includes an asset\u2019s purchase price and any directly attributable costs of bringing theasset to working condition for its intended use.Depreciation is calculated and recognized as an expense on a straight-line basis over an asset\u2019s estimated useful life. The estimated useful lives, residual values and depreciation method are reviewed at each balance sheet date, with the effect of any changes in estimate accounted for on a prospective basis. The following useful lives are used in the calculation of depreciation:Facility40 yearsFacility equipment5-20 yearsComputer equipment3 yearsLeasehold improvements3-15 yearsFurniture and fixtures5 yearsCertain of the Group\u2019s property, plant and equipment assets have been pledged to secure borrowings as further described in Note20. Significant disposals of pledged assets are subject to lender approval. Upon disposal or retirement of an asset, the differencebetween the sales proceeds, if applicable, and the carrying amount of the asset is recognized in the consolidated statements ofprofit or loss and other comprehensive income or loss at the time of disposal or retirement.At the end of each reporting period, or sooner if events triggering an interim impairment assessment occur, the Group reviews thecarrying amounts of its property, plant and equipment to determine whether there is any indication that the value of such assets areimpaired. Triggering events that warrant an interim impairment assessment include, but are not limited to, the technicalobsolescence of equipment or failure of such equipment to meet regulatory requirements. If any such indication exists, therecoverable amount of the asset is estimated in order to determine the extent of the impairment loss and the carrying amount ofthe asset is reduced to its recoverable amount, which is the higher of fair value less costs of disposal and value in use.2.16 InventoriesInventories, which consist of raw materials and supplies, work in progress and finished goods are stated at the lower of cost or netrealizable value. Net realizable value is the expected sales price less completion costs and costs to be incurred in marketing, sellingand distributing the inventory. Cost is calculated using the weighted average cost method or the first-in, first-out method,depending on the nature of the inventory. Inventories include direct costs for raw materials and supplies and, as applicable, direct and indirect labor and overhead expenses that have been incurred to bring inventories to their present location and condition. See Note 17 for further details.If the net realizable value is lower than the carrying amount, a write-down of inventory is recognized for the amount by which thecarrying amount exceeds net realizable value. During the years ended 31 December 2022 and 2021, write-down of inventoriesamounted to $2.1 million and $1.2 million, respectively, due to product expiration. There were no reversals of inventory write-downs during the years ended 31 December 2022 and 2021. See Note 17 for further details.The Group does not pledge inventories as collateral to secure its liabilities.2.17 Financial assetsRecognition of financial assetsFinancial assets are recognized when the Group becomes a party to the contractual provisions of the instrument. Financial assetsare initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, otherthan financial assets measured at FVTPL, are added to or deducted from the fair value of the financial assets, as appropriate, oninitial recognition. Transaction costs directly attributable to the acquisition of financial assets at FVTPL are recognized immediatelyin profit or loss. There were no transaction costs related to the acquisition of financials assets in 2022 or 2021. All of the Group\u2019sfinancial assets are measured at amortized cost as of 31 December 2022 and 2021.Financial assets measured at amortized costFinancial assets measured at amortized cost are debt instruments that give rise to contractual cash flows that are solely payments ofprincipal and interest on the principal amount outstanding. The Group's financial assets measured at amortized cost are tradereceivables, certain other current assets, receivables from related parties, restricted cash and cash and cash equivalents.Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effect ofdiscounting is immaterial.Impairment of financial assetsThe Group recognizes a loss allowance for expected credit losses (ECL) on its trade receivables and other debt instruments thatare measured at amortized cost. In addition, although contract assets are not financial assets, a loss allowance for ECL are alsorecognized for such assets. ECL is based on the difference between the contractual cash flows due in accordance with the contractand all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. Theamount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financialinstrument.The Group always recognizes lifetime ECL for trade receivables and contract assets. The expected credit losses on these financialassets are estimated using a provision matrix based on the Group\u2019s historical credit loss experience, adjusted for factors that arespecific to the debtors, general economic conditions and an assessment of both the current as well as the forecasted direction ofconditions at the reporting date, including time value of money where appropriate.The Group writes off a financial asset when there is no reasonable expectation of recovery, such as information indicating that thedebtor is in severe financial difficulty and there is no realistic prospect of recovery. A trade receivable or contract asset that isconsidered uncollectible is written off against the allowance account. Subsequent recoveries of amounts previously written off arecredited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.The Group did not write off any trade receivables or contract assets during the years ended 31 December 2022 and 2021.The Group estimates impairment for related party receivables on an individual basis. No impairment is recognized for restrictedcash or cash and cash equivalents as management has estimated that the effects of any calculated ECL would be immaterial.Derecognition of financial assetsThe Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfersthe financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neithertransfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Grouprecognizes its retained interest in the asset as well as an associated liability. If the Group retains substantially all the risks andrewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes acollateralized borrowing for the proceeds received.On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the consideration receivedand receivable and the cumulative gain or loss that had been recognized in other comprehensive income or loss and accumulated inequity is recognized in profit or loss.2.18 Financial liabilitiesFinancial liabilitiesThe Group\u2019s financial liabilities consist of trade and other payables, certain other current liabilities loans and borrowings, leaseliabilities, derivative financial instruments, long-term incentive plans, share appreciation right plans and other long-term liability to arelated party. All financial liabilities are initially measured at fair value. Loans and borrowings are recorded net of directlyattributable transaction costs and less the value attributable to any embedded derivative financial instruments, if applicable. The Group derecognizes financial liabilities when, and only when, the Group\u2019s obligations are discharged, cancelled, substantiallymodified or have expired. Additionally, management elected, as part of its accounting policy, to recognize the difference betweenthe carrying amount of the financial liabilities and the fair value of the consideration paid for the extinguishment in theconsolidated statement of profit or loss and other comprehensive income or loss.Financial liabilities subsequently measured at amortized costAfter initial recognition, financial liabilities other than derivative financial instruments, and awards issued pursuant to long-termincentive plans are subsequently measured at amortized cost using the effective interest method. The effective interest method is amethod of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. Theeffective interest rate is the rate that discounts all estimated future cash payments through the expected life of the financial liability,or a shorter period if appropriate, to the amortized cost of a financial liability. The effective interest rate includes the effects of anydiscount or premium on acquisition of the financial liability, as well as any fees or costs incurred upon acquisition.Financial liabilities subsequently measured at FVTPLDerivative financial instrumentsCertain rights and features pursuant to borrowing arrangements and other contracts may provide the counterparty with one ormore financial instruments that need to be evaluated and potentially accounted for separately by the Group. These financialinstruments are either embedded in a host instrument or are treated as a separate financial instrument if they are contractuallytransferable independent from the host instrument. Such rights and features pursuant to the Group\u2019s contracts with both thirdparties and related parties include earn out rights, conversion rights and warrant rights.Equity conversion features within host debt instruments that meet the definition of a derivative and have economic and riskcharacteristics that are not closely related to the host instrument are embedded derivatives that are separated from the hostinstrument and accounted for separately. As part of the accounting for embedded derivatives or separate financial instruments,management considers the appropriate accounting classification under IAS 32. Embedded derivatives and separate financialinstruments that meet the fixed-for-fixed criteria are classified as equity and initially measured at fair value.Warrant rights that provide the holder with an option to purchase ordinary shares at a specified price or pursuant to a specifiedformula are generally separate derivative financial instruments that are accounted for as derivative liabilities. Earn Out Shares grantthe holder with a variable number of Ordinary Shares based on certain vesting conditions tied to the stock price and are accountedfor as derivative liabilities. In the event that the fair value of any derivative liabilities, determined using unobservable inputs,exceeds the transaction price of a borrowing arrangement, the Group records a deferred loss at the inception of the borrowingarrangement for the difference between the fair value of the derivative liabilities and the transaction price of the borrowingarrangement. Such deferred losses are recognized over the term of the related borrowing arrangement using the straight-linemethod of amortization. The deferred loss is netted against derivative financial liabilities on the consolidated statements of financialposition. Amortization of the deferred loss is recognized as a component of \u201cFinance costs\u201d in the consolidated statements ofprofit or loss and other comprehensive income or loss. The Group recognized derivative liabilities related to the Predecessor Earn Out Shares, OACB Earn Out Shares and assumedOACB warrants. Additionally, the Group recognized an embedded derivative for the conversion feature associated with theTranche A Convertible Bonds, as further described in Note 20. These features are liability-classified, rather than equity-classified,because the Group is obligated to issue a variable number of ordinary shares to the holder upon conversion or exercise of thefeature. Therefore, these derivative liabilities were initially recorded at fair value and remeasured to fair value at each reportingperiod with gains and losses arising from changes in the fair value recognized in finance income or finance costs, as appropriate. The fair values of the derivative liabilities were determined using a valuation approach that incorporated a range of inputs that areboth observable and unobservable in nature. The inputs used in the initial and subsequent fair value measurements predominantlyrelate to (i) the price of the Group\u2019s Ordinary Shares (ii) the volatility of the Group\u2019s Ordinary Shares, (ii) a risky discount ratecorresponding to the credit risk associated with the repayment of the host debt instruments, and (iii) the probabilities of eachderivative being exercised by the holder and the timing of such exercises. The probabilities are determined based on all relevantinternal and external information available and are reviewed and reassessed at each reporting date. The Group will derecognize any derivative liabilities if and when the rights are exercised by the holders or the time period duringwhich the rights can be exercised expires.Other long-term liability to related partyThe Group\u2019s other long-term liability to a related party arose from its acquisition of rights for the commercialization of theGroup\u2019s biosimilar Adalimumab product in certain territories in Asia from Lotus Pharmaceutical Co. Ltd., a related party, duringthe year ended 31 December 2020. Pursuant to the terms of the asset acquisition, the Group made an upfront payment of $1.9million and is required to pay $7.4 million upon the commercial launch of Adalimumab in China. The Group concluded that theevent triggering future payment is probable and, as such, recorded the full amount of the liability as a non-current liability in theconsolidated statements of financial position as of 31 December 2022 and 2021. The upfront payment and contingent paymentamounts were charged to \u201cResearch and development expense\u201d in the consolidated statements of profit or loss and othercomprehensive income or loss.Other current liabilitiesIn December 2021, Alvotech entered into an exclusive global licensing agreement with BiosanaPharma (Biosana) for the co-development of AVT23. Under the terms of the agreement, Biosana granted Alvotech an exclusive global right for AVT23, whichwill be produced using Biosana\u2019s proprietary process technology. In exchange, Alvotech made an upfront payment of $7.5 millionupon the signing of the agreement (the \u201cupfront payment\u201d), with an additional $7.5 million due at the earlier of the closing of theBusiness Combination (see Note 27) or 30 April 2022 (the \u201cdeferred upfront payment\u201d). In addition, Alvotech may be obligated topay Biosana up to an aggregate of $13.5 million, payable upon the achievement of various development and regulatory milestones,as well as certain tiered royalty payments based on commercial sales of AVT23. The agreement terminates 15 years after the launchof AVT23 and is subject to certain customary termination rights.The Group concluded that the deferred upfront payment is probable and, as such, recorded the full amount of the liability in\u201cOther current liabilities\u201d on the consolidated statement of financial position as of 31 December 2021. The upfront payment andthe deferred upfront payment amounts were capitalized as other intangible assets in the consolidated statement of financialposition and will be amortized over the useful life of 15 years. The Group will accrue the additional contingent payments if andwhen the related milestones and other contingencies are deemed probable of being achieved.Long-term incentive plansShare appreciation rightsThe Group issued to certain current and former employees share appreciation rights (SARs) that require settlement in connectionwith the occurrence of specified, future triggering events. Grants occurred from 2015 through 2020. The awards include acombination of vesting conditions, such as service and performance conditions, as well as non-vesting conditions depending on theparticular award. The individuals retain their vested awards upon termination of employment with the Group. Settlement amountsare determined by the change in the Group\u2019s market value from the grant date of the SAR until the triggering events occur. TheSARs do not expire at a specific date.Pursuant to the terms of the SAR agreements, management determined that the Group cannot avoid paying cash to settle theawards and, therefore, SARs are liability-classified in the consolidated statements of financial position. Accordingly, SARs wererecorded at fair value and were subsequently remeasured each reporting period with the change in fair value reflected as a gain orloss in the consolidated statements of profit or loss and other comprehensive income or loss, as appropriate. The fair value of theSARs was determined using the Black-Scholes-Merton pricing model. In connection with the closing of the Business Combination,the Company reached a settlement agreement for share appreciation rights previously awarded to certain current and formeremployees. The remaining share appreciation rights were settled through the issuance of fully vested RSUs under the ManagementIncentive Plan on 1 December 2022. See Note 21 for further details. Employee incentive planThe Group also sponsors an employee incentive plan for certain qualifying employees. Under the plans, such employees areentitled to cash payments upon achievement of key milestones, such as a research and development milestone or the occurrence ofan exit event. The awards include a combination of vesting conditions, such as service and performance conditions, as well as non-vesting conditions depending on the particular award. Since the Group cannot avoid paying cash to settle the awards, the employeeincentive plan is liability-classified in the consolidated statements of financial position. Accordingly, awards issued pursuant to theemployee incentive plan are recorded at fair value and are subsequently remeasured each reporting period with the change in fairvalue reflected as a gain or loss in the consolidated statements of profit or loss and other comprehensive income or loss, asappropriate. Employee incentive plan liabilities are presented as either current or non-current on the consolidated statements offinancial position based on the anticipated timing of settlement.The fair value of the employee incentive plan awards is determined by estimating the probability of success in reaching thespecified milestones and other levers, such as the anticipated timing of potential milestone achievement. See Note 21 for furtherdetails.Management incentive planThe Group can issue share options, restricted share units (\u201cRSUs\u201d), and other share-based awards under the Company\u2019s newincentive plan (the \u201cManagement Incentive Plan\u201d) which was approved by the Board in June 2022. Awards issued under theManagement Incentive Plan are accounted for in accordance with IFRS 2. Share-based payments are classified as equity-settledshare-based payments as the Company intends to settle the awards with equity and has the commercial substance to do so. Share-based payments are measured at the grant date fair value of the instruments issued and recognized over the expected vestingperiods. The number of shares expected to vest are reviewed and adjusted at the end of each reporting period such that theamount of expense recognized shall be based on the number of equity instruments that will eventually vest. See Note 22 forfurther details. 2.19 Litigation and other contingenciesThe Group may, from time to time, become involved in legal proceedings arising out of the normal course of its operations. Forinstance, as a developer and manufacturer of biosimilars, the Group may be subject to lawsuits alleging patent infringement orother similar claims filed by the reference product sponsor. Similarly, the Group may utilize patent challenge procedures tochallenge the validity, enforceability or infringement of the reference product sponsor\u2019s patents. Other parties may also file patentinfringement claims against the Group alleging that the Group\u2019s products or manufacturing process techniques infringe theirpatents.The Group establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome isprobable and the loss is reasonably estimable. When such conditions are not met for a specific legal matter, no reserve isestablished. Although management currently believes that resolving claims against the Group, including claims where anunfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of operations, or financialcondition of the Group, these matters are subject to inherent uncertainties and management\u2019s view of these matters may change inthe future. It is possible that an unfavorable outcome of a lawsuit or other contingency could have a material impact on theliquidity, results of operations, or financial condition of the Group.Significant judgment is required in both the determination of probability of loss and the determination as to whether the amountof loss can be reasonably estimated. Accruals are based only on information available at the time of the assessment, due to theuncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related topending claims and litigation and may revise its previous estimates, which could materially affect the Group\u2019s results of operationsin a given period.The Group maintains liability insurance coverages for various claims and exposures. The Group\u2019s insurance coverage limits itsmaximum exposure on claims; however, the Group is responsible for any uninsured portion of losses. Management believes thatpresent insurance coverage is sufficient to cover potential exposures.2.20 LeasesThe Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for those with a lease termof twelve months or less and leases of low value assets. For these leases, the Group recognizes the lease payments as an operatingexpense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time patternin which economic benefits from the leased assets are consumed. The Group\u2019s leased assets consist of various real estate, fleet andequipment leases. Right-of-use assets reflect the initial measurement of the lease liability, lease payments made at or before the lease commencementdate and any initial direct costs less lease incentives that may have been received by the Group. These assets are subsequentlymeasured at cost less accumulated depreciation, impairment losses and remeasurements of the underlying lease liability. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the underlying asset. If a lease transfersownership of the underlying asset to the Group or the lease includes a purchase option that the Group is reasonably certain toexercise, the related right-of-use asset is depreciated over the useful life of the underlying asset. Depreciation starts at thecommencement date of the lease.Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date,discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incrementalborrowing rate, which is the rate of interest that the Group would need to pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment based on information available at the commencementdate of the lease. The lease payments included in the measurement of the lease liability comprise fixed payments (including in-substance fixed payments) less any incentives, variable lease payments that depend on an index or rate, expected residual guaranteesand the exercise price of purchase options reasonably certain to be exercised by the Group.The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability, using theeffective interest method, and by reducing the carrying amount to reflect payments made during the lease term. The Groupremeasures the lease liability if the lease term has changed, when lease payments based on an index or rate change or when a leasecontract is modified and the modification is not accounted for as a separate lease.Variable payments that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognized as an expense in the period in which the event or condition that triggers thosepayments occurs.As a practical expedient, lessees are not required to separate non-lease components from lease components, and instead accountfor any lease and associated non-lease components as a single lease component. The Group has used this practical expedient.2.21 Loss per shareHolders of the Predecessor Earn Out Shares and OACB Earn Out Shares have equal dividend and participation rights to theordinary shareholders. However, these participating securities are classified as liabilities and as such, the shares held are notincluded in the weighted average number of ordinary shares outstanding in the basic loss per share calculation.The calculation of basic loss per share is based on the loss for the year attributable to ordinary shareholders of the Group and theweighted average number of ordinary shares outstanding during the period.Diluted loss per share is computed by dividing the loss for the year attributable to ordinary shareholders of the Group by theweighted average number of ordinary shares outstanding in the basic loss per share calculation, both of which are adjusted for theeffects of all dilutive potential ordinary shares. Antidilutive effects of potential ordinary shares, which result in an increase inearnings per share or a reduction in loss per share, are not recognized in the computation of diluted loss per share. 3. New accounting standardsNew standards and interpretations adopted and effective during the periodsThe following new IFRS standards have been adopted by the Group effective 1 January 2022:IAS 16 (Amendments) \u2013 Property, Plant and Equipment \u2013 Proceeds before Intended UseThe IASB issued amendments to IAS 16, which prohibit deducting from the cost of an item of property, plant and equipment anyproceeds from selling items produced before that asset is available for use; that is, proceeds from items being sold while bringingthe asset to the location and condition necessary for it to be capable of operating in the manner intended by management.Consequently, an entity recognizes such sales proceeds and related costs in profit or loss. The entity measures the cost of thoseitems in accordance with IAS 2 Inventories. The amendments also clarified the meaning of \u2018testing whether an asset is functioningproperly\u2019. IAS 16 now specifies this as assessing whether the technical and physical performance of the asset is such that it iscapable of being used in the production or supply of goods or services, for rental to others, or for administrative purposes. Theadoption of the amendments did not have a material impact on the consolidated financial statements of the Group.IAS 37 (Amendment) - Onerous Contracts \u2013 Cost of Fulfilling a Contract The IASB issued amendments to IAS 37 to specify that the \u2018cost of fulfilling\u2019 a contract comprises the \u2018costs that relate directly tothe contract\u2019. Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract (examples would be direct labor or materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be theallocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The amendmentsapply to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual reporting period inwhich the entity first applies the amendments. Comparatives are not restated. Instead, the entity shall recognize the cumulativeeffect of initially applying the amendments as an adjustment to the opening balance of retained earnings or other component ofequity, as appropriate, at the date of initial application. The adoption of the amendments did not have a material impact on theconsolidated financial statements of the Group.Annual Improvements to IFRS Standards 2018-2020 CycleIFRS 9 Financial Instruments The IASB issues amendments on IFRS 9, which clarifies that in applying the \u201810 percent\u2019 test to assess whether to derecognize afinancial liability, an entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paidor received by either the entity or the lender on the other\u2019s behalf. The amendment is applied prospectively to modifications andexchanges that occur on or after the date the entity first applies the amendment. The adoption of the amendments did not have amaterial impact on the consolidated financial statements of the Group.New and revised IFRS standards in issue but not yet effectiveThe following new standards are not yet adopted by or effective for the Group and have not been applied in preparing theseConsolidated Financial Statements.IFRS 10 and IAS 28 (Amendments) \u2013 Sale or Contribution of Assets between Investor and its Associate or Joint Venture:The IASB issues amendments to IFRS 10 and IAS 28, which relate to situations where there is a sale or contribution of assetsbetween an investor and its associate or joint venture. The amendments state that gains or losses resulting from the loss of controlof a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using theequity method, are recognized in the parent\u2019s profit or loss only to the extent of the unrelated investors\u2019 interests in that associateor joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (thathas become an associate or a joint venture that is accounted for using the equity method) to fair value are recognized in the formerparent\u2019s profit or loss only to the extent of the unrelated investors\u2019 interests in the new associate or joint venture. The effective date of the amendments has yet to be set by the Board; however, earlier application of the amendments is permitted. The Groupanticipates that the application of these amendments may have an impact on the consolidated financial statements in future periodsshould such transactions arise.IAS 1 (Amendments) \u2013 Classification of Liabilities as Current or Non-CurrentThe IASB issues amendments to IAS 1, which affect the presentation of liabilities as current or non-current in the statement offinancial position. The amendment does not impact the amount or timing of recognition of any asset, liability, income or expenses,or the information disclosed about those items. The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected byexpectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence ifcovenants are complied with at the end of the reporting period, and introduce a definition of \u2018settlement\u2019 to make clear thatsettlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendments areapplied retrospectively for annual periods beginning on or after 1 January 2023, with early application permitted. The Groupanticipates that the application of these amendments may have an impact on the consolidated financial statements in futureperiods.Annual Improvements to IFRS Standards 2018-2020 CycleThe Annual Improvements include amendments to the following Standards that are relevant to the Group:IFRS 16 Leases The IASB issues amendments on IFRS 16, which removes the illustration of the reimbursement of leasehold improvements. Asthe amendment to IFRS 16 only regards an illustrative example, no effective date is stated. IAS 1 Presentation of Financial Statements, Practice statement 2 and IAS 8 Accounting Policies, Changes in Accounting Estimates and ErrorsThe aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes inaccounting estimates and changes in accounting policies. The amendment is effective for annual periods beginning on or after 1January 2023.IAS 12 Income TaxesThese require companies to recognize deferred tax on transactions that, on initial recognition give rise to equal amounts of taxableand deductible temporary differences. The amendment is effective for annual periods beginning on or after 1 January 2023.The Group anticipates that the application of these amendments will not have a material impact on the consolidated financialstatements. 4. Segment reportingAs disclosed in Note 2, the Group operates and manages its business as one operating segment.The majority of the Group\u2019s revenue is generated from long-term out-license contracts which provide the customer with exclusiverights to a particular territory, which generally span multiple countries or a particular continent, as well as the Group\u2019s promises tocontinue development of the underlying compound and to provide supply of the product to the customer upon commercialization. Therefore, based on the nature of the customer agreements, revenue information is not currently available on a country-by-countrybasis.Revenue from customers based on the geographic market in which the revenue is earned, which predominantly aligns with therights conveyed to the Group\u2019s customers pursuant to its out-license contracts, is as follows (in thousands):20222021North America.................................................................................................................................................30,780 11,660 Europe...............................................................................................................................................................39,433 20,509 Asia.....................................................................................................................................................................6,798 1,323 Other..................................................................................................................................................................6,018 3,280 83,029 36,772 Non-current assets, excluding financial instruments and deferred tax assets, based on the location of the asset is as follows (inthousands):2022 2021North America.................................................................................................................................................240 439 Europe...............................................................................................................................................................334,837 249,803 Asia and other..................................................................................................................................................3,715 2,194 338,792 252,436 Revenue from transactions with individual customers that exceed ten percent or more of the Group\u2019s total revenue is as follows (inthousands, except for percentages):2022Revenue % TotalCustomer A......................................................................................................................................................17,940 21.6%Customer B.......................................................................................................................................................38,376 46.2%2021Revenue % TotalCustomer A......................................................................................................................................................10,070 27.4%Customer B.......................................................................................................................................................18,369 50.0%5. Revenue and other incomeRevenue from contracts with CustomersDisaggregated revenueThe following table summarizes the Groups\u2019 revenue from contracts with customers, disaggregated by the type of good or serviceand timing of transfer of control of such goods and services to customers (in thousands):2022 2021Product revenue (point in time revenue recognition)..............................................................................24,836 - License revenue (point in time revenue recognition)...............................................................................424 1,453 Research and development and other service revenue*..........................................................................57,769 35,319 83,029 36,772 * Over time revenue recognitionReassessment of variable considerationSubsequent changes to the estimate of the transaction price are generally recorded as adjustments to revenue in the period ofchange. The Group updates variable consideration estimates on a quarterly basis. The quarterly changes in estimates did not resultin material adjustments to the Group\u2019s previously reported revenue or trade receivables during the years ended 31 December 2022and 2021.Contract assets and liabilitiesA reconciliation of the beginning and ending balances of contract assets and contract liabilities is shown in the table below (inthousands):Contract Contract assetsliabilities31 December 2020 .........................................................................................................................................34,724 53,066 Contract asset additions ................................................................................................................................21,525 - Amounts transferred to trade receivables .................................................................................................(36,811) - Customer prepayments .................................................................................................................................- 34,577 Revenue recognized .......................................................................................................................................- (13,107) 31 December 2021 .........................................................................................................................................19,438 74,536 Contract asset additions ................................................................................................................................29,823 - Amounts transferred to trade receivables .................................................................................................(19,690) - Customer prepayments .................................................................................................................................- 46,127 Revenue recognized .......................................................................................................................................- (26,782)Foreign currency adjustment .......................................................................................................................(915) 51 31 December 2022 .........................................................................................................................................28,656 93,932The net increase in contract assets as of 31 December 2022 is primarily due revenue recognized when the performance obligationhas been met which is offset by the transfer of such amounts to trade receivables on the basis that the Group\u2019s right to thatconsideration is no longer contingent on its performance. The net increase in contract liabilities as of 31 December 2022 is due tocustomer prepayments in advance of the Group\u2019s performance. As of 31 December 2022, $3.3 million and $25.4 million arerecorded as non-current contract assets and current contract assets, respectively. Non-current contract assets will materialize overthe next 2 to 3 years. As of 31 December 2022, $57.0 million and $36.9 million are recorded as non-current contract liabilities andcurrent contract liabilities, respectively. Non-current contract liabilities will be recognized as revenue over the next 2 to 5 years aseither services are rendered or contractual milestones are achieved, depending on the performance obligation to which the paymentrelates.Remaining performance obligationsDue to the long-term nature of the Group\u2019s out-license contracts, the Group\u2019s obligations pursuant to such contracts representpartially unsatisfied performance obligations at year-end. The revenues under existing out-license contracts with original expecteddurations of more than one year are estimated to be $283.0 million. The Group expects to recognize the majority of this revenueover the next 3 years.Out-license agreementsTeva Pharmaceutical Industries Ltd. (Teva) In August 2020, the Group entered into an exclusive strategic agreement with Teva for the commercialization in the United Statesof five of the Group\u2019s biosimilar product candidates. The initial pipeline contains biosimilar candidates addressing multipletherapeutic areas. Under this agreement, the Group will be responsible for the development, registration and supply of thebiosimilars, while Teva will be exclusively commercializing the products in the United States pursuant to an intellectual propertylicense granted by the Group to Teva. In connection with the agreement, Teva made an upfront payment of $40.0 million. The Group also received $35.0 million in development milestones and is entitled to receive up to an additional $50.0 million in development milestones, $175.0 million in regulatory milestones and milestones due upon the first commercial sale of the biosimilar product candidates and $200.0 million in contingent payments based upon the achievement of cumulative net sales amounts. Subject to some limitations, as consideration for supplies, the Group will receive 40% of the value of Teva\u2019s net sales of the products.On 27 February 2023, the Group and Teva signed an amendment to the licence & development agreement. As part of thatamendment, the Group agreed to provide future financial consideration to Teva to assist with the cost of launching and marketingthe licensed biosimilar products.STADA Arzneimittel AG (STADA)In November 2019, the Group entered into an exclusive strategic agreement with STADA for the commercialization of seven biosimilars in all key European markets and selected markets outside Europe. The initial pipeline contains biosimilar candidates aimed at treating autoimmunity, oncology, ophthalmology and inflammatory conditions. Under this agreement, the Group will be responsible for the development, registration and supply of the biosimilars, while STADA will be exclusively commercializing the products in the relevant territories pursuant to an intellectual property license granted by the Group to STADA. In connection with the agreement, STADA made an upfront payment of $5.9 million. The Group has received $78.6 million indevelopment milestones through the year ended 31 December 2022. The Group is also entitled to receive up to an aggregate of$130.9 million in additional development milestones, $60.1 million in regulatory milestones and milestones due upon the firstcommercial sale of the biosimilar product candidates and $11.8 million in contingent payments based upon the achievement ofcumulative net sales amounts. The Group is also expected to receive a royalty of approximately 40% of the estimated net sellingprice from STADA\u2019s and its affiliates\u2019 commercialization of the contracted biosimilars. 6. Salaries and other employee expensesThe average number of individuals employed by the Group during the years ended 31 December 2022 and 2021 was 858 and 645respectively. The aggregate salary and other employee expenses incurred by the Group for these employees were as follows (inthousands):20222021Salary expense..................................................................................................................................................92,082 67,433 Defined contribution plan expense (1) ......................................................................................................10,052 7,694 Long-term incentive plan expense...............................................................................................................5,481 17,955 Share-based payments (see Note 22) ..........................................................................................................10,317 - Other employee expense................................................................................................................................11,670 10,274 Temporary labor..............................................................................................................................................5,838 6,164 135,440 109,520 (1)Defined contribution plan expense consists of costs incurred by the Group for employees of certain subsidiaries that are required by local laws to participate in pension schemes. These pension schemes are not sponsored or administered by the Group. Pursuant to the requirements of the schemes, the Group is required to contribute a certain percentage of its payroll costs to the pension schemes. Such contributions are charged to the consolidated statements of profit or loss and other comprehensive income or loss as they become payable in accordance with the rules of the pension schemes.Salaries and other employee expense is included within the consolidated statements of profit or loss and other comprehensive income or loss as follows (in thousands):2022 2021Cost of product revenue................................................................................................................................42,501 - Research and development expenses .........................................................................................................52,962 71,588 General and administrative expenses .........................................................................................................39,977 37,932 Total salary and other employee expenses..................................................................................................135,440 109,520 7. Finance income and finance costFinance income earned during the years ended 31 December 2022 and 2021 is as follows (in thousands):20222021Changes in the fair value of derivatives (see Note 27).............................................................................1,637 51,549 Interest income from cash and cash equivalents.......................................................................................556 18 Other interest income.....................................................................................................................................356 1 2,549 51,568 Finance cost incurred during the years ended 31 December 2022 and 2021 is as follows (in thousands):20222021Changes in the fair value of derivatives (see Note 27).............................................................................96,981 2,804 Interest on debt and borrowings..................................................................................................................71,452 106,548 Consenting fee (see Note 20)........................................................................................................................7,430 - Loss on remeasurement of bonds (see Note 20)......................................................................................6,511 - Interest on lease liabilities (see Note 13).....................................................................................................6,022 6,423 Amortization of deferred debt issue costs.................................................................................................23 1,586 188,419 117,361 8. Depreciation, amortization and impairmentDepreciation, amortization and impairment expenses incurred during the years ended 31 December 2022 and 2021 are as follows(in thousands):20222021Deprec. and impairm. of property, plant and equipm. (see Note 12)...................................................9,807 10,666 Depreciation of right of use assets (see Note 13).....................................................................................9,869 8,699 Amortization and impairment of intangible assets (see Note 15)..........................................................3,488 4,916 23,164 24,281 Depreciation, amortization and impairment expense is included within the consolidated statements of profit or loss and other comprehensive income or loss as follows (in thousands):20222021Cost of product revenue................................................................................................................................10,053 - Research and development expenses .........................................................................................................9,757 21,764 General and administrative expenses .........................................................................................................3,354 2,517 Total depreciation, amortization and impairment expense.....................................................................23,164 24,281 9. Audit fees20222021Financial Statement audit fees.......................................................................................................................2,615 5,502 Other fees, including tax services.................................................................................................................676 136 Total fees...........................................................................................................................................................3,291 5,638 Audit fees for 2021 include fees for the audit of the PCAOB uplift of the consolidated financial statements for 2019 and 2020.Other fees for 2022 include review services for the F-4 and other SEC filings.10. Income taxTaxation recognized in the consolidated statements of profit or loss and other comprehensive income or loss during the yearsended 31 December 2022 and 2021 is as follows (in thousands):Current tax20222021Direct taxes - current......................................................................................................................................1,015 706 Direct taxes - prior year..................................................................................................................................(115) 491 Total current tax..............................................................................................................................................900 1,197 Deferred taxCurrent..............................................................................................................................................................(54,236) (48,414)Prior year...........................................................................................................................................................15,269 (477) Total deferred tax............................................................................................................................................(38,967) (48,891)Total income tax benefit................................................................................................................................(38,067) (47,694)The prior year deferred tax impact of $15.3 million mainly relates to foreign currency impact on losses denominated in Icelandickrona.The factors affecting the tax benefit during the years ended 31 December 2022 and 2021 relate to the recognition of a deferred taxasset on accumulated tax losses, as management assessed that it was probable that the accumulated tax losses would be fullyutilized in the coming years, as further described below. There were no accruals for tax contingencies during the years ended 31 December 2022 and 2021.The effective tax rate for the year of 6.9% (2021: 32.0%) is lower than the applicable Luxembourgish statutory rate of corporationtax. The reconciling items between the statutory rate and the effective tax rate are as follows: 2022 2021Tax rate .............................................................................................................................................................24.9% 24.9% Effect of tax rate in foreign jurisdictions ...................................................................................................(2.4%) (8.2%)Recognition of tax losses ..............................................................................................................................- - Permanent differences ...................................................................................................................................(8.9%) 30.4% Non-recognition of tax losses ......................................................................................................................(3.8%) (15.0%)Other items ......................................................................................................................................................(2.9%) (0.1%)Effective tax rate ............................................................................................................................................6.9% 32.0% The movement in net deferred taxes during the years ended 31 December 2022 and 2021 is as follows (in thousands):2022 2021Balance at 1 January........................................................................................................................................170,268 121,647 Deferred tax credited to profit or loss........................................................................................................38,919 48,621 Balance at 31 December................................................................................................................................209,187 170,268 Deferred tax assets..........................................................................................................................................209,496 170,418 Deferred tax liabilities.....................................................................................................................................(309) (150)Where there is a right of offset of deferred tax balances within the same tax jurisdiction, IAS 12 requires these to be presented aftersuch offset in the consolidated statements of financial position. The closing deferred tax balances included above are after offset;however, the disclosure of deferred tax assets by category below are presented before such offset.The amount of deferred tax recognized in the consolidated statements of financial position as of 31 December 2022 and 2021 is asfollows (in thousands):2022 2021Deferred tax assets attributable to temporary differences in respect of tax losses.............................205,290 158,330 Deferred tax asset attributable to other temporary differences.............................................................6,832 12,088 Deferred tax liabilities attributable to other temporary differences......................................................(2,935) (150)Net deferred tax assets...................................................................................................................................209,187 170,268 A deferred tax liability of $2.9 million and $0.2 million has been recognized in relation to the difference in measurement basis ofcustomer relationships and other ordinary timing differences as of 31 December 2022 and 2021, respectively. A deferred tax asset has been recognized in relation to ordinary timing differences arising from various provisions, reserves,employee benefits and tax losses carried forward in the group. The recognition of the deferred tax asset on the Icelandic tax losses,since 2020, is backed by the Group\u2019s latest ten-year forecast whereby profit associated with product and milestone revenue issignificant and provides considerable headroom over and above the level needed to support full recognition of such losses. Adeferred tax asset of $209.5 million and $170.4 million is recognized as of 31 December 2022 and 2021, respectively.These tax losses expire as follows (in thousands):2023-2025 .........................................................................................................................................................................................35,751 2026-2028 .........................................................................................................................................................................................210,224 Later ..................................................................................................................................................................................................836,536 1,082,511 11. Loss per shareBasic loss per share is computed by dividing loss for the year by the weighted average number of ordinary shares outstandingduring the period. Diluted loss per share is computed by adjusting the calculation of basic loss per share for the effects of dilutive potential ordinaryshares from financial instruments that may be converted or exercised into ordinary shares of the Group. For the year ended 31December 2022 148,857,998 potential ordinary shares pursuant to the RSUs, Senior Bond Warrants, Aztiq Convertible Bond,December Convertible Bonds, OACB warrants, Predecessor Earn Out Shares, and OACB Earn Out Shares were excluded in thecalculation of diluted loss per share, since the effect of doing so would result in a reduction of loss per share and thus beantidilutive. For the year ended 31 December 2021, there were no potential ordinary shares pursuant to such agreements as allconversion, warrant and funding rights associated with these agreements had been exercised or otherwise expired (refer to Note 21for further details). Therefore, the calculation of diluted loss per share did not differ from the calculation of basic loss per share. The calculation of basic and diluted loss per share for the years ended 31 December 2022 and 2021 is as follows (in thousands,except for share and per share amounts):2022 2021Earnings Loss for the year .........................................................................................................................................(513,580) (101,504)Number of shares Weighted average number of ordinary shares outstanding ................................................................197,721,710 110,673,309 Basic and diluted loss per share ...................................................................................................................(2.60) (0.92)12. Property, plant and equipmentProperty, plant and equipment consists of facility and computer equipment, furniture, fixtures and leasehold improvements.Movements within property, plant and equipment during the years ended 31 December 2022 and 2021 are as follows (inthousands):Furniture, fixt.Facility and leasehold ComputerFacilityequipment improvements equipment TotalCostBalance at 1 January 2022 ............................ - 88,510 32,395 1,551 122,456 Reclassifications of assets ............................... - 25,486 (25,486) - - Additions ......................................................... 115,000 35,156 2,706 357 153,219 Disposals ......................................................... - (2,959) - - (2,959)Translation difference ................................... - (1,043) (17) 51 (1,009)Balance at 31 December 2022 .................... 115,000 145,150 9,598 1,959 271,707 DepreciationBalance at 1 January 2022 ............................ - 33,853 8,614 1,459 43,926 Reclassifications of assets ............................ - 5,985 (5,985) - - Depreciation ................................................... 359 8,752 621 75 9,807 Disposals ......................................................... - (2,597) - - (2,597)Translation difference ................................... - 9 (17) (15) (23)Balance at 31 December 2022 .................... 359 46,002 3,233 1,519 51,113 Net carrying amountBalance at 31 December 2022 .................... 114,641 99,148 6,365 440 220,594 Furniture, fixt.Facility and leasehold Computerequipment improvements equipment TotalCostBalance at 1 January 2021 ............................................................ 70,308 27,600 1,513 99,421 Additions .........................................................................................19,345 4,845 69 24,259 Translation difference.................................................................... (1,143) (50) (31) (1,224)Balance at 31 December 2021 .....................................................88,510 32,395 1,551 122,456 DepreciationBalance at 1 January 2021 ............................................................ 25,540 7,016 1,419 33,975 Depreciation ...................................................................................6,870 1,637 67 8,574 Impairment .....................................................................................2,092 - - 2,092 Translation difference.................................................................... (649) (39) (27) (715)Balance at 31 December 2021 .....................................................33,853 8,614 1,459 43,926 Net carrying amountBalance at 31 December 2021 .....................................................54,657 23,781 92 78,530 On 16 November 2022 the Group entered into a share purchase agreement (the \u201cShare Purchase Agreement\u201d) relating to shares inFasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf. (\u201cSaemundur\u201d) with ATP Holdings ehf., an affiliate of Aztiq. Pursuant to the Share PurchaseAgreement, Alvotech is purchased 99.99% of the shares in Saemundur through the issuance the Aztiq Convertible Bond, asdefined and discussed in Note 20, and the assumption of debt. At the time of closing, Saemundur\u2019s only asset was the propertywhere Alvotech\u2019s Reykjavik manufacturing and research facility (the \u201cFacility\u201d) are located. See Note 20 for further details. The Share Purchase Agreement was accounted for as an asset acquisition under IFRS 3 as all of the fair value of the gross assetsacquired from Saemundur were concentrated in the Alvotech Facility. As a result, the purchase price was determined to be $115.0million, which consists of $80.0 million related to the fair value of the Aztiq Convertible Bond, $30.0 million in loans assumed bythe Company, and $5.0 million associated with the settlement of the pre-existing relationship with Saemundur. The entire purchaseprice was allocated to the Facility as it was the only asset acquired. Additionally, the Company recognized a $3.9 million loss on theextinguishment of the lease liability related to the Facility. See Note 20 for further details.At 31 December 2021, the Group performed a review of its property, plant and equipment and determined certain laboratoryequipment was no longer in use. In assessing recoverable amount, the Group determined the market for resale was non-existentdue to the unique nature of the equipment. Management therefore determined to fully impair the assets, resulting in an impairmentof $2.1 million during each of the year ended 31 December 2021. See Note 8 for where impairment charges have been recognizedas an expense within in the consolidated statements of profit or loss and other comprehensive income or loss. The Group pledged $122.4 million and $6.8 million of property, plant and equipment as collateral to secure bank loans with thirdparties as of 31 December 2022 and 2021, respectively. 13. LeasesThe Group\u2019s leased assets consist of facilities, fleet and equipment pursuant to both arrangements with third parties and relatedparties. The carrying amounts of the Group\u2019s right-of-use assets and the movements during the years ended 31 December 2022and 2021 are as follows (in thousands):2022 2021Right-of-use assetsBalance at 1 January .......................................................................................................................................126,801 111,519Adjustments for indexed leases ...................................................................................................................10,201 5,358New or renewed leases ..................................................................................................................................9,583 18,871Derecognition due to acquisition of Alvotech Facility (see Note 12) .................................................(88,941) - Depreciation ....................................................................................................................................................(9,869) (8,699)Translation difference ....................................................................................................................................(274) (248)Balance at 31 December ...............................................................................................................................47,501 126,801The Group\u2019s right-of-use assets as of 31 December 2022 and 2021 are comprised of the following (in thousands):2022 2021Right-of-use assetsFacilities ............................................................................................................................................................41,702 122,927Fleet ..................................................................................................................................................................339 159Equipment .......................................................................................................................................................5,460 3,71547,501 126,801At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments tobe made over the lease term. The Group\u2019s lease liabilities and the movements during the years ended 31 December 2022 and 2021are as follows (in thousands):Lease liabilities 2022 2021Balance at 1 January .......................................................................................................................................122,140 108,947Adjustments for indexed leases ...................................................................................................................10,247 5,358New or renewed leases ..................................................................................................................................7,458 18,116Installment payments .....................................................................................................................................(7,655) (6,595)Derecognition due to acquisition of Alvotech Facility (see Note 12) .................................................(80,075) - Foreign currency adjustment .......................................................................................................................(11,682) (3,744)Translation difference ....................................................................................................................................99 58 Balance at 31 December ...............................................................................................................................40,532 122,140 Current liabilities ............................................................................................................................................(5,163) (7,295)Non-current liabilities ....................................................................................................................................35,369 114,845The amounts recognized in the consolidated statements of profit or loss and other comprehensive income or loss during the yearsended 31 December 2022 and 2021 in relation to the Group\u2019s lease arrangements are as follows (in thousands):2022 2021Depreciation expense from right-of-use assets Facilities .........................................................................................................................................................(9,423) (8,228) Fleet ................................................................................................................................................................(119) (38) Equipment .....................................................................................................................................................(327) (433)Total depreciation expense from right-of-use assets ...............................................................................(9,869) (8,699)Interest expense on lease liabilities .............................................................................................................(6,022) (6,423)Foreign currency difference on lease liability ............................................................................................11,682 3,744 Loss from extinguishment of lease agreement (see Note 12) ...............................................................(3,859) - Total amount recognized in profit and loss ..............................................................................................(8,068) (11,378)The maturity analysis of undiscounted lease payments as of 31 December 2022 and 2021 is as follows (in thousands):2022 2021Less than one year ..........................................................................................................................................6,000 13,164One to five years ............................................................................................................................................20,160 49,379Thereafter ........................................................................................................................................................22,274 117,51148,434 180,054The Group\u2019s lease liabilities as of 31 December 2022 and 2021 do not include $0.1 million of costs for short\u2010term leases and lowvalue leases.14. GoodwillThe Group\u2019s goodwill balances as of 31 December 2022 and 2021 are as follows (in thousands):2022 2021Balance at 1 January.......................................................................................................................................... 12,367 13,427 Translation difference....................................................................................................................................... (724) (1,060)Balance as of 31 December............................................................................................................................. 11,643 12,367 Goodwill is recognized at the Group level, which is determined to be the smallest cash-generating unit. The recoverable amount ofthe cash-generating unit is determined based on a value in use calculation which uses cash flow projections based on the financialforecast for the period 2023-2030 that has been approved by management and the Board of Directors. The Group\u2019s operations arecurrently in a development phase, and the ten-year forecast includes the initial revenue generating phase when products currently indevelopment will be available for market. The Group determined that the terminal growth rate and the discount rate are the keyassumptions used in determining the current estimate of value in use. Cash flows beyond 2030 have been extrapolated using a negative 5.0% terminal rate in both the 2022 and 2021 value in usecalculations respectively. A discount rate of 27.6% (2021: 21.5%) per annum was used in determining the current estimate of valuein use. Since the recoverable amount of the cash-generating unit was substantially in excess of its carrying amount as of 31December 2022 and 2021, management believes that any reasonably possible change in the key assumptions on which therecoverable amount of the cash-generating unit is based would not cause the carrying amount of the cash-generating unit to exceedits recoverable amount. There were no goodwill impairment charges recognized in the consolidated statements of profit or loss and other comprehensiveincome or loss in any prior periods.15. Intangible assetsIntangible assets consist of software, customer relationships and licensed intellectual property rights. Movements in intangibleassets during the years ended 31 December 2022 and 2021 are as follows (in thousands):Customer Intellectual Software Totalrelationshipsproperty rightsCostBalance at 1 January 2022..............................................................8,777 2,329 15,000 26,106 Additions..........................................................................................7,682 - - 7,682 Impairment......................................................................................(2,755) - - (2,755)Translation difference....................................................................(20) (148) - (168)Balance at 31 December 2022......................................................13,684 2,181 15,000 30,865 Amortization Balance at 1 January 2022..............................................................2,933 1,664 - 4,597Amortization ..................................................................................423 310 - 733Translation difference....................................................................(13) (104) - (117)Balance at 31 December 2022......................................................3,343 1,870 - 5,213Net carrying amountBalance at 31 December 2022......................................................10,341 311 15,000 25,652 CustomerIntellectual Software relationships Totalproperty rightsCostBalance at 1 January 2021..............................................................7,603 2,528 - 10,131Additions............................................................................................ 5,186 - 15,000 20,186Impairment......................................................................................(3,993) - - (3,993)Translation difference...................................................................... (19) (199) - (218)Balance at 31 December 2021......................................................8,777 2,329 15,000 26,106 Amortization Balance at 1 January 2021..............................................................2,351 1,445 - 3,796Amortization .....................................................................................591 332 - 923Translation difference...................................................................... (9) (113) - (122)Balance at 31 December 2021......................................................2,933 1,664 - 4,597Net carrying amountBalance at 31 December 2021......................................................5,844 665 15,000 21,509 Additions during the year ended 31 December 2021 were primarily comprised of licensed intellectual property rights from Biosana. Refer to Note 2.18 for further details.Expense for amortization of the Group\u2019s intangible assets is included within the consolidated statements of profit or loss and other comprehensive income or loss as follows (in thousands ):2022 2021Cost of product revenue................................................................................................................................471 - Research and development expenses .........................................................................................................- 324 General and administrative expenses .........................................................................................................262 599 733 923 At 31 December, 2022 and 2021, the Group performed a review of its intangible assets and determined certain softwaredevelopment had been abandoned. In assessing recoverable amount, the Group determined the market for resale was non-existent.Management therefore determined to fully impair the assets, resulting in an impairment charge of $2.8 million and $4.0 millionduring the year ended 31 December 2022 and 2021, respectively. The impairment charge was recognized as an expense as follows:$2.1 million in \u201cCost of product revenue\u201d and $0.7 million in \u201cGeneral and administrative expenses.\u201d For the year ended 31December 2021 the impairment was recognized as an expense within \u201cResearch and development expenses\u201d in the consolidatedstatements of profit or loss and other comprehensive income or loss.At 31 December 2022 the Group performed an impairment analysis on the intellectual property rights indefinite lived intangibleasset. No impairment loss was recognized as the asset\u2019s recoverable amount exceeded the carrying amount.16. Cash and cash equivalentsCash and cash equivalentsCash and cash equivalents include both cash in banks and on hand. Cash and cash equivalents as shown in the consolidatedstatements of cash flows as of 31 December 2022 and 2021 is as follows (in thousands):2022 2021Cash and cash equivalents denominated in US dollars ...........................................................................10,377 15,798 Cash and cash equivalents denominated in other currencies ................................................................56,050 1,758 66,427 17,556 Restricted cashRestricted cash as shown on the consolidated statements of financial position relates to cash that may only be used pursuant tocertain of the Group\u2019s borrowing arrangements. Therefore, these deposits are not available for general use by the Group.Movements in restricted cash balances during the years ended 31 December 2022 and 2021 are as follows (in thousands):2022 2021Balance at 1 January .......................................................................................................................................10,087 10,087 Additions during the year .............................................................................................................................14,914 - Interest income ...............................................................................................................................................186 - Balance at 31 December ...............................................................................................................................25,187 10,087 The Group\u2019s restricted cash is available for use after one year or later. 17.InventoriesThe Group\u2019s inventory balances as of 31 December 2022 and 2021 are as follows (in thousands):2022 2021Raw materials and supplies............................................................................................................................41,961 26,590 Work in progress............................................................................................................................................. 29,450 13,730 Finished goods.................................................................................................................................................2,121 - Inventory reserves...........................................................................................................................................(2,062) (1,262)Balance at 31 December ...............................................................................................................................71,470 39,058 The increase in inventory from 31 December 2021 to 31 December 2022 is due to the commercial launch of certain of the Group\u2019sbiosimilar product candidates. The Company recognized $8.5 million of inventories in cost of product revenue during the year ended 31 December 2022. 18.Other current assetsThe composition of other current assets as of 31 December 2022 and 2021 is as follows (in thousands):2022 2021Value-added tax............................................................................................................................................... 6,468 4,725 Prepaid expenses............................................................................................................................................. 20,601 9,320 Proceeds receivable from Convertible Bonds (see Note 20)..................................................................3,520 - Derivative asset................................................................................................................................................851 - Other short-term receivables........................................................................................................................ 1,509 691 32,949 14,736 19. Share capitalAn equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all liabilities. Equityinstruments issued by a Group entity are recognized in the amount of the proceeds received, net of direct issue costs.Prior to the Capital Reorganization the Group\u2019s equity consisted of Class A and Class B ordinary shares (together the \u201cPredecessorOrdinary Shares\u201d). The Group\u2019s authorized share capital was $99.7 million, consisting of the equivalent of 99,961,829 Class A orClass B ordinary shares with a par value of $0.01 per share. All share capital issued as of 31 December 2021 and 2020 was fullypaid.The Capital Reorganization resulted in the following share capital activity:\u2022 All of the outstanding Predecessor Ordinary Shares were exchanged for 180,600,000 Ordinary Shares and 38,330,000Predecessor Earn Out Shares;\u2022 976,505 of Class A OACB Ordinary Shares were exchanged for Ordinary Shares;\u2022 6,250,000 of Class B OACB Ordinary Shares were exchanged for 5,000,000 Ordinary Shares and 1,250,000 OACBEarn Out Shares; and\u202217,493,000 Ordinary Shares were issued in the PIPE Financing.No dividends were paid or declared during the years ended 31 December 2022 and 2021.Share capital and share premium of the Group\u2019s Ordinary Shares issued as of 31 December 2022 and 2021 is as follows (inthousands, except for share amounts):20222021Share capital Share capital and share and share SharespremiumSharespremiumClass A ordinary shares..................................................................- - 13,386,098 997,824 Class B ordinary shares..................................................................- - 95,701 2,429 Ordinary shares...............................................................................252,160,087 1,060,558 - - Total share capital and share premium.......................................252,160,087 1,060,558 13,481,799 1,000,253 Movements in the Group\u2019s Class A and Class B ordinary shares, share capital and share premium during the years ended 31December 2022 and 2021 are as follows (in thousands, except for share amounts):Predecessor Ordinary Ordinary SharesSharesShare capitalShare premiumTotalBalance at 1 January 2021............................. - 7,259,139 73 166,740 166,813 Share issue........................................................ - 6,222,660 62 833,378 833,440 Balance at 31 December 2021...................... - 13,481,799 135 1,000,118 1,000,253 Elimination of Predecessor OrdinaryShares (Note 1.1)............................................- (13,481,799) (135) 135 - Issuance of Ordinary Shares (Note 1.1)..... 186,576,505 - 1,866 63,169 65,035 PIPE Financing (Note 1.1)........................... 17,493,000 - 175 174,755 174,930 Transaction costs on share issue.................. - - - (5,562) (5,562)Predec. Earn Out Sh. (Note 22).................. 38,330,000 - - (227,500) (227,500)OACB Earn Out Sh. (Note 22)................... 1,250,000 - - (9,100) (9,100)SARs settlement (Note 21)........................... 3,510,582 - 35 30,267 30,302 Settlement of related party loans withOrdinary Shares.............................................. 5,000,000 - 50 32,150 32,200 Balance at 31 December 2022...................... 252,160,087 - 2,126 1,058,432 1,060,558 Alvotech Manco ehf., a subsidiary of Alvotech hf., owns 27,072,167 Ordinary Shares in Alvotech. Such shares are intended for thefuture issuance of Ordinary Shares under the Management Incentive Plan and other equity offerings. 20. BorrowingsThe Group\u2019s debt consists of interest-bearing borrowings from financial institutions, related parties and third parties. Outstandingborrowings, net of transaction costs, presented on the consolidated statements of financial position as current and non-current asof 31 December 2022 and 2021 is as follows (in thousands):2022 2021Senior Bonds....................................................................................................................................................530,506 - Bonds.................................................................................................................................................................- 394,129 Aztiq Convertible Bond.................................................................................................................................65,793 - Alvogen Facility...............................................................................................................................................64,588 - Convertible Bonds..........................................................................................................................................32,441 - Other borrowings............................................................................................................................................71,242 6,782 Total outstanding borrowings, net of debt issue costs............................................................................764,570 400,911 Less: current portion of borrowings............................................................................................................(19,916) (2,771)Total non-current borrowings......................................................................................................................744,654 398,140 Convertible shareholder loansIn connection with the Business Combination Agreement (see Note 1.1), on 7 December 2021, the Group\u2019s shareholders enteredinto the BCA Framework Agreement resulting in the exercise of the conversion, warrant, and funding rights associated with theconvertible shareholder loans. As a result, the following issuances of Class A ordinary shares occurred:\u2022 1,522,103 shares from the exercise of warrant and funding rights in exchange for $101.3 million of cash;\u2022 1,137,248 shares from the exercise of warrant rights in exchange for the settlement of $73.7 million of accrued payment-in-kind\u2022 2,306,555 shares resulting from the conversion of $166.8 million of outstanding principal and accrued payment-in-kind interest.In connection with these exercises, for the year ended 31 December 2021, the Group recognized finance income of $48.7 millionresulting from the remeasurement of the derivative liabilities at the date of extinguishment and a $149.2 million gain onextinguishment of financial liabilities, which primarily reflects the difference between the carrying amount of the pre-transactionconvertible shareholder loans and the related derivative financial liabilities and the fair value of the ordinary shares issued. Inaddition, the gain on extinguishment of financial liabilities includes transaction costs incurred as part of the extinguishment, theacceleration of previously deferred debt issue costs incurred in connection with the issuance of the convertible shareholder loansand the acceleration of previously unamortized accretion of the convertible shareholder loans.Convertible bonds, Bonds and Senior BondsConvertible bondsOn 14 December 2018, the Group issued $300.0 million of convertible bonds to multiple third parties. The offering included$125.0 million of Tranche A bonds that included a guarantee from Alvogen and a 10% bonus if the bondholders converted at thetime of an IPO. In addition, $175.0 million of Tranche B bonds were issued that do not have a guarantee but include a 25% bonusif the bondholders elect to convert at the time of an IPO. The bonds offered a 15% payment-in-kind interest rate and a put optionto sell the bond back to the Group if an IPO had not occurred within three years from the original date of issuance. The Group recorded $5.4 million, recorded as a component of finance income in the consolidated statements of profit or loss andother comprehensive income or loss for the year ended 31 December 2020. Fair value measurements of the derivative financialliabilities are set out in Note 27.BondsOn 24 June 2021, holders of the Group\u2019s convertible bonds converted $100.7 million of principal and accrued interest and $4.8million of additional premium offered by the Group to the bondholders into 455,687 Class A ordinary shares. Following theconversion, certain bondholders elected to redeem their remaining bonds for cash, resulting in the payment of $55.3 million inoutstanding principal and accrued interest plus an additional $6.1 million of premium that the bondholders elected to be paid incash.The remaining unconverted and unredeemed bonds were replaced with new bonds with an extended maturity of June 2025 andthe elimination of conversion rights, among other amendments to the terms and conditions. The Group offered the holders of thereplaced bonds an extension premium of $8.1 million for their agreement to extend the maturity of the replaced bonds to June2025, as well as an additional premium of $2.6 million, both of which were granted to the bondholders in the form of additionalbonds. The Group also issued an additional $113.8 million of bonds to one previous bondholder and one new bondholder. On thedate of issuance, the fair value and the nominal value of the bonds was $358.8 million and $397.4 million, respectively. Thedifference between the nominal value and fair value was recognized as a discount that will be amortized over the term of thebonds.The Group determined that the 24 June 2021 transaction was a substantial modification to its convertible bonds and the associatedderivative financial liability and accounted for the transaction as an extinguishment. As a result, the Group recognized a gain onextinguishment of financial liabilities of $2.6 million during the year ended 31 December 2021, primarily driven by the differencebetween the fair value of the post-transaction bonds and the carrying amount of the pre-transaction bonds. The gain onextinguishment of financial liabilities also includes the following:\u2022 Transaction costs and fees incurred as part of the extinguishment;\u2022 The acceleration of previously deferred debt issue costs incurred in connection with the issuance of the pre-transaction bonds;\u2022 The acceleration of previously unamortized accretion of the pre-transaction bonds.Prior to the extinguishment of the convertible bonds and as noted above, the bondholders had the option to convert the bondsinto Class A ordinary shares up to fourteen days prior to maturity. This conversion right was separately accounted for as aderivative financial liability. During the period from 1 January 2021 to 24 June 2021, there was no change in fair value of thederivative financial liability.As of 31 December 2021, the carrying amount of the bonds was $363.1 million. Accrued interest on the bonds as of 31 December2021 is $31.0 million. The Group has the option, at any time, to prepay all or any part of the outstanding bonds. If the Groupelects to prepay the bonds within the first three years of the bond agreement, the bondholders are entitled to be paid an additionalpremium of at least 2.0% of the outstanding principal at the time of such prepayment.In January and June of 2022, the Group amended the terms of the outstanding bonds. The amendments resulted in the following:\u2022 Following the close of the Business Combination, the interest rate will range from 7.5% to 10.0% depending on the amount of aggregate net proceeds, as defined by the terms of the amended bond agreement;\u2022 A $7.4 million consent fee, recognized as finance costs, paid to the bondholders who did not vote against the Business Combination Agreement;\u2022 The requirement for Alvotech to maintain a minimum of $25.0 million of restricted cash in a separate liquidity account; and\u2022 A decrease in the interest rate to 7.5%, following the closing of the Business Combination, if the Company issues additional shares within six months of the Closing Date, resulting in the Company exceeding the amount of aggregate net proceeds, as defined in the bond agreement.As a result of the closing of the Business Combination, there was a change in future cash flows on the bonds related to the increasein interest rate from 7.5% to 10.0%. The Company remeasured the carrying value in accordance with IFRS 9 to the present valueof the revised cash flows and recognized a $6.5 million loss on the remeasurement of the bonds.Senior BondsOn 16 November 2022, the Group amended and upsized the outstanding bonds by $70.0 million. The amended bond agreement(the \u201cSenior Bonds\u201d) resulted in the following:\u2022 An increase in principal from $455.7 million at the time of the amendment, to $525.7 million;\u2022 An increase in the interest rate, resulting in a range from 10.75% to 12.0% depending on the occurrence of certain events, asdefined by the terms of the agreement. The Group accounted for this interest rate feature (the \u201cSenior Bond Interest RateFeature\u201d) as an embedded derivative, classified as an other current asset in the consolidated statement of financial position as of 31December 2022;\u2022 Amended the terms of the related party loans from Alvogen, setting forth subordination conditions;\u2022 Contingently issuable penny warrants (exercise price of $0.01) to the bondholders (the \u201cSenior Bond Warrants\u201d) if certainevents occur, issuable in two tranches representing 1.5% and 1.0% of the fully diluted ordinary share capital, as defined in theSenior Bonds agreement (see Note 27).The Group determined that the 16 November 2022 transaction was a substantial modification to its bonds and accounted for thetransaction as an extinguishment. As a result, the Group recognized a loss on extinguishment of financial liabilities of $40.9 million,including $12.1 million of transaction costs, during the year ended 31 December 2022, primarily driven by the difference betweenthe fair value of the post-transaction Senior Bonds and the Senior Bond Warrants and the carrying amount of the pre-transactionbonds. The loss on extinguishment of financial liabilities includes the following:\u2022 Extinguishment of bonds with a carrying value of $440.1 million, including $4.8 million of accrued interest;\u2022 Net cash proceeds of $57.9 million, including transaction costs paid of $12.1 million;\u2022 Recognition of a $4.6 million derivative asset for the Senior Bond Interest Rate Feature;\u2022 Recognition of $528.2 million and $15.4 million representing the fair value of the new Senior Bonds and Senior Bond WarrantsAs of 31 December 2022, the carrying amount of the Senior Bonds is $530.5 million. Accrued interest on the Senior Bonds as of31 December 2022 is $2.6 million. The Group has the option, at any time, to prepay all or any part of the outstanding bonds. The Group has pledged it\u00b4s intellectual property as collateral for the Senior Bonds.Aztiq Convertible BondOn 16 November 2022 the Group issued a convertible bond (the \u201cAztiq Convertible Bond\u201d) to ATP Holdings ehf. for the SharePurchase Agreement and the acquisition of the Alvotech Facility (See Note 12). The Aztiq Convertible Bond has a principalamount of $80.0 million and carries an interest rate of 12.50% per annum. Interest is payable in six-month intervals and iscapitalized and added to the outstanding principal amount of the bonds. The maturity date of the convertible bond is the later ofthe (i) 16 November 2025 or (ii) 91 days after the earlier of the full redemption or the final maturity date of the Senior Bonds.Bondholders have the right to convert their outstanding bonds into ordinary shares of Alvotech on December 31, 2023, June 30,2024, or when the bond has been called or put up for redemption, including on the maturity date, for a conversion price is $10.00per share.The conversion feature (the \u201cAztiq Conversion Feature\u201d) was determined to be an embedded derivative as the economiccharacteristics and risks are not closely related to the debt host. The Group classified the Aztiq Conversion Feature as equity due to the conversion price having preservation and passage of time adjustments that meet fixed-for-fixed criteria. As a result, the Grouprecognized the following related to the Aztiq Convertible Bond:\u2022 $64.0 million related to the debt host;\u2022 $16.0 million related to the Aztiq Conversion Feature;\u2022 $30.0 million related to the loans (the \u201cFacility Loans\u201d) on the building, which were assumed by the Group as part of the assetAs of 31 December 2022, the carrying amount of the Aztiq Convertible Bond is $65.8 million. Accrued interest on the AztiqConvertible Bond as of 31 December 2022 is $0.5 million. Facility LoansAs noted above, the Group assumed the Facility Loans as part of the asset acquisition for the Facility. On 9 December 2022, theGroup extinguished the assumed loans from Arion banki hf., with an outstanding balance of $30.9 million, with new loans fromLandsbankinn hf. for $48.8 million, and carries variable interest rate, currently 8.3% and 9.3% per annum. The refinancing resultedin net cash proceeds of $17.2 million after transaction costs paid.As of 31 December 2022, the carrying amount of the Facility Loans is $48.8 million. Accrued interest on the Facility Loans as of 31December 2022 is $0.3 million. Related party loans and Alvogen FacilityIn connection with an undertaking by Alvotech shareholders to ensure that Alvotech was sufficiently funded through the closingof the Business Combination by providing at least $50.0 million for the operations of the Group, Alvogen and Aztiq providedinterest free loan advances to Alvotech. On 22 February 2022, Alvotech borrowed $15.0 million under the facility from Alvogen,as lender. On 29 March 2022, Alvotech withdrew an additional amount of $10.0 million under the facility, for aggregateindebtedness of $25.0 million. On 11 March 2022, Alvotech borrowed $15.0 million under the facility from Aztiq, as lender. On 31March 2022, Alvotech withdrew an additional amount of $10.0 million under the facility, for aggregate indebtedness of $25.0million.On 12 July 22, the Company entered into settlement agreements with both Aztiq and Alvogen for the $25.0 million in related partyloans provided by each party. As a result of the settlement agreements, Aztiq and Alvogen each received 2,500,000 OrdinaryShares. The settlement was accounted for as an extinguishment of financial liabilities. In accordance with IFRS 9, the differencebetween the fair value of the consideration paid for the settlement, which was determined to be $32.2 million, and the extinguishedfinancial liabilities of $50.0 million was recognized as a gain on the extinguishment of financial liabilities in the consolidatedstatement of profit or loss and other comprehensive income or loss.On 11 April 2022, Alvotech entered into a loan agreement with Alvogen, as lender, for a loan of up to $40.0 million bearing aninterest rate of 10% per annum. The loan was drawable in two separate installments of $20.0 million each. On 12 April 2022,Alvotech withdrew the first installment of $20.0 million. Alvotech withdrew a second installment of $20.0 million on 9 May 2022for aggregate indebtedness of $40.0 million.On 1 June 2022, Alvotech also entered into a loan agreement with Alvogen, as lender, for a loan of $20.0 million bearing aninterest rate of 10% per annum. Alvotech withdrew the entire loan amount of $20.0 million on 1 June 2022. In connection with the 16 November 2022 bond amendment, Alvotech entered into a subordinated loan agreement with Alvogen(the \u201cAlvogen Facility\u201d). As part of the subordinated loan agreement, the Group agreed to the following:\u2022 Rollover the $63.3 million outstanding, which includes $3.3 million of accrued interest, under the Alvogen loans, into the newsubordinated loan agreement, and withdraw an additional $50.0 million in loans;\u2022 The interest rate was increased from 10% per annum to 17.5% per annum on the outstanding amounts under the loan facility;\u2022 A repayment date of 91 days after the full redemption or the final maturity date of the Senior Bonds;\u2022 Contingently issuable penny warrants to the bondholders (the \"Alvogen Facility Warrants\") if certain events occur, representing4.0% of the fully diluted ordinary share capital, as defined in the Alvogen Facility agreement.The Group determined that the 16 November 2022 transaction was a substantial modification to its related party loans andaccounted for the transaction as an extinguishment. As a result, the Group recognized the following: \u2022 Extinguishment of bonds with a carrying value of $63.2 million, including $3.2 million of accrued interest;\u2022 Net cash proceeds of $50.0 million;\u2022 Recognition of $113.2 million and $1.3 million representing the fair value of the new Alvogen Facility and Alvogen FacilityWarrants, respectively.On 20 December 2022, the Company repaid $50.0 million under the Alvogen Facility, with proceeds from the Convertible Bonds.As a result, Alvotech extinguished the liability to issue the Alvogen Facility Warrants. As of 31 December 2022, the carrying amount of the loans is $64.6 million. Convertible BondsOn 20 December 2022 the Group issued two tranches of convertible bonds (the \u201cConvertible Bonds\u201d). Tranche A is ISKdenominated with a principal balance of $59.1 million, of which $3.5 million in cash proceeds were received subsequent to 31December 2022 (see Note 18), and carries an annual payment-in-kind interest rate of 15% per year, while Tranche B is USDdenominated with a principal balance of $0.6 million and carries an annual payment-in-kind interest rate of 12.5% per year. Thematurity date of the Convertible Bonds is the later of the (i) 20 December 2025 or (ii) 91 days after the earlier of the fullredemption or the final maturity date of the Senior Bonds. Holders of both the Tranche A and Tranche B Convertible Bonds, mayelect, at their sole discretion, to convert all or part of the principal amount and accrued interest into Alvotech Ordinary Shares at aconversion price of $10.00 per share on December 31, 2023, or June 30, 2024.The conversion features (the \u201cTranche A Conversion Feature\u201d and \u201cTranche B Conversion Feature\u201d) for both the Tranche A andTranche B Convertible Bonds were determined to be embedded derivatives as the economic characteristics and risks are notclosely related to the debt host. The Group classified the Tranche A Conversion Feature as a liability due to the variability createdby conversion rates resulting from the tranche being denominated in ISK and was determined to have a fair value of $24.9 millionat issuance date (see Note 27 for further details). The Group classified the Tranche B Conversion Feature as equity due to theconversion price having preservation and passage of time adjustments that meet the fixed-for-fixed criteria. As of 31 December 2022, the carrying amount of the Tranche A and Tranche B Convertible Bond is $31.9 million and $0.5million, respectively. Other borrowingsIn 2015 and 2016, the Group entered into several term loan agreements with a financial institution for a total principal amount of$25.9 million. The loan agreements set forth terms and conditions between the Group and the financial institution, inclusive ofcertain representations and non-financial covenants. Per the terms of the loan agreements, the loans mature throughout late 2023and into the second half of 2024, depending on the issuance date of each loan. Interest on the loans is variable interest rate of USDSOFR plus a margin of 4.95%, payable on a monthly basis. Interest accrued and unpaid at the end of each interest period increasesthe principal obligations owed by the Group to the financial institution. As of 31 December 2022 and 2021, the outstandingbalance on the loans, including accrued interest, is $3.2 million and $5.7 million, respectively. The Group is in compliance with allrepresentations and non-financial covenants required by these agreements. In addition, the Group has pledged property, plant andequipment as collateral to secure these borrowings, as further described in Note 12.In 2021, the Group entered into two loan agreements with two separate lenders, Origo hf. and Arion banki hf. The outstandingbalance on the borrowings held with Origo hf. and Arion banki hf., including accrued interest, was $0.2 million and $0.3 million asof 31 December 2022 and 31 December 2021, respectively. The loans mature in late 2023 and 2024.On 22 February 2022, the Group entered into a credit facility agreement with Landsbankinn hf. with the ability to draw down anamount up to $18.3 million. The credit facility is in place to help finance equipment purchases in the future. Per the terms of thecredit facility, any borrowings are required to be paid by 1 August 2023 and have a variable interest rate of USD SOFR plus amargin of 4.95%. As of 31 December 2022, the outstanding balance on the credit facility was $14.0 million, including accruedinterest.On 22 February 2022, the Group entered into a loan agreement with Landsbankinn hf. for a principal amount of $3.2 million. Theloan is in place to help finance equipment purchases. Per the terms of the loan agreement, annuity payments are due monthly witha final maturity in February 2029. The loan has a variable interest rate of USD SOFR plus a margin of 4.25%. As of 31 December2022, the outstanding balance on the loan was $2.9 million, including accrued interest.On 8 August 2022, the Group entered into a loan agreement with Landsbankinn hf. for a principal amount of $1.8 million. Theloan is in place to help finance equipment purchases. Per the terms of the loan agreement, annuity payments are due monthly witha final maturity in August 2029. The loan has a variable interest rate of USD SOFR plus a margin of 4.25%. As of 31 December2022, the outstanding balance on the loan was $1.8 million, including accrued interest.Movements in the Group\u2019s outstanding borrowings during the years ended 31 December 2022 and 2021 are as follows (inthousands): 2022 2021Borrowings, net at 1 January.........................................................................................................................400,911 567,899 Borrowings converted to equity...................................................................................................................- (105,501)Redemption of borrowings...........................................................................................................................- (34,899)Paid payment-in-kind interest.......................................................................................................................- (19,200)Premium on redeemed and unredeemed bonds.......................................................................................- 15,472 Change in fair value upon extinguishment of convertible shareholder loans......................................- 32,114 Recognition of deferred debt issue costs....................................................................................................(2,889) - Accretion/derecognition of borrowings discount....................................................................................35,065 5,506 Recognition of new borrowings discount..................................................................................................(43,241) (34,302)Proceeds from new borrowings...................................................................................................................467,196 114,282 Loans from related party converted to equity...........................................................................................(50,000) (240,542)Repayments of borrowings............................................................................................................................(83,951) (2,597)Accrued interest...............................................................................................................................................40,424 89,958 Amortization of deferred debt issue costs.................................................................................................23 12,754 Foreign currency exchange difference.........................................................................................................1,032 (33)Borrowings, net at 31 December.................................................................................................................764,570 400,911 The weighted-average interest rates of outstanding borrowings for the years ended 31 December 2022 and 2021 are 12.41% and14.83%, respectively.Contractual maturities of principal amounts on the Group\u2019s outstanding borrowings as of 31 December 2022 and 2021 are asfollows (in thousands):2022 2021Within one year................................................................................................................................................19,916 2,771 Within two years..............................................................................................................................................3,804 2,920 Within three years............................................................................................................................................696,646 622 Within four years.............................................................................................................................................3,374 394,222 Thereafter..........................................................................................................................................................40,830 376 764,570 400,911 21. Long-term incentive plansShare appreciation rightsPrior to 2019, the Group granted SARs to three former employees. During the year ended 31 December 2020 and 2019, theGroup granted SARs to one and two current employees, respectively. There were no new granted SARS in the years ended 31December 2022 and 2021. Settlement of SARs In connection with the closing of the Business Combination, the Company reached a settlement agreement for share appreciationrights previously awarded to certain current and former employees. The rights were settled as follows:\u2022 two former employees will each receive 1,755,291 Ordinary Shares to be issued one year after the Closing Date. In accordancewith IFRS 2, the settlements were accounted for as a modification of a share-based payment transaction that changes the awardsclassification from cash-settled to equity-settled;\u2022 one former employee will receive a $1.5 million cash payment in July 2022; and\u2022 one current employee can elect to receive a cash payment of $1.5 million or 150,000 Ordinary Shares to be issued one year afterthe Closing Date. The Company recognized the cash settlement option as a liability with a fair value of $0.8 million and the sharesettlement option as equity with a fair value of $0.7 million. The settlement agreements resulted in a net $36.8 million decrease in the SARs liability, a $31.0 million increase in equity equal tothe fair value of the Ordinary Shares issued to the two former employees and potentially issued to one current employee, a $1.5million increase in other current liabilities and income of $4.3 million in general and administrative expense recognized for thedifference between the extinguished liabilities and the fair value of consideration paid to the current and former employees. As of31 December 2022, the Company recognized $0.7 million as an other current liability related to the remaining SARs liability. Significant assumptions used in the Finnerty model to determine the fair value of the Ordinary Shares to be issued for thesettlement as of 15 June 2022 are as follows:15 June 2022Asset price.........................................................................................................................................................................................$9.38Term (years)......................................................................................................................................................................................1 yearVolatility rate.....................................................................................................................................................................................35.0%Dividend yield..................................................................................................................................................................................0.0%Indicated put option value.............................................................................................................................................................$0.75Discount for lack of marketability................................................................................................................................................8.0%The asset price is based on the public trading price of Ordinary Shares at the time of the settlement. The term is based on when the holder\u2019s will no longer be restricted from trading the Ordinary Shares. The volatility rate is based on historical data from a peergroup of public companies with an enterprise value between $500 million and $5 billion. The dividend yield is based on theexpected dividends to be paid out by the Company. The discount for lack of marketability reflects the timing of when the shareswill be issued and can be traded by the holders.On 1 December 2022, the Company issued Ordinary Shares to settle the remaining outstanding SARs. The vested portion of theGroup\u2019s SARs liability as of the settlement date was $3.8 million. The Ordinary Shares granted for the settlement will be deliveredin June 2023. As a result, management recognized a gain of $0.3 million on the extinguishment of the SARs liability resulting fromthe difference in the carrying value of the liability and fair value of the Ordinary Shares issued.Historical SARs Accounting The Group\u2019s SAR liability as of 31 December 2021 totaled $41.4 million. Expense recognized for the Group\u2019s SAR liability for theyear ended 31 December 2021 totaled $11.3 million. The vested portion of the Group\u2019s SAR liability as of 31 December 2021 is$36.6 million. Significant assumptions used in the Black-Scholes-Merton pricing model as of 31 December 2021 is as follows:2021Risk-free interest rate......................................................................................................................................................................0.1%Volatility rate.....................................................................................................................................................................................42.0%Expected dividend yield.................................................................................................................................................................0.0%Expected life.....................................................................................................................................................................................0.4 - 1.0 yearsShare price at valuation...................................................................................................................................................................$1,806Strike price........................................................................................................................................................................................$925-$1,695The risk-free interest rate is the continuously compounded risk-free rate for a one-year US government zero-yield bond. Expectedvolatility is based on historical data from a peer group of public companies. The expected life is based on when the Group expectseach holder\u2019s award will be fully vested and settled by the Group, which is dependent on management\u2019s expectation of whenspecified triggering events requiring settlement will occur. The share price at valuation is based on the Group\u2019s equity valuation atthe time of various equity-related transactions that occurred during 2021 and 2020. The strike price represents actual andanticipated increases in equity between the SAR agreement date and the anticipated dates of settlement triggering events. The strikeprice is used to determine the difference between the equity value at the time of the settlement triggering event and the originalequity value of the Group.Employee incentive planMovements in the Group\u2019s employee incentive plan liabilities during the years ended 31 December 2022 and 2021 are as follows 2022 2021Balance at 1 January........................................................................................................................................14,935 10,501 Additions...........................................................................................................................................................5,075 6,648 Payments...........................................................................................................................................................(7,693) (2,214)Balance at 31 December prior to reclassification......................................................................................12,317 14,935 Reclassified to other current liabilities.........................................................................................................(11,773) - Balance at 31 December................................................................................................................................544 14,935 22. Share-based payments On 1 December 2022, the Renumeration Committee authorized and the Group granted restricted stock units (\u201cRSUs\u201d) toemployees, executives, and directors granting rights to Ordinary Shares once vesting conditions are met. Compensation expensefor RSUs is determined based upon the market price of the Ordinary Shares underlying the awards on the date of grant andexpensed over the vesting period, which is generally a one to four-year period, with a 1-year cliff vesting period and subsequentmonthly vesting, resulting from participates completing a service condition. Movements in RSUs during the year ended 31December 2022 are as follows:Weighted Average Fair RSUsvalueGranted.............................................................................................................................................................7,659,049 $6.68Vested................................................................................................................................................................(679,563) $6.30Outstanding at 31 December........................................................................................................................6,979,486 $6.72The Group recognized $10.3 million of share-based payment expense during the year ended 31 December 2022 (in thousands):2022Cost of product revenue................................................................................................................................................................1,522 Research and development expenses...........................................................................................................................................2,994 General and administrative expenses...........................................................................................................................................5,801 10,317 23. LitigationIn 2022, prior to the issuance date of these consolidated financial statements, the Group was involved in four litigations (all nowdismissed) in the United States adverse to AbbVie arising out of the development of Alvotech\u2019s AVT02 product, and the filing of abiologics license application with the U.S. Food and Drug Administration seeking regulatory approval (the \u201cAbbVie Litigations\u201d).On 19 March 2021, AbbVie Inc. and AbbVie Biotechnology Ltd. (collectively, \u201cAbbVie\u201d) filed an action against Alvotech hf. inthe United States District Court for the Northern District of Illinois alleging trade secret misappropriation under the Defend TradeSecrets Act and under the Illinois Trade Secrets Act. The complaint pleaded, among other things, that Alvotech hired a certainformer AbbVie employee in order to acquire and access trade secrets belonging to AbbVie. In October 2021, the Court grantedAlvotech\u2019s motion to dismiss the action, and AbbVie later appealed that ruling to U.S. Court of Appeals for the Seventh Circuit.On 17 December 2021, AbbVie Inc., AbbVie Biotechnology Ltd, and AbbVie Operations Singapore Pte. Ltd. filed a complaintwith the U.S. International Trade Commission against Alvotech hf., Alvotech Germany GmbH, Alvotech Swiss AG, AlvotechUSA Inc., Teva Pharmaceutical Industries Ltd., Teva Pharmaceuticals USA Inc., and Ivers-Lee AG (Certain Adalimumab,Processes for Manufacturing or Relating to Same, and Products Containing Same, Investigation No. 337-TA-1296). The complaintraised trade secret misappropriation allegations similar to those raised in the trade secret litigation that AbbVie previously filed inthe Northern District of Illinois. On 27 April 2021, AbbVie filed an action against Alvotech hf. in the United States District Court for the Northern District ofIllinois alleging infringement of four patents, under the patent laws of the United States. On 28 May 2021, AbbVie filed anotheraction against Alvotech hf. in the United States District Court for the Northern District of Illinois alleging infringement of 58patents, under the patent laws of the United States, the BPCIA, and the Declaratory Judgment Act, and later added two morepatents. As of 31 December 2022, the AbbVie Litigations were dismissed. On 8 March 2022, Alvotech entered into the AbbVie U.S.Agreement with AbbVie Inc. and AbbVie Biotechnology Ltd with respect to AVT02 for the U.S. market. Pursuant to thesettlement component of the AbbVie U.S. Agreement, the parties agreed to stipulate to the dismissal of all claims, counterclaimsand potential claims in the four U.S. litigations, with each party to bear its own fees and costs. The parties further agreed to releaseeach other from certain claims and demands. Under the licensing component of the AbbVie U.S. Agreement, AbbVie grantedAlvotech a license effective 1 July 2023 to make, import, use, distribute, sell and offer for sale AVT02 in the U.S. and a license tomanufacture, import and store a reasonable amount of AVT02 in anticipation of the commercial launch of AVT02 in the U.S.Under the agreement, Alvotech may sublicense certain rights to Teva, as a commercialization partner, and may also sublicense toother parties subject to certain conditions. In return, Alvotech is obligated to pay a royalty to AbbVie in the single-digits of the netsales of AVT02 in the U.S. The agreement does not provide for upfront or milestone payments. The obligation of Alvotech to payroyalties shall terminate on the earlier of (i) 11 February 2025; or (ii) a determination that licensed patents are invalid orunenforceable, at which time the license granted will be deemed fully paid up and irrevocable. Each party has the right to terminatethe agreement upon breach of certain terms of the agreement that remains uncured for a certain period of time. Additionally,AbbVie may terminate the agreement if Alvotech takes certain actions concerning the patentability, validity or enforceability ofAbbVie\u2019s patents in the U.S. with respect to AVT02.The Group incurred approximately $8.7 million and $13.5 million in legal expenses during the years ended 31 December 2022 and2021, respectively, in preparation for, and/or in relation to, these litigations. Aside from these matters, the Group is not currently aparty to any material litigations or similar matters. 24. Related partiesRelated parties are those parties which have considerable influence over the Group, directly or indirectly, including a parentcompany, owners or their families, large investors, key management personnel and their families and parties that are controlled byor dependent on the Group, such as affiliates and joint ventures. Key management personnel include the Group\u2019s executiveofficers and directors, since these individuals have the authority and responsibility for planning, directing and controlling theactivities of the Group. Interests in subsidiaries are set out in Note 1.Transactions with related partiesA related party transaction is a transfer of resources, services or obligations between the Group and a related party, regardless ofwhether a price is charged. The Group engages with related parties for both purchased and sold services, loans and otherborrowings and other activities.The Group entered into two lease agreements with Fasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf. in January 2019 and October 2020 for facilitiesin Iceland, both with remaining lease terms of approximately 17 years as of 31 December 2021. The Group also entered into tenseparate lease agreements with HRJAF ehf. throughout 2019 and 2020 for a group of apartment buildings in Iceland used fortemporary housing of employees and third party contractors. Two of the leases were terminated during the year ended 31December 2020. The group extinguished the lease agreements with S\u00e6mundur hf. as a result of the Share Purchase Agreement (seeNote 12). The remaining lease terms for the other eight leases approximate 8 years, on average, as of 31 December 2022. The Group provides and receives certain support services through arrangements with Aztiq, Alvogen and Alvogen Malta(Outlicensing) Ltd. (Adalvo). Services provided to Alvogen consist of finance, administrative, legal and human resource services.Services received from Alvogen primarily consist of marketing, salary processing and information technology support services.Services received from Adalvo primarily consist of legal, regulatory, supply chain management and portfolio and marketintelligence services. Purchased service includes rental fees and service expenses, as described above. Rental fees and service expenses with relatedparties are presented as \u201cGeneral and administrative expenses\u201d or \u201cResearch and development expenses\u201d in the consolidatedstatements of profit or loss and other comprehensive income or loss, depending on the nature of the service performed andexpense incurred by the Group. Rental liabilities from lease arrangements with related parties are presented as a component of\u201cLease liabilities\u201d on the consolidated statements of financial position. Service payables are presented as \u201cLiabilities to relatedparties\u201d on the consolidated statements of financial position. Interest includes interest expense on borrowings. Interest expenses on loans from related parties are presented as \u201cFinance costs\u201din the consolidated statements of profit or loss and other comprehensive income or loss. Borrowings are presented as\u201cBorrowings\u201d and \u201cCurrent maturities of borrowings\u201d on the consolidated statements of financial position. See Note 20 forfurther details on the Borrowing arrangements with related parties. Sold service includes services provided to related parties, as described above. Income from related parties for such services arepresented as \u201cOther income\u201d in the consolidated statements of profit or loss and other comprehensive income or loss. Amountsreceivable for such activities are presented as \u201cReceivables from related parties\u201d on the consolidated statements of financialposition. The Group has not recorded bad debt provisions for its receivables from related parties.Related party transactions as of and for the year ended 31 December 2022 are as follows (in thousands):Purchased Sold Receivables Payables /service / interest Service LoansAlvogen Lux Holdings S.\u00e0 r.l. \u2013 Sister company (a) ...............5,415 - - 64,588 Aztiq Fj\u00e1rfestingar ehf. (a) ...........................................................216 - - 20 Aztiq Consulting ehf. ....................................................................442 - - 25 ATP Holdings ehf. ........................................................................1,254 - 765 81,254 Fasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf. - Sister company (e) ..............7,189 - - - Fasteignaf\u00e9lagi\u00f0 Eyj\u00f3lfur hf. - Sister company .......................- 196 - - Alvogen Iceland ehf. - Sister company ...................................465 174 - 484 Alvogen ehf. - Sister company ..................................................- 68 1 - Lotus Pharmaceuticals Co. Ltd. - Sister company (b) ............- 3 2 7,440 Lotus International Pte. Ltd. - Sister company ........................- 4 3 - Alvogen Emerging Markets - Sister company .........................98 - - - Alvogen Korea co. Ltd - Sister company ..................................- 1 - - Alvogen Inc. - Sister company ...................................................585 266 12 222 Alvotech and CCHN Biopharmaceutical Co., Ltd. (c) .........- - 758 - Adalvo Limited - Sister company ...............................................1,218 106 - 349 Alvogen Malta Sh. Services - Sister company ..........................603 - 7 - Alvogen Spain SL - Sister Company ..........................................117 - - - Norwich Clinical Services Ltd - Sister Company ....................301 - - 31 Alvogen Pharma Pvt Ltd - Sister Company .............................1,159 - - - Fl\u00f3ki Fasteignir ehf. (HRJ\u00c1F ehf.) - Sister company ............1,516 - - 8,876 L41 ehf. ............................................................................................26 - - - Lambhagavegur 7 ehf. (d) ............................................................537 - - - 21,141 818 1,548 163,289 (a) The full amount of purchased service relates to interest expenses from long-term liabilities and the full amount of payables / loans are interest-bearing long-term liabilities (see Note 20).(b) Payables to Lotus Pharmaceuticals Co. Ltd. consists of the long-term liability as further described in Note 2. This long-term liability is presented as \u201cOther long-term liability to related party\u201d on the consolidated statements of financial position.(c) The amount receivable from Alvotech and CCHN Biopharmaceutical Co., Ltd. relates to amounts due for reference drugs used in research and development studies and certain consulting fees incurred by the Group. (d) Lambhagavegur is no longer a related party as it was sold during the year ended 31 December 2022. (e) Fasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf. was acquired as part of the Share Purchase Agreement, with ATP Holdings ehf., on 16November 2022. The related party transactions reflect activity until the acquisition date. See Note 12 and Note 20 for furtherdetails. Related party transactions as of and for the year ended 31 December 2021 are as follows (in thousands):Purchased Sold Receivables Payables /service / interest Service LoansAlvogen Lux Holdings S.\u00e0 r.l. \u2013 Sister company (a) ...............9,383 - - - Aztiq Pharma Partners S.\u00e0 r.l. \u2013 Sister company (a) ...............16,048 - - - Alvogen Aztiq AB \u2013 Sister company (a) ...................................297 - - 43Aztiq Fj\u00e1rfestingar ehf. (a) ...........................................................120 - - - Aztiq Investment Advisory AB (a) ............................................- - 2 - Fasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf. - Sister company ..................7,762 - - 83,770Alvogen Iceland ehf. - Sister company ...................................454 2,308 109 14Alvogen ehf. - Sister company ..................................................6 2 2 - Alvogen UK - Sister company ...................................................299 - 17 - Lotus Pharmaceuticals Co. Ltd. - Sister company (b) ............- 312 295 7,440Alvogen Emerging Markets - Sister company .........................238 - - 16Alvogen Korea co. Ltd - Sister company ..................................- 9 - - Alvogen Inc. - Sister company ...................................................89 654 301 - Alvotech and CCHN Biopharmaceutical Co., Ltd. (c) .........- - 320 - Alvogen Malta Sh. Services - Sister company ..........................1,216 151 - 283Alvogen Malta (Outlicensing) Ltd - Sister company ..............1,045 279 65 229Alvogen Spain SL - Sister Company ..........................................294 - - 23Norwich Clinical Services Ltd - Sister Company ....................41 - - 17Alvogen Pharma Pvt Ltd - Sister Company .............................491 - - 13HRJ\u00c1F ehf - Sister company .....................................................1,415 - - 9,794L41 ehf. ............................................................................................29 - - - Lambhagavegur 7 ehf. ..................................................................713 - - 12,66139,940 3,715 1,111 114,303 (a) The full amount of purchased service relates to interest expenses from long-term liabilities and the full amount of payables / loans are interest-bearing long-term liabilities (see Note 20).(b) Payables to Lotus Pharmaceuticals Co. Ltd. consists of the long-term liability as further described in Note 2. This long-term liability is presented as \u201cOther long-term liability to related party\u201d on the consolidated statements of financial position.(c) The amount receivable from Alvotech and CCHN Biopharmaceutical Co., Ltd. relates to amounts due for reference drugs used in research and development studies and certain consulting fees incurred by the Group. Commitments and guaranteesThe Group does not have any contractual commitments with its related parties other than the receivables, loans and payablespreviously disclosed. Key management personnelAt 31 December 2022 and 2021 there are no loans to the members of the Board of Directors and the CEO. In addition, therewere no transactions carried out (except those in Note 24) between the Group and members of the Board of Directors nor theCEO in the year ended 31 December 2022 and 2021. The Board of Directors' remuneration is shown in the table below. Board of Directors' fee for the year and shares at year end (board fees in2022thousands and shares in whole amounts).Pension Shares at year-Board feescontributionend**Robert Wessman, Chairman of the board..................................................................740 - - Richard Davies, Vice-Chairman...................................................................................68 - 1,133,131 Ann Merchant, Board Member (from 16.6.2022)....................................................43 - - \u00c1rni Har\u00f0arson, Board Member (from 16.6.2022)*................................................- - - Faysal Kalmoua, Board Member*................................................................................- - - Linda McGoldrick, Board Member (from 16.6.2022).............................................38 - - Lisa Graver, Board Member (from 16.6.2022)..........................................................38 - - Tomas Ekman, Board Member*..................................................................................- - - Hirofumi Imai, Board member (until 16.6.2022)......................................................- - - 927 - 1,133,131 *Waived their board compensation (both cash and equity).**Direct share ownership2022Salaries and Pension Termination Other long-Key employeesbenefitscontributionbenefitsterm benefitsMark Levick CEO..........................................................................892 162 1,157 - Other Executive Team Members (9)..........................................5,400 446 820 5,015 6,292 608 1,977 5,015 Board of Directors' fee for the year and shares at year end (board fees in2021thousands and shares in whole amounts).Pension Shares at year-Board feescontributionend**Robert Wessman, Chairman of the board..................................................................- - - Richard Davies, Vice-Chairman...................................................................................- - 893,060 Faysal Kalmoua, Board Member*................................................................................- - - Tomas Ekman, Board Member*..................................................................................- - - Hirofumi Imai, Board member....................................................................................- - - Tanya Zharov (from 23.8.2021)*.................................................................................- - - - - 893,060 *Waived their board compensation (both cash and equity).**Direct share ownership2021Salaries and Pension Termination Other long-Key employeesbenefitscontributionbenefitsterm benefitsMark Levick CEO..........................................................................877 159 - - Other Executive Team Members (9)..........................................4,531 333 - 985 5,408 492 - 985 25. Other current liabilitiesThe composition of other current liabilities as of 31 December 2022 and 2021 is as follows (in thousands):2022 2021Unpaid salary and salary related expenses..................................................................................................15,620 10,235 Accrued interest...............................................................................................................................................2,249 7,547 Accrued payable to Biosana..........................................................................................................................- 7,500Accrued vacation leave...................................................................................................................................5,025 4,626 Employee incentive plan................................................................................................................................12,433 - Accrued expenses............................................................................................................................................18,720 12,104 54,047 42,012 26. Interests in joint venturesIn September 2018, Alvotech hf., a subsidiary of the Group, entered into a joint venture agreement with Changchun High & NewTechnology Industries (Group) Inc. (the \u201cjoint venture partner\u201d) to form a newly created joint venture entity, Alvotech & CCHNBiopharmaceutical Co., Ltd. (the \u201cjoint venture\u201d or \u201cJVCO\u201d). The purpose of the JVCO is to develop, manufacture and sellbiosimilar products in the Chinese market. The JVCO\u2019s place of business is also the country of incorporation.Place of Ownership interestCarrying amountName of entitybusiness2022 202120222021Alvotech & CCHN BiopharmaceuticalChina 50% 50% 48,568 55,307 Co., LtdThe proportion of ownership interest is the same as the proportion of voting rights held by the Group. Management evaluatedwhether the Group\u2019s voting rights are sufficient for providing a practical ability to direct the relevant activities and strategicobjectives of JVCO unilaterally. As the Group does not hold a majority of the voting rights, the Group does not control JVCO. Asa result, the Group\u2019s investment in JVCO is accounted for using the equity method.The following table provides the change in the Group\u2019s investment in a joint venture during the years ended 31 December 2022and 2021 (in thousands):2022 2021Balance at 1 January........................................................................................................................................55,307 56,679 Share in losses..................................................................................................................................................(2,590) (2,418)Translation difference.....................................................................................................................................(4,149) 1,046 Balance at 31 December................................................................................................................................48,568 55,307 The tables below provide summarized financial information for the JVCO. The information disclosed reflects the amountspresented in the financial statements of the JVCO and not the Group\u2019s share of those amounts. They have been amended toreflect adjustments made by the Group when using the equity method, including fair value adjustments and modifications fordifferences in accounting policy.Summarized Statement of Financial Position (in thousands)2022 2021Current assets Cash and bank balances..............................................................................................................................17,203 29,659 Trade receivables..........................................................................................................................................- 15 Inventories....................................................................................................................................................250 18 Other current assets ...................................................................................................................................1,539 1,372 Total current assets ........................................................................................................................................18,992 31,064 Total non-current assets107,487 94,525 Current liabilities Financial liabilities .......................................................................................................................................145 - Other current liabilities...............................................................................................................................14,129 12,156 Total current liabilities ...................................................................................................................................14,274 12,156 Total non-current liabilities15,069 2,820 Net assets97,136 110,613 Reconciliation to carrying amounts (in thousands):2022 2021Opening net assets at 1 January....................................................................................................................110,613 113,061 Loss for the year..............................................................................................................................................(5,180) (4,836) Other comprehensive income.......................................................................................................................- - Cash contributions of owners.......................................................................................................................- - Receivable from owners.................................................................................................................................- - Dividend paid...................................................................................................................................................- - Other, net..........................................................................................................................................................(8,297) 2,388 Closing net assets at 31 December..............................................................................................................97,136 110,613 Group\u2019s share in %.........................................................................................................................................50% 50%Group\u2019s share in USD....................................................................................................................................48,568 55,307 Carrying amount..............................................................................................................................................48,568 55,307 2022 2021Summarized Statement of Profit or Loss & Other Comprehensive Income (in thousands)Revenue.............................................................................................................................................................- - Interest income................................................................................................................................................433 1,295 Depreciation and Amortization....................................................................................................................829 210 Interest expense...............................................................................................................................................151 - Income tax expense........................................................................................................................................- - Other expenses................................................................................................................................................4,633 5,920 Exchange rate differences..............................................................................................................................- 1 Loss for the year................................................................................................................(5,180) (4,836) Other comprehensive income.......................................................................................................................- - Total comprehensive loss..............................................................................................................................(5,180) (4,836) Dividends received from joint venture entity............................................................................................- - The Group did not receive any dividends from JVCO during the years ended 31 December 2022 and 2021. The Group had a $5.0million commitment to provide a cash contribution to JVCO as of 31 December 2019, which was paid during the year ended 31December 2020. Similarly, the joint venture partner had a $50.0 million commitment to provide a cash contribution to JVCO as of31 December 2019, which was also paid during the year ended 31 December 2020. The Group does not have any remainingcommitments to JVCO as of 31 December 2022 and 2021. Furthermore, the Group does not have any contingent liabilitiesrelating to its interests in JVCO as of 31 December 2022 or 2021. While there are no significant restrictions resulting fromcontractual arrangements with JVCO, entities in China are subject to local exchange control regulations. These regulations providefor restrictions on exporting capital from those countries, other than dividends. 27. Financial instrumentsAccounting classification and carrying amountsFinancial assets as of 31 December 2022 and 2021, all of which are measured at amortized cost, are as follows (in thousands):2022 2021Cash and cash equivalents.............................................................................................................................66,427 17,556 Restricted cash.................................................................................................................................................25,187 10,087 Trade receivables.............................................................................................................................................32,972 29,396 Other current assets........................................................................................................................................5,880 14,518 Receivables from related parties...................................................................................................................1,548 1,111 Other long-term assets...................................................................................................................................4,484 -136,498 72,668 Financial liabilities as of 31 December 2022 and 2021 are as follows (in thousands):2022 2021Borrowings (measured at amortized cost)..................................................................................................764,570 400,911 Derivative financial liabilities (measured at FVTPL)................................................................................380,232 -Other long-term liability to related party (measured at amortized cost)..............................................7,440 7,440 Long-term incentive plan (measured at FVTPL)......................................................................................544 56,334 Trade and other payables (measured at amortized cost).........................................................................49,188 28,587 Lease liabilities (measured at amortized cost)............................................................................................40,532 122,140 Liabilities to related parties (measured at amortized cost)......................................................................1,131 638 Other current liabilities...................................................................................................................................53,664 42,012 1,297,301 658,062 It is management\u2019s estimate that the carrying amounts of financial assets and financial liabilities carried at amortized costapproximate their fair value, with the exception of the Senior Bonds , since any applicable interest receivable or payable is eitherclose to current market rates or the instruments are short-term in nature. Material differences between the fair values and carryingamounts of these borrowings are identified as follows (in thousands): At 31 December 2022Carrying amountFair valueSenior Bonds....................................................................................................................................................530,506 535,167 At 31 December 2021Carrying amountFair valueBonds.................................................................................................................................................................363,100 368,476 Fair value measurementsThe following tables illustrate the fair value measurement hierarchy of the Group\u2019s financial instruments measured to fair value ona recurring basis as of 31 December 2022 (in thousands):2022Level 1 Level 2 Level 3 TotalSenior Bond Warrants....................................................................- - 45,325 45,325 Tranche A Conversion Feature....................................................- - 38,055 38,055 Sr. Bond Interest Rate Feat. (incl. in oth. current assets).......- - 851 851 Predecessor Earn Out Shares.......................................................- 276,200 - 276,200OACB Earn Out Shares................................................................- 10,500 - 10,500OACB Warrants..............................................................................10,152 - - 10,15210,152 286,700 84,231 381,083 The Group did not recognize any transfers of assets or liabilities between levels of the fair value hierarchy during the years ended31 December 2022 and 2021.The Group recognized derivative financial liabilities related to the equity conversion rights in the convertible bonds as well as theequity conversion rights, warrant rights and funding rights in the convertible shareholder loans as of 31 December 2020. Thesederivative financial liabilities were extinguished during the year ended 31 December 2021. Refer to Note 20 for additional detailson the extinguishment. Tranche A Conversion Feature As noted in Note 20, in connection with the Convertible Bonds the Group classified the Tranche A Conversion Feature as anembedded derivative liability due to the variability created by conversion rates resulting from the tranche being denominated inISK. The conversion feature had a fair value of $24.9 million and $38.1 million as of 20 December 2022 and 31 December 2022,respectively. The change in fair resulted in $13.2 million of finance costs for the year ended 31 December 2022.The fair value of the Tranche A Conversion Feature was determined using a lattice model that incorporated inputs andassumptions as further described below. The inputs and assumptions associated with the valuation of the instruments aredetermined based on all relevant internal and external information available and are reviewed and reassessed at each reporting date.The following table presents the assumptions and inputs that were used for the model in valuing the Tranche A ConversionFeature:31 December 20 December 20222022Stock price...........................................................................................................................................................$10.00 $8.00Conversion price................................................................................................................................................$10.00 $10.00Volatility rate.......................................................................................................................................................45.0% 45.0%Risk-free interest rate........................................................................................................................................4.2% 4.0%Dividend yield....................................................................................................................................................0.0% 0.0%Risk yield.............................................................................................................................................................19.3% 18.6%Senior Bond WarrantsAs part of the Senior Bonds agreement (see Note 20), the Group agreed to issue penny warrants to the Bondholders that areissuable if certain events occur. The contingently issuable Senior Bond Warrants include two tranches:\u2022 One tranche representing 1.5% of the fully diluted ordinary share capital if the aggregate amount of the net proceeds of all newequity issuances received by the Company on or before 15 December 2022 is less than $75.0 million, as defined in the SeniorBonds agreement.\u2022 One tranche representing 1.0% of the fully diluted ordinary share capital if the aggregate amount of the net Proceeds of all newequity issuances received by the Company on or before 31 March 2023 is less than $150.0 million, as defined in the Senior Bondsagreement.The Senior Bond Warrants are accounted for as derivative financial liabilities in accordance with IFRS 9 and IAS 32 and will besubject to ongoing mark-to-market adjustments through the consolidated statement of profit or loss and other comprehensiveincome or loss. The Senior Bond Warrants had a fair value of $15.4 million on 16 November 2022. The fair value was determinedusing the Finnerty model along with the publicly quoted trading price of Ordinary Shares and probability of the contingent eventsoccurring at the valuation date. Probabilities associated with the instruments are determined based on all relevant internal andexternal information available and are reviewed and reassessed at each reporting date.On 31 December 2022, the Company issued 4,198,807 warrants, with an exercise price of $0.01, representing the first tranche ofSenior Bond Warrants. The issued warrants, along with the remaining tranche of contingently issuable warrants had a fair value of$45.3 million as of 31 December 2022. The Group recognized $29.9 million in finance costs resulting from the change in fair valueof the Senior Bond Warrants.Predecessor Earn Out SharesAs part of the Business Combination, Predecessor shareholders were granted a total of 38,330,000 Ordinary Shares subject tocertain vesting conditions (\u201cPredecessor Earn Out Shares\u201d). One half of the Predecessor Earn Out Shares will vest if, at any timeduring the five years following the closing of the Business Combination, the Alvotech ordinary share price is at or above a volumeweighted average price (\u201cVWAP\u201d) of $15.00 per share for any ten trading days within any twenty-trading day period, with the otherhalf vesting at a VWAP of $20.00 per share for any ten trading days within any twenty-trading day period. The Predecessor EarnOut Shares are accounted for as derivative financial liabilities in accordance with IAS 32 and will be subject to ongoing mark-to-market adjustments through the consolidated statement of profit or loss and other comprehensive income or loss. The PredecessorEarn Out Shares had a fair value of $227.5 million at the Closing Date and $276.2 million as of 31 December 2022, resulting in$48.7 million of finance costs during the year ended 31 December 2022.The fair value of the Predecessor Earn Out Shares was determined using Monte Carlo analysis that incorporated inputs andassumptions as further described below. The inputs and assumptions associated with the valuation of the instruments aredetermined based on all relevant internal and external information available and are reviewed and reassessed at each reporting date.The following table presents the assumptions and inputs that were used for the model in valuing the Predecessor Earn Out Shares:31 December 202215 June 2022Share price...........................................................................................................................................................$10.00 $9.38Volatility rate.......................................................................................................................................................45.0% 37.5%Risk-free interest rate........................................................................................................................................4.05% 3.4%OACB Earn Out SharesFormer OACB shareholders were granted a total of 1,250,000 Ordinary Shares subject to certain vesting conditions (\u201cOACB EarnOut Shares\u201d). One half of the OACB Earn Out Shares will vest if, at any time during the five years following the closing of theBusiness Combination, the Alvotech ordinary share price is at or above a VWAP of $12.50 per share for any ten trading dayswithin any twenty-trading day period, with the other half vesting at a VWAP of $15.00 per share. The OACB Earn Out Shares areaccounted for as derivative financial liabilities in accordance with IAS 32 and will be subject to ongoing mark-to-marketadjustments through the statement of profit or loss and other comprehensive income or loss. The OACB Earn Out Shares had afair value of $9.1 million at the Closing Date and $10.5 million as of 31 December 2022, resulting in $1.4 million of finance costsduring the year ended 31 December 2022. The fair value of the OACB Earn Out Shares was determined using a Monte Carlo analysis that incorporated inputs andassumptions as further described below. Assumptions and inputs associated with the valuation of the instruments are determinedbased on all relevant internal and external information available and are reviewed and reassessed at each reporting date. Thefollowing table presents the assumptions and inputs that were used for the model in valuing the OACB Earn Out Shares:31 December 202215 June 2022Share price...........................................................................................................................................................$10.00 $9.38Volatility rate.......................................................................................................................................................45.0% 37.5%Risk-free interest rate........................................................................................................................................4.05% 3.4%OACB Warrants Additionally, as part of the Business Combination the Company assumed the 10,916,647 outstanding OACB warrants, onsubstantially the same contractual terms and conditions as were in effect immediately prior to the Business Combination, includingan exercise price of $11.50. Each warrant entitles the holder to purchase one Alvotech ordinary share. The OACB warrants areaccounted for as derivative financial liabilities in accordance with IAS 32 and will be subject to ongoing mark-to-marketadjustments through the consolidated statement of profit or loss and other comprehensive income or loss. The OACB warrantshad a fair value of $11.8 million at the Closing Date and $10.2 million as of 31 December 2022. The fair value of the warrants wasderived from the publicly quoted trading price at the valuation date. The change in fair value of the OACB Warrants resulted in$1.6 million of finance income for the year ended 31 December 2022.Convertible shareholder loansThe fair value of the derivatives associated with the convertible shareholder loans was $485.9 million and $534.7 million at 7December 2021, the date of extinguishment (refer to Note 20 for additional details) and 31 December 2020. Changes in the fairvalue of the financial instruments during the period are recognized in the consolidated statements of profit or loss and othercomprehensive income or loss.The fair value of the derivatives associated with the convertible shareholder loans on 7 December 2021 was determined based onthe number of shares to be issued at the closing of the Business Combination Agreement multiplied by OACB stock price ($9.86). In aggregate, the fair value of the derivative liabilities associated with the convertible shareholder loans and convertible bonds at 31December 2019 was $479.3 million. In 2020, the fair value of the derivative liabilities increased by $55.4 million, resulting inderivative liabilities of $534.7 million at 31 December 2020. In 2021, the fair value of the financial instruments decreased by $48.8million, resulting in derivative liabilities of $485.9 million at 7 December 2021, the date of extinguishment. Included in the changesin fair value of the derivative liabilities is the amortization of a deferred loss associated with the recognition of funding rights at theinception of the convertible shareholder loan with Aztiq. Specifically, at inception, the fair value of the funding rights, determinedusing unobservable inputs, exceeded the transaction price by $15.0 million. The deferred loss was recognized over the 5-year termof the convertible shareholder loan using the straight-line method of amortization. The unamortized deferred loss, which is nettedagainst derivative financial liabilities on the consolidated statements of financial position, was $3.1 million as of 7 December 2021,the date of extinguishment.The Group did not recognize any transfers of assets or liabilities between levels of the fair value hierarchy during the years ended31 December 2022 and 2021.Capital managementThe capital structure of the Group consists of equity, debt and cash. For the foreseeable future, the Board of Directors willmaintain a capital structure that supports the Group\u2019s strategic objectives through managing the budgeting process, maintainingstrong investor relations and managing the financial risks of the Group, as further described below. No changes were made in theobjectives, policies or processes for managing capital during the years ended 31 December 2022 and 2021.Financial risk managementThe Group\u2019s corporate treasury function provides services across the organization, coordinates access to domestic andinternational financial markets, monitors and manages the financial risks relating to the Group\u2019s operations through internal riskreports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk andinterest rate risk), credit risk and liquidity risk.Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inmarket interest rates. The Group\u2019s exposure to the risk of fluctuations in market interest rates primarily relates to the cash in bankthat is subject to floating interest rates.The following table provides an interest rate sensitivity analysis for the effect on loss before tax (in thousands):2022 2021Variable-rate financial liabilities +100.........................................................................................................(186) (65)Variable-rate financial liabilities -100...........................................................................................................186 65 Foreign currency riskForeign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inforeign exchange rates. The Group\u2019s exposure to currency risk arises from financial assets and financial liabilities denominated inother currencies than the presentation currency of the Group.Below are the foreign currencies that have the most significant impact on the Group's operations.Closing rateAverage rateChange2022 2021 2022 2021EUR ....................................................................1.061 1.133 1.052 1.183 (6.4%)GBP ....................................................................1.204 1.350 1.233 1.376 (10.8%)ISK ......................................................................0.007 0.008 0.007 0.008 (8.3%)CHF ....................................................................1.071 1.094 1.047 1.094 (2.1%)INR .....................................................................0.012 0.013 0.013 0.014 (10.1%)The Group\u2019s assets and liabilities that are denominated in foreign currencies as of 31 December 2022 are as follows (in thousands):Assets Liabilities NetEUR ..................................................................................................................................36,420 26,514 9,906 GBP ..................................................................................................................................111 1,538 (1,427)ISK ....................................................................................................................................49,484 109,507 (60,023)CHF ..................................................................................................................................69 7,305 (7,236)INR ...................................................................................................................................11 517 (506)The Group\u2019s assets and liabilities that are denominated in foreign currencies as of 31 December 2021 are as follows (in thousands):Assets Liabilities NetEUR ..................................................................................................................................31,718 15,720 15,998 GBP ..................................................................................................................................180 673 (493)ISK ....................................................................................................................................5,421 148,747 (143,326)CHF ..................................................................................................................................715 7,305 (6,590)A reasonable possible strengthening or weakening of the Group\u2019s significant foreign currencies against the USD would affect themeasurement of financial instruments denominated in a foreign currency and affect equity by the amount shown in the sensitivityanalysis table below. The analysis assumes that all other variables, such as interest rates, remain constant.Year ended 31 December 2022 EUR GBP ISK CHF INR-10% weakening ............................................. (991) (143) (6,002) (724) (51)+10% strengthening ..................................... 991 143 6,002 724 51 Year ended 31 December 2021 EUR GBP ISK CHF INR-10% weakening ............................................. (1,600) (49) (14,333) (659) N/A+10% strengthening ..................................... 1,600 49 14,333 659 N/ALiquidity riskLiquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilitiesthat are settled by delivering cash or another financial asset.Contractual maturities of financial assets and liabilities as of 31 December 2022 are as follows (in thousands):Within one One to twoFinancial assets year years Thereafter TotalNon-interest bearing .....................................................................40,400 - - 40,400 Variable-interest bearing ...............................................................66,427 - 29,671 96,098 Total financial assets .....................................................................106,827 - 29,671 136,498 Financial liabilitiesNon-interest bearing .....................................................................104,366 - 7,984 112,350 Fixed-interest bearing - Borrowings ..........................................45,757 66,308 896,921 1,008,986 Derivative liabilities .......................................................................- - 380,232 380,232 Variable-interest bearing - Borrowings ......................................25,259 8,036 59,109 92,404 Total financial liabilities ................................................................175,382 74,344 1,344,246 1,593,972 Credit riskCredit risk it the risk that a counterparty will not fulfill its contractual obligations under a financial instrument contract, leading to afinancial loss for the Group. The maximum credit risk exposure for the Group\u2019s financial assets as of 31 December 2022 and 2021is as follows (in thousands):2022 2021Cash and cash equivalents ............................................................................................................................66,427 17,556 Restricted cash ................................................................................................................................................25,187 10,087 Other assets .....................................................................................................................................................44,884 66,344 136,498 93,987 The Group\u2019s cash and cash equivalents and restricted cash are deposited with high-quality financial institutions. Managementbelieves these financial institutions are financially sound and, accordingly, that minimal credit risk exists. The Group has notexperienced any losses on its deposits of cash and cash equivalents and restricted cash yet monitors the credit rating of thesefinancial institutions on a periodic basis.Other assets primarily consist of other current assets, as described in Note 18, and trade receivables and contract assets recognizedin connection with the Group\u2019s performance pursuant to its contracts with customers, all of which are large multinationalpharmaceutical companies. There are no significant amounts past due as of 31 December 2022 and 2021 and the Group concludesthat any expected credit losses with respect to these assets is immaterial.Contractual maturities of financial assets and liabilities as of 31 December 2021 are as follows (in thousands):Within one One to twoyear years Thereafter TotalFinancial assetsNon-interest bearing .....................................................................29,396 - - 29,396 Variable-interest bearing ...............................................................17,556 - 10,087 27,643 Total financial assets .....................................................................46,952 - 10,087 57,039 Financial liabilitiesNon-interest bearing .....................................................................71,237 - 63,774 135,011 Fixed-interest bearing - Borrowings ..........................................16,663 33,235 500,675 550,573 Variable-interest bearing - Borrowings ......................................3,041 3,035 1,117 7,193 Total financial liabilities ................................................................90,941 36,270 565,566 692,777 Refer to Note 13 for the maturity analysis of the Group\u2019s undiscounted lease payments.28. Supplemental cash flow informationSupplement cash flow information for the year ended 31 December 2022 and 2021 is included below (in thousands).Non-cash investing and financing activities 2022 2021Acquisition of property, plant and equipment in trade payables...........................................................4,131 3,812 Acquisition of intangibles in trade payables and other current liabilities.............................................4,075 - Right-of-use assets obtained through new operating leases....................................................................9,583 18,871 Addition of the Facility through Aztiq Convertible Bond......................................................................115,005 - Non-cash issuance of Aztiq Convertible Bond.........................................................................................80,000 - Equity issued through conversion of borrowings.....................................................................................32,200 346,043 Acquisition of other intangible assets through financing agreements..................................................- 461 29. Subsequent eventsThe Group evaluated subsequent events through 1 March 2023, the date the consolidated financial statements were available to beissued.On 25 January 2023, the Company issued an additional $10.0 million in Tranche B Convertible Bonds. Holders of the Tranche BConvertible Bonds may elect, at their sole discretion, to convert all or part of the principal amount and accrued interest intoAlvotech Ordinary Shares at a conversion price of $10.00 per share on December 31, 2023, or June 30, 2024. The conversionfeature will be accounted for as an embedded derivative and classified as equity.On 10 February 2023, the Company completed a private placement equity offering of $137.0 million, at current ISK exchangerates, of its Ordinary Shares, par value $0.01 per share, at a purchase price of $11.57 per share. The Shares are expected bedelivered from previously issued ordinary shares held by Alvotech\u2019s subsidiary, Alvotech Manco ehf. As a result of proceeds raisedfrom the private placement offering, the Company extinguished the liability related to the Senior Bond Warrants resulting in thepotential issuance of penny warrants representing 1.0% of the fully diluted ordinary share capital (see Note 20). This will beaccounted for as an extinguishment of a financial liability in the consolidated statement of profit or loss and other comprehensiveincome or loss.On 17 February 2023, the first tranche of OACB Earn Out Shares vested resulting in the issuance of 625,000 Ordinary Shares. Theissuance of Ordinary Shares for the first tranche will be accounted for as an extinguishment of a financial liability in theconsolidated statement of profit or loss and other comprehensive income or loss.On 27 February 2023, the Group and Teva signed an amendment to the licence & development agreement. As part of thatamendment, the Group agreed to provide future financial consideration to Teva to assist with the cost of launching and marketingthe licensed biosimilar products.Subsequent to 31 December 2022, Senior Bond Warrant holders elected to exercise their warrants. As a result, 3,014,189 OrdinaryShares were issued in exchange for the exercising of the penny warrants. The Company received an immaterial amount of cash andwill recognize the transaction as an extinguishment of the derivative financial liabilities. The difference between the equity issuedand carrying value of the derivative financial liabilities will be recognized in the consolidated statement of profit or loss and othercomprehensive income or loss. Subsequent to 31 December 2022, holders of the OACB Warrants exercised their warrant rights for an exercise price of $11.50 forthe rights to one Ordinary Share per warrant. The exercises result in the issuance of 271,150 Ordinary Shares and cash proceeds of$3.1 million. The Company will recognize the transaction as an extinguishment of the derivative financial liabilities. The differencebetween the equity issued and carrying value of the derivative financial liabilities will be recognized in the consolidated statement ofprofit or loss and other comprehensive income or loss.",
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"value": "1.1 Capital ReorganizationOn 15 June 2022 (the \u201cClosing Date\u201d), the Company consummated the capital reorganization with Alvotech Holdings S.A. andOACB (the \u201cBusiness Combination\u201d or \u201cCapital Reorganization\u201d) pursuant to the business combination agreement, dated as of 7December 2021, as amended by an amendment agreement dated 18 April 2022 and 7 June 2022 (the \u201cBusiness CombinationAgreement\u201d), by and among the Company, Oaktree Acquisition Corp. II (\u201cOACB\u201d) and the Predecessor. The closing of theBusiness Combination resulted in the following transactions:\u25cf OACB merged with and into the Company, whereby (i) all of the outstanding ordinary shares of OACB (\u201cOACB OrdinaryShares\u201d) were exchanged for ordinary shares of Alvotech (\u201cOrdinary Shares\u201d) on a one-for-one basis, pursuant to a share capitalincrease of Alvotech and (ii) all of the outstanding warrants of OACB ceased to represent a right to acquire OACB OrdinaryShares and now represent a right to be issued one Ordinary Share, with Alvotech as the surviving company in the merger. Prior tothe merger OACB shares were redeemed, resulting in $9.8 million of cash proceeds from the OACB trust account;\u25cf Alvotech redeemed and canceled the initial shares held by the initial sole shareholder of Alvotech pursuant to a share capitalreduction of Alvotech;\u25cf The legal form of Alvotech changed from a simplified joint stock company (soci\u00e9t\u00e9 par actions simplifi\u00e9e) to a public limitedliability company (soci\u00e9t\u00e9 anonyme) under Luxembourg law; and\u25cf The Predecessor merged with and into the Parent, whereby all outstanding ordinary shares of the Predecessor (\u201cPredecessorOrdinary Shares\u201d) were exchanged for Ordinary Shares, pursuant to a share capital increase of Alvotech, with Alvotech as thesurviving company in the merger.Concurrently with the execution of the Business Combination Agreement, OACB and Alvotech entered into subscriptionagreements (\u201cSubscription Agreements\u201d) with certain investors (the \u201cPIPE Financing\u201d). On 15 June 2022, immediately prior to theclosing of the Business Combination, the PIPE Financing was closed, pursuant to the Subscription Agreements, in whichsubscribers collectively subscribed for 17,493,000 Ordinary Shares at $10.00 per share for an aggregate subscription price equal to$174.9 million.As part of the Business Combination, Predecessor shareholders were granted a total of 38,330,000 Ordinary Shares subject tocertain vesting conditions (\u201cPredecessor Earn Out Shares\u201d). Former OACB shareholders were granted a total of 1,250,000Ordinary Shares subject to certain vesting conditions (\u201cOACB Earn Out Shares\u201d). Additionally, as part of the BusinessCombination the Company assumed the 10,916,647 outstanding warrants (\u201cOACB Warrants\u201d), on substantially the samecontractual terms and conditions as were in effect immediately prior to the Business Combination. See Note 27 for further details. The Business Combination was accounted for as a capital reorganization. Under this method of accounting, OACB was treated asthe \u201cacquired\u201d company for financial reporting purposes, with Alvotech Holdings S.A. being the accounting acquirer andaccounting predecessor. Accordingly, the capital reorganization was treated as the equivalent of Alvotech issuing shares at theclosing of the Business Combination for the net assets of OACB as of the Closing Date, accompanied by a recapitalization. Thecapital reorganization, which was not within the scope of IFRS 3 since OACB did not meet the definition of a business inaccordance with that guidance, was accounted for within the scope of IFRS 2. In accordance with IFRS 2, Alvotech recorded a one-time non-cash share listing expense of $83.4 million, recognized as a general and administrative expense, based on the excess of thefair value of Alvotech shares issued, at the Closing Date, over the fair value of OACB's identifiable net assets acquired. The fairvalue of shares issued was estimated based on a market price of $9.38 per share as of 15 June 2022. Shares (in 000s)OACB Shareholders Class A Shareholders..................................................................................................................................976,505 Class B Shareholders..................................................................................................................................5,000,000 OACB Earn Out Shares............................................................................................................................1,250,000 Total Alvotech Shares issued to OACB shareholders.........................................................................7,226,505 Fair value of Shares issued to OACB as of 15 June 2022..................................................................56,060$ Fair value of OACB Earn Out Shares issued to OACB as of 15 June 2022..................................9,100 Estimated fair market value......................................................................................................................65,160 Adjusted net liabilities of OACB as of 15 June 2022..........................................................................(18,251)Difference - being the share listing expense..............................................................................................83,411 In connection with the Business Combination and PIPE Financing, the Company incurred $28.5 million of transaction costs,which represent legal, financial advisory, and other professional fees in connection with the Business Combination and PIPEFinancing, during the year ended 31 December 2022. Of this amount, $5.6 million represented equity issuance costs related toPIPE Financing that were capitalized in share premium. The remaining $22.9 million was recognized as general and administrativeexpense.",
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"value": "public limited company ",
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"value": "9, rue de Bitbourg, L-1273 Luxembourg,",
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"value": "The Company and its subsidiaries (collectively referred to as the \u201cGroup\u201d) are a global biotech company specialized in thedevelopment and manufacture of biosimilar medicines for patients worldwide. The Group has commercialized a certain biosimilarproduct and has multiple biosimilar molecules.",
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"pp-value-9-2": {
"value": "1.2 Information about subsidiaries and joint venturesIssued and paid capital Principal (presented in Place ofProportion of ownership and Entity name establishmentactivitywhole shares) voting power held by Alvotech31.12.2022 31.12.2021Alvotech hf...................................................... Biopharm. 3,885,102 Iceland 100.00% 100.00%Alvotech Germany GmbH........................... Biopharm. 31,182 Germany 100.00% 100.00%Alvotech Swiss AG........................................ Biopharm. 153,930 Switzerland 100.00% 100.00%Alvotech Hannover GmbH......................... Biopharm. 29,983 Germany 100.00% 100.00%Alvotech Malta Ltd........................................ Group Serv. 80,450 Malta 100.00% 100.00%Alvotech USA Inc.......................................... Biopharm. 10 USA 100.00% 100.00%Alvotech UK Ltd............................................ Group Serv. 135 UK 100.00% 100.00%Alvotech Manco ehf...................................... Group Serv. 203,046 Iceland 100.00% -Alvotech Biosciences India Pvt Ltd............ Biopharm. 96,113 India 100.00% -Fasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf..................... Real Estate 12,965,337 Iceland 100.00% -Alvotech & CCHN Bioph.. Co. Ltd*......... Biopharm. 110,000,021 China 50.00% 50.00%* Alvotech & CCHN Biopharmaceutical Co. Ltd. is an unconsolidated joint venture (see Note 26). 1.3 Information about shareholdersSignificant shareholders of the Company are Aztiq Pharma Partners S.\u00e0 r.l. (Aztiq) and Alvogen Lux Holdings S.\u00e0 r.l. (Alvogen),with 40.7% and 35.8% ownership interest as of 31 December 2022, respectively. The remaining 23.5% ownership interest is heldby various entities, with no single shareholder holding more than 2.4% ownership interest as of 31 December 2022.Aztiq and Alvogen held 45.1% and 39.5% ownership interest as of 31 December 2021, respectively. The remaining 15.4%ownership interest was held by various entities, with no single shareholder holding more than 2.4% ownership interest as of 31December 2021.",
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"pp-value-10-2": {
"value": "1.4 Impact of COVID-19, the Russia and Ukraine Conflict, and Economic ConditionsWith the ongoing COVID-19 pandemic, the Group created a COVID-19 task force which implemented a business continuity planto address and mitigate the impact of the pandemic on the Group\u2019s business and operations across sites. As a result, in the short-term, the pandemic has not had a material impact on the Group\u2019s financial condition, results of operations, the timelines forbiosimilar product development, expansion efforts or the Group\u2019s operations as a whole. However, the extent to which thepandemic will impact the Group\u2019s business, biosimilar product development and expansion efforts, corporate developmentobjectives and the value of and market for the Ordinary Shares will depend on future developments that are highly uncertain andcannot be predicted with confidence at this time, such as the ultimate direction of the pandemic, emergence and spread of newvariants of the disease, travel restrictions, quarantines, social distancing, business closure requirements and the effectiveness ofother actions taken globally to contain and treat the disease. The global economic slowdown, the overall disruption of global supply chains and distribution systems, the effects of this on the work of appropriate regulatory authorities in different regions and theother risks and uncertainties associated with the pandemic could have a material adverse effect on the Group\u2019s business, financialcondition, results of operations and growth prospects.In February 2022, Russia began a military invasion of Ukraine. The global response to this invasion could have an adverse impacton the Group\u2019s business, including the effects of relocating clinical trials and the Group\u2019s ability to market and sell products inEurope, by creating disruptions in global supply chain, and potentially having an adverse impact on the global economy, Europeaneconomy, financial markets, energy markets, currency rates, and otherwise. Currently, the conflict has not had a material impact onthe Group\u2019s financial condition, results of operations, the timelines for biosimilar product development, expansion efforts or theGroup\u2019s operations as a whole.The Company believes that inflation will have a general impact on the business in line with overall price increases, increases in thecost of borrowing, and operating in an inflationary economy. We cannot predict the timing, strength, or duration of anyinflationary period or economic slowdown or its ultimate impact on the Company. If the conditions in the general economysignificantly deviate from present levels and continue to deteriorate it could have a material adverse effect on the Group\u2019s business,financial condition, results of operations and growth prospects.",
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"value": "1.5 Going concernThe Group has primarily funded its operations with proceeds from the issuance of ordinary shares and the issuance of loans andborrowings to both related parties and third parties. The Group has also incurred recurring losses since its inception, including netlosses of $513.6 million and $101.5 million for the years ended 31 December 2022 and 2021, respectively, and had an accumulateddeficit of $1,654.1 million as of 31 December 2022. The Group has not generated positive operational cash flow, largely due to thecontinued focus on biosimilar product development and expansion efforts.As of 31 December 2022, the Group had cash and cash equivalents, excluding restricted cash, of $66.4 million and current assetsless current liabilities of $63.4 million. In February and March 2022, Alvotech received $25.0 million from each of Alvogen andAztiq pursuant to interest free loan advances provided by both significant shareholders, who agreed to settle these outstandingamounts in Ordinary Shares rather than cash in July 2022. The closing of the Business Combination and the PIPE Financingprovided the Group with net proceeds of $131.9 million that is expected to be used to finance the continuing development andcommercialization of its biosimilar products. Additionally, during the year ended 31 December 2022 the Company received $110.0million in loans from Alvogen, successfully amended and upsized the outstanding Senior Bonds resulting in $57.9 million of netcash proceeds, along with net cash proceeds of $73.4 million from the issuance of the Tranche A and Tranche B ConvertibleBonds and Facility Loans, of which $50.0 million was used to repay amounts drawn under the Alvogen Facility. On 25 January 2023, the Company issued an additional $10.0 million in Tranche B Convertible Bonds. Holders of the Tranche BConvertible Bonds may elect, at their sole discretion, to convert all or part of the principal amount and accrued interest intoAlvotech Ordinary Shares at a conversion price of $10.00 per share on December 31, 2023, or June 30, 2024. See Note 29 forfurther details.On 10 February 2023, Alvotech completed a private placement, at the then-prevailing exchange rates, of its Ordinary Shares at apurchase price of $11.57 per Ordinary Share, resulting in proceeds of $137.0 million and transaction costs of $4.8 million. See Note29 for further details.Additionally, the Group expects to continue to source its financing during the development of its biosimilar products from newand existing out-license contracts with customers. In light of these conditions and events, along with those noted in Note 1.4,management evaluated whether there is substantial doubt about the Group\u2019s ability to continue as a going concern for at least oneyear after the date that the consolidated financial statements are issued. Based on the cash on hand, funding received, and projectedfuture cash flows, management concluded that the Company has the ability to continue as a going concern for at least one yearafter the date that the consolidated financial statements are issued. As such, the consolidated financial statements have been prepared on a going concern basis. However, although managementcontinues to pursue these plans, there is no assurance that the Group will be successful in obtaining sufficient funding on termsacceptable to the Group to fund continuing operations, if at all. If financing is obtained, the terms of such financing may adverselyaffect the holdings or the rights of the Group\u2019s shareholders. The ability to obtain funding, therefore, is outside of management\u2019scontrol and is a material uncertainty that may cast significant doubt upon the Group\u2019s ability to continue as a going concern.",
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"value": "2. Summary of significant accounting policies2.1 Basis of preparationThe consolidated financial statements of the Group have been prepared in accordance and in compliance with InternationalFinancial Reporting Standards (IFRS) as adopted by the European Union, as issued by the International Accounting StandardsBoard (IASB), which comprise all standards and interpretations approved by the IASB.All amendments to IFRSs issued by the IASB that are effective for annual periods that begin on or after 1 January 2022 have beenadopted as further described within the footnotes to the consolidated financial statements. The Group has not adopted anystandards or amendments to standards in issue that are available for early adoption.The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and financialliabilities which have been measured at fair value. Historical cost is generally based on the fair value of the consideration given inexchange for goods and services. The consolidated financial statements are presented in U.S. Dollar (USD) and all values arerounded to the nearest thousand unless otherwise indicated.",
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"value": "2.2 Basis of consolidationThe consolidated financial statements incorporate the financial statements of the Company and entities controlled by theCompany and its subsidiaries. Control is achieved when the Company:\u2022 has power over the investee;\u2022 is exposed, or has rights, to variable returns from its involvement with the investee; and \u2022 has the ability to use its power to affect its returns. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the votingrights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considersall relevant facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give itpower, including:\u2022 the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders; \u2022 potential voting rights held by the Company, other vote holders or other parties; \u2022 rights arising from other contractual arrangements; and \u2022 any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct therelevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company losescontrol of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included inthe consolidated statements of profit or loss and other comprehensive income or loss from the date the Company gains controluntil the date when the Company ceases to control the subsidiary. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.All intra-group transactions, balances, income and expenses are eliminated in full in consolidation. ",
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"pp-value-16-2": {
"value": "2.3 Investments in joint venturesTo the extent the Group concludes that it does not control, and thus consolidate, a joint venture, the Group accounts for itsinterest in joint ventures using the equity method of accounting. As such, investments in a joint venture are initially recognized atcost and the carrying amount is subsequently adjusted for the Group\u2019s share of the profit or loss of the joint venture, as well as anydistributions received from the joint venture. The Group carries its ownership interest in a joint venture as \u201cInvestment in jointventure\u201d on the consolidated statements of financial position. The Group\u2019s profit or loss includes its share of the profit or loss ofthe joint venture and, to the extent applicable, other comprehensive income or loss for the Group includes its share of othercomprehensive income or loss of the joint venture. The Group\u2019s share of a joint venture\u2019s profit or loss in a particular year ispresented as \u201cShare of net loss of joint venture\u201d in the consolidated statements of profit or loss and other comprehensive incomeor loss. The carrying amount of equity-accounted investments is assessed for impairment as a single asset. Impairment losses are incurredonly if there is objective evidence of impairment as a result of loss events that have an impact on estimated future cash flows andthat can be reliably estimated. Losses expected as a result of future events are not recognized. The Group did not recognize anyimpairment losses related to its investment in the joint venture for the years ended 31 December 2022 and 2021.Refer to Note 26 for additional information regarding the Group\u2019s joint venture as of 31 December 2022 and 2021 and for theyears ended 31 December 2022 and 2021.2.5 Segment reportingThe Group operates and manages its business as one operating segment based on the manner in which the Chief ExecutiveOfficer, the Group\u2019s chief operating decision maker, assesses performance and allocates resources across the Group.2.6 Revenue recognitionProduct revenueThe Company recognizes revenue from the sale of its biosimilar product to commercial partners, identified as the customer, whencontrol is transferred, and the performance obligations have been satisfied. This is when the title passes to the customer, which isupon shipment of the product. At that point, the commercial partner has full discretion over the channel and price to sell theproducts. Revenue is recognized based on the net selling price from the commercial partners, which is considered to be thetransaction price and includes estimated rebates, returns and chargebacks, and other forms of variable consideration recognized bythe Customer. Variable consideration is accounted for by the Company only to the extent that it is highly probable that asignificant reversal in the revenue recognized will not occur. Variable consideration, which includes any adjustments to the netselling price, is estimated based on the most likely amount method on a contract-by-contract basis.Out-licensing revenueThe majority of the Group\u2019s revenue is generated from long-term out-license contracts which provide the customer with anexclusive right to market and sell products in a particular territory once such products are approved for commercialization. Thesecontracts typically include the Group\u2019s promises to continue development of the underlying compound and to provide supply ofthe product to the customer upon commercialization. The Group concludes that the license, development services and commercialsupply are separate performance obligations. This is because customers generally have the capabilities to perform the necessarydevelopment, manufacturing and commercialization activities on their own or with readily available resources and have therequisite expertise in the industry and the territory for which the license has been granted. Further, the intellectual property isgenerally in a later phase of development at the time the license is granted such that any subsequent development activitiesperformed by the Group are not expected to significantly modify or transform the intellectual property. The fact that the Group iscontractually obligated to perform development activities for and provide commercial supply to the customer does not impact thisconclusion. The Group\u2019s promise to provide commercial supply to its customers is contingent upon the achievement of regulatoryapproval in the particular territory for which the license has been granted.The consideration to which the Group is entitled pursuant to these contracts generally includes upfront payments and paymentsbased upon the achievement of development and regulatory milestones. All contracts include a potential refund obligation wherebythe Group must refund the consideration paid by the customer in the event of a technical failure or the occurrence of certain othermatters that result in partial or full cancellation of the contract. As such, the entire transaction price is comprised of variableconsideration, which is estimated using the most likely amount method due to the binary nature of the outcomes under thesecontracts. Such variable consideration is included in the transaction price only when it is highly probable that doing so will notresult in a significant reversal of cumulative revenue recognized when the underlying uncertainty associated with the variableconsideration is subsequently resolved. The Group does not account for a significant financing component since a substantialamount of consideration promised by the customer is variable and the amount or timing of that consideration varies on the basisof a future event that is not substantially within the control of either party. Certain contracts also include commercializationmilestones upon the first commercial sale of a product in a particular territory, as well as royalties. Commercialization milestonesand royalties are accounted for as sales-based royalties; therefore, such amounts are not included in the transaction price andrecognized as revenue until the underlying sale that triggers the milestone or royalty occurs.Upfront payments, when applicable, are received in advance of transferring control of all goods and services. Therefore, a portionof upfront payments is recorded as a contract liability upon receipt. Due to the existence of refund provisions, upfront paymentsand certain development milestone payments are generally included in the transaction price upon submission of the first clinicaltrial application to the respective regulatory agency, since it is at this point in time that a significant reversal of cumulative revenuerecognized related to such payments is no longer highly probable. Other development and regulatory milestones may not beincluded in the transaction price until such milestones are achieved due to the degree of uncertainty associated with achieving thesemilestones. Contract liabilities are presented on the consolidated statements of financial position as either current or non-currentbased upon forecasted performance. In certain contracts, the Group may transfer control of goods and services, and thusrecognize revenue, prior to having the right to invoice the customer. In these circumstances, the Group recognizes contract assetsfor revenue recognized, and subsequently reclasses the contract asset to trade receivables upon issuing an invoice and the right toconsideration is only conditional on the passage of time. Contract assets are presented on the consolidated statements of financialposition as either current or non-current based upon the expected timing of settlement.The standalone selling prices of the development services and the license to intellectual property are not directly observable and,therefore, are estimated. The standalone selling price of the development services is estimated based on the expected costs to beincurred during the development period, using various data points such as the underlying development budget, contractualmilestones and performance completed at the time of entering into the contract with a customer. The standalone selling price ofthe license is estimated using the residual approach on the basis that the Group licenses intellectual property for a broad range ofamounts and has not previously licensed intellectual property on a standalone basis. Therefore, the Group first allocates thetransaction price to the development services and subsequently allocates the remainder of the transaction price to the license. Ifproduct is still in early phase development and the constraint on variable consideration has not been resolved, all the transactionprice is allocated to the development service. The standalone selling price of the commercial supply is directly observable and the stated prices in the Group\u2019s supply contractsreflect the standalone selling price of such goods.The licenses to intellectual property are right of use licenses on the basis that the ongoing development work performed by theGroup does not significantly affect the intellectual property to which the customer has rights. Therefore, control of the licensetransfers to the customer at the point in time when the right to use the license is granted to the customer. The license is generallygranted to the customer at the time the contract is executed with the customer.The Group satisfies its performance obligation related to the development services over time as the Group\u2019s performanceenhances the value of the licensed intellectual property controlled by the customer throughout the performance period. The Grouprecognizes revenue using a cost-based input measure since this measure best reflects the progress of the development services and,therefore, the pattern of transfer of control of the services to the customer. In certain instances, the Group may subcontractservices to other parties for which the Group is ultimately responsible. Costs incurred for such subcontracted services are includedin the Group\u2019s measure of progress for satisfying its performance obligation. Changes in the total estimated costs to be incurred inmeasuring the Group\u2019s progress toward satisfying its performance obligation may result in adjustments to cumulative revenuerecognized at the time the change in estimate occurs.Upon the achievement of regulatory approval and the commencement of commercial sale of its products, the Group will satisfy itsperformance obligation related to commercial supply at the point in time when control of the manufactured product is transferredto the customer. Transfer of control for such goods will occur in accordance with the stated shipping terms.The Group does not incur incremental costs of obtaining a contract with a customer that would require capitalization. Costs tofulfill performance obligations are not incurred in advance of performance and, as such, are expensed when incurred.Other revenueOther revenue primarily consists of clinical trial support services rendered by the Group for its customers, which is recognized asthe service is provided. Revenue for such services is presented in the consolidated statements of profit or loss and othercomprehensive income or loss net of any discounts.2.8 Research and development expensesResearch and development expenses primarily consist of personnel costs, material and other lab supply costs, facility costs andinternal and external costs related to the execution of studies and other development program advancement initiatives. Suchexpenses also include costs incurred in preparation for commercial launch, such as designing and developing commercial-scalemanufacturing capabilities and processes, quality control processes, production asset validation and other related activities. Thecosts also include amortization, depreciation and impairment losses related to software, property, plant and equipment, and right-of-use assets used in research and development activities and pre-commercial manufacturing and quality control activities.An internally generated intangible asset arising from the Group\u2019s development is recognized only if the Group can demonstrate:the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intent to complete theintangible asset and use or sell it; how the intangible asset will generate probable future economic benefits; the availability ofadequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and the abilityto measure reliably the expenditure attributable to the intangible asset during its development.The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the datewhen the intangible asset first meets the aforementioned recognition criteria. If an internally-generated intangible asset cannot berecognized, the related development expenditure is charged to profit or loss in the period in which it is incurred.Expenditures related to research and development activities are generally recognized as an expense in the period in which they areincurred. Due to significant regulatory uncertainties and other uncertainties inherent in the development of pharmaceuticalproducts, the Group did not capitalize any research and development expenses as internally-developed intangible assets during theyears ended 31 December 2022 and 2021.2.9 General and administrative expensesGeneral and administration expenses primarily consist of personnel-related costs, including salaries and other related compensationexpense, for corporate and other administrative and operational functions including finance, human resources, informationtechnology and legal, as well as facility-related costs. These costs relate to the operation of the business and are not related toresearch and development initiatives.Expenditures related to general and administration activities are recognized as an expense in the period in which they are incurred.2.10 Finance income and finance costFinance income consists of changes in the fair value of derivative financial liabilities and interest income. Interest income from afinancial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income canbe measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effectiveinterest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of thefinancial asset to that asset's net carrying amount on initial recognition.Finance cost consists of changes in the fair value of derivative financial liabilities, interest expense related to lease liabilities andborrowings, accretion of borrowings and amortization of deferred debt issue costs. 2.11 Foreign currency translationThe consolidated financial statements are presented in U.S. Dollars, which is the Group\u2019s presentation currency. The Groupmaintains the financial statements of each entity within the Group in its respective functional currency. The majority of theGroup\u2019s expenses are incurred in U.S. Dollar and Icelandic Krona, and the majority of the Company\u2019s cash and cash equivalentsare held in a combination of U.S. Dollars and Euros. Transactions in currencies other than the Group\u2019s presentation currency(foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reportingperiod, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary itemscarried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair valuewas determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.Exchange differences on monetary items are recognized in profit or loss in the period in which they arise.Exchange differences arising on translation of a foreign controlled subsidiary are recognized in other comprehensive income orloss and accumulated in a translation reserve within equity. The cumulative translation amount is reclassified to profit or loss if andwhen the net investment in the foreign controlled subsidiary is disposed.2.12 Fair value measurementsThe Group measures certain financial liabilities at fair value through profit or loss (FVTPL) each reporting period. Fair value is theprice that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants atthe measurement date.The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available tomeasure the fair values of such financial liabilities, maximizing the use of relevant observable inputs and minimizing the use ofunobservable inputs.Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques, asfollows:\u2022 Level 1: quoted prices in active markets for identical assets and liabilities;\u2022 Level 2: inputs other than quoted prices that are observable for the asset or liability, either directly (e.g., prices) or indirectly (e.g.,derived from prices); and \u2022 Level 3: inputs for the asset or liability that are unobservable.The carrying amounts of cash and cash equivalents, restricted cash, trade receivables, other current assets, contract assets, trade andother payables and accrued and other liabilities in the Group\u2019s consolidated statements of financial position approximate their fairvalue because of the short maturities and nature of these instruments.For liabilities that are measured at fair value on a recurring basis, the Group determines whether transfers have occurred betweenlevels in the fair value hierarchy by reassessing the inputs used in determining fair value at the end of each reporting period. 2.13 Goodwill and other intangible assetsGoodwillAcquisitions are first reviewed to determine whether a set of assets acquired constitute a business and should be accounted for as abusiness combination. If the assets acquired do not meet the definition of a business, the Group will account for the transaction asan asset acquisition. If the definition of a business combination is met, the Group will account for the transaction using theacquisition method of accounting. The consideration transferred in a business combination is measured at fair value, which iscalculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group tothe former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in the consolidated statements of profit or loss and other comprehensive income or loss as incurred.Goodwill represents the excess of the purchase price of the business combination over the Group's interest in the net fair value ofthe identifiable assets, liabilities, contingent liabilities, the amount of any noncontrolling interests in the acquiree and the fair valueof the acquirer's previously held equity interest in the acquiree. Goodwill is reviewed for impairment at least annually, andwhenever there is an indication that the asset may be impaired. An impairment loss is recognized for the amount by which theasset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs ofdisposal and value in use. The value in use calculation is performed using discounted expected future cash flows. The discount rateapplied to these cash flows is based on the weighted average cost of capital and reflects current market assessments of the timevalue of money. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the businesscombination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Thoseprovisional amounts are adjusted during the measurement period, or as additional assets or liabilities are recognized, to reflect newinformation obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected theamounts recognized at that date.The Group did not complete any business combinations during the year ended 31 December 2021. Refer to Note 1.1 for theBusiness Combination completed during the year ended 31 December 2022. Other intangible assetsOther intangible assets consist of software, customer relationships, and intellectual property rights licensed from Biosana (see Note2.18). Intangible assets acquired in a business combination are identified and recognized separately from goodwill if they satisfy thedefinition of an intangible asset and their fair values can be reliably measured. The cost of intangible assets is their fair value at theacquisition date.Intangible assets with finite useful lives are reported at cost less accumulated amortization and accumulated impairment losses.Amortization is recognized on a straight-line basis over an asset\u2019s estimated useful life. The estimated useful life and amortizationmethod are reviewed at each balance sheet date, with the effect of any changes in estimate being accounted for on a prospectivebasis. Intangible assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. The following useful lives are used in the calculation of amortization:Software 3-5 yearsCustomer relationships 7 yearsIntangible assets with indefinite useful lives are reviewed for impairment at least annually, and whenever there is an indication thatthe asset may be impaired. An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and value in use. The valuein use calculation is performed using discounted expected future cash flows. The discount rate applied to these cash flows is basedon the weighted average cost of capital and reflects current market assessments of the time value of money.2.14 Income taxIncome tax includes the current tax and deferred tax charge recorded in the consolidated statements of profit or loss and othercomprehensive income or loss.Current taxThe current tax expense is based on taxable profit for the year. Taxable profit differs from \u2018profit before tax\u2019 as reported in theconsolidated statement of profit or loss and other comprehensive income or loss because it excludes items of income or expensethat are taxable or deductible in other years and items that are never taxable or deductible. The Group's current tax expense iscalculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.Accruals for tax contingencies are made when it is not probable that a tax authority will accept the tax position, based uponmanagement\u2019s interpretation of applicable laws and regulations and the expectation of how the tax authority will resolve the matter.Accruals for tax contingencies are measured using either the most likely amount or the expected value amount depending on whichmethod the entity expects to better predict the resolution of the uncertainty.Deferred taxDeferred tax is provided in full for all temporary differences between the carrying amounts of assets and liabilities in theconsolidated financial statements and the corresponding tax bases used in the computation of taxable profit, except to the extentthe temporary difference arises from:\u2022 The initial recognition of an asset or a liability in a transaction that is not a business combination and that affects neither thetaxable profit nor accounting profit;\u2022 The initial recognition of residual goodwill (for deferred tax liabilities only); or\u2022 Investments in subsidiaries, branches, associates and joint ventures, where the Group is able to control the timing of the reversalof the temporary difference and it is not probable that it will reverse in the foreseeable future.Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability issettled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of thereporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that wouldfollow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amount of theassets and liabilities.Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognizedfor all deductible temporary differences to the extent that it is probable that taxable profits will be available against which thosedeductible temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at the end of eachreporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all orpart of the asset to be recovered.Deferred tax is charged or credited to the consolidated statement of profit or loss and other comprehensive income or loss, exceptwhen the tax arises from a business combination or it relates to items charged or credited directly to equity, in which case thedeferred tax is also taken directly to equity.Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Groupintends to settle its current tax assets and liabilities on a net basis in that taxation authority.2.15 Property, plant and equipmentProperty, plant and equipment is recognized as an asset when it is probable that future economic benefits associated with the assetwill flow to the Group and the cost of the asset can be measured in a reliable manner. Property, plant and equipment whichqualifies for recognition as an asset are initially measured at cost.The cost of property, plant and equipment includes an asset\u2019s purchase price and any directly attributable costs of bringing theasset to working condition for its intended use.Depreciation is calculated and recognized as an expense on a straight-line basis over an asset\u2019s estimated useful life. The estimated useful lives, residual values and depreciation method are reviewed at each balance sheet date, with the effect of any changes in estimate accounted for on a prospective basis. The following useful lives are used in the calculation of depreciation:Facility40 yearsFacility equipment5-20 yearsComputer equipment3 yearsLeasehold improvements3-15 yearsFurniture and fixtures5 yearsCertain of the Group\u2019s property, plant and equipment assets have been pledged to secure borrowings as further described in Note20. Significant disposals of pledged assets are subject to lender approval. Upon disposal or retirement of an asset, the differencebetween the sales proceeds, if applicable, and the carrying amount of the asset is recognized in the consolidated statements ofprofit or loss and other comprehensive income or loss at the time of disposal or retirement.At the end of each reporting period, or sooner if events triggering an interim impairment assessment occur, the Group reviews thecarrying amounts of its property, plant and equipment to determine whether there is any indication that the value of such assets areimpaired. Triggering events that warrant an interim impairment assessment include, but are not limited to, the technicalobsolescence of equipment or failure of such equipment to meet regulatory requirements. If any such indication exists, therecoverable amount of the asset is estimated in order to determine the extent of the impairment loss and the carrying amount ofthe asset is reduced to its recoverable amount, which is the higher of fair value less costs of disposal and value in use.2.16 InventoriesInventories, which consist of raw materials and supplies, work in progress and finished goods are stated at the lower of cost or netrealizable value. Net realizable value is the expected sales price less completion costs and costs to be incurred in marketing, sellingand distributing the inventory. Cost is calculated using the weighted average cost method or the first-in, first-out method,depending on the nature of the inventory. Inventories include direct costs for raw materials and supplies and, as applicable, direct and indirect labor and overhead expenses that have been incurred to bring inventories to their present location and condition. See Note 17 for further details.If the net realizable value is lower than the carrying amount, a write-down of inventory is recognized for the amount by which thecarrying amount exceeds net realizable value. During the years ended 31 December 2022 and 2021, write-down of inventoriesamounted to $2.1 million and $1.2 million, respectively, due to product expiration. There were no reversals of inventory write-downs during the years ended 31 December 2022 and 2021. See Note 17 for further details.The Group does not pledge inventories as collateral to secure its liabilities.2.17 Financial assetsRecognition of financial assetsFinancial assets are recognized when the Group becomes a party to the contractual provisions of the instrument. Financial assetsare initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, otherthan financial assets measured at FVTPL, are added to or deducted from the fair value of the financial assets, as appropriate, oninitial recognition. Transaction costs directly attributable to the acquisition of financial assets at FVTPL are recognized immediatelyin profit or loss. There were no transaction costs related to the acquisition of financials assets in 2022 or 2021. All of the Group\u2019sfinancial assets are measured at amortized cost as of 31 December 2022 and 2021.Financial assets measured at amortized costFinancial assets measured at amortized cost are debt instruments that give rise to contractual cash flows that are solely payments ofprincipal and interest on the principal amount outstanding. The Group's financial assets measured at amortized cost are tradereceivables, certain other current assets, receivables from related parties, restricted cash and cash and cash equivalents.Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effect ofdiscounting is immaterial.Impairment of financial assetsThe Group recognizes a loss allowance for expected credit losses (ECL) on its trade receivables and other debt instruments thatare measured at amortized cost. In addition, although contract assets are not financial assets, a loss allowance for ECL are alsorecognized for such assets. ECL is based on the difference between the contractual cash flows due in accordance with the contractand all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. Theamount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financialinstrument.The Group always recognizes lifetime ECL for trade receivables and contract assets. The expected credit losses on these financialassets are estimated using a provision matrix based on the Group\u2019s historical credit loss experience, adjusted for factors that arespecific to the debtors, general economic conditions and an assessment of both the current as well as the forecasted direction ofconditions at the reporting date, including time value of money where appropriate.The Group writes off a financial asset when there is no reasonable expectation of recovery, such as information indicating that thedebtor is in severe financial difficulty and there is no realistic prospect of recovery. A trade receivable or contract asset that isconsidered uncollectible is written off against the allowance account. Subsequent recoveries of amounts previously written off arecredited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.The Group did not write off any trade receivables or contract assets during the years ended 31 December 2022 and 2021.The Group estimates impairment for related party receivables on an individual basis. No impairment is recognized for restrictedcash or cash and cash equivalents as management has estimated that the effects of any calculated ECL would be immaterial.Derecognition of financial assetsThe Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfersthe financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neithertransfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Grouprecognizes its retained interest in the asset as well as an associated liability. If the Group retains substantially all the risks andrewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes acollateralized borrowing for the proceeds received.On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the consideration receivedand receivable and the cumulative gain or loss that had been recognized in other comprehensive income or loss and accumulated inequity is recognized in profit or loss.2.18 Financial liabilitiesFinancial liabilitiesThe Group\u2019s financial liabilities consist of trade and other payables, certain other current liabilities loans and borrowings, leaseliabilities, derivative financial instruments, long-term incentive plans, share appreciation right plans and other long-term liability to arelated party. All financial liabilities are initially measured at fair value. Loans and borrowings are recorded net of directlyattributable transaction costs and less the value attributable to any embedded derivative financial instruments, if applicable. The Group derecognizes financial liabilities when, and only when, the Group\u2019s obligations are discharged, cancelled, substantiallymodified or have expired. Additionally, management elected, as part of its accounting policy, to recognize the difference betweenthe carrying amount of the financial liabilities and the fair value of the consideration paid for the extinguishment in theconsolidated statement of profit or loss and other comprehensive income or loss.Financial liabilities subsequently measured at amortized costAfter initial recognition, financial liabilities other than derivative financial instruments, and awards issued pursuant to long-termincentive plans are subsequently measured at amortized cost using the effective interest method. The effective interest method is amethod of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. Theeffective interest rate is the rate that discounts all estimated future cash payments through the expected life of the financial liability,or a shorter period if appropriate, to the amortized cost of a financial liability. The effective interest rate includes the effects of anydiscount or premium on acquisition of the financial liability, as well as any fees or costs incurred upon acquisition.Financial liabilities subsequently measured at FVTPLDerivative financial instrumentsCertain rights and features pursuant to borrowing arrangements and other contracts may provide the counterparty with one ormore financial instruments that need to be evaluated and potentially accounted for separately by the Group. These financialinstruments are either embedded in a host instrument or are treated as a separate financial instrument if they are contractuallytransferable independent from the host instrument. Such rights and features pursuant to the Group\u2019s contracts with both thirdparties and related parties include earn out rights, conversion rights and warrant rights.Equity conversion features within host debt instruments that meet the definition of a derivative and have economic and riskcharacteristics that are not closely related to the host instrument are embedded derivatives that are separated from the hostinstrument and accounted for separately. As part of the accounting for embedded derivatives or separate financial instruments,management considers the appropriate accounting classification under IAS 32. Embedded derivatives and separate financialinstruments that meet the fixed-for-fixed criteria are classified as equity and initially measured at fair value.Warrant rights that provide the holder with an option to purchase ordinary shares at a specified price or pursuant to a specifiedformula are generally separate derivative financial instruments that are accounted for as derivative liabilities. Earn Out Shares grantthe holder with a variable number of Ordinary Shares based on certain vesting conditions tied to the stock price and are accountedfor as derivative liabilities. In the event that the fair value of any derivative liabilities, determined using unobservable inputs,exceeds the transaction price of a borrowing arrangement, the Group records a deferred loss at the inception of the borrowingarrangement for the difference between the fair value of the derivative liabilities and the transaction price of the borrowingarrangement. Such deferred losses are recognized over the term of the related borrowing arrangement using the straight-linemethod of amortization. The deferred loss is netted against derivative financial liabilities on the consolidated statements of financialposition. Amortization of the deferred loss is recognized as a component of \u201cFinance costs\u201d in the consolidated statements ofprofit or loss and other comprehensive income or loss. The Group recognized derivative liabilities related to the Predecessor Earn Out Shares, OACB Earn Out Shares and assumedOACB warrants. Additionally, the Group recognized an embedded derivative for the conversion feature associated with theTranche A Convertible Bonds, as further described in Note 20. These features are liability-classified, rather than equity-classified,because the Group is obligated to issue a variable number of ordinary shares to the holder upon conversion or exercise of thefeature. Therefore, these derivative liabilities were initially recorded at fair value and remeasured to fair value at each reportingperiod with gains and losses arising from changes in the fair value recognized in finance income or finance costs, as appropriate. The fair values of the derivative liabilities were determined using a valuation approach that incorporated a range of inputs that areboth observable and unobservable in nature. The inputs used in the initial and subsequent fair value measurements predominantlyrelate to (i) the price of the Group\u2019s Ordinary Shares (ii) the volatility of the Group\u2019s Ordinary Shares, (ii) a risky discount ratecorresponding to the credit risk associated with the repayment of the host debt instruments, and (iii) the probabilities of eachderivative being exercised by the holder and the timing of such exercises. The probabilities are determined based on all relevantinternal and external information available and are reviewed and reassessed at each reporting date. The Group will derecognize any derivative liabilities if and when the rights are exercised by the holders or the time period duringwhich the rights can be exercised expires.Other long-term liability to related partyThe Group\u2019s other long-term liability to a related party arose from its acquisition of rights for the commercialization of theGroup\u2019s biosimilar Adalimumab product in certain territories in Asia from Lotus Pharmaceutical Co. Ltd., a related party, duringthe year ended 31 December 2020. Pursuant to the terms of the asset acquisition, the Group made an upfront payment of $1.9million and is required to pay $7.4 million upon the commercial launch of Adalimumab in China. The Group concluded that theevent triggering future payment is probable and, as such, recorded the full amount of the liability as a non-current liability in theconsolidated statements of financial position as of 31 December 2022 and 2021. The upfront payment and contingent paymentamounts were charged to \u201cResearch and development expense\u201d in the consolidated statements of profit or loss and othercomprehensive income or loss.Other current liabilitiesIn December 2021, Alvotech entered into an exclusive global licensing agreement with BiosanaPharma (Biosana) for the co-development of AVT23. Under the terms of the agreement, Biosana granted Alvotech an exclusive global right for AVT23, whichwill be produced using Biosana\u2019s proprietary process technology. In exchange, Alvotech made an upfront payment of $7.5 millionupon the signing of the agreement (the \u201cupfront payment\u201d), with an additional $7.5 million due at the earlier of the closing of theBusiness Combination (see Note 27) or 30 April 2022 (the \u201cdeferred upfront payment\u201d). In addition, Alvotech may be obligated topay Biosana up to an aggregate of $13.5 million, payable upon the achievement of various development and regulatory milestones,as well as certain tiered royalty payments based on commercial sales of AVT23. The agreement terminates 15 years after the launchof AVT23 and is subject to certain customary termination rights.The Group concluded that the deferred upfront payment is probable and, as such, recorded the full amount of the liability in\u201cOther current liabilities\u201d on the consolidated statement of financial position as of 31 December 2021. The upfront payment andthe deferred upfront payment amounts were capitalized as other intangible assets in the consolidated statement of financialposition and will be amortized over the useful life of 15 years. The Group will accrue the additional contingent payments if andwhen the related milestones and other contingencies are deemed probable of being achieved.Long-term incentive plansShare appreciation rightsThe Group issued to certain current and former employees share appreciation rights (SARs) that require settlement in connectionwith the occurrence of specified, future triggering events. Grants occurred from 2015 through 2020. The awards include acombination of vesting conditions, such as service and performance conditions, as well as non-vesting conditions depending on theparticular award. The individuals retain their vested awards upon termination of employment with the Group. Settlement amountsare determined by the change in the Group\u2019s market value from the grant date of the SAR until the triggering events occur. TheSARs do not expire at a specific date.Pursuant to the terms of the SAR agreements, management determined that the Group cannot avoid paying cash to settle theawards and, therefore, SARs are liability-classified in the consolidated statements of financial position. Accordingly, SARs wererecorded at fair value and were subsequently remeasured each reporting period with the change in fair value reflected as a gain orloss in the consolidated statements of profit or loss and other comprehensive income or loss, as appropriate. The fair value of theSARs was determined using the Black-Scholes-Merton pricing model. In connection with the closing of the Business Combination,the Company reached a settlement agreement for share appreciation rights previously awarded to certain current and formeremployees. The remaining share appreciation rights were settled through the issuance of fully vested RSUs under the ManagementIncentive Plan on 1 December 2022. See Note 21 for further details. Employee incentive planThe Group also sponsors an employee incentive plan for certain qualifying employees. Under the plans, such employees areentitled to cash payments upon achievement of key milestones, such as a research and development milestone or the occurrence ofan exit event. The awards include a combination of vesting conditions, such as service and performance conditions, as well as non-vesting conditions depending on the particular award. Since the Group cannot avoid paying cash to settle the awards, the employeeincentive plan is liability-classified in the consolidated statements of financial position. Accordingly, awards issued pursuant to theemployee incentive plan are recorded at fair value and are subsequently remeasured each reporting period with the change in fairvalue reflected as a gain or loss in the consolidated statements of profit or loss and other comprehensive income or loss, asappropriate. Employee incentive plan liabilities are presented as either current or non-current on the consolidated statements offinancial position based on the anticipated timing of settlement.The fair value of the employee incentive plan awards is determined by estimating the probability of success in reaching thespecified milestones and other levers, such as the anticipated timing of potential milestone achievement. See Note 21 for furtherdetails.Management incentive planThe Group can issue share options, restricted share units (\u201cRSUs\u201d), and other share-based awards under the Company\u2019s newincentive plan (the \u201cManagement Incentive Plan\u201d) which was approved by the Board in June 2022. Awards issued under theManagement Incentive Plan are accounted for in accordance with IFRS 2. Share-based payments are classified as equity-settledshare-based payments as the Company intends to settle the awards with equity and has the commercial substance to do so. Share-based payments are measured at the grant date fair value of the instruments issued and recognized over the expected vestingperiods. The number of shares expected to vest are reviewed and adjusted at the end of each reporting period such that theamount of expense recognized shall be based on the number of equity instruments that will eventually vest. See Note 22 forfurther details. 2.19 Litigation and other contingenciesThe Group may, from time to time, become involved in legal proceedings arising out of the normal course of its operations. Forinstance, as a developer and manufacturer of biosimilars, the Group may be subject to lawsuits alleging patent infringement orother similar claims filed by the reference product sponsor. Similarly, the Group may utilize patent challenge procedures tochallenge the validity, enforceability or infringement of the reference product sponsor\u2019s patents. Other parties may also file patentinfringement claims against the Group alleging that the Group\u2019s products or manufacturing process techniques infringe theirpatents.The Group establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome isprobable and the loss is reasonably estimable. When such conditions are not met for a specific legal matter, no reserve isestablished. Although management currently believes that resolving claims against the Group, including claims where anunfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of operations, or financialcondition of the Group, these matters are subject to inherent uncertainties and management\u2019s view of these matters may change inthe future. It is possible that an unfavorable outcome of a lawsuit or other contingency could have a material impact on theliquidity, results of operations, or financial condition of the Group.Significant judgment is required in both the determination of probability of loss and the determination as to whether the amountof loss can be reasonably estimated. Accruals are based only on information available at the time of the assessment, due to theuncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related topending claims and litigation and may revise its previous estimates, which could materially affect the Group\u2019s results of operationsin a given period.The Group maintains liability insurance coverages for various claims and exposures. The Group\u2019s insurance coverage limits itsmaximum exposure on claims; however, the Group is responsible for any uninsured portion of losses. Management believes thatpresent insurance coverage is sufficient to cover potential exposures.2.20 LeasesThe Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for those with a lease termof twelve months or less and leases of low value assets. For these leases, the Group recognizes the lease payments as an operatingexpense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time patternin which economic benefits from the leased assets are consumed. The Group\u2019s leased assets consist of various real estate, fleet andequipment leases. Right-of-use assets reflect the initial measurement of the lease liability, lease payments made at or before the lease commencementdate and any initial direct costs less lease incentives that may have been received by the Group. These assets are subsequentlymeasured at cost less accumulated depreciation, impairment losses and remeasurements of the underlying lease liability. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the underlying asset. If a lease transfersownership of the underlying asset to the Group or the lease includes a purchase option that the Group is reasonably certain toexercise, the related right-of-use asset is depreciated over the useful life of the underlying asset. Depreciation starts at thecommencement date of the lease.Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date,discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incrementalborrowing rate, which is the rate of interest that the Group would need to pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment based on information available at the commencementdate of the lease. The lease payments included in the measurement of the lease liability comprise fixed payments (including in-substance fixed payments) less any incentives, variable lease payments that depend on an index or rate, expected residual guaranteesand the exercise price of purchase options reasonably certain to be exercised by the Group.The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability, using theeffective interest method, and by reducing the carrying amount to reflect payments made during the lease term. The Groupremeasures the lease liability if the lease term has changed, when lease payments based on an index or rate change or when a leasecontract is modified and the modification is not accounted for as a separate lease.Variable payments that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognized as an expense in the period in which the event or condition that triggers thosepayments occurs.As a practical expedient, lessees are not required to separate non-lease components from lease components, and instead accountfor any lease and associated non-lease components as a single lease component. The Group has used this practical expedient.2.21 Loss per shareHolders of the Predecessor Earn Out Shares and OACB Earn Out Shares have equal dividend and participation rights to theordinary shareholders. However, these participating securities are classified as liabilities and as such, the shares held are notincluded in the weighted average number of ordinary shares outstanding in the basic loss per share calculation.The calculation of basic loss per share is based on the loss for the year attributable to ordinary shareholders of the Group and theweighted average number of ordinary shares outstanding during the period.Diluted loss per share is computed by dividing the loss for the year attributable to ordinary shareholders of the Group by theweighted average number of ordinary shares outstanding in the basic loss per share calculation, both of which are adjusted for theeffects of all dilutive potential ordinary shares. Antidilutive effects of potential ordinary shares, which result in an increase inearnings per share or a reduction in loss per share, are not recognized in the computation of diluted loss per share. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-16-3": {
"value": "2.3 Investments in joint venturesTo the extent the Group concludes that it does not control, and thus consolidate, a joint venture, the Group accounts for itsinterest in joint ventures using the equity method of accounting. As such, investments in a joint venture are initially recognized atcost and the carrying amount is subsequently adjusted for the Group\u2019s share of the profit or loss of the joint venture, as well as anydistributions received from the joint venture. The Group carries its ownership interest in a joint venture as \u201cInvestment in jointventure\u201d on the consolidated statements of financial position. The Group\u2019s profit or loss includes its share of the profit or loss ofthe joint venture and, to the extent applicable, other comprehensive income or loss for the Group includes its share of othercomprehensive income or loss of the joint venture. The Group\u2019s share of a joint venture\u2019s profit or loss in a particular year ispresented as \u201cShare of net loss of joint venture\u201d in the consolidated statements of profit or loss and other comprehensive incomeor loss. The carrying amount of equity-accounted investments is assessed for impairment as a single asset. Impairment losses are incurredonly if there is objective evidence of impairment as a result of loss events that have an impact on estimated future cash flows andthat can be reliably estimated. Losses expected as a result of future events are not recognized. The Group did not recognize anyimpairment losses related to its investment in the joint venture for the years ended 31 December 2022 and 2021.Refer to Note 26 for additional information regarding the Group\u2019s joint venture as of 31 December 2022 and 2021 and for theyears ended 31 December 2022 and 2021.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-16-4": {
"value": "2.3 Investments in joint venturesTo the extent the Group concludes that it does not control, and thus consolidate, a joint venture, the Group accounts for itsinterest in joint ventures using the equity method of accounting. As such, investments in a joint venture are initially recognized atcost and the carrying amount is subsequently adjusted for the Group\u2019s share of the profit or loss of the joint venture, as well as anydistributions received from the joint venture. The Group carries its ownership interest in a joint venture as \u201cInvestment in jointventure\u201d on the consolidated statements of financial position. The Group\u2019s profit or loss includes its share of the profit or loss ofthe joint venture and, to the extent applicable, other comprehensive income or loss for the Group includes its share of othercomprehensive income or loss of the joint venture. The Group\u2019s share of a joint venture\u2019s profit or loss in a particular year ispresented as \u201cShare of net loss of joint venture\u201d in the consolidated statements of profit or loss and other comprehensive incomeor loss. The carrying amount of equity-accounted investments is assessed for impairment as a single asset. Impairment losses are incurredonly if there is objective evidence of impairment as a result of loss events that have an impact on estimated future cash flows andthat can be reliably estimated. Losses expected as a result of future events are not recognized. The Group did not recognize anyimpairment losses related to its investment in the joint venture for the years ended 31 December 2022 and 2021.Refer to Note 26 for additional information regarding the Group\u2019s joint venture as of 31 December 2022 and 2021 and for theyears ended 31 December 2022 and 2021.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-17-1": {
"value": "2.4 Critical accounting judgments and key sources of estimation uncertaintyThe preparation of the consolidated financial statements in conformity with IFRS requires Group management to makejudgments, estimates and assumptions about the reported amounts of assets, liabilities, income and expenses that are not readilyapparent from other sources. The estimates and associated assumptions are based on information available when the consolidated financial statements are prepared, historical experience and other factors that are considered to be relevant. Judgments and assumptions involving key estimates are primarily made in relation to the measurement and recognition of revenue (as described in Note 2.6 and Note 5), the measurement and recognition of extinguishment of financial liabilities (as described in Note 2.18 and Note 20), the valuation of derivative financial liabilities (as described in Note 2.18 and Note 25), the valuation of management share appreciation rights (SARs) (as described in Note 2.18 and Note 21), and the valuation of deferred tax assets (as described in Note 2.14 and Note 10). Apart from those involving estimations, critical accounting judgments include the Group\u2019s evaluation as to whether it controls its joint venture in China (as described in Note 2.3 and 26) and material uncertainties with respect to the Group\u2019s going concern assessment (as described in Note 1.5). Existing circumstances and assumptions may change due to events arising that are beyond the Group\u2019s control. Therefore, actualresults may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized inthe period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periodsif the revision affects both current and future periods.",
"dimensions": {
"concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-18-3": {
"value": "2.5 Segment reportingThe Group operates and manages its business as one operating segment based on the manner in which the Chief ExecutiveOfficer, the Group\u2019s chief operating decision maker, assesses performance and allocates resources across the Group.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-19-3": {
"value": "2.6 Revenue recognitionProduct revenueThe Company recognizes revenue from the sale of its biosimilar product to commercial partners, identified as the customer, whencontrol is transferred, and the performance obligations have been satisfied. This is when the title passes to the customer, which isupon shipment of the product. At that point, the commercial partner has full discretion over the channel and price to sell theproducts. Revenue is recognized based on the net selling price from the commercial partners, which is considered to be thetransaction price and includes estimated rebates, returns and chargebacks, and other forms of variable consideration recognized bythe Customer. Variable consideration is accounted for by the Company only to the extent that it is highly probable that asignificant reversal in the revenue recognized will not occur. Variable consideration, which includes any adjustments to the netselling price, is estimated based on the most likely amount method on a contract-by-contract basis.Out-licensing revenueThe majority of the Group\u2019s revenue is generated from long-term out-license contracts which provide the customer with anexclusive right to market and sell products in a particular territory once such products are approved for commercialization. Thesecontracts typically include the Group\u2019s promises to continue development of the underlying compound and to provide supply ofthe product to the customer upon commercialization. The Group concludes that the license, development services and commercialsupply are separate performance obligations. This is because customers generally have the capabilities to perform the necessarydevelopment, manufacturing and commercialization activities on their own or with readily available resources and have therequisite expertise in the industry and the territory for which the license has been granted. Further, the intellectual property isgenerally in a later phase of development at the time the license is granted such that any subsequent development activitiesperformed by the Group are not expected to significantly modify or transform the intellectual property. The fact that the Group iscontractually obligated to perform development activities for and provide commercial supply to the customer does not impact thisconclusion. The Group\u2019s promise to provide commercial supply to its customers is contingent upon the achievement of regulatoryapproval in the particular territory for which the license has been granted.The consideration to which the Group is entitled pursuant to these contracts generally includes upfront payments and paymentsbased upon the achievement of development and regulatory milestones. All contracts include a potential refund obligation wherebythe Group must refund the consideration paid by the customer in the event of a technical failure or the occurrence of certain othermatters that result in partial or full cancellation of the contract. As such, the entire transaction price is comprised of variableconsideration, which is estimated using the most likely amount method due to the binary nature of the outcomes under thesecontracts. Such variable consideration is included in the transaction price only when it is highly probable that doing so will notresult in a significant reversal of cumulative revenue recognized when the underlying uncertainty associated with the variableconsideration is subsequently resolved. The Group does not account for a significant financing component since a substantialamount of consideration promised by the customer is variable and the amount or timing of that consideration varies on the basisof a future event that is not substantially within the control of either party. Certain contracts also include commercializationmilestones upon the first commercial sale of a product in a particular territory, as well as royalties. Commercialization milestonesand royalties are accounted for as sales-based royalties; therefore, such amounts are not included in the transaction price andrecognized as revenue until the underlying sale that triggers the milestone or royalty occurs.Upfront payments, when applicable, are received in advance of transferring control of all goods and services. Therefore, a portionof upfront payments is recorded as a contract liability upon receipt. Due to the existence of refund provisions, upfront paymentsand certain development milestone payments are generally included in the transaction price upon submission of the first clinicaltrial application to the respective regulatory agency, since it is at this point in time that a significant reversal of cumulative revenuerecognized related to such payments is no longer highly probable. Other development and regulatory milestones may not beincluded in the transaction price until such milestones are achieved due to the degree of uncertainty associated with achieving thesemilestones. Contract liabilities are presented on the consolidated statements of financial position as either current or non-currentbased upon forecasted performance. In certain contracts, the Group may transfer control of goods and services, and thusrecognize revenue, prior to having the right to invoice the customer. In these circumstances, the Group recognizes contract assetsfor revenue recognized, and subsequently reclasses the contract asset to trade receivables upon issuing an invoice and the right toconsideration is only conditional on the passage of time. Contract assets are presented on the consolidated statements of financialposition as either current or non-current based upon the expected timing of settlement.The standalone selling prices of the development services and the license to intellectual property are not directly observable and,therefore, are estimated. The standalone selling price of the development services is estimated based on the expected costs to beincurred during the development period, using various data points such as the underlying development budget, contractualmilestones and performance completed at the time of entering into the contract with a customer. The standalone selling price ofthe license is estimated using the residual approach on the basis that the Group licenses intellectual property for a broad range ofamounts and has not previously licensed intellectual property on a standalone basis. Therefore, the Group first allocates thetransaction price to the development services and subsequently allocates the remainder of the transaction price to the license. Ifproduct is still in early phase development and the constraint on variable consideration has not been resolved, all the transactionprice is allocated to the development service. The standalone selling price of the commercial supply is directly observable and the stated prices in the Group\u2019s supply contractsreflect the standalone selling price of such goods.The licenses to intellectual property are right of use licenses on the basis that the ongoing development work performed by theGroup does not significantly affect the intellectual property to which the customer has rights. Therefore, control of the licensetransfers to the customer at the point in time when the right to use the license is granted to the customer. The license is generallygranted to the customer at the time the contract is executed with the customer.The Group satisfies its performance obligation related to the development services over time as the Group\u2019s performanceenhances the value of the licensed intellectual property controlled by the customer throughout the performance period. The Grouprecognizes revenue using a cost-based input measure since this measure best reflects the progress of the development services and,therefore, the pattern of transfer of control of the services to the customer. In certain instances, the Group may subcontractservices to other parties for which the Group is ultimately responsible. Costs incurred for such subcontracted services are includedin the Group\u2019s measure of progress for satisfying its performance obligation. Changes in the total estimated costs to be incurred inmeasuring the Group\u2019s progress toward satisfying its performance obligation may result in adjustments to cumulative revenuerecognized at the time the change in estimate occurs.Upon the achievement of regulatory approval and the commencement of commercial sale of its products, the Group will satisfy itsperformance obligation related to commercial supply at the point in time when control of the manufactured product is transferredto the customer. Transfer of control for such goods will occur in accordance with the stated shipping terms.The Group does not incur incremental costs of obtaining a contract with a customer that would require capitalization. Costs tofulfill performance obligations are not incurred in advance of performance and, as such, are expensed when incurred.Other revenueOther revenue primarily consists of clinical trial support services rendered by the Group for its customers, which is recognized asthe service is provided. Revenue for such services is presented in the consolidated statements of profit or loss and othercomprehensive income or loss net of any discounts.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-21-2": {
"value": "2.7 Cost of product revenueCost of product revenue includes the cost of inventory sold, labor costs, manufacturing overhead expenses and reserves forexpected scrap, as well as shipping and freight costs and royalty costs related to in-license agreements. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCostOfSalesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-22-3": {
"value": "2.8 Research and development expensesResearch and development expenses primarily consist of personnel costs, material and other lab supply costs, facility costs andinternal and external costs related to the execution of studies and other development program advancement initiatives. Suchexpenses also include costs incurred in preparation for commercial launch, such as designing and developing commercial-scalemanufacturing capabilities and processes, quality control processes, production asset validation and other related activities. Thecosts also include amortization, depreciation and impairment losses related to software, property, plant and equipment, and right-of-use assets used in research and development activities and pre-commercial manufacturing and quality control activities.An internally generated intangible asset arising from the Group\u2019s development is recognized only if the Group can demonstrate:the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intent to complete theintangible asset and use or sell it; how the intangible asset will generate probable future economic benefits; the availability ofadequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and the abilityto measure reliably the expenditure attributable to the intangible asset during its development.The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the datewhen the intangible asset first meets the aforementioned recognition criteria. If an internally-generated intangible asset cannot berecognized, the related development expenditure is charged to profit or loss in the period in which it is incurred.Expenditures related to research and development activities are generally recognized as an expense in the period in which they areincurred. Due to significant regulatory uncertainties and other uncertainties inherent in the development of pharmaceuticalproducts, the Group did not capitalize any research and development expenses as internally-developed intangible assets during theyears ended 31 December 2022 and 2021.2.9 General and administrative expensesGeneral and administration expenses primarily consist of personnel-related costs, including salaries and other related compensationexpense, for corporate and other administrative and operational functions including finance, human resources, informationtechnology and legal, as well as facility-related costs. These costs relate to the operation of the business and are not related toresearch and development initiatives.Expenditures related to general and administration activities are recognized as an expense in the period in which they are incurred.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-22-4": {
"value": "2.8 Research and development expensesResearch and development expenses primarily consist of personnel costs, material and other lab supply costs, facility costs andinternal and external costs related to the execution of studies and other development program advancement initiatives. Suchexpenses also include costs incurred in preparation for commercial launch, such as designing and developing commercial-scalemanufacturing capabilities and processes, quality control processes, production asset validation and other related activities. Thecosts also include amortization, depreciation and impairment losses related to software, property, plant and equipment, and right-of-use assets used in research and development activities and pre-commercial manufacturing and quality control activities.An internally generated intangible asset arising from the Group\u2019s development is recognized only if the Group can demonstrate:the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intent to complete theintangible asset and use or sell it; how the intangible asset will generate probable future economic benefits; the availability ofadequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and the abilityto measure reliably the expenditure attributable to the intangible asset during its development.The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the datewhen the intangible asset first meets the aforementioned recognition criteria. If an internally-generated intangible asset cannot berecognized, the related development expenditure is charged to profit or loss in the period in which it is incurred.Expenditures related to research and development activities are generally recognized as an expense in the period in which they areincurred. Due to significant regulatory uncertainties and other uncertainties inherent in the development of pharmaceuticalproducts, the Group did not capitalize any research and development expenses as internally-developed intangible assets during theyears ended 31 December 2022 and 2021.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-24-3": {
"value": "2.10 Finance income and finance costFinance income consists of changes in the fair value of derivative financial liabilities and interest income. Interest income from afinancial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income canbe measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effectiveinterest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of thefinancial asset to that asset's net carrying amount on initial recognition.Finance cost consists of changes in the fair value of derivative financial liabilities, interest expense related to lease liabilities andborrowings, accretion of borrowings and amortization of deferred debt issue costs. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-25-3": {
"value": "2.11 Foreign currency translationThe consolidated financial statements are presented in U.S. Dollars, which is the Group\u2019s presentation currency. The Groupmaintains the financial statements of each entity within the Group in its respective functional currency. The majority of theGroup\u2019s expenses are incurred in U.S. Dollar and Icelandic Krona, and the majority of the Company\u2019s cash and cash equivalentsare held in a combination of U.S. Dollars and Euros. Transactions in currencies other than the Group\u2019s presentation currency(foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reportingperiod, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary itemscarried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair valuewas determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.Exchange differences on monetary items are recognized in profit or loss in the period in which they arise.Exchange differences arising on translation of a foreign controlled subsidiary are recognized in other comprehensive income orloss and accumulated in a translation reserve within equity. The cumulative translation amount is reclassified to profit or loss if andwhen the net investment in the foreign controlled subsidiary is disposed.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-26-3": {
"value": "2.12 Fair value measurementsThe Group measures certain financial liabilities at fair value through profit or loss (FVTPL) each reporting period. Fair value is theprice that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants atthe measurement date.The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available tomeasure the fair values of such financial liabilities, maximizing the use of relevant observable inputs and minimizing the use ofunobservable inputs.Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques, asfollows:\u2022 Level 1: quoted prices in active markets for identical assets and liabilities;\u2022 Level 2: inputs other than quoted prices that are observable for the asset or liability, either directly (e.g., prices) or indirectly (e.g.,derived from prices); and \u2022 Level 3: inputs for the asset or liability that are unobservable.The carrying amounts of cash and cash equivalents, restricted cash, trade receivables, other current assets, contract assets, trade andother payables and accrued and other liabilities in the Group\u2019s consolidated statements of financial position approximate their fairvalue because of the short maturities and nature of these instruments.For liabilities that are measured at fair value on a recurring basis, the Group determines whether transfers have occurred betweenlevels in the fair value hierarchy by reassessing the inputs used in determining fair value at the end of each reporting period. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-27-3": {
"value": "2.13 Goodwill and other intangible assetsGoodwillAcquisitions are first reviewed to determine whether a set of assets acquired constitute a business and should be accounted for as abusiness combination. If the assets acquired do not meet the definition of a business, the Group will account for the transaction asan asset acquisition. If the definition of a business combination is met, the Group will account for the transaction using theacquisition method of accounting. The consideration transferred in a business combination is measured at fair value, which iscalculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group tothe former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in the consolidated statements of profit or loss and other comprehensive income or loss as incurred.Goodwill represents the excess of the purchase price of the business combination over the Group's interest in the net fair value ofthe identifiable assets, liabilities, contingent liabilities, the amount of any noncontrolling interests in the acquiree and the fair valueof the acquirer's previously held equity interest in the acquiree. Goodwill is reviewed for impairment at least annually, andwhenever there is an indication that the asset may be impaired. An impairment loss is recognized for the amount by which theasset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs ofdisposal and value in use. The value in use calculation is performed using discounted expected future cash flows. The discount rateapplied to these cash flows is based on the weighted average cost of capital and reflects current market assessments of the timevalue of money. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the businesscombination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Thoseprovisional amounts are adjusted during the measurement period, or as additional assets or liabilities are recognized, to reflect newinformation obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected theamounts recognized at that date.The Group did not complete any business combinations during the year ended 31 December 2021. Refer to Note 1.1 for theBusiness Combination completed during the year ended 31 December 2022. Other intangible assetsOther intangible assets consist of software, customer relationships, and intellectual property rights licensed from Biosana (see Note2.18). Intangible assets acquired in a business combination are identified and recognized separately from goodwill if they satisfy thedefinition of an intangible asset and their fair values can be reliably measured. The cost of intangible assets is their fair value at theacquisition date.Intangible assets with finite useful lives are reported at cost less accumulated amortization and accumulated impairment losses.Amortization is recognized on a straight-line basis over an asset\u2019s estimated useful life. The estimated useful life and amortizationmethod are reviewed at each balance sheet date, with the effect of any changes in estimate being accounted for on a prospectivebasis. Intangible assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. The following useful lives are used in the calculation of amortization:Software 3-5 yearsCustomer relationships 7 yearsIntangible assets with indefinite useful lives are reviewed for impairment at least annually, and whenever there is an indication thatthe asset may be impaired. An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and value in use. The valuein use calculation is performed using discounted expected future cash flows. The discount rate applied to these cash flows is basedon the weighted average cost of capital and reflects current market assessments of the time value of money.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-27-4": {
"value": "2.13 Goodwill and other intangible assetsGoodwillAcquisitions are first reviewed to determine whether a set of assets acquired constitute a business and should be accounted for as abusiness combination. If the assets acquired do not meet the definition of a business, the Group will account for the transaction asan asset acquisition. If the definition of a business combination is met, the Group will account for the transaction using theacquisition method of accounting. The consideration transferred in a business combination is measured at fair value, which iscalculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group tothe former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in the consolidated statements of profit or loss and other comprehensive income or loss as incurred.Goodwill represents the excess of the purchase price of the business combination over the Group's interest in the net fair value ofthe identifiable assets, liabilities, contingent liabilities, the amount of any noncontrolling interests in the acquiree and the fair valueof the acquirer's previously held equity interest in the acquiree. Goodwill is reviewed for impairment at least annually, andwhenever there is an indication that the asset may be impaired. An impairment loss is recognized for the amount by which theasset\u2019s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs ofdisposal and value in use. The value in use calculation is performed using discounted expected future cash flows. The discount rateapplied to these cash flows is based on the weighted average cost of capital and reflects current market assessments of the timevalue of money. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the businesscombination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Thoseprovisional amounts are adjusted during the measurement period, or as additional assets or liabilities are recognized, to reflect newinformation obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected theamounts recognized at that date.The Group did not complete any business combinations during the year ended 31 December 2021. Refer to Note 1.1 for theBusiness Combination completed during the year ended 31 December 2022. Other intangible assetsOther intangible assets consist of software, customer relationships, and intellectual property rights licensed from Biosana (see Note2.18). Intangible assets acquired in a business combination are identified and recognized separately from goodwill if they satisfy thedefinition of an intangible asset and their fair values can be reliably measured. The cost of intangible assets is their fair value at theacquisition date.Intangible assets with finite useful lives are reported at cost less accumulated amortization and accumulated impairment losses.Amortization is recognized on a straight-line basis over an asset\u2019s estimated useful life. The estimated useful life and amortizationmethod are reviewed at each balance sheet date, with the effect of any changes in estimate being accounted for on a prospectivebasis. Intangible assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. The following useful lives are used in the calculation of amortization:Software 3-5 yearsCustomer relationships 7 yearsIntangible assets with indefinite useful lives are reviewed for impairment at least annually, and whenever there is an indication thatthe asset may be impaired. An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and value in use. The valuein use calculation is performed using discounted expected future cash flows. The discount rate applied to these cash flows is basedon the weighted average cost of capital and reflects current market assessments of the time value of money.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-29-3": {
"value": "2.14 Income taxIncome tax includes the current tax and deferred tax charge recorded in the consolidated statements of profit or loss and othercomprehensive income or loss.Current taxThe current tax expense is based on taxable profit for the year. Taxable profit differs from \u2018profit before tax\u2019 as reported in theconsolidated statement of profit or loss and other comprehensive income or loss because it excludes items of income or expensethat are taxable or deductible in other years and items that are never taxable or deductible. The Group's current tax expense iscalculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.Accruals for tax contingencies are made when it is not probable that a tax authority will accept the tax position, based uponmanagement\u2019s interpretation of applicable laws and regulations and the expectation of how the tax authority will resolve the matter.Accruals for tax contingencies are measured using either the most likely amount or the expected value amount depending on whichmethod the entity expects to better predict the resolution of the uncertainty.Deferred taxDeferred tax is provided in full for all temporary differences between the carrying amounts of assets and liabilities in theconsolidated financial statements and the corresponding tax bases used in the computation of taxable profit, except to the extentthe temporary difference arises from:\u2022 The initial recognition of an asset or a liability in a transaction that is not a business combination and that affects neither thetaxable profit nor accounting profit;\u2022 The initial recognition of residual goodwill (for deferred tax liabilities only); or\u2022 Investments in subsidiaries, branches, associates and joint ventures, where the Group is able to control the timing of the reversalof the temporary difference and it is not probable that it will reverse in the foreseeable future.Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability issettled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of thereporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that wouldfollow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amount of theassets and liabilities.Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognizedfor all deductible temporary differences to the extent that it is probable that taxable profits will be available against which thosedeductible temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at the end of eachreporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all orpart of the asset to be recovered.Deferred tax is charged or credited to the consolidated statement of profit or loss and other comprehensive income or loss, exceptwhen the tax arises from a business combination or it relates to items charged or credited directly to equity, in which case thedeferred tax is also taken directly to equity.Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Groupintends to settle its current tax assets and liabilities on a net basis in that taxation authority.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-30-3": {
"value": "2.15 Property, plant and equipmentProperty, plant and equipment is recognized as an asset when it is probable that future economic benefits associated with the assetwill flow to the Group and the cost of the asset can be measured in a reliable manner. Property, plant and equipment whichqualifies for recognition as an asset are initially measured at cost.The cost of property, plant and equipment includes an asset\u2019s purchase price and any directly attributable costs of bringing theasset to working condition for its intended use.Depreciation is calculated and recognized as an expense on a straight-line basis over an asset\u2019s estimated useful life. The estimated useful lives, residual values and depreciation method are reviewed at each balance sheet date, with the effect of any changes in estimate accounted for on a prospective basis. The following useful lives are used in the calculation of depreciation:Facility40 yearsFacility equipment5-20 yearsComputer equipment3 yearsLeasehold improvements3-15 yearsFurniture and fixtures5 yearsCertain of the Group\u2019s property, plant and equipment assets have been pledged to secure borrowings as further described in Note20. Significant disposals of pledged assets are subject to lender approval. Upon disposal or retirement of an asset, the differencebetween the sales proceeds, if applicable, and the carrying amount of the asset is recognized in the consolidated statements ofprofit or loss and other comprehensive income or loss at the time of disposal or retirement.At the end of each reporting period, or sooner if events triggering an interim impairment assessment occur, the Group reviews thecarrying amounts of its property, plant and equipment to determine whether there is any indication that the value of such assets areimpaired. Triggering events that warrant an interim impairment assessment include, but are not limited to, the technicalobsolescence of equipment or failure of such equipment to meet regulatory requirements. If any such indication exists, therecoverable amount of the asset is estimated in order to determine the extent of the impairment loss and the carrying amount ofthe asset is reduced to its recoverable amount, which is the higher of fair value less costs of disposal and value in use.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-31-3": {
"value": "2.16 InventoriesInventories, which consist of raw materials and supplies, work in progress and finished goods are stated at the lower of cost or netrealizable value. Net realizable value is the expected sales price less completion costs and costs to be incurred in marketing, sellingand distributing the inventory. Cost is calculated using the weighted average cost method or the first-in, first-out method,depending on the nature of the inventory. Inventories include direct costs for raw materials and supplies and, as applicable, direct and indirect labor and overhead expenses that have been incurred to bring inventories to their present location and condition. See Note 17 for further details.If the net realizable value is lower than the carrying amount, a write-down of inventory is recognized for the amount by which thecarrying amount exceeds net realizable value. During the years ended 31 December 2022 and 2021, write-down of inventoriesamounted to $2.1 million and $1.2 million, respectively, due to product expiration. There were no reversals of inventory write-downs during the years ended 31 December 2022 and 2021. See Note 17 for further details.The Group does not pledge inventories as collateral to secure its liabilities.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-32-3": {
"value": "2.17 Financial assetsRecognition of financial assetsFinancial assets are recognized when the Group becomes a party to the contractual provisions of the instrument. Financial assetsare initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, otherthan financial assets measured at FVTPL, are added to or deducted from the fair value of the financial assets, as appropriate, oninitial recognition. Transaction costs directly attributable to the acquisition of financial assets at FVTPL are recognized immediatelyin profit or loss. There were no transaction costs related to the acquisition of financials assets in 2022 or 2021. All of the Group\u2019sfinancial assets are measured at amortized cost as of 31 December 2022 and 2021.Financial assets measured at amortized costFinancial assets measured at amortized cost are debt instruments that give rise to contractual cash flows that are solely payments ofprincipal and interest on the principal amount outstanding. The Group's financial assets measured at amortized cost are tradereceivables, certain other current assets, receivables from related parties, restricted cash and cash and cash equivalents.Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effect ofdiscounting is immaterial.Impairment of financial assetsThe Group recognizes a loss allowance for expected credit losses (ECL) on its trade receivables and other debt instruments thatare measured at amortized cost. In addition, although contract assets are not financial assets, a loss allowance for ECL are alsorecognized for such assets. ECL is based on the difference between the contractual cash flows due in accordance with the contractand all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. Theamount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financialinstrument.The Group always recognizes lifetime ECL for trade receivables and contract assets. The expected credit losses on these financialassets are estimated using a provision matrix based on the Group\u2019s historical credit loss experience, adjusted for factors that arespecific to the debtors, general economic conditions and an assessment of both the current as well as the forecasted direction ofconditions at the reporting date, including time value of money where appropriate.The Group writes off a financial asset when there is no reasonable expectation of recovery, such as information indicating that thedebtor is in severe financial difficulty and there is no realistic prospect of recovery. A trade receivable or contract asset that isconsidered uncollectible is written off against the allowance account. Subsequent recoveries of amounts previously written off arecredited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.The Group did not write off any trade receivables or contract assets during the years ended 31 December 2022 and 2021.The Group estimates impairment for related party receivables on an individual basis. No impairment is recognized for restrictedcash or cash and cash equivalents as management has estimated that the effects of any calculated ECL would be immaterial.Derecognition of financial assetsThe Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfersthe financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neithertransfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Grouprecognizes its retained interest in the asset as well as an associated liability. If the Group retains substantially all the risks andrewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes acollateralized borrowing for the proceeds received.On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the consideration receivedand receivable and the cumulative gain or loss that had been recognized in other comprehensive income or loss and accumulated inequity is recognized in profit or loss.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-33-3": {
"value": "2.18 Financial liabilitiesFinancial liabilitiesThe Group\u2019s financial liabilities consist of trade and other payables, certain other current liabilities loans and borrowings, leaseliabilities, derivative financial instruments, long-term incentive plans, share appreciation right plans and other long-term liability to arelated party. All financial liabilities are initially measured at fair value. Loans and borrowings are recorded net of directlyattributable transaction costs and less the value attributable to any embedded derivative financial instruments, if applicable. The Group derecognizes financial liabilities when, and only when, the Group\u2019s obligations are discharged, cancelled, substantiallymodified or have expired. Additionally, management elected, as part of its accounting policy, to recognize the difference betweenthe carrying amount of the financial liabilities and the fair value of the consideration paid for the extinguishment in theconsolidated statement of profit or loss and other comprehensive income or loss.Financial liabilities subsequently measured at amortized costAfter initial recognition, financial liabilities other than derivative financial instruments, and awards issued pursuant to long-termincentive plans are subsequently measured at amortized cost using the effective interest method. The effective interest method is amethod of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. Theeffective interest rate is the rate that discounts all estimated future cash payments through the expected life of the financial liability,or a shorter period if appropriate, to the amortized cost of a financial liability. The effective interest rate includes the effects of anydiscount or premium on acquisition of the financial liability, as well as any fees or costs incurred upon acquisition.Financial liabilities subsequently measured at FVTPLDerivative financial instrumentsCertain rights and features pursuant to borrowing arrangements and other contracts may provide the counterparty with one ormore financial instruments that need to be evaluated and potentially accounted for separately by the Group. These financialinstruments are either embedded in a host instrument or are treated as a separate financial instrument if they are contractuallytransferable independent from the host instrument. Such rights and features pursuant to the Group\u2019s contracts with both thirdparties and related parties include earn out rights, conversion rights and warrant rights.Equity conversion features within host debt instruments that meet the definition of a derivative and have economic and riskcharacteristics that are not closely related to the host instrument are embedded derivatives that are separated from the hostinstrument and accounted for separately. As part of the accounting for embedded derivatives or separate financial instruments,management considers the appropriate accounting classification under IAS 32. Embedded derivatives and separate financialinstruments that meet the fixed-for-fixed criteria are classified as equity and initially measured at fair value.Warrant rights that provide the holder with an option to purchase ordinary shares at a specified price or pursuant to a specifiedformula are generally separate derivative financial instruments that are accounted for as derivative liabilities. Earn Out Shares grantthe holder with a variable number of Ordinary Shares based on certain vesting conditions tied to the stock price and are accountedfor as derivative liabilities. In the event that the fair value of any derivative liabilities, determined using unobservable inputs,exceeds the transaction price of a borrowing arrangement, the Group records a deferred loss at the inception of the borrowingarrangement for the difference between the fair value of the derivative liabilities and the transaction price of the borrowingarrangement. Such deferred losses are recognized over the term of the related borrowing arrangement using the straight-linemethod of amortization. The deferred loss is netted against derivative financial liabilities on the consolidated statements of financialposition. Amortization of the deferred loss is recognized as a component of \u201cFinance costs\u201d in the consolidated statements ofprofit or loss and other comprehensive income or loss. The Group recognized derivative liabilities related to the Predecessor Earn Out Shares, OACB Earn Out Shares and assumedOACB warrants. Additionally, the Group recognized an embedded derivative for the conversion feature associated with theTranche A Convertible Bonds, as further described in Note 20. These features are liability-classified, rather than equity-classified,because the Group is obligated to issue a variable number of ordinary shares to the holder upon conversion or exercise of thefeature. Therefore, these derivative liabilities were initially recorded at fair value and remeasured to fair value at each reportingperiod with gains and losses arising from changes in the fair value recognized in finance income or finance costs, as appropriate. The fair values of the derivative liabilities were determined using a valuation approach that incorporated a range of inputs that areboth observable and unobservable in nature. The inputs used in the initial and subsequent fair value measurements predominantlyrelate to (i) the price of the Group\u2019s Ordinary Shares (ii) the volatility of the Group\u2019s Ordinary Shares, (ii) a risky discount ratecorresponding to the credit risk associated with the repayment of the host debt instruments, and (iii) the probabilities of eachderivative being exercised by the holder and the timing of such exercises. The probabilities are determined based on all relevantinternal and external information available and are reviewed and reassessed at each reporting date. The Group will derecognize any derivative liabilities if and when the rights are exercised by the holders or the time period duringwhich the rights can be exercised expires.Other long-term liability to related partyThe Group\u2019s other long-term liability to a related party arose from its acquisition of rights for the commercialization of theGroup\u2019s biosimilar Adalimumab product in certain territories in Asia from Lotus Pharmaceutical Co. Ltd., a related party, duringthe year ended 31 December 2020. Pursuant to the terms of the asset acquisition, the Group made an upfront payment of $1.9million and is required to pay $7.4 million upon the commercial launch of Adalimumab in China. The Group concluded that theevent triggering future payment is probable and, as such, recorded the full amount of the liability as a non-current liability in theconsolidated statements of financial position as of 31 December 2022 and 2021. The upfront payment and contingent paymentamounts were charged to \u201cResearch and development expense\u201d in the consolidated statements of profit or loss and othercomprehensive income or loss.Other current liabilitiesIn December 2021, Alvotech entered into an exclusive global licensing agreement with BiosanaPharma (Biosana) for the co-development of AVT23. Under the terms of the agreement, Biosana granted Alvotech an exclusive global right for AVT23, whichwill be produced using Biosana\u2019s proprietary process technology. In exchange, Alvotech made an upfront payment of $7.5 millionupon the signing of the agreement (the \u201cupfront payment\u201d), with an additional $7.5 million due at the earlier of the closing of theBusiness Combination (see Note 27) or 30 April 2022 (the \u201cdeferred upfront payment\u201d). In addition, Alvotech may be obligated topay Biosana up to an aggregate of $13.5 million, payable upon the achievement of various development and regulatory milestones,as well as certain tiered royalty payments based on commercial sales of AVT23. The agreement terminates 15 years after the launchof AVT23 and is subject to certain customary termination rights.The Group concluded that the deferred upfront payment is probable and, as such, recorded the full amount of the liability in\u201cOther current liabilities\u201d on the consolidated statement of financial position as of 31 December 2021. The upfront payment andthe deferred upfront payment amounts were capitalized as other intangible assets in the consolidated statement of financialposition and will be amortized over the useful life of 15 years. The Group will accrue the additional contingent payments if andwhen the related milestones and other contingencies are deemed probable of being achieved.Long-term incentive plansShare appreciation rightsThe Group issued to certain current and former employees share appreciation rights (SARs) that require settlement in connectionwith the occurrence of specified, future triggering events. Grants occurred from 2015 through 2020. The awards include acombination of vesting conditions, such as service and performance conditions, as well as non-vesting conditions depending on theparticular award. The individuals retain their vested awards upon termination of employment with the Group. Settlement amountsare determined by the change in the Group\u2019s market value from the grant date of the SAR until the triggering events occur. TheSARs do not expire at a specific date.Pursuant to the terms of the SAR agreements, management determined that the Group cannot avoid paying cash to settle theawards and, therefore, SARs are liability-classified in the consolidated statements of financial position. Accordingly, SARs wererecorded at fair value and were subsequently remeasured each reporting period with the change in fair value reflected as a gain orloss in the consolidated statements of profit or loss and other comprehensive income or loss, as appropriate. The fair value of theSARs was determined using the Black-Scholes-Merton pricing model. In connection with the closing of the Business Combination,the Company reached a settlement agreement for share appreciation rights previously awarded to certain current and formeremployees. The remaining share appreciation rights were settled through the issuance of fully vested RSUs under the ManagementIncentive Plan on 1 December 2022. See Note 21 for further details. Employee incentive planThe Group also sponsors an employee incentive plan for certain qualifying employees. Under the plans, such employees areentitled to cash payments upon achievement of key milestones, such as a research and development milestone or the occurrence ofan exit event. The awards include a combination of vesting conditions, such as service and performance conditions, as well as non-vesting conditions depending on the particular award. Since the Group cannot avoid paying cash to settle the awards, the employeeincentive plan is liability-classified in the consolidated statements of financial position. Accordingly, awards issued pursuant to theemployee incentive plan are recorded at fair value and are subsequently remeasured each reporting period with the change in fairvalue reflected as a gain or loss in the consolidated statements of profit or loss and other comprehensive income or loss, asappropriate. Employee incentive plan liabilities are presented as either current or non-current on the consolidated statements offinancial position based on the anticipated timing of settlement.The fair value of the employee incentive plan awards is determined by estimating the probability of success in reaching thespecified milestones and other levers, such as the anticipated timing of potential milestone achievement. See Note 21 for furtherdetails.Management incentive planThe Group can issue share options, restricted share units (\u201cRSUs\u201d), and other share-based awards under the Company\u2019s newincentive plan (the \u201cManagement Incentive Plan\u201d) which was approved by the Board in June 2022. Awards issued under theManagement Incentive Plan are accounted for in accordance with IFRS 2. Share-based payments are classified as equity-settledshare-based payments as the Company intends to settle the awards with equity and has the commercial substance to do so. Share-based payments are measured at the grant date fair value of the instruments issued and recognized over the expected vestingperiods. The number of shares expected to vest are reviewed and adjusted at the end of each reporting period such that theamount of expense recognized shall be based on the number of equity instruments that will eventually vest. See Note 22 forfurther details. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-36-3": {
"value": "2.19 Litigation and other contingenciesThe Group may, from time to time, become involved in legal proceedings arising out of the normal course of its operations. Forinstance, as a developer and manufacturer of biosimilars, the Group may be subject to lawsuits alleging patent infringement orother similar claims filed by the reference product sponsor. Similarly, the Group may utilize patent challenge procedures tochallenge the validity, enforceability or infringement of the reference product sponsor\u2019s patents. Other parties may also file patentinfringement claims against the Group alleging that the Group\u2019s products or manufacturing process techniques infringe theirpatents.The Group establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome isprobable and the loss is reasonably estimable. When such conditions are not met for a specific legal matter, no reserve isestablished. Although management currently believes that resolving claims against the Group, including claims where anunfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of operations, or financialcondition of the Group, these matters are subject to inherent uncertainties and management\u2019s view of these matters may change inthe future. It is possible that an unfavorable outcome of a lawsuit or other contingency could have a material impact on theliquidity, results of operations, or financial condition of the Group.Significant judgment is required in both the determination of probability of loss and the determination as to whether the amountof loss can be reasonably estimated. Accruals are based only on information available at the time of the assessment, due to theuncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related topending claims and litigation and may revise its previous estimates, which could materially affect the Group\u2019s results of operationsin a given period.The Group maintains liability insurance coverages for various claims and exposures. The Group\u2019s insurance coverage limits itsmaximum exposure on claims; however, the Group is responsible for any uninsured portion of losses. Management believes thatpresent insurance coverage is sufficient to cover potential exposures.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-38-3": {
"value": "2.20 LeasesThe Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for those with a lease termof twelve months or less and leases of low value assets. For these leases, the Group recognizes the lease payments as an operatingexpense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time patternin which economic benefits from the leased assets are consumed. The Group\u2019s leased assets consist of various real estate, fleet andequipment leases. Right-of-use assets reflect the initial measurement of the lease liability, lease payments made at or before the lease commencementdate and any initial direct costs less lease incentives that may have been received by the Group. These assets are subsequentlymeasured at cost less accumulated depreciation, impairment losses and remeasurements of the underlying lease liability. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the underlying asset. If a lease transfersownership of the underlying asset to the Group or the lease includes a purchase option that the Group is reasonably certain toexercise, the related right-of-use asset is depreciated over the useful life of the underlying asset. Depreciation starts at thecommencement date of the lease.Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date,discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incrementalborrowing rate, which is the rate of interest that the Group would need to pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment based on information available at the commencementdate of the lease. The lease payments included in the measurement of the lease liability comprise fixed payments (including in-substance fixed payments) less any incentives, variable lease payments that depend on an index or rate, expected residual guaranteesand the exercise price of purchase options reasonably certain to be exercised by the Group.The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability, using theeffective interest method, and by reducing the carrying amount to reflect payments made during the lease term. The Groupremeasures the lease liability if the lease term has changed, when lease payments based on an index or rate change or when a leasecontract is modified and the modification is not accounted for as a separate lease.Variable payments that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognized as an expense in the period in which the event or condition that triggers thosepayments occurs.As a practical expedient, lessees are not required to separate non-lease components from lease components, and instead accountfor any lease and associated non-lease components as a single lease component. The Group has used this practical expedient.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-39-3": {
"value": "2.21 Loss per shareHolders of the Predecessor Earn Out Shares and OACB Earn Out Shares have equal dividend and participation rights to theordinary shareholders. However, these participating securities are classified as liabilities and as such, the shares held are notincluded in the weighted average number of ordinary shares outstanding in the basic loss per share calculation.The calculation of basic loss per share is based on the loss for the year attributable to ordinary shareholders of the Group and theweighted average number of ordinary shares outstanding during the period.Diluted loss per share is computed by dividing the loss for the year attributable to ordinary shareholders of the Group by theweighted average number of ordinary shares outstanding in the basic loss per share calculation, both of which are adjusted for theeffects of all dilutive potential ordinary shares. Antidilutive effects of potential ordinary shares, which result in an increase inearnings per share or a reduction in loss per share, are not recognized in the computation of diluted loss per share. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-40-2": {
"value": "3. New accounting standardsNew standards and interpretations adopted and effective during the periodsThe following new IFRS standards have been adopted by the Group effective 1 January 2022:IAS 16 (Amendments) \u2013 Property, Plant and Equipment \u2013 Proceeds before Intended UseThe IASB issued amendments to IAS 16, which prohibit deducting from the cost of an item of property, plant and equipment anyproceeds from selling items produced before that asset is available for use; that is, proceeds from items being sold while bringingthe asset to the location and condition necessary for it to be capable of operating in the manner intended by management.Consequently, an entity recognizes such sales proceeds and related costs in profit or loss. The entity measures the cost of thoseitems in accordance with IAS 2 Inventories. The amendments also clarified the meaning of \u2018testing whether an asset is functioningproperly\u2019. IAS 16 now specifies this as assessing whether the technical and physical performance of the asset is such that it iscapable of being used in the production or supply of goods or services, for rental to others, or for administrative purposes. Theadoption of the amendments did not have a material impact on the consolidated financial statements of the Group.IAS 37 (Amendment) - Onerous Contracts \u2013 Cost of Fulfilling a Contract The IASB issued amendments to IAS 37 to specify that the \u2018cost of fulfilling\u2019 a contract comprises the \u2018costs that relate directly tothe contract\u2019. Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract (examples would be direct labor or materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be theallocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The amendmentsapply to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual reporting period inwhich the entity first applies the amendments. Comparatives are not restated. Instead, the entity shall recognize the cumulativeeffect of initially applying the amendments as an adjustment to the opening balance of retained earnings or other component ofequity, as appropriate, at the date of initial application. The adoption of the amendments did not have a material impact on theconsolidated financial statements of the Group.Annual Improvements to IFRS Standards 2018-2020 CycleIFRS 9 Financial Instruments The IASB issues amendments on IFRS 9, which clarifies that in applying the \u201810 percent\u2019 test to assess whether to derecognize afinancial liability, an entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paidor received by either the entity or the lender on the other\u2019s behalf. The amendment is applied prospectively to modifications andexchanges that occur on or after the date the entity first applies the amendment. The adoption of the amendments did not have amaterial impact on the consolidated financial statements of the Group.New and revised IFRS standards in issue but not yet effectiveThe following new standards are not yet adopted by or effective for the Group and have not been applied in preparing theseConsolidated Financial Statements.IFRS 10 and IAS 28 (Amendments) \u2013 Sale or Contribution of Assets between Investor and its Associate or Joint Venture:The IASB issues amendments to IFRS 10 and IAS 28, which relate to situations where there is a sale or contribution of assetsbetween an investor and its associate or joint venture. The amendments state that gains or losses resulting from the loss of controlof a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using theequity method, are recognized in the parent\u2019s profit or loss only to the extent of the unrelated investors\u2019 interests in that associateor joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (thathas become an associate or a joint venture that is accounted for using the equity method) to fair value are recognized in the formerparent\u2019s profit or loss only to the extent of the unrelated investors\u2019 interests in the new associate or joint venture. The effective date of the amendments has yet to be set by the Board; however, earlier application of the amendments is permitted. The Groupanticipates that the application of these amendments may have an impact on the consolidated financial statements in future periodsshould such transactions arise.IAS 1 (Amendments) \u2013 Classification of Liabilities as Current or Non-CurrentThe IASB issues amendments to IAS 1, which affect the presentation of liabilities as current or non-current in the statement offinancial position. The amendment does not impact the amount or timing of recognition of any asset, liability, income or expenses,or the information disclosed about those items. The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected byexpectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence ifcovenants are complied with at the end of the reporting period, and introduce a definition of \u2018settlement\u2019 to make clear thatsettlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendments areapplied retrospectively for annual periods beginning on or after 1 January 2023, with early application permitted. The Groupanticipates that the application of these amendments may have an impact on the consolidated financial statements in futureperiods.Annual Improvements to IFRS Standards 2018-2020 CycleThe Annual Improvements include amendments to the following Standards that are relevant to the Group:IFRS 16 Leases The IASB issues amendments on IFRS 16, which removes the illustration of the reimbursement of leasehold improvements. Asthe amendment to IFRS 16 only regards an illustrative example, no effective date is stated. IAS 1 Presentation of Financial Statements, Practice statement 2 and IAS 8 Accounting Policies, Changes in Accounting Estimates and ErrorsThe aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes inaccounting estimates and changes in accounting policies. The amendment is effective for annual periods beginning on or after 1January 2023.IAS 12 Income TaxesThese require companies to recognize deferred tax on transactions that, on initial recognition give rise to equal amounts of taxableand deductible temporary differences. The amendment is effective for annual periods beginning on or after 1 January 2023.The Group anticipates that the application of these amendments will not have a material impact on the consolidated financialstatements. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-40-3": {
"value": "3. New accounting standardsNew standards and interpretations adopted and effective during the periodsThe following new IFRS standards have been adopted by the Group effective 1 January 2022:IAS 16 (Amendments) \u2013 Property, Plant and Equipment \u2013 Proceeds before Intended UseThe IASB issued amendments to IAS 16, which prohibit deducting from the cost of an item of property, plant and equipment anyproceeds from selling items produced before that asset is available for use; that is, proceeds from items being sold while bringingthe asset to the location and condition necessary for it to be capable of operating in the manner intended by management.Consequently, an entity recognizes such sales proceeds and related costs in profit or loss. The entity measures the cost of thoseitems in accordance with IAS 2 Inventories. The amendments also clarified the meaning of \u2018testing whether an asset is functioningproperly\u2019. IAS 16 now specifies this as assessing whether the technical and physical performance of the asset is such that it iscapable of being used in the production or supply of goods or services, for rental to others, or for administrative purposes. Theadoption of the amendments did not have a material impact on the consolidated financial statements of the Group.IAS 37 (Amendment) - Onerous Contracts \u2013 Cost of Fulfilling a Contract The IASB issued amendments to IAS 37 to specify that the \u2018cost of fulfilling\u2019 a contract comprises the \u2018costs that relate directly tothe contract\u2019. Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract (examples would be direct labor or materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be theallocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The amendmentsapply to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual reporting period inwhich the entity first applies the amendments. Comparatives are not restated. Instead, the entity shall recognize the cumulativeeffect of initially applying the amendments as an adjustment to the opening balance of retained earnings or other component ofequity, as appropriate, at the date of initial application. The adoption of the amendments did not have a material impact on theconsolidated financial statements of the Group.Annual Improvements to IFRS Standards 2018-2020 CycleIFRS 9 Financial Instruments The IASB issues amendments on IFRS 9, which clarifies that in applying the \u201810 percent\u2019 test to assess whether to derecognize afinancial liability, an entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paidor received by either the entity or the lender on the other\u2019s behalf. The amendment is applied prospectively to modifications andexchanges that occur on or after the date the entity first applies the amendment. The adoption of the amendments did not have amaterial impact on the consolidated financial statements of the Group.New and revised IFRS standards in issue but not yet effectiveThe following new standards are not yet adopted by or effective for the Group and have not been applied in preparing theseConsolidated Financial Statements.IFRS 10 and IAS 28 (Amendments) \u2013 Sale or Contribution of Assets between Investor and its Associate or Joint Venture:The IASB issues amendments to IFRS 10 and IAS 28, which relate to situations where there is a sale or contribution of assetsbetween an investor and its associate or joint venture. The amendments state that gains or losses resulting from the loss of controlof a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using theequity method, are recognized in the parent\u2019s profit or loss only to the extent of the unrelated investors\u2019 interests in that associateor joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (thathas become an associate or a joint venture that is accounted for using the equity method) to fair value are recognized in the formerparent\u2019s profit or loss only to the extent of the unrelated investors\u2019 interests in the new associate or joint venture. The effective date of the amendments has yet to be set by the Board; however, earlier application of the amendments is permitted. The Groupanticipates that the application of these amendments may have an impact on the consolidated financial statements in future periodsshould such transactions arise.IAS 1 (Amendments) \u2013 Classification of Liabilities as Current or Non-CurrentThe IASB issues amendments to IAS 1, which affect the presentation of liabilities as current or non-current in the statement offinancial position. The amendment does not impact the amount or timing of recognition of any asset, liability, income or expenses,or the information disclosed about those items. The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected byexpectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence ifcovenants are complied with at the end of the reporting period, and introduce a definition of \u2018settlement\u2019 to make clear thatsettlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendments areapplied retrospectively for annual periods beginning on or after 1 January 2023, with early application permitted. The Groupanticipates that the application of these amendments may have an impact on the consolidated financial statements in futureperiods.Annual Improvements to IFRS Standards 2018-2020 CycleThe Annual Improvements include amendments to the following Standards that are relevant to the Group:IFRS 16 Leases The IASB issues amendments on IFRS 16, which removes the illustration of the reimbursement of leasehold improvements. Asthe amendment to IFRS 16 only regards an illustrative example, no effective date is stated. IAS 1 Presentation of Financial Statements, Practice statement 2 and IAS 8 Accounting Policies, Changes in Accounting Estimates and ErrorsThe aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes inaccounting estimates and changes in accounting policies. The amendment is effective for annual periods beginning on or after 1January 2023.IAS 12 Income TaxesThese require companies to recognize deferred tax on transactions that, on initial recognition give rise to equal amounts of taxableand deductible temporary differences. The amendment is effective for annual periods beginning on or after 1 January 2023.The Group anticipates that the application of these amendments will not have a material impact on the consolidated financialstatements. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-42-2": {
"value": "4. Segment reportingAs disclosed in Note 2, the Group operates and manages its business as one operating segment.The majority of the Group\u2019s revenue is generated from long-term out-license contracts which provide the customer with exclusiverights to a particular territory, which generally span multiple countries or a particular continent, as well as the Group\u2019s promises tocontinue development of the underlying compound and to provide supply of the product to the customer upon commercialization. Therefore, based on the nature of the customer agreements, revenue information is not currently available on a country-by-countrybasis.Revenue from customers based on the geographic market in which the revenue is earned, which predominantly aligns with therights conveyed to the Group\u2019s customers pursuant to its out-license contracts, is as follows (in thousands):20222021North America.................................................................................................................................................30,780 11,660 Europe...............................................................................................................................................................39,433 20,509 Asia.....................................................................................................................................................................6,798 1,323 Other..................................................................................................................................................................6,018 3,280 83,029 36,772 Non-current assets, excluding financial instruments and deferred tax assets, based on the location of the asset is as follows (inthousands):2022 2021North America.................................................................................................................................................240 439 Europe...............................................................................................................................................................334,837 249,803 Asia and other..................................................................................................................................................3,715 2,194 338,792 252,436 Revenue from transactions with individual customers that exceed ten percent or more of the Group\u2019s total revenue is as follows (inthousands, except for percentages):2022Revenue % TotalCustomer A......................................................................................................................................................17,940 21.6%Customer B.......................................................................................................................................................38,376 46.2%2021Revenue % TotalCustomer A......................................................................................................................................................10,070 27.4%Customer B.......................................................................................................................................................18,369 50.0%",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-43-2": {
"value": "5. Revenue and other incomeRevenue from contracts with CustomersDisaggregated revenueThe following table summarizes the Groups\u2019 revenue from contracts with customers, disaggregated by the type of good or serviceand timing of transfer of control of such goods and services to customers (in thousands):2022 2021Product revenue (point in time revenue recognition)..............................................................................24,836 - License revenue (point in time revenue recognition)...............................................................................424 1,453 Research and development and other service revenue*..........................................................................57,769 35,319 83,029 36,772 * Over time revenue recognitionReassessment of variable considerationSubsequent changes to the estimate of the transaction price are generally recorded as adjustments to revenue in the period ofchange. The Group updates variable consideration estimates on a quarterly basis. The quarterly changes in estimates did not resultin material adjustments to the Group\u2019s previously reported revenue or trade receivables during the years ended 31 December 2022and 2021.Contract assets and liabilitiesA reconciliation of the beginning and ending balances of contract assets and contract liabilities is shown in the table below (inthousands):Contract Contract assetsliabilities31 December 2020 .........................................................................................................................................34,724 53,066 Contract asset additions ................................................................................................................................21,525 - Amounts transferred to trade receivables .................................................................................................(36,811) - Customer prepayments .................................................................................................................................- 34,577 Revenue recognized .......................................................................................................................................- (13,107) 31 December 2021 .........................................................................................................................................19,438 74,536 Contract asset additions ................................................................................................................................29,823 - Amounts transferred to trade receivables .................................................................................................(19,690) - Customer prepayments .................................................................................................................................- 46,127 Revenue recognized .......................................................................................................................................- (26,782)Foreign currency adjustment .......................................................................................................................(915) 51 31 December 2022 .........................................................................................................................................28,656 93,932The net increase in contract assets as of 31 December 2022 is primarily due revenue recognized when the performance obligationhas been met which is offset by the transfer of such amounts to trade receivables on the basis that the Group\u2019s right to thatconsideration is no longer contingent on its performance. The net increase in contract liabilities as of 31 December 2022 is due tocustomer prepayments in advance of the Group\u2019s performance. As of 31 December 2022, $3.3 million and $25.4 million arerecorded as non-current contract assets and current contract assets, respectively. Non-current contract assets will materialize overthe next 2 to 3 years. As of 31 December 2022, $57.0 million and $36.9 million are recorded as non-current contract liabilities andcurrent contract liabilities, respectively. Non-current contract liabilities will be recognized as revenue over the next 2 to 5 years aseither services are rendered or contractual milestones are achieved, depending on the performance obligation to which the paymentrelates.Remaining performance obligationsDue to the long-term nature of the Group\u2019s out-license contracts, the Group\u2019s obligations pursuant to such contracts representpartially unsatisfied performance obligations at year-end. The revenues under existing out-license contracts with original expecteddurations of more than one year are estimated to be $283.0 million. The Group expects to recognize the majority of this revenueover the next 3 years.Out-license agreementsTeva Pharmaceutical Industries Ltd. (Teva) In August 2020, the Group entered into an exclusive strategic agreement with Teva for the commercialization in the United Statesof five of the Group\u2019s biosimilar product candidates. The initial pipeline contains biosimilar candidates addressing multipletherapeutic areas. Under this agreement, the Group will be responsible for the development, registration and supply of thebiosimilars, while Teva will be exclusively commercializing the products in the United States pursuant to an intellectual propertylicense granted by the Group to Teva. In connection with the agreement, Teva made an upfront payment of $40.0 million. The Group also received $35.0 million in development milestones and is entitled to receive up to an additional $50.0 million in development milestones, $175.0 million in regulatory milestones and milestones due upon the first commercial sale of the biosimilar product candidates and $200.0 million in contingent payments based upon the achievement of cumulative net sales amounts. Subject to some limitations, as consideration for supplies, the Group will receive 40% of the value of Teva\u2019s net sales of the products.On 27 February 2023, the Group and Teva signed an amendment to the licence & development agreement. As part of thatamendment, the Group agreed to provide future financial consideration to Teva to assist with the cost of launching and marketingthe licensed biosimilar products.STADA Arzneimittel AG (STADA)In November 2019, the Group entered into an exclusive strategic agreement with STADA for the commercialization of seven biosimilars in all key European markets and selected markets outside Europe. The initial pipeline contains biosimilar candidates aimed at treating autoimmunity, oncology, ophthalmology and inflammatory conditions. Under this agreement, the Group will be responsible for the development, registration and supply of the biosimilars, while STADA will be exclusively commercializing the products in the relevant territories pursuant to an intellectual property license granted by the Group to STADA. In connection with the agreement, STADA made an upfront payment of $5.9 million. The Group has received $78.6 million indevelopment milestones through the year ended 31 December 2022. The Group is also entitled to receive up to an aggregate of$130.9 million in additional development milestones, $60.1 million in regulatory milestones and milestones due upon the firstcommercial sale of the biosimilar product candidates and $11.8 million in contingent payments based upon the achievement ofcumulative net sales amounts. The Group is also expected to receive a royalty of approximately 40% of the estimated net sellingprice from STADA\u2019s and its affiliates\u2019 commercialization of the contracted biosimilars. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRevenueExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-44-3": {
"value": "License revenue (point in time revenue recognition)...............................................................................424 1,453 Research and development and other service revenue*..........................................................................57,769 35,319 83,029 36,772 * Over time revenue recognitionReassessment of variable considerationSubsequent changes to the estimate of the transaction price are generally recorded as adjustments to revenue in the period ofchange. The Group updates variable consideration estimates on a quarterly basis. The quarterly changes in estimates did not resultin material adjustments to the Group\u2019s previously reported revenue or trade receivables during the years ended 31 December 2022and 2021.Contract assets and liabilitiesA reconciliation of the beginning and ending balances of contract assets and contract liabilities is shown in the table below (inthousands):Contract Contract assetsliabilities31 December 2020 .........................................................................................................................................34,724 53,066 Contract asset additions ................................................................................................................................21,525 - Amounts transferred to trade receivables .................................................................................................(36,811) - Customer prepayments .................................................................................................................................- 34,577 Revenue recognized .......................................................................................................................................- (13,107) 31 December 2021 .........................................................................................................................................19,438 74,536 Contract asset additions ................................................................................................................................29,823 - Amounts transferred to trade receivables .................................................................................................(19,690) - Customer prepayments .................................................................................................................................- 46,127 Revenue recognized .......................................................................................................................................- (26,782)Foreign currency adjustment .......................................................................................................................(915) 51 31 December 2022 .........................................................................................................................................28,656 93,932The net increase in contract assets as of 31 December 2022 is primarily due revenue recognized when the performance obligationhas been met which is offset by the transfer of such amounts to trade receivables on the basis that the Group\u2019s right to thatconsideration is no longer contingent on its performance. The net increase in contract liabilities as of 31 December 2022 is due tocustomer prepayments in advance of the Group\u2019s performance. As of 31 December 2022, $3.3 million and $25.4 million arerecorded as non-current contract assets and current contract assets, respectively. Non-current contract assets will materialize overthe next 2 to 3 years. As of 31 December 2022, $57.0 million and $36.9 million are recorded as non-current contract liabilities andcurrent contract liabilities, respectively. Non-current contract liabilities will be recognized as revenue over the next 2 to 5 years aseither services are rendered or contractual milestones are achieved, depending on the performance obligation to which the paymentrelates.Remaining performance obligationsDue to the long-term nature of the Group\u2019s out-license contracts, the Group\u2019s obligations pursuant to such contracts representpartially unsatisfied performance obligations at year-end. The revenues under existing out-license contracts with original expecteddurations of more than one year are estimated to be $283.0 million. The Group expects to recognize the majority of this revenueover the next 3 years.Out-license agreementsTeva Pharmaceutical Industries Ltd. (Teva) In August 2020, the Group entered into an exclusive strategic agreement with Teva for the commercialization in the United Statesof five of the Group\u2019s biosimilar product candidates. The initial pipeline contains biosimilar candidates addressing multipletherapeutic areas. Under this agreement, the Group will be responsible for the development, registration and supply of thebiosimilars, while Teva will be exclusively commercializing the products in the United States pursuant to an intellectual propertylicense granted by the Group to Teva. In connection with the agreement, Teva made an upfront payment of $40.0 million. The Group also received $35.0 million in development milestones and is entitled to receive up to an additional $50.0 million in development milestones, $175.0 million in regulatory milestones and milestones due upon the first commercial sale of the biosimilar product candidates and $200.0 million in contingent payments based upon the achievement of cumulative net sales amounts. Subject to some limitations, as consideration for supplies, the Group will receive 40% of the value of Teva\u2019s net sales of the products.On 27 February 2023, the Group and Teva signed an amendment to the licence & development agreement. As part of thatamendment, the Group agreed to provide future financial consideration to Teva to assist with the cost of launching and marketingthe licensed biosimilar products.STADA Arzneimittel AG (STADA)In November 2019, the Group entered into an exclusive strategic agreement with STADA for the commercialization of seven biosimilars in all key European markets and selected markets outside Europe. The initial pipeline contains biosimilar candidates aimed at treating autoimmunity, oncology, ophthalmology and inflammatory conditions. Under this agreement, the Group will be responsible for the development, registration and supply of the biosimilars, while STADA will be exclusively commercializing the products in the relevant territories pursuant to an intellectual property license granted by the Group to STADA. In connection with the agreement, STADA made an upfront payment of $5.9 million. The Group has received $78.6 million indevelopment milestones through the year ended 31 December 2022. The Group is also entitled to receive up to an aggregate of$130.9 million in additional development milestones, $60.1 million in regulatory milestones and milestones due upon the firstcommercial sale of the biosimilar product candidates and $11.8 million in contingent payments based upon the achievement ofcumulative net sales amounts. The Group is also expected to receive a royalty of approximately 40% of the estimated net sellingprice from STADA\u2019s and its affiliates\u2019 commercialization of the contracted biosimilars. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-46-2": {
"value": "6. Salaries and other employee expensesThe average number of individuals employed by the Group during the years ended 31 December 2022 and 2021 was 858 and 645respectively. The aggregate salary and other employee expenses incurred by the Group for these employees were as follows (inthousands):20222021Salary expense..................................................................................................................................................92,082 67,433 Defined contribution plan expense (1) ......................................................................................................10,052 7,694 Long-term incentive plan expense...............................................................................................................5,481 17,955 Share-based payments (see Note 22) ..........................................................................................................10,317 - Other employee expense................................................................................................................................11,670 10,274 Temporary labor..............................................................................................................................................5,838 6,164 135,440 109,520 (1)Defined contribution plan expense consists of costs incurred by the Group for employees of certain subsidiaries that are required by local laws to participate in pension schemes. These pension schemes are not sponsored or administered by the Group. Pursuant to the requirements of the schemes, the Group is required to contribute a certain percentage of its payroll costs to the pension schemes. Such contributions are charged to the consolidated statements of profit or loss and other comprehensive income or loss as they become payable in accordance with the rules of the pension schemes.Salaries and other employee expense is included within the consolidated statements of profit or loss and other comprehensive income or loss as follows (in thousands):2022 2021Cost of product revenue................................................................................................................................42,501 - Research and development expenses .........................................................................................................52,962 71,588 General and administrative expenses .........................................................................................................39,977 37,932 Total salary and other employee expenses..................................................................................................135,440 109,520 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-47-2": {
"value": "7. Finance income and finance costFinance income earned during the years ended 31 December 2022 and 2021 is as follows (in thousands):20222021Changes in the fair value of derivatives (see Note 27).............................................................................1,637 51,549 Interest income from cash and cash equivalents.......................................................................................556 18 Other interest income.....................................................................................................................................356 1 2,549 51,568 Finance cost incurred during the years ended 31 December 2022 and 2021 is as follows (in thousands):20222021Changes in the fair value of derivatives (see Note 27).............................................................................96,981 2,804 Interest on debt and borrowings..................................................................................................................71,452 106,548 Consenting fee (see Note 20)........................................................................................................................7,430 - Loss on remeasurement of bonds (see Note 20)......................................................................................6,511 - Interest on lease liabilities (see Note 13).....................................................................................................6,022 6,423 Amortization of deferred debt issue costs.................................................................................................23 1,586 188,419 117,361 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-47-3": {
"value": "7. Finance income and finance costFinance income earned during the years ended 31 December 2022 and 2021 is as follows (in thousands):20222021Changes in the fair value of derivatives (see Note 27).............................................................................1,637 51,549 Interest income from cash and cash equivalents.......................................................................................556 18 Other interest income.....................................................................................................................................356 1 2,549 51,568 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-48-3": {
"value": "Finance cost incurred during the years ended 31 December 2022 and 2021 is as follows (in thousands):20222021Changes in the fair value of derivatives (see Note 27).............................................................................96,981 2,804 Interest on debt and borrowings..................................................................................................................71,452 106,548 Consenting fee (see Note 20)........................................................................................................................7,430 - Loss on remeasurement of bonds (see Note 20)......................................................................................6,511 - Interest on lease liabilities (see Note 13).....................................................................................................6,022 6,423 Amortization of deferred debt issue costs.................................................................................................23 1,586 188,419 117,361 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceCostExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-49-2": {
"value": "8. Depreciation, amortization and impairmentDepreciation, amortization and impairment expenses incurred during the years ended 31 December 2022 and 2021 are as follows(in thousands):20222021Deprec. and impairm. of property, plant and equipm. (see Note 12)...................................................9,807 10,666 Depreciation of right of use assets (see Note 13).....................................................................................9,869 8,699 Amortization and impairment of intangible assets (see Note 15)..........................................................3,488 4,916 23,164 24,281 Depreciation, amortization and impairment expense is included within the consolidated statements of profit or loss and other comprehensive income or loss as follows (in thousands):20222021Cost of product revenue................................................................................................................................10,053 - Research and development expenses .........................................................................................................9,757 21,764 General and administrative expenses .........................................................................................................3,354 2,517 Total depreciation, amortization and impairment expense.....................................................................23,164 24,281 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfExpensesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-49-3": {
"value": "8. Depreciation, amortization and impairmentDepreciation, amortization and impairment expenses incurred during the years ended 31 December 2022 and 2021 are as follows(in thousands):20222021Deprec. and impairm. of property, plant and equipm. (see Note 12)...................................................9,807 10,666 Depreciation of right of use assets (see Note 13).....................................................................................9,869 8,699 Amortization and impairment of intangible assets (see Note 15)..........................................................3,488 4,916 23,164 24,281 Depreciation, amortization and impairment expense is included within the consolidated statements of profit or loss and other comprehensive income or loss as follows (in thousands):20222021Cost of product revenue................................................................................................................................10,053 - Research and development expenses .........................................................................................................9,757 21,764 General and administrative expenses .........................................................................................................3,354 2,517 Total depreciation, amortization and impairment expense.....................................................................23,164 24,281 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-49-4": {
"value": "8. Depreciation, amortization and impairmentDepreciation, amortization and impairment expenses incurred during the years ended 31 December 2022 and 2021 are as follows(in thousands):20222021Deprec. and impairm. of property, plant and equipm. (see Note 12)...................................................9,807 10,666 Depreciation of right of use assets (see Note 13).....................................................................................9,869 8,699 Amortization and impairment of intangible assets (see Note 15)..........................................................3,488 4,916 23,164 24,281 Depreciation, amortization and impairment expense is included within the consolidated statements of profit or loss and other comprehensive income or loss as follows (in thousands):20222021Cost of product revenue................................................................................................................................10,053 - Research and development expenses .........................................................................................................9,757 21,764 General and administrative expenses .........................................................................................................3,354 2,517 Total depreciation, amortization and impairment expense.....................................................................23,164 24,281 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-50-2": {
"value": "9. Audit fees20222021Financial Statement audit fees.......................................................................................................................2,615 5,502 Other fees, including tax services.................................................................................................................676 136 Total fees...........................................................................................................................................................3,291 5,638 Audit fees for 2021 include fees for the audit of the PCAOB uplift of the consolidated financial statements for 2019 and 2020.Other fees for 2022 include review services for the F-4 and other SEC filings.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-51-2": {
"value": "10. Income taxTaxation recognized in the consolidated statements of profit or loss and other comprehensive income or loss during the yearsended 31 December 2022 and 2021 is as follows (in thousands):Current tax20222021Direct taxes - current......................................................................................................................................1,015 706 Direct taxes - prior year..................................................................................................................................(115) 491 Total current tax..............................................................................................................................................900 1,197 Deferred taxCurrent..............................................................................................................................................................(54,236) (48,414)Prior year...........................................................................................................................................................15,269 (477) Total deferred tax............................................................................................................................................(38,967) (48,891)Total income tax benefit................................................................................................................................(38,067) (47,694)The prior year deferred tax impact of $15.3 million mainly relates to foreign currency impact on losses denominated in Icelandickrona.The factors affecting the tax benefit during the years ended 31 December 2022 and 2021 relate to the recognition of a deferred taxasset on accumulated tax losses, as management assessed that it was probable that the accumulated tax losses would be fullyutilized in the coming years, as further described below. There were no accruals for tax contingencies during the years ended 31 December 2022 and 2021.The effective tax rate for the year of 6.9% (2021: 32.0%) is lower than the applicable Luxembourgish statutory rate of corporationtax. The reconciling items between the statutory rate and the effective tax rate are as follows: 2022 2021Tax rate .............................................................................................................................................................24.9% 24.9% Effect of tax rate in foreign jurisdictions ...................................................................................................(2.4%) (8.2%)Recognition of tax losses ..............................................................................................................................- - Permanent differences ...................................................................................................................................(8.9%) 30.4% Non-recognition of tax losses ......................................................................................................................(3.8%) (15.0%)Other items ......................................................................................................................................................(2.9%) (0.1%)Effective tax rate ............................................................................................................................................6.9% 32.0% The movement in net deferred taxes during the years ended 31 December 2022 and 2021 is as follows (in thousands):2022 2021Balance at 1 January........................................................................................................................................170,268 121,647 Deferred tax credited to profit or loss........................................................................................................38,919 48,621 Balance at 31 December................................................................................................................................209,187 170,268 Deferred tax assets..........................................................................................................................................209,496 170,418 Deferred tax liabilities.....................................................................................................................................(309) (150)Where there is a right of offset of deferred tax balances within the same tax jurisdiction, IAS 12 requires these to be presented aftersuch offset in the consolidated statements of financial position. The closing deferred tax balances included above are after offset;however, the disclosure of deferred tax assets by category below are presented before such offset.The amount of deferred tax recognized in the consolidated statements of financial position as of 31 December 2022 and 2021 is asfollows (in thousands):2022 2021Deferred tax assets attributable to temporary differences in respect of tax losses.............................205,290 158,330 Deferred tax asset attributable to other temporary differences.............................................................6,832 12,088 Deferred tax liabilities attributable to other temporary differences......................................................(2,935) (150)Net deferred tax assets...................................................................................................................................209,187 170,268 A deferred tax liability of $2.9 million and $0.2 million has been recognized in relation to the difference in measurement basis ofcustomer relationships and other ordinary timing differences as of 31 December 2022 and 2021, respectively. A deferred tax asset has been recognized in relation to ordinary timing differences arising from various provisions, reserves,employee benefits and tax losses carried forward in the group. The recognition of the deferred tax asset on the Icelandic tax losses,since 2020, is backed by the Group\u2019s latest ten-year forecast whereby profit associated with product and milestone revenue issignificant and provides considerable headroom over and above the level needed to support full recognition of such losses. Adeferred tax asset of $209.5 million and $170.4 million is recognized as of 31 December 2022 and 2021, respectively.These tax losses expire as follows (in thousands):2023-2025 .........................................................................................................................................................................................35,751 2026-2028 .........................................................................................................................................................................................210,224 Later ..................................................................................................................................................................................................836,536 1,082,511 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-53-2": {
"value": "11. Loss per shareBasic loss per share is computed by dividing loss for the year by the weighted average number of ordinary shares outstandingduring the period. Diluted loss per share is computed by adjusting the calculation of basic loss per share for the effects of dilutive potential ordinaryshares from financial instruments that may be converted or exercised into ordinary shares of the Group. For the year ended 31December 2022 148,857,998 potential ordinary shares pursuant to the RSUs, Senior Bond Warrants, Aztiq Convertible Bond,December Convertible Bonds, OACB warrants, Predecessor Earn Out Shares, and OACB Earn Out Shares were excluded in thecalculation of diluted loss per share, since the effect of doing so would result in a reduction of loss per share and thus beantidilutive. For the year ended 31 December 2021, there were no potential ordinary shares pursuant to such agreements as allconversion, warrant and funding rights associated with these agreements had been exercised or otherwise expired (refer to Note 21for further details). Therefore, the calculation of diluted loss per share did not differ from the calculation of basic loss per share. The calculation of basic and diluted loss per share for the years ended 31 December 2022 and 2021 is as follows (in thousands,except for share and per share amounts):2022 2021Earnings Loss for the year .........................................................................................................................................(513,580) (101,504)Number of shares Weighted average number of ordinary shares outstanding ................................................................197,721,710 110,673,309 Basic and diluted loss per share ...................................................................................................................(2.60) (0.92)",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-54-2": {
"value": "12. Property, plant and equipmentProperty, plant and equipment consists of facility and computer equipment, furniture, fixtures and leasehold improvements.Movements within property, plant and equipment during the years ended 31 December 2022 and 2021 are as follows (inthousands):Furniture, fixt.Facility and leasehold ComputerFacilityequipment improvements equipment TotalCostBalance at 1 January 2022 ............................ - 88,510 32,395 1,551 122,456 Reclassifications of assets ............................... - 25,486 (25,486) - - Additions ......................................................... 115,000 35,156 2,706 357 153,219 Disposals ......................................................... - (2,959) - - (2,959)Translation difference ................................... - (1,043) (17) 51 (1,009)Balance at 31 December 2022 .................... 115,000 145,150 9,598 1,959 271,707 DepreciationBalance at 1 January 2022 ............................ - 33,853 8,614 1,459 43,926 Reclassifications of assets ............................ - 5,985 (5,985) - - Depreciation ................................................... 359 8,752 621 75 9,807 Disposals ......................................................... - (2,597) - - (2,597)Translation difference ................................... - 9 (17) (15) (23)Balance at 31 December 2022 .................... 359 46,002 3,233 1,519 51,113 Net carrying amountBalance at 31 December 2022 .................... 114,641 99,148 6,365 440 220,594 Furniture, fixt.Facility and leasehold Computerequipment improvements equipment TotalCostBalance at 1 January 2021 ............................................................ 70,308 27,600 1,513 99,421 Additions .........................................................................................19,345 4,845 69 24,259 Translation difference.................................................................... (1,143) (50) (31) (1,224)Balance at 31 December 2021 .....................................................88,510 32,395 1,551 122,456 DepreciationBalance at 1 January 2021 ............................................................ 25,540 7,016 1,419 33,975 Depreciation ...................................................................................6,870 1,637 67 8,574 Impairment .....................................................................................2,092 - - 2,092 Translation difference.................................................................... (649) (39) (27) (715)Balance at 31 December 2021 .....................................................33,853 8,614 1,459 43,926 Net carrying amountBalance at 31 December 2021 .....................................................54,657 23,781 92 78,530 On 16 November 2022 the Group entered into a share purchase agreement (the \u201cShare Purchase Agreement\u201d) relating to shares inFasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf. (\u201cSaemundur\u201d) with ATP Holdings ehf., an affiliate of Aztiq. Pursuant to the Share PurchaseAgreement, Alvotech is purchased 99.99% of the shares in Saemundur through the issuance the Aztiq Convertible Bond, asdefined and discussed in Note 20, and the assumption of debt. At the time of closing, Saemundur\u2019s only asset was the propertywhere Alvotech\u2019s Reykjavik manufacturing and research facility (the \u201cFacility\u201d) are located. See Note 20 for further details. The Share Purchase Agreement was accounted for as an asset acquisition under IFRS 3 as all of the fair value of the gross assetsacquired from Saemundur were concentrated in the Alvotech Facility. As a result, the purchase price was determined to be $115.0million, which consists of $80.0 million related to the fair value of the Aztiq Convertible Bond, $30.0 million in loans assumed bythe Company, and $5.0 million associated with the settlement of the pre-existing relationship with Saemundur. The entire purchaseprice was allocated to the Facility as it was the only asset acquired. Additionally, the Company recognized a $3.9 million loss on theextinguishment of the lease liability related to the Facility. See Note 20 for further details.At 31 December 2021, the Group performed a review of its property, plant and equipment and determined certain laboratoryequipment was no longer in use. In assessing recoverable amount, the Group determined the market for resale was non-existentdue to the unique nature of the equipment. Management therefore determined to fully impair the assets, resulting in an impairmentof $2.1 million during each of the year ended 31 December 2021. See Note 8 for where impairment charges have been recognizedas an expense within in the consolidated statements of profit or loss and other comprehensive income or loss. The Group pledged $122.4 million and $6.8 million of property, plant and equipment as collateral to secure bank loans with thirdparties as of 31 December 2022 and 2021, respectively. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-56-2": {
"value": "13. LeasesThe Group\u2019s leased assets consist of facilities, fleet and equipment pursuant to both arrangements with third parties and relatedparties. The carrying amounts of the Group\u2019s right-of-use assets and the movements during the years ended 31 December 2022and 2021 are as follows (in thousands):2022 2021Right-of-use assetsBalance at 1 January .......................................................................................................................................126,801 111,519Adjustments for indexed leases ...................................................................................................................10,201 5,358New or renewed leases ..................................................................................................................................9,583 18,871Derecognition due to acquisition of Alvotech Facility (see Note 12) .................................................(88,941) - Depreciation ....................................................................................................................................................(9,869) (8,699)Translation difference ....................................................................................................................................(274) (248)Balance at 31 December ...............................................................................................................................47,501 126,801The Group\u2019s right-of-use assets as of 31 December 2022 and 2021 are comprised of the following (in thousands):2022 2021Right-of-use assetsFacilities ............................................................................................................................................................41,702 122,927Fleet ..................................................................................................................................................................339 159Equipment .......................................................................................................................................................5,460 3,71547,501 126,801At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments tobe made over the lease term. The Group\u2019s lease liabilities and the movements during the years ended 31 December 2022 and 2021are as follows (in thousands):Lease liabilities 2022 2021Balance at 1 January .......................................................................................................................................122,140 108,947Adjustments for indexed leases ...................................................................................................................10,247 5,358New or renewed leases ..................................................................................................................................7,458 18,116Installment payments .....................................................................................................................................(7,655) (6,595)Derecognition due to acquisition of Alvotech Facility (see Note 12) .................................................(80,075) - Foreign currency adjustment .......................................................................................................................(11,682) (3,744)Translation difference ....................................................................................................................................99 58 Balance at 31 December ...............................................................................................................................40,532 122,140 Current liabilities ............................................................................................................................................(5,163) (7,295)Non-current liabilities ....................................................................................................................................35,369 114,845The amounts recognized in the consolidated statements of profit or loss and other comprehensive income or loss during the yearsended 31 December 2022 and 2021 in relation to the Group\u2019s lease arrangements are as follows (in thousands):2022 2021Depreciation expense from right-of-use assets Facilities .........................................................................................................................................................(9,423) (8,228) Fleet ................................................................................................................................................................(119) (38) Equipment .....................................................................................................................................................(327) (433)Total depreciation expense from right-of-use assets ...............................................................................(9,869) (8,699)Interest expense on lease liabilities .............................................................................................................(6,022) (6,423)Foreign currency difference on lease liability ............................................................................................11,682 3,744 Loss from extinguishment of lease agreement (see Note 12) ...............................................................(3,859) - Total amount recognized in profit and loss ..............................................................................................(8,068) (11,378)The maturity analysis of undiscounted lease payments as of 31 December 2022 and 2021 is as follows (in thousands):2022 2021Less than one year ..........................................................................................................................................6,000 13,164One to five years ............................................................................................................................................20,160 49,379Thereafter ........................................................................................................................................................22,274 117,51148,434 180,054The Group\u2019s lease liabilities as of 31 December 2022 and 2021 do not include $0.1 million of costs for short\u2010term leases and lowvalue leases.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLeasesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-58-2": {
"value": "14. GoodwillThe Group\u2019s goodwill balances as of 31 December 2022 and 2021 are as follows (in thousands):2022 2021Balance at 1 January.......................................................................................................................................... 12,367 13,427 Translation difference....................................................................................................................................... (724) (1,060)Balance as of 31 December............................................................................................................................. 11,643 12,367 Goodwill is recognized at the Group level, which is determined to be the smallest cash-generating unit. The recoverable amount ofthe cash-generating unit is determined based on a value in use calculation which uses cash flow projections based on the financialforecast for the period 2023-2030 that has been approved by management and the Board of Directors. The Group\u2019s operations arecurrently in a development phase, and the ten-year forecast includes the initial revenue generating phase when products currently indevelopment will be available for market. The Group determined that the terminal growth rate and the discount rate are the keyassumptions used in determining the current estimate of value in use. Cash flows beyond 2030 have been extrapolated using a negative 5.0% terminal rate in both the 2022 and 2021 value in usecalculations respectively. A discount rate of 27.6% (2021: 21.5%) per annum was used in determining the current estimate of valuein use. Since the recoverable amount of the cash-generating unit was substantially in excess of its carrying amount as of 31December 2022 and 2021, management believes that any reasonably possible change in the key assumptions on which therecoverable amount of the cash-generating unit is based would not cause the carrying amount of the cash-generating unit to exceedits recoverable amount. There were no goodwill impairment charges recognized in the consolidated statements of profit or loss and other comprehensiveincome or loss in any prior periods.15. Intangible assetsIntangible assets consist of software, customer relationships and licensed intellectual property rights. Movements in intangibleassets during the years ended 31 December 2022 and 2021 are as follows (in thousands):Customer Intellectual Software Totalrelationshipsproperty rightsCostBalance at 1 January 2022..............................................................8,777 2,329 15,000 26,106 Additions..........................................................................................7,682 - - 7,682 Impairment......................................................................................(2,755) - - (2,755)Translation difference....................................................................(20) (148) - (168)Balance at 31 December 2022......................................................13,684 2,181 15,000 30,865 Amortization Balance at 1 January 2022..............................................................2,933 1,664 - 4,597Amortization ..................................................................................423 310 - 733Translation difference....................................................................(13) (104) - (117)Balance at 31 December 2022......................................................3,343 1,870 - 5,213Net carrying amountBalance at 31 December 2022......................................................10,341 311 15,000 25,652 CustomerIntellectual Software relationships Totalproperty rightsCostBalance at 1 January 2021..............................................................7,603 2,528 - 10,131Additions............................................................................................ 5,186 - 15,000 20,186Impairment......................................................................................(3,993) - - (3,993)Translation difference...................................................................... (19) (199) - (218)Balance at 31 December 2021......................................................8,777 2,329 15,000 26,106 Amortization Balance at 1 January 2021..............................................................2,351 1,445 - 3,796Amortization .....................................................................................591 332 - 923Translation difference...................................................................... (9) (113) - (122)Balance at 31 December 2021......................................................2,933 1,664 - 4,597Net carrying amountBalance at 31 December 2021......................................................5,844 665 15,000 21,509 Additions during the year ended 31 December 2021 were primarily comprised of licensed intellectual property rights from Biosana. Refer to Note 2.18 for further details.Expense for amortization of the Group\u2019s intangible assets is included within the consolidated statements of profit or loss and other comprehensive income or loss as follows (in thousands ):2022 2021Cost of product revenue................................................................................................................................471 - Research and development expenses .........................................................................................................- 324 General and administrative expenses .........................................................................................................262 599 733 923 At 31 December, 2022 and 2021, the Group performed a review of its intangible assets and determined certain softwaredevelopment had been abandoned. In assessing recoverable amount, the Group determined the market for resale was non-existent.Management therefore determined to fully impair the assets, resulting in an impairment charge of $2.8 million and $4.0 millionduring the year ended 31 December 2022 and 2021, respectively. The impairment charge was recognized as an expense as follows:$2.1 million in \u201cCost of product revenue\u201d and $0.7 million in \u201cGeneral and administrative expenses.\u201d For the year ended 31December 2021 the impairment was recognized as an expense within \u201cResearch and development expenses\u201d in the consolidatedstatements of profit or loss and other comprehensive income or loss.At 31 December 2022 the Group performed an impairment analysis on the intellectual property rights indefinite lived intangibleasset. No impairment loss was recognized as the asset\u2019s recoverable amount exceeded the carrying amount.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-58-3": {
"value": "14. GoodwillThe Group\u2019s goodwill balances as of 31 December 2022 and 2021 are as follows (in thousands):2022 2021Balance at 1 January.......................................................................................................................................... 12,367 13,427 Translation difference....................................................................................................................................... (724) (1,060)Balance as of 31 December............................................................................................................................. 11,643 12,367 Goodwill is recognized at the Group level, which is determined to be the smallest cash-generating unit. The recoverable amount ofthe cash-generating unit is determined based on a value in use calculation which uses cash flow projections based on the financialforecast for the period 2023-2030 that has been approved by management and the Board of Directors. The Group\u2019s operations arecurrently in a development phase, and the ten-year forecast includes the initial revenue generating phase when products currently indevelopment will be available for market. The Group determined that the terminal growth rate and the discount rate are the keyassumptions used in determining the current estimate of value in use. Cash flows beyond 2030 have been extrapolated using a negative 5.0% terminal rate in both the 2022 and 2021 value in usecalculations respectively. A discount rate of 27.6% (2021: 21.5%) per annum was used in determining the current estimate of valuein use. Since the recoverable amount of the cash-generating unit was substantially in excess of its carrying amount as of 31December 2022 and 2021, management believes that any reasonably possible change in the key assumptions on which therecoverable amount of the cash-generating unit is based would not cause the carrying amount of the cash-generating unit to exceedits recoverable amount. There were no goodwill impairment charges recognized in the consolidated statements of profit or loss and other comprehensiveincome or loss in any prior periods.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfGoodwillExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-59-3": {
"value": "15. Intangible assetsIntangible assets consist of software, customer relationships and licensed intellectual property rights. Movements in intangibleassets during the years ended 31 December 2022 and 2021 are as follows (in thousands):Customer Intellectual Software Totalrelationshipsproperty rightsCostBalance at 1 January 2022..............................................................8,777 2,329 15,000 26,106 Additions..........................................................................................7,682 - - 7,682 Impairment......................................................................................(2,755) - - (2,755)Translation difference....................................................................(20) (148) - (168)Balance at 31 December 2022......................................................13,684 2,181 15,000 30,865 Amortization Balance at 1 January 2022..............................................................2,933 1,664 - 4,597Amortization ..................................................................................423 310 - 733Translation difference....................................................................(13) (104) - (117)Balance at 31 December 2022......................................................3,343 1,870 - 5,213Net carrying amountBalance at 31 December 2022......................................................10,341 311 15,000 25,652 CustomerIntellectual Software relationships Totalproperty rightsCostBalance at 1 January 2021..............................................................7,603 2,528 - 10,131Additions............................................................................................ 5,186 - 15,000 20,186Impairment......................................................................................(3,993) - - (3,993)Translation difference...................................................................... (19) (199) - (218)Balance at 31 December 2021......................................................8,777 2,329 15,000 26,106 Amortization Balance at 1 January 2021..............................................................2,351 1,445 - 3,796Amortization .....................................................................................591 332 - 923Translation difference...................................................................... (9) (113) - (122)Balance at 31 December 2021......................................................2,933 1,664 - 4,597Net carrying amountBalance at 31 December 2021......................................................5,844 665 15,000 21,509 Additions during the year ended 31 December 2021 were primarily comprised of licensed intellectual property rights from Biosana. Refer to Note 2.18 for further details.Expense for amortization of the Group\u2019s intangible assets is included within the consolidated statements of profit or loss and other comprehensive income or loss as follows (in thousands ):2022 2021Cost of product revenue................................................................................................................................471 - Research and development expenses .........................................................................................................- 324 General and administrative expenses .........................................................................................................262 599 733 923 At 31 December, 2022 and 2021, the Group performed a review of its intangible assets and determined certain softwaredevelopment had been abandoned. In assessing recoverable amount, the Group determined the market for resale was non-existent.Management therefore determined to fully impair the assets, resulting in an impairment charge of $2.8 million and $4.0 millionduring the year ended 31 December 2022 and 2021, respectively. The impairment charge was recognized as an expense as follows:$2.1 million in \u201cCost of product revenue\u201d and $0.7 million in \u201cGeneral and administrative expenses.\u201d For the year ended 31December 2021 the impairment was recognized as an expense within \u201cResearch and development expenses\u201d in the consolidatedstatements of profit or loss and other comprehensive income or loss.At 31 December 2022 the Group performed an impairment analysis on the intellectual property rights indefinite lived intangibleasset. No impairment loss was recognized as the asset\u2019s recoverable amount exceeded the carrying amount.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-61-2": {
"value": "16. Cash and cash equivalentsCash and cash equivalentsCash and cash equivalents include both cash in banks and on hand. Cash and cash equivalents as shown in the consolidatedstatements of cash flows as of 31 December 2022 and 2021 is as follows (in thousands):2022 2021Cash and cash equivalents denominated in US dollars ...........................................................................10,377 15,798 Cash and cash equivalents denominated in other currencies ................................................................56,050 1,758 66,427 17,556 Restricted cashRestricted cash as shown on the consolidated statements of financial position relates to cash that may only be used pursuant tocertain of the Group\u2019s borrowing arrangements. Therefore, these deposits are not available for general use by the Group.Movements in restricted cash balances during the years ended 31 December 2022 and 2021 are as follows (in thousands):2022 2021Balance at 1 January .......................................................................................................................................10,087 10,087 Additions during the year .............................................................................................................................14,914 - Interest income ...............................................................................................................................................186 - Balance at 31 December ...............................................................................................................................25,187 10,087 The Group\u2019s restricted cash is available for use after one year or later. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-62-2": {
"value": "17.InventoriesThe Group\u2019s inventory balances as of 31 December 2022 and 2021 are as follows (in thousands):2022 2021Raw materials and supplies............................................................................................................................41,961 26,590 Work in progress............................................................................................................................................. 29,450 13,730 Finished goods.................................................................................................................................................2,121 - Inventory reserves...........................................................................................................................................(2,062) (1,262)Balance at 31 December ...............................................................................................................................71,470 39,058 The increase in inventory from 31 December 2021 to 31 December 2022 is due to the commercial launch of certain of the Group\u2019sbiosimilar product candidates. The Company recognized $8.5 million of inventories in cost of product revenue during the year ended 31 December 2022. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInventoriesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-63-2": {
"value": "18.Other current assetsThe composition of other current assets as of 31 December 2022 and 2021 is as follows (in thousands):2022 2021Value-added tax............................................................................................................................................... 6,468 4,725 Prepaid expenses............................................................................................................................................. 20,601 9,320 Proceeds receivable from Convertible Bonds (see Note 20)..................................................................3,520 - Derivative asset................................................................................................................................................851 - Other short-term receivables........................................................................................................................ 1,509 691 32,949 14,736 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-63-3": {
"value": "18.Other current assetsThe composition of other current assets as of 31 December 2022 and 2021 is as follows (in thousands):2022 2021Value-added tax............................................................................................................................................... 6,468 4,725 Prepaid expenses............................................................................................................................................. 20,601 9,320 Proceeds receivable from Convertible Bonds (see Note 20)..................................................................3,520 - Derivative asset................................................................................................................................................851 - Other short-term receivables........................................................................................................................ 1,509 691 32,949 14,736 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-64-2": {
"value": "19. Share capitalAn equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all liabilities. Equityinstruments issued by a Group entity are recognized in the amount of the proceeds received, net of direct issue costs.Prior to the Capital Reorganization the Group\u2019s equity consisted of Class A and Class B ordinary shares (together the \u201cPredecessorOrdinary Shares\u201d). The Group\u2019s authorized share capital was $99.7 million, consisting of the equivalent of 99,961,829 Class A orClass B ordinary shares with a par value of $0.01 per share. All share capital issued as of 31 December 2021 and 2020 was fullypaid.The Capital Reorganization resulted in the following share capital activity:\u2022 All of the outstanding Predecessor Ordinary Shares were exchanged for 180,600,000 Ordinary Shares and 38,330,000Predecessor Earn Out Shares;\u2022 976,505 of Class A OACB Ordinary Shares were exchanged for Ordinary Shares;\u2022 6,250,000 of Class B OACB Ordinary Shares were exchanged for 5,000,000 Ordinary Shares and 1,250,000 OACBEarn Out Shares; and\u202217,493,000 Ordinary Shares were issued in the PIPE Financing.No dividends were paid or declared during the years ended 31 December 2022 and 2021.Share capital and share premium of the Group\u2019s Ordinary Shares issued as of 31 December 2022 and 2021 is as follows (inthousands, except for share amounts):20222021Share capital Share capital and share and share SharespremiumSharespremiumClass A ordinary shares..................................................................- - 13,386,098 997,824 Class B ordinary shares..................................................................- - 95,701 2,429 Ordinary shares...............................................................................252,160,087 1,060,558 - - Total share capital and share premium.......................................252,160,087 1,060,558 13,481,799 1,000,253 Movements in the Group\u2019s Class A and Class B ordinary shares, share capital and share premium during the years ended 31December 2022 and 2021 are as follows (in thousands, except for share amounts):Predecessor Ordinary Ordinary SharesSharesShare capitalShare premiumTotalBalance at 1 January 2021............................. - 7,259,139 73 166,740 166,813 Share issue........................................................ - 6,222,660 62 833,378 833,440 Balance at 31 December 2021...................... - 13,481,799 135 1,000,118 1,000,253 Elimination of Predecessor OrdinaryShares (Note 1.1)............................................- (13,481,799) (135) 135 - Issuance of Ordinary Shares (Note 1.1)..... 186,576,505 - 1,866 63,169 65,035 PIPE Financing (Note 1.1)........................... 17,493,000 - 175 174,755 174,930 Transaction costs on share issue.................. - - - (5,562) (5,562)Predec. Earn Out Sh. (Note 22).................. 38,330,000 - - (227,500) (227,500)OACB Earn Out Sh. (Note 22)................... 1,250,000 - - (9,100) (9,100)SARs settlement (Note 21)........................... 3,510,582 - 35 30,267 30,302 Settlement of related party loans withOrdinary Shares.............................................. 5,000,000 - 50 32,150 32,200 Balance at 31 December 2022...................... 252,160,087 - 2,126 1,058,432 1,060,558 Alvotech Manco ehf., a subsidiary of Alvotech hf., owns 27,072,167 Ordinary Shares in Alvotech. Such shares are intended for thefuture issuance of Ordinary Shares under the Management Incentive Plan and other equity offerings. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-66-2": {
"value": "20. BorrowingsThe Group\u2019s debt consists of interest-bearing borrowings from financial institutions, related parties and third parties. Outstandingborrowings, net of transaction costs, presented on the consolidated statements of financial position as current and non-current asof 31 December 2022 and 2021 is as follows (in thousands):2022 2021Senior Bonds....................................................................................................................................................530,506 - Bonds.................................................................................................................................................................- 394,129 Aztiq Convertible Bond.................................................................................................................................65,793 - Alvogen Facility...............................................................................................................................................64,588 - Convertible Bonds..........................................................................................................................................32,441 - Other borrowings............................................................................................................................................71,242 6,782 Total outstanding borrowings, net of debt issue costs............................................................................764,570 400,911 Less: current portion of borrowings............................................................................................................(19,916) (2,771)Total non-current borrowings......................................................................................................................744,654 398,140 Convertible shareholder loansIn connection with the Business Combination Agreement (see Note 1.1), on 7 December 2021, the Group\u2019s shareholders enteredinto the BCA Framework Agreement resulting in the exercise of the conversion, warrant, and funding rights associated with theconvertible shareholder loans. As a result, the following issuances of Class A ordinary shares occurred:\u2022 1,522,103 shares from the exercise of warrant and funding rights in exchange for $101.3 million of cash;\u2022 1,137,248 shares from the exercise of warrant rights in exchange for the settlement of $73.7 million of accrued payment-in-kind\u2022 2,306,555 shares resulting from the conversion of $166.8 million of outstanding principal and accrued payment-in-kind interest.In connection with these exercises, for the year ended 31 December 2021, the Group recognized finance income of $48.7 millionresulting from the remeasurement of the derivative liabilities at the date of extinguishment and a $149.2 million gain onextinguishment of financial liabilities, which primarily reflects the difference between the carrying amount of the pre-transactionconvertible shareholder loans and the related derivative financial liabilities and the fair value of the ordinary shares issued. Inaddition, the gain on extinguishment of financial liabilities includes transaction costs incurred as part of the extinguishment, theacceleration of previously deferred debt issue costs incurred in connection with the issuance of the convertible shareholder loansand the acceleration of previously unamortized accretion of the convertible shareholder loans.Convertible bonds, Bonds and Senior BondsConvertible bondsOn 14 December 2018, the Group issued $300.0 million of convertible bonds to multiple third parties. The offering included$125.0 million of Tranche A bonds that included a guarantee from Alvogen and a 10% bonus if the bondholders converted at thetime of an IPO. In addition, $175.0 million of Tranche B bonds were issued that do not have a guarantee but include a 25% bonusif the bondholders elect to convert at the time of an IPO. The bonds offered a 15% payment-in-kind interest rate and a put optionto sell the bond back to the Group if an IPO had not occurred within three years from the original date of issuance. The Group recorded $5.4 million, recorded as a component of finance income in the consolidated statements of profit or loss andother comprehensive income or loss for the year ended 31 December 2020. Fair value measurements of the derivative financialliabilities are set out in Note 27.BondsOn 24 June 2021, holders of the Group\u2019s convertible bonds converted $100.7 million of principal and accrued interest and $4.8million of additional premium offered by the Group to the bondholders into 455,687 Class A ordinary shares. Following theconversion, certain bondholders elected to redeem their remaining bonds for cash, resulting in the payment of $55.3 million inoutstanding principal and accrued interest plus an additional $6.1 million of premium that the bondholders elected to be paid incash.The remaining unconverted and unredeemed bonds were replaced with new bonds with an extended maturity of June 2025 andthe elimination of conversion rights, among other amendments to the terms and conditions. The Group offered the holders of thereplaced bonds an extension premium of $8.1 million for their agreement to extend the maturity of the replaced bonds to June2025, as well as an additional premium of $2.6 million, both of which were granted to the bondholders in the form of additionalbonds. The Group also issued an additional $113.8 million of bonds to one previous bondholder and one new bondholder. On thedate of issuance, the fair value and the nominal value of the bonds was $358.8 million and $397.4 million, respectively. Thedifference between the nominal value and fair value was recognized as a discount that will be amortized over the term of thebonds.The Group determined that the 24 June 2021 transaction was a substantial modification to its convertible bonds and the associatedderivative financial liability and accounted for the transaction as an extinguishment. As a result, the Group recognized a gain onextinguishment of financial liabilities of $2.6 million during the year ended 31 December 2021, primarily driven by the differencebetween the fair value of the post-transaction bonds and the carrying amount of the pre-transaction bonds. The gain onextinguishment of financial liabilities also includes the following:\u2022 Transaction costs and fees incurred as part of the extinguishment;\u2022 The acceleration of previously deferred debt issue costs incurred in connection with the issuance of the pre-transaction bonds;\u2022 The acceleration of previously unamortized accretion of the pre-transaction bonds.Prior to the extinguishment of the convertible bonds and as noted above, the bondholders had the option to convert the bondsinto Class A ordinary shares up to fourteen days prior to maturity. This conversion right was separately accounted for as aderivative financial liability. During the period from 1 January 2021 to 24 June 2021, there was no change in fair value of thederivative financial liability.As of 31 December 2021, the carrying amount of the bonds was $363.1 million. Accrued interest on the bonds as of 31 December2021 is $31.0 million. The Group has the option, at any time, to prepay all or any part of the outstanding bonds. If the Groupelects to prepay the bonds within the first three years of the bond agreement, the bondholders are entitled to be paid an additionalpremium of at least 2.0% of the outstanding principal at the time of such prepayment.In January and June of 2022, the Group amended the terms of the outstanding bonds. The amendments resulted in the following:\u2022 Following the close of the Business Combination, the interest rate will range from 7.5% to 10.0% depending on the amount of aggregate net proceeds, as defined by the terms of the amended bond agreement;\u2022 A $7.4 million consent fee, recognized as finance costs, paid to the bondholders who did not vote against the Business Combination Agreement;\u2022 The requirement for Alvotech to maintain a minimum of $25.0 million of restricted cash in a separate liquidity account; and\u2022 A decrease in the interest rate to 7.5%, following the closing of the Business Combination, if the Company issues additional shares within six months of the Closing Date, resulting in the Company exceeding the amount of aggregate net proceeds, as defined in the bond agreement.As a result of the closing of the Business Combination, there was a change in future cash flows on the bonds related to the increasein interest rate from 7.5% to 10.0%. The Company remeasured the carrying value in accordance with IFRS 9 to the present valueof the revised cash flows and recognized a $6.5 million loss on the remeasurement of the bonds.Senior BondsOn 16 November 2022, the Group amended and upsized the outstanding bonds by $70.0 million. The amended bond agreement(the \u201cSenior Bonds\u201d) resulted in the following:\u2022 An increase in principal from $455.7 million at the time of the amendment, to $525.7 million;\u2022 An increase in the interest rate, resulting in a range from 10.75% to 12.0% depending on the occurrence of certain events, asdefined by the terms of the agreement. The Group accounted for this interest rate feature (the \u201cSenior Bond Interest RateFeature\u201d) as an embedded derivative, classified as an other current asset in the consolidated statement of financial position as of 31December 2022;\u2022 Amended the terms of the related party loans from Alvogen, setting forth subordination conditions;\u2022 Contingently issuable penny warrants (exercise price of $0.01) to the bondholders (the \u201cSenior Bond Warrants\u201d) if certainevents occur, issuable in two tranches representing 1.5% and 1.0% of the fully diluted ordinary share capital, as defined in theSenior Bonds agreement (see Note 27).The Group determined that the 16 November 2022 transaction was a substantial modification to its bonds and accounted for thetransaction as an extinguishment. As a result, the Group recognized a loss on extinguishment of financial liabilities of $40.9 million,including $12.1 million of transaction costs, during the year ended 31 December 2022, primarily driven by the difference betweenthe fair value of the post-transaction Senior Bonds and the Senior Bond Warrants and the carrying amount of the pre-transactionbonds. The loss on extinguishment of financial liabilities includes the following:\u2022 Extinguishment of bonds with a carrying value of $440.1 million, including $4.8 million of accrued interest;\u2022 Net cash proceeds of $57.9 million, including transaction costs paid of $12.1 million;\u2022 Recognition of a $4.6 million derivative asset for the Senior Bond Interest Rate Feature;\u2022 Recognition of $528.2 million and $15.4 million representing the fair value of the new Senior Bonds and Senior Bond WarrantsAs of 31 December 2022, the carrying amount of the Senior Bonds is $530.5 million. Accrued interest on the Senior Bonds as of31 December 2022 is $2.6 million. The Group has the option, at any time, to prepay all or any part of the outstanding bonds. The Group has pledged it\u00b4s intellectual property as collateral for the Senior Bonds.Aztiq Convertible BondOn 16 November 2022 the Group issued a convertible bond (the \u201cAztiq Convertible Bond\u201d) to ATP Holdings ehf. for the SharePurchase Agreement and the acquisition of the Alvotech Facility (See Note 12). The Aztiq Convertible Bond has a principalamount of $80.0 million and carries an interest rate of 12.50% per annum. Interest is payable in six-month intervals and iscapitalized and added to the outstanding principal amount of the bonds. The maturity date of the convertible bond is the later ofthe (i) 16 November 2025 or (ii) 91 days after the earlier of the full redemption or the final maturity date of the Senior Bonds.Bondholders have the right to convert their outstanding bonds into ordinary shares of Alvotech on December 31, 2023, June 30,2024, or when the bond has been called or put up for redemption, including on the maturity date, for a conversion price is $10.00per share.The conversion feature (the \u201cAztiq Conversion Feature\u201d) was determined to be an embedded derivative as the economiccharacteristics and risks are not closely related to the debt host. The Group classified the Aztiq Conversion Feature as equity due to the conversion price having preservation and passage of time adjustments that meet fixed-for-fixed criteria. As a result, the Grouprecognized the following related to the Aztiq Convertible Bond:\u2022 $64.0 million related to the debt host;\u2022 $16.0 million related to the Aztiq Conversion Feature;\u2022 $30.0 million related to the loans (the \u201cFacility Loans\u201d) on the building, which were assumed by the Group as part of the assetAs of 31 December 2022, the carrying amount of the Aztiq Convertible Bond is $65.8 million. Accrued interest on the AztiqConvertible Bond as of 31 December 2022 is $0.5 million. Facility LoansAs noted above, the Group assumed the Facility Loans as part of the asset acquisition for the Facility. On 9 December 2022, theGroup extinguished the assumed loans from Arion banki hf., with an outstanding balance of $30.9 million, with new loans fromLandsbankinn hf. for $48.8 million, and carries variable interest rate, currently 8.3% and 9.3% per annum. The refinancing resultedin net cash proceeds of $17.2 million after transaction costs paid.As of 31 December 2022, the carrying amount of the Facility Loans is $48.8 million. Accrued interest on the Facility Loans as of 31December 2022 is $0.3 million. Related party loans and Alvogen FacilityIn connection with an undertaking by Alvotech shareholders to ensure that Alvotech was sufficiently funded through the closingof the Business Combination by providing at least $50.0 million for the operations of the Group, Alvogen and Aztiq providedinterest free loan advances to Alvotech. On 22 February 2022, Alvotech borrowed $15.0 million under the facility from Alvogen,as lender. On 29 March 2022, Alvotech withdrew an additional amount of $10.0 million under the facility, for aggregateindebtedness of $25.0 million. On 11 March 2022, Alvotech borrowed $15.0 million under the facility from Aztiq, as lender. On 31March 2022, Alvotech withdrew an additional amount of $10.0 million under the facility, for aggregate indebtedness of $25.0million.On 12 July 22, the Company entered into settlement agreements with both Aztiq and Alvogen for the $25.0 million in related partyloans provided by each party. As a result of the settlement agreements, Aztiq and Alvogen each received 2,500,000 OrdinaryShares. The settlement was accounted for as an extinguishment of financial liabilities. In accordance with IFRS 9, the differencebetween the fair value of the consideration paid for the settlement, which was determined to be $32.2 million, and the extinguishedfinancial liabilities of $50.0 million was recognized as a gain on the extinguishment of financial liabilities in the consolidatedstatement of profit or loss and other comprehensive income or loss.On 11 April 2022, Alvotech entered into a loan agreement with Alvogen, as lender, for a loan of up to $40.0 million bearing aninterest rate of 10% per annum. The loan was drawable in two separate installments of $20.0 million each. On 12 April 2022,Alvotech withdrew the first installment of $20.0 million. Alvotech withdrew a second installment of $20.0 million on 9 May 2022for aggregate indebtedness of $40.0 million.On 1 June 2022, Alvotech also entered into a loan agreement with Alvogen, as lender, for a loan of $20.0 million bearing aninterest rate of 10% per annum. Alvotech withdrew the entire loan amount of $20.0 million on 1 June 2022. In connection with the 16 November 2022 bond amendment, Alvotech entered into a subordinated loan agreement with Alvogen(the \u201cAlvogen Facility\u201d). As part of the subordinated loan agreement, the Group agreed to the following:\u2022 Rollover the $63.3 million outstanding, which includes $3.3 million of accrued interest, under the Alvogen loans, into the newsubordinated loan agreement, and withdraw an additional $50.0 million in loans;\u2022 The interest rate was increased from 10% per annum to 17.5% per annum on the outstanding amounts under the loan facility;\u2022 A repayment date of 91 days after the full redemption or the final maturity date of the Senior Bonds;\u2022 Contingently issuable penny warrants to the bondholders (the \"Alvogen Facility Warrants\") if certain events occur, representing4.0% of the fully diluted ordinary share capital, as defined in the Alvogen Facility agreement.The Group determined that the 16 November 2022 transaction was a substantial modification to its related party loans andaccounted for the transaction as an extinguishment. As a result, the Group recognized the following: \u2022 Extinguishment of bonds with a carrying value of $63.2 million, including $3.2 million of accrued interest;\u2022 Net cash proceeds of $50.0 million;\u2022 Recognition of $113.2 million and $1.3 million representing the fair value of the new Alvogen Facility and Alvogen FacilityWarrants, respectively.On 20 December 2022, the Company repaid $50.0 million under the Alvogen Facility, with proceeds from the Convertible Bonds.As a result, Alvotech extinguished the liability to issue the Alvogen Facility Warrants. As of 31 December 2022, the carrying amount of the loans is $64.6 million. Convertible BondsOn 20 December 2022 the Group issued two tranches of convertible bonds (the \u201cConvertible Bonds\u201d). Tranche A is ISKdenominated with a principal balance of $59.1 million, of which $3.5 million in cash proceeds were received subsequent to 31December 2022 (see Note 18), and carries an annual payment-in-kind interest rate of 15% per year, while Tranche B is USDdenominated with a principal balance of $0.6 million and carries an annual payment-in-kind interest rate of 12.5% per year. Thematurity date of the Convertible Bonds is the later of the (i) 20 December 2025 or (ii) 91 days after the earlier of the fullredemption or the final maturity date of the Senior Bonds. Holders of both the Tranche A and Tranche B Convertible Bonds, mayelect, at their sole discretion, to convert all or part of the principal amount and accrued interest into Alvotech Ordinary Shares at aconversion price of $10.00 per share on December 31, 2023, or June 30, 2024.The conversion features (the \u201cTranche A Conversion Feature\u201d and \u201cTranche B Conversion Feature\u201d) for both the Tranche A andTranche B Convertible Bonds were determined to be embedded derivatives as the economic characteristics and risks are notclosely related to the debt host. The Group classified the Tranche A Conversion Feature as a liability due to the variability createdby conversion rates resulting from the tranche being denominated in ISK and was determined to have a fair value of $24.9 millionat issuance date (see Note 27 for further details). The Group classified the Tranche B Conversion Feature as equity due to theconversion price having preservation and passage of time adjustments that meet the fixed-for-fixed criteria. As of 31 December 2022, the carrying amount of the Tranche A and Tranche B Convertible Bond is $31.9 million and $0.5million, respectively. Other borrowingsIn 2015 and 2016, the Group entered into several term loan agreements with a financial institution for a total principal amount of$25.9 million. The loan agreements set forth terms and conditions between the Group and the financial institution, inclusive ofcertain representations and non-financial covenants. Per the terms of the loan agreements, the loans mature throughout late 2023and into the second half of 2024, depending on the issuance date of each loan. Interest on the loans is variable interest rate of USDSOFR plus a margin of 4.95%, payable on a monthly basis. Interest accrued and unpaid at the end of each interest period increasesthe principal obligations owed by the Group to the financial institution. As of 31 December 2022 and 2021, the outstandingbalance on the loans, including accrued interest, is $3.2 million and $5.7 million, respectively. The Group is in compliance with allrepresentations and non-financial covenants required by these agreements. In addition, the Group has pledged property, plant andequipment as collateral to secure these borrowings, as further described in Note 12.In 2021, the Group entered into two loan agreements with two separate lenders, Origo hf. and Arion banki hf. The outstandingbalance on the borrowings held with Origo hf. and Arion banki hf., including accrued interest, was $0.2 million and $0.3 million asof 31 December 2022 and 31 December 2021, respectively. The loans mature in late 2023 and 2024.On 22 February 2022, the Group entered into a credit facility agreement with Landsbankinn hf. with the ability to draw down anamount up to $18.3 million. The credit facility is in place to help finance equipment purchases in the future. Per the terms of thecredit facility, any borrowings are required to be paid by 1 August 2023 and have a variable interest rate of USD SOFR plus amargin of 4.95%. As of 31 December 2022, the outstanding balance on the credit facility was $14.0 million, including accruedinterest.On 22 February 2022, the Group entered into a loan agreement with Landsbankinn hf. for a principal amount of $3.2 million. Theloan is in place to help finance equipment purchases. Per the terms of the loan agreement, annuity payments are due monthly witha final maturity in February 2029. The loan has a variable interest rate of USD SOFR plus a margin of 4.25%. As of 31 December2022, the outstanding balance on the loan was $2.9 million, including accrued interest.On 8 August 2022, the Group entered into a loan agreement with Landsbankinn hf. for a principal amount of $1.8 million. Theloan is in place to help finance equipment purchases. Per the terms of the loan agreement, annuity payments are due monthly witha final maturity in August 2029. The loan has a variable interest rate of USD SOFR plus a margin of 4.25%. As of 31 December2022, the outstanding balance on the loan was $1.8 million, including accrued interest.Movements in the Group\u2019s outstanding borrowings during the years ended 31 December 2022 and 2021 are as follows (inthousands): 2022 2021Borrowings, net at 1 January.........................................................................................................................400,911 567,899 Borrowings converted to equity...................................................................................................................- (105,501)Redemption of borrowings...........................................................................................................................- (34,899)Paid payment-in-kind interest.......................................................................................................................- (19,200)Premium on redeemed and unredeemed bonds.......................................................................................- 15,472 Change in fair value upon extinguishment of convertible shareholder loans......................................- 32,114 Recognition of deferred debt issue costs....................................................................................................(2,889) - Accretion/derecognition of borrowings discount....................................................................................35,065 5,506 Recognition of new borrowings discount..................................................................................................(43,241) (34,302)Proceeds from new borrowings...................................................................................................................467,196 114,282 Loans from related party converted to equity...........................................................................................(50,000) (240,542)Repayments of borrowings............................................................................................................................(83,951) (2,597)Accrued interest...............................................................................................................................................40,424 89,958 Amortization of deferred debt issue costs.................................................................................................23 12,754 Foreign currency exchange difference.........................................................................................................1,032 (33)Borrowings, net at 31 December.................................................................................................................764,570 400,911 The weighted-average interest rates of outstanding borrowings for the years ended 31 December 2022 and 2021 are 12.41% and14.83%, respectively.Contractual maturities of principal amounts on the Group\u2019s outstanding borrowings as of 31 December 2022 and 2021 are asfollows (in thousands):2022 2021Within one year................................................................................................................................................19,916 2,771 Within two years..............................................................................................................................................3,804 2,920 Within three years............................................................................................................................................696,646 622 Within four years.............................................................................................................................................3,374 394,222 Thereafter..........................................................................................................................................................40,830 376 764,570 400,911 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBorrowingsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"pp-value-72-2": {
"value": "21. Long-term incentive plansShare appreciation rightsPrior to 2019, the Group granted SARs to three former employees. During the year ended 31 December 2020 and 2019, theGroup granted SARs to one and two current employees, respectively. There were no new granted SARS in the years ended 31December 2022 and 2021. Settlement of SARs In connection with the closing of the Business Combination, the Company reached a settlement agreement for share appreciationrights previously awarded to certain current and former employees. The rights were settled as follows:\u2022 two former employees will each receive 1,755,291 Ordinary Shares to be issued one year after the Closing Date. In accordancewith IFRS 2, the settlements were accounted for as a modification of a share-based payment transaction that changes the awardsclassification from cash-settled to equity-settled;\u2022 one former employee will receive a $1.5 million cash payment in July 2022; and\u2022 one current employee can elect to receive a cash payment of $1.5 million or 150,000 Ordinary Shares to be issued one year afterthe Closing Date. The Company recognized the cash settlement option as a liability with a fair value of $0.8 million and the sharesettlement option as equity with a fair value of $0.7 million. The settlement agreements resulted in a net $36.8 million decrease in the SARs liability, a $31.0 million increase in equity equal tothe fair value of the Ordinary Shares issued to the two former employees and potentially issued to one current employee, a $1.5million increase in other current liabilities and income of $4.3 million in general and administrative expense recognized for thedifference between the extinguished liabilities and the fair value of consideration paid to the current and former employees. As of31 December 2022, the Company recognized $0.7 million as an other current liability related to the remaining SARs liability. Significant assumptions used in the Finnerty model to determine the fair value of the Ordinary Shares to be issued for thesettlement as of 15 June 2022 are as follows:15 June 2022Asset price.........................................................................................................................................................................................$9.38Term (years)......................................................................................................................................................................................1 yearVolatility rate.....................................................................................................................................................................................35.0%Dividend yield..................................................................................................................................................................................0.0%Indicated put option value.............................................................................................................................................................$0.75Discount for lack of marketability................................................................................................................................................8.0%The asset price is based on the public trading price of Ordinary Shares at the time of the settlement. The term is based on when the holder\u2019s will no longer be restricted from trading the Ordinary Shares. The volatility rate is based on historical data from a peergroup of public companies with an enterprise value between $500 million and $5 billion. The dividend yield is based on theexpected dividends to be paid out by the Company. The discount for lack of marketability reflects the timing of when the shareswill be issued and can be traded by the holders.On 1 December 2022, the Company issued Ordinary Shares to settle the remaining outstanding SARs. The vested portion of theGroup\u2019s SARs liability as of the settlement date was $3.8 million. The Ordinary Shares granted for the settlement will be deliveredin June 2023. As a result, management recognized a gain of $0.3 million on the extinguishment of the SARs liability resulting fromthe difference in the carrying value of the liability and fair value of the Ordinary Shares issued.Historical SARs Accounting The Group\u2019s SAR liability as of 31 December 2021 totaled $41.4 million. Expense recognized for the Group\u2019s SAR liability for theyear ended 31 December 2021 totaled $11.3 million. The vested portion of the Group\u2019s SAR liability as of 31 December 2021 is$36.6 million. Significant assumptions used in the Black-Scholes-Merton pricing model as of 31 December 2021 is as follows:2021Risk-free interest rate......................................................................................................................................................................0.1%Volatility rate.....................................................................................................................................................................................42.0%Expected dividend yield.................................................................................................................................................................0.0%Expected life.....................................................................................................................................................................................0.4 - 1.0 yearsShare price at valuation...................................................................................................................................................................$1,806Strike price........................................................................................................................................................................................$925-$1,695The risk-free interest rate is the continuously compounded risk-free rate for a one-year US government zero-yield bond. Expectedvolatility is based on historical data from a peer group of public companies. The expected life is based on when the Group expectseach holder\u2019s award will be fully vested and settled by the Group, which is dependent on management\u2019s expectation of whenspecified triggering events requiring settlement will occur. The share price at valuation is based on the Group\u2019s equity valuation atthe time of various equity-related transactions that occurred during 2021 and 2020. The strike price represents actual andanticipated increases in equity between the SAR agreement date and the anticipated dates of settlement triggering events. The strikeprice is used to determine the difference between the equity value at the time of the settlement triggering event and the originalequity value of the Group.Employee incentive planMovements in the Group\u2019s employee incentive plan liabilities during the years ended 31 December 2022 and 2021 are as follows 2022 2021Balance at 1 January........................................................................................................................................14,935 10,501 Additions...........................................................................................................................................................5,075 6,648 Payments...........................................................................................................................................................(7,693) (2,214)Balance at 31 December prior to reclassification......................................................................................12,317 14,935 Reclassified to other current liabilities.........................................................................................................(11,773) - Balance at 31 December................................................................................................................................544 14,935 ",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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"pp-value-74-2": {
"value": "22. Share-based payments On 1 December 2022, the Renumeration Committee authorized and the Group granted restricted stock units (\u201cRSUs\u201d) toemployees, executives, and directors granting rights to Ordinary Shares once vesting conditions are met. Compensation expensefor RSUs is determined based upon the market price of the Ordinary Shares underlying the awards on the date of grant andexpensed over the vesting period, which is generally a one to four-year period, with a 1-year cliff vesting period and subsequentmonthly vesting, resulting from participates completing a service condition. Movements in RSUs during the year ended 31December 2022 are as follows:Weighted Average Fair RSUsvalueGranted.............................................................................................................................................................7,659,049 $6.68Vested................................................................................................................................................................(679,563) $6.30Outstanding at 31 December........................................................................................................................6,979,486 $6.72The Group recognized $10.3 million of share-based payment expense during the year ended 31 December 2022 (in thousands):2022Cost of product revenue................................................................................................................................................................1,522 Research and development expenses...........................................................................................................................................2,994 General and administrative expenses...........................................................................................................................................5,801 10,317 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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"pp-value-75-2": {
"value": "23. LitigationIn 2022, prior to the issuance date of these consolidated financial statements, the Group was involved in four litigations (all nowdismissed) in the United States adverse to AbbVie arising out of the development of Alvotech\u2019s AVT02 product, and the filing of abiologics license application with the U.S. Food and Drug Administration seeking regulatory approval (the \u201cAbbVie Litigations\u201d).On 19 March 2021, AbbVie Inc. and AbbVie Biotechnology Ltd. (collectively, \u201cAbbVie\u201d) filed an action against Alvotech hf. inthe United States District Court for the Northern District of Illinois alleging trade secret misappropriation under the Defend TradeSecrets Act and under the Illinois Trade Secrets Act. The complaint pleaded, among other things, that Alvotech hired a certainformer AbbVie employee in order to acquire and access trade secrets belonging to AbbVie. In October 2021, the Court grantedAlvotech\u2019s motion to dismiss the action, and AbbVie later appealed that ruling to U.S. Court of Appeals for the Seventh Circuit.On 17 December 2021, AbbVie Inc., AbbVie Biotechnology Ltd, and AbbVie Operations Singapore Pte. Ltd. filed a complaintwith the U.S. International Trade Commission against Alvotech hf., Alvotech Germany GmbH, Alvotech Swiss AG, AlvotechUSA Inc., Teva Pharmaceutical Industries Ltd., Teva Pharmaceuticals USA Inc., and Ivers-Lee AG (Certain Adalimumab,Processes for Manufacturing or Relating to Same, and Products Containing Same, Investigation No. 337-TA-1296). The complaintraised trade secret misappropriation allegations similar to those raised in the trade secret litigation that AbbVie previously filed inthe Northern District of Illinois. On 27 April 2021, AbbVie filed an action against Alvotech hf. in the United States District Court for the Northern District ofIllinois alleging infringement of four patents, under the patent laws of the United States. On 28 May 2021, AbbVie filed anotheraction against Alvotech hf. in the United States District Court for the Northern District of Illinois alleging infringement of 58patents, under the patent laws of the United States, the BPCIA, and the Declaratory Judgment Act, and later added two morepatents. As of 31 December 2022, the AbbVie Litigations were dismissed. On 8 March 2022, Alvotech entered into the AbbVie U.S.Agreement with AbbVie Inc. and AbbVie Biotechnology Ltd with respect to AVT02 for the U.S. market. Pursuant to thesettlement component of the AbbVie U.S. Agreement, the parties agreed to stipulate to the dismissal of all claims, counterclaimsand potential claims in the four U.S. litigations, with each party to bear its own fees and costs. The parties further agreed to releaseeach other from certain claims and demands. Under the licensing component of the AbbVie U.S. Agreement, AbbVie grantedAlvotech a license effective 1 July 2023 to make, import, use, distribute, sell and offer for sale AVT02 in the U.S. and a license tomanufacture, import and store a reasonable amount of AVT02 in anticipation of the commercial launch of AVT02 in the U.S.Under the agreement, Alvotech may sublicense certain rights to Teva, as a commercialization partner, and may also sublicense toother parties subject to certain conditions. In return, Alvotech is obligated to pay a royalty to AbbVie in the single-digits of the netsales of AVT02 in the U.S. The agreement does not provide for upfront or milestone payments. The obligation of Alvotech to payroyalties shall terminate on the earlier of (i) 11 February 2025; or (ii) a determination that licensed patents are invalid orunenforceable, at which time the license granted will be deemed fully paid up and irrevocable. Each party has the right to terminatethe agreement upon breach of certain terms of the agreement that remains uncured for a certain period of time. Additionally,AbbVie may terminate the agreement if Alvotech takes certain actions concerning the patentability, validity or enforceability ofAbbVie\u2019s patents in the U.S. with respect to AVT02.The Group incurred approximately $8.7 million and $13.5 million in legal expenses during the years ended 31 December 2022 and2021, respectively, in preparation for, and/or in relation to, these litigations. Aside from these matters, the Group is not currently aparty to any material litigations or similar matters. ",
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"language": "en",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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"pp-value-75-3": {
"value": "23. LitigationIn 2022, prior to the issuance date of these consolidated financial statements, the Group was involved in four litigations (all nowdismissed) in the United States adverse to AbbVie arising out of the development of Alvotech\u2019s AVT02 product, and the filing of abiologics license application with the U.S. Food and Drug Administration seeking regulatory approval (the \u201cAbbVie Litigations\u201d).On 19 March 2021, AbbVie Inc. and AbbVie Biotechnology Ltd. (collectively, \u201cAbbVie\u201d) filed an action against Alvotech hf. inthe United States District Court for the Northern District of Illinois alleging trade secret misappropriation under the Defend TradeSecrets Act and under the Illinois Trade Secrets Act. The complaint pleaded, among other things, that Alvotech hired a certainformer AbbVie employee in order to acquire and access trade secrets belonging to AbbVie. In October 2021, the Court grantedAlvotech\u2019s motion to dismiss the action, and AbbVie later appealed that ruling to U.S. Court of Appeals for the Seventh Circuit.On 17 December 2021, AbbVie Inc., AbbVie Biotechnology Ltd, and AbbVie Operations Singapore Pte. Ltd. filed a complaintwith the U.S. International Trade Commission against Alvotech hf., Alvotech Germany GmbH, Alvotech Swiss AG, AlvotechUSA Inc., Teva Pharmaceutical Industries Ltd., Teva Pharmaceuticals USA Inc., and Ivers-Lee AG (Certain Adalimumab,Processes for Manufacturing or Relating to Same, and Products Containing Same, Investigation No. 337-TA-1296). The complaintraised trade secret misappropriation allegations similar to those raised in the trade secret litigation that AbbVie previously filed inthe Northern District of Illinois. On 27 April 2021, AbbVie filed an action against Alvotech hf. in the United States District Court for the Northern District ofIllinois alleging infringement of four patents, under the patent laws of the United States. On 28 May 2021, AbbVie filed anotheraction against Alvotech hf. in the United States District Court for the Northern District of Illinois alleging infringement of 58patents, under the patent laws of the United States, the BPCIA, and the Declaratory Judgment Act, and later added two morepatents. As of 31 December 2022, the AbbVie Litigations were dismissed. On 8 March 2022, Alvotech entered into the AbbVie U.S.Agreement with AbbVie Inc. and AbbVie Biotechnology Ltd with respect to AVT02 for the U.S. market. Pursuant to thesettlement component of the AbbVie U.S. Agreement, the parties agreed to stipulate to the dismissal of all claims, counterclaimsand potential claims in the four U.S. litigations, with each party to bear its own fees and costs. The parties further agreed to releaseeach other from certain claims and demands. Under the licensing component of the AbbVie U.S. Agreement, AbbVie grantedAlvotech a license effective 1 July 2023 to make, import, use, distribute, sell and offer for sale AVT02 in the U.S. and a license tomanufacture, import and store a reasonable amount of AVT02 in anticipation of the commercial launch of AVT02 in the U.S.Under the agreement, Alvotech may sublicense certain rights to Teva, as a commercialization partner, and may also sublicense toother parties subject to certain conditions. In return, Alvotech is obligated to pay a royalty to AbbVie in the single-digits of the netsales of AVT02 in the U.S. The agreement does not provide for upfront or milestone payments. The obligation of Alvotech to payroyalties shall terminate on the earlier of (i) 11 February 2025; or (ii) a determination that licensed patents are invalid orunenforceable, at which time the license granted will be deemed fully paid up and irrevocable. Each party has the right to terminatethe agreement upon breach of certain terms of the agreement that remains uncured for a certain period of time. Additionally,AbbVie may terminate the agreement if Alvotech takes certain actions concerning the patentability, validity or enforceability ofAbbVie\u2019s patents in the U.S. with respect to AVT02.The Group incurred approximately $8.7 million and $13.5 million in legal expenses during the years ended 31 December 2022 and2021, respectively, in preparation for, and/or in relation to, these litigations. Aside from these matters, the Group is not currently aparty to any material litigations or similar matters. ",
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"pp-value-76-2": {
"value": "24. Related partiesRelated parties are those parties which have considerable influence over the Group, directly or indirectly, including a parentcompany, owners or their families, large investors, key management personnel and their families and parties that are controlled byor dependent on the Group, such as affiliates and joint ventures. Key management personnel include the Group\u2019s executiveofficers and directors, since these individuals have the authority and responsibility for planning, directing and controlling theactivities of the Group. Interests in subsidiaries are set out in Note 1.Transactions with related partiesA related party transaction is a transfer of resources, services or obligations between the Group and a related party, regardless ofwhether a price is charged. The Group engages with related parties for both purchased and sold services, loans and otherborrowings and other activities.The Group entered into two lease agreements with Fasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf. in January 2019 and October 2020 for facilitiesin Iceland, both with remaining lease terms of approximately 17 years as of 31 December 2021. The Group also entered into tenseparate lease agreements with HRJAF ehf. throughout 2019 and 2020 for a group of apartment buildings in Iceland used fortemporary housing of employees and third party contractors. Two of the leases were terminated during the year ended 31December 2020. The group extinguished the lease agreements with S\u00e6mundur hf. as a result of the Share Purchase Agreement (seeNote 12). The remaining lease terms for the other eight leases approximate 8 years, on average, as of 31 December 2022. The Group provides and receives certain support services through arrangements with Aztiq, Alvogen and Alvogen Malta(Outlicensing) Ltd. (Adalvo). Services provided to Alvogen consist of finance, administrative, legal and human resource services.Services received from Alvogen primarily consist of marketing, salary processing and information technology support services.Services received from Adalvo primarily consist of legal, regulatory, supply chain management and portfolio and marketintelligence services. Purchased service includes rental fees and service expenses, as described above. Rental fees and service expenses with relatedparties are presented as \u201cGeneral and administrative expenses\u201d or \u201cResearch and development expenses\u201d in the consolidatedstatements of profit or loss and other comprehensive income or loss, depending on the nature of the service performed andexpense incurred by the Group. Rental liabilities from lease arrangements with related parties are presented as a component of\u201cLease liabilities\u201d on the consolidated statements of financial position. Service payables are presented as \u201cLiabilities to relatedparties\u201d on the consolidated statements of financial position. Interest includes interest expense on borrowings. Interest expenses on loans from related parties are presented as \u201cFinance costs\u201din the consolidated statements of profit or loss and other comprehensive income or loss. Borrowings are presented as\u201cBorrowings\u201d and \u201cCurrent maturities of borrowings\u201d on the consolidated statements of financial position. See Note 20 forfurther details on the Borrowing arrangements with related parties. Sold service includes services provided to related parties, as described above. Income from related parties for such services arepresented as \u201cOther income\u201d in the consolidated statements of profit or loss and other comprehensive income or loss. Amountsreceivable for such activities are presented as \u201cReceivables from related parties\u201d on the consolidated statements of financialposition. The Group has not recorded bad debt provisions for its receivables from related parties.Related party transactions as of and for the year ended 31 December 2022 are as follows (in thousands):Purchased Sold Receivables Payables /service / interest Service LoansAlvogen Lux Holdings S.\u00e0 r.l. \u2013 Sister company (a) ...............5,415 - - 64,588 Aztiq Fj\u00e1rfestingar ehf. (a) ...........................................................216 - - 20 Aztiq Consulting ehf. ....................................................................442 - - 25 ATP Holdings ehf. ........................................................................1,254 - 765 81,254 Fasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf. - Sister company (e) ..............7,189 - - - Fasteignaf\u00e9lagi\u00f0 Eyj\u00f3lfur hf. - Sister company .......................- 196 - - Alvogen Iceland ehf. - Sister company ...................................465 174 - 484 Alvogen ehf. - Sister company ..................................................- 68 1 - Lotus Pharmaceuticals Co. Ltd. - Sister company (b) ............- 3 2 7,440 Lotus International Pte. Ltd. - Sister company ........................- 4 3 - Alvogen Emerging Markets - Sister company .........................98 - - - Alvogen Korea co. Ltd - Sister company ..................................- 1 - - Alvogen Inc. - Sister company ...................................................585 266 12 222 Alvotech and CCHN Biopharmaceutical Co., Ltd. (c) .........- - 758 - Adalvo Limited - Sister company ...............................................1,218 106 - 349 Alvogen Malta Sh. Services - Sister company ..........................603 - 7 - Alvogen Spain SL - Sister Company ..........................................117 - - - Norwich Clinical Services Ltd - Sister Company ....................301 - - 31 Alvogen Pharma Pvt Ltd - Sister Company .............................1,159 - - - Fl\u00f3ki Fasteignir ehf. (HRJ\u00c1F ehf.) - Sister company ............1,516 - - 8,876 L41 ehf. ............................................................................................26 - - - Lambhagavegur 7 ehf. (d) ............................................................537 - - - 21,141 818 1,548 163,289 (a) The full amount of purchased service relates to interest expenses from long-term liabilities and the full amount of payables / loans are interest-bearing long-term liabilities (see Note 20).(b) Payables to Lotus Pharmaceuticals Co. Ltd. consists of the long-term liability as further described in Note 2. This long-term liability is presented as \u201cOther long-term liability to related party\u201d on the consolidated statements of financial position.(c) The amount receivable from Alvotech and CCHN Biopharmaceutical Co., Ltd. relates to amounts due for reference drugs used in research and development studies and certain consulting fees incurred by the Group. (d) Lambhagavegur is no longer a related party as it was sold during the year ended 31 December 2022. (e) Fasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf. was acquired as part of the Share Purchase Agreement, with ATP Holdings ehf., on 16November 2022. The related party transactions reflect activity until the acquisition date. See Note 12 and Note 20 for furtherdetails. Related party transactions as of and for the year ended 31 December 2021 are as follows (in thousands):Purchased Sold Receivables Payables /service / interest Service LoansAlvogen Lux Holdings S.\u00e0 r.l. \u2013 Sister company (a) ...............9,383 - - - Aztiq Pharma Partners S.\u00e0 r.l. \u2013 Sister company (a) ...............16,048 - - - Alvogen Aztiq AB \u2013 Sister company (a) ...................................297 - - 43Aztiq Fj\u00e1rfestingar ehf. (a) ...........................................................120 - - - Aztiq Investment Advisory AB (a) ............................................- - 2 - Fasteignaf\u00e9lagi\u00f0 S\u00e6mundur hf. - Sister company ..................7,762 - - 83,770Alvogen Iceland ehf. - Sister company ...................................454 2,308 109 14Alvogen ehf. - Sister company ..................................................6 2 2 - Alvogen UK - Sister company ...................................................299 - 17 - Lotus Pharmaceuticals Co. Ltd. - Sister company (b) ............- 312 295 7,440Alvogen Emerging Markets - Sister company .........................238 - - 16Alvogen Korea co. Ltd - Sister company ..................................- 9 - - Alvogen Inc. - Sister company ...................................................89 654 301 - Alvotech and CCHN Biopharmaceutical Co., Ltd. (c) .........- - 320 - Alvogen Malta Sh. Services - Sister company ..........................1,216 151 - 283Alvogen Malta (Outlicensing) Ltd - Sister company ..............1,045 279 65 229Alvogen Spain SL - Sister Company ..........................................294 - - 23Norwich Clinical Services Ltd - Sister Company ....................41 - - 17Alvogen Pharma Pvt Ltd - Sister Company .............................491 - - 13HRJ\u00c1F ehf - Sister company .....................................................1,415 - - 9,794L41 ehf. ............................................................................................29 - - - Lambhagavegur 7 ehf. ..................................................................713 - - 12,66139,940 3,715 1,111 114,303 (a) The full amount of purchased service relates to interest expenses from long-term liabilities and the full amount of payables / loans are interest-bearing long-term liabilities (see Note 20).(b) Payables to Lotus Pharmaceuticals Co. Ltd. consists of the long-term liability as further described in Note 2. This long-term liability is presented as \u201cOther long-term liability to related party\u201d on the consolidated statements of financial position.(c) The amount receivable from Alvotech and CCHN Biopharmaceutical Co., Ltd. relates to amounts due for reference drugs used in research and development studies and certain consulting fees incurred by the Group. Commitments and guaranteesThe Group does not have any contractual commitments with its related parties other than the receivables, loans and payablespreviously disclosed. Key management personnelAt 31 December 2022 and 2021 there are no loans to the members of the Board of Directors and the CEO. In addition, therewere no transactions carried out (except those in Note 24) between the Group and members of the Board of Directors nor theCEO in the year ended 31 December 2022 and 2021. The Board of Directors' remuneration is shown in the table below. Board of Directors' fee for the year and shares at year end (board fees in2022thousands and shares in whole amounts).Pension Shares at year-Board feescontributionend**Robert Wessman, Chairman of the board..................................................................740 - - Richard Davies, Vice-Chairman...................................................................................68 - 1,133,131 Ann Merchant, Board Member (from 16.6.2022)....................................................43 - - \u00c1rni Har\u00f0arson, Board Member (from 16.6.2022)*................................................- - - Faysal Kalmoua, Board Member*................................................................................- - - Linda McGoldrick, Board Member (from 16.6.2022).............................................38 - - Lisa Graver, Board Member (from 16.6.2022)..........................................................38 - - Tomas Ekman, Board Member*..................................................................................- - - Hirofumi Imai, Board member (until 16.6.2022)......................................................- - - 927 - 1,133,131 *Waived their board compensation (both cash and equity).**Direct share ownership2022Salaries and Pension Termination Other long-Key employeesbenefitscontributionbenefitsterm benefitsMark Levick CEO..........................................................................892 162 1,157 - Other Executive Team Members (9)..........................................5,400 446 820 5,015 6,292 608 1,977 5,015 Board of Directors' fee for the year and shares at year end (board fees in2021thousands and shares in whole amounts).Pension Shares at year-Board feescontributionend**Robert Wessman, Chairman of the board..................................................................- - - Richard Davies, Vice-Chairman...................................................................................- - 893,060 Faysal Kalmoua, Board Member*................................................................................- - - Tomas Ekman, Board Member*..................................................................................- - - Hirofumi Imai, Board member....................................................................................- - - Tanya Zharov (from 23.8.2021)*.................................................................................- - - - - 893,060 *Waived their board compensation (both cash and equity).**Direct share ownership2021Salaries and Pension Termination Other long-Key employeesbenefitscontributionbenefitsterm benefitsMark Levick CEO..........................................................................877 159 - - Other Executive Team Members (9)..........................................4,531 333 - 985 5,408 492 - 985 ",
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"language": "en",
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"pp-value-80-2": {
"value": "25. Other current liabilitiesThe composition of other current liabilities as of 31 December 2022 and 2021 is as follows (in thousands):2022 2021Unpaid salary and salary related expenses..................................................................................................15,620 10,235 Accrued interest...............................................................................................................................................2,249 7,547 Accrued payable to Biosana..........................................................................................................................- 7,500Accrued vacation leave...................................................................................................................................5,025 4,626 Employee incentive plan................................................................................................................................12,433 - Accrued expenses............................................................................................................................................18,720 12,104 54,047 42,012 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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"pp-value-80-3": {
"value": "25. Other current liabilitiesThe composition of other current liabilities as of 31 December 2022 and 2021 is as follows (in thousands):2022 2021Unpaid salary and salary related expenses..................................................................................................15,620 10,235 Accrued interest...............................................................................................................................................2,249 7,547 Accrued payable to Biosana..........................................................................................................................- 7,500Accrued vacation leave...................................................................................................................................5,025 4,626 Employee incentive plan................................................................................................................................12,433 - Accrued expenses............................................................................................................................................18,720 12,104 54,047 42,012 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:222100DCZBOWV5DZ8372",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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"pp-value-81-2": {
"value": "26. Interests in joint venturesIn September 2018, Alvotech hf., a subsidiary of the Group, entered into a joint venture agreement with Changchun High & NewTechnology Industries (Group) Inc. (the \u201cjoint venture partner\u201d) to form a newly created joint venture entity, Alvotech & CCHNBiopharmaceutical Co., Ltd. (the \u201cjoint venture\u201d or \u201cJVCO\u201d). The purpose of the JVCO is to develop, manufacture and sellbiosimilar products in the Chinese market. The JVCO\u2019s place of business is also the country of incorporation.Place of Ownership interestCarrying amountName of entitybusiness2022 202120222021Alvotech & CCHN BiopharmaceuticalChina 50% 50% 48,568 55,307 Co., LtdThe proportion of ownership interest is the same as the proportion of voting rights held by the Group. Management evaluatedwhether the Group\u2019s voting rights are sufficient for providing a practical ability to direct the relevant activities and strategicobjectives of JVCO unilaterally. As the Group does not hold a majority of the voting rights, the Group does not control JVCO. Asa result, the Group\u2019s investment in JVCO is accounted for using the equity method.The following table provides the change in the Group\u2019s investment in a joint venture during the years ended 31 December 2022and 2021 (in thousands):2022 2021Balance at 1 January........................................................................................................................................55,307 56,679 Share in losses..................................................................................................................................................(2,590) (2,418)Translation difference.....................................................................................................................................(4,149) 1,046 Balance at 31 December................................................................................................................................48,568 55,307 The tables below provide summarized financial information for the JVCO. The information disclosed reflects the amountspresented in the financial statements of the JVCO and not the Group\u2019s share of those amounts. They have been amended toreflect adjustments made by the Group when using the equity method, including fair value adjustments and modifications fordifferences in accounting policy.Summarized Statement of Financial Position (in thousands)2022 2021Current assets Cash and bank balances..............................................................................................................................17,203 29,659 Trade receivables..........................................................................................................................................- 15 Inventories....................................................................................................................................................250 18 Other current assets ...................................................................................................................................1,539 1,372 Total current assets ........................................................................................................................................18,992 31,064 Total non-current assets107,487 94,525 Current liabilities Financial liabilities .......................................................................................................................................145 - Other current liabilities...............................................................................................................................14,129 12,156 Total current liabilities ...................................................................................................................................14,274 12,156 Total non-current liabilities15,069 2,820 Net assets97,136 110,613 Reconciliation to carrying amounts (in thousands):2022 2021Opening net assets at 1 January....................................................................................................................110,613 113,061 Loss for the year..............................................................................................................................................(5,180) (4,836) Other comprehensive income.......................................................................................................................- - Cash contributions of owners.......................................................................................................................- - Receivable from owners.................................................................................................................................- - Dividend paid...................................................................................................................................................- - Other, net..........................................................................................................................................................(8,297) 2,388 Closing net assets at 31 December..............................................................................................................97,136 110,613 Group\u2019s share in %.........................................................................................................................................50% 50%Group\u2019s share in USD....................................................................................................................................48,568 55,307 Carrying amount..............................................................................................................................................48,568 55,307 2022 2021Summarized Statement of Profit or Loss & Other Comprehensive Income (in thousands)Revenue.............................................................................................................................................................- - Interest income................................................................................................................................................433 1,295 Depreciation and Amortization....................................................................................................................829 210 Interest expense...............................................................................................................................................151 - Income tax expense........................................................................................................................................- - Other expenses................................................................................................................................................4,633 5,920 Exchange rate differences..............................................................................................................................- 1 Loss for the year................................................................................................................(5,180) (4,836) Other comprehensive income.......................................................................................................................- - Total comprehensive loss..............................................................................................................................(5,180) (4,836) Dividends received from joint venture entity............................................................................................- - The Group did not receive any dividends from JVCO during the years ended 31 December 2022 and 2021. The Group had a $5.0million commitment to provide a cash contribution to JVCO as of 31 December 2019, which was paid during the year ended 31December 2020. Similarly, the joint venture partner had a $50.0 million commitment to provide a cash contribution to JVCO as of31 December 2019, which was also paid during the year ended 31 December 2020. The Group does not have any remainingcommitments to JVCO as of 31 December 2022 and 2021. Furthermore, the Group does not have any contingent liabilitiesrelating to its interests in JVCO as of 31 December 2022 or 2021. While there are no significant restrictions resulting fromcontractual arrangements with JVCO, entities in China are subject to local exchange control regulations. These regulations providefor restrictions on exporting capital from those countries, other than dividends. ",
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"pp-value-84-2": {
"value": "27. Financial instrumentsAccounting classification and carrying amountsFinancial assets as of 31 December 2022 and 2021, all of which are measured at amortized cost, are as follows (in thousands):2022 2021Cash and cash equivalents.............................................................................................................................66,427 17,556 Restricted cash.................................................................................................................................................25,187 10,087 Trade receivables.............................................................................................................................................32,972 29,396 Other current assets........................................................................................................................................5,880 14,518 Receivables from related parties...................................................................................................................1,548 1,111 Other long-term assets...................................................................................................................................4,484 -136,498 72,668 Financial liabilities as of 31 December 2022 and 2021 are as follows (in thousands):2022 2021Borrowings (measured at amortized cost)..................................................................................................764,570 400,911 Derivative financial liabilities (measured at FVTPL)................................................................................380,232 -Other long-term liability to related party (measured at amortized cost)..............................................7,440 7,440 Long-term incentive plan (measured at FVTPL)......................................................................................544 56,334 Trade and other payables (measured at amortized cost).........................................................................49,188 28,587 Lease liabilities (measured at amortized cost)............................................................................................40,532 122,140 Liabilities to related parties (measured at amortized cost)......................................................................1,131 638 Other current liabilities...................................................................................................................................53,664 42,012 1,297,301 658,062 It is management\u2019s estimate that the carrying amounts of financial assets and financial liabilities carried at amortized costapproximate their fair value, with the exception of the Senior Bonds , since any applicable interest receivable or payable is eitherclose to current market rates or the instruments are short-term in nature. Material differences between the fair values and carryingamounts of these borrowings are identified as follows (in thousands): At 31 December 2022Carrying amountFair valueSenior Bonds....................................................................................................................................................530,506 535,167 At 31 December 2021Carrying amountFair valueBonds.................................................................................................................................................................363,100 368,476 Fair value measurementsThe following tables illustrate the fair value measurement hierarchy of the Group\u2019s financial instruments measured to fair value ona recurring basis as of 31 December 2022 (in thousands):2022Level 1 Level 2 Level 3 TotalSenior Bond Warrants....................................................................- - 45,325 45,325 Tranche A Conversion Feature....................................................- - 38,055 38,055 Sr. Bond Interest Rate Feat. (incl. in oth. current assets).......- - 851 851 Predecessor Earn Out Shares.......................................................- 276,200 - 276,200OACB Earn Out Shares................................................................- 10,500 - 10,500OACB Warrants..............................................................................10,152 - - 10,15210,152 286,700 84,231 381,083 The Group did not recognize any transfers of assets or liabilities between levels of the fair value hierarchy during the years ended31 December 2022 and 2021.The Group recognized derivative financial liabilities related to the equity conversion rights in the convertible bonds as well as theequity conversion rights, warrant rights and funding rights in the convertible shareholder loans as of 31 December 2020. Thesederivative financial liabilities were extinguished during the year ended 31 December 2021. Refer to Note 20 for additional detailson the extinguishment. Tranche A Conversion Feature As noted in Note 20, in connection with the Convertible Bonds the Group classified the Tranche A Conversion Feature as anembedded derivative liability due to the variability created by conversion rates resulting from the tranche being denominated inISK. The conversion feature had a fair value of $24.9 million and $38.1 million as of 20 December 2022 and 31 December 2022,respectively. The change in fair resulted in $13.2 million of finance costs for the year ended 31 December 2022.The fair value of the Tranche A Conversion Feature was determined using a lattice model that incorporated inputs andassumptions as further described below. The inputs and assumptions associated with the valuation of the instruments aredetermined based on all relevant internal and external information available and are reviewed and reassessed at each reporting date.The following table presents the assumptions and inputs that were used for the model in valuing the Tranche A ConversionFeature:31 December 20 December 20222022Stock price...........................................................................................................................................................$10.00 $8.00Conversion price................................................................................................................................................$10.00 $10.00Volatility rate.......................................................................................................................................................45.0% 45.0%Risk-free interest rate........................................................................................................................................4.2% 4.0%Dividend yield....................................................................................................................................................0.0% 0.0%Risk yield.............................................................................................................................................................19.3% 18.6%Senior Bond WarrantsAs part of the Senior Bonds agreement (see Note 20), the Group agreed to issue penny warrants to the Bondholders that areissuable if certain events occur. The contingently issuable Senior Bond Warrants include two tranches:\u2022 One tranche representing 1.5% of the fully diluted ordinary share capital if the aggregate amount of the net proceeds of all newequity issuances received by the Company on or before 15 December 2022 is less than $75.0 million, as defined in the SeniorBonds agreement.\u2022 One tranche representing 1.0% of the fully diluted ordinary share capital if the aggregate amount of the net Proceeds of all newequity issuances received by the Company on or before 31 March 2023 is less than $150.0 million, as defined in the Senior Bondsagreement.The Senior Bond Warrants are accounted for as derivative financial liabilities in accordance with IFRS 9 and IAS 32 and will besubject to ongoing mark-to-market adjustments through the consolidated statement of profit or loss and other comprehensiveincome or loss. The Senior Bond Warrants had a fair value of $15.4 million on 16 November 2022. The fair value was determinedusing the Finnerty model along with the publicly quoted trading price of Ordinary Shares and probability of the contingent eventsoccurring at the valuation date. Probabilities associated with the instruments are determined based on all relevant internal andexternal information available and are reviewed and reassessed at each reporting date.On 31 December 2022, the Company issued 4,198,807 warrants, with an exercise price of $0.01, representing the first tranche ofSenior Bond Warrants. The issued warrants, along with the remaining tranche of contingently issuable warrants had a fair value of$45.3 million as of 31 December 2022. The Group recognized $29.9 million in finance costs resulting from the change in fair valueof the Senior Bond Warrants.Predecessor Earn Out SharesAs part of the Business Combination, Predecessor shareholders were granted a total of 38,330,000 Ordinary Shares subject tocertain vesting conditions (\u201cPredecessor Earn Out Shares\u201d). One half of the Predecessor Earn Out Shares will vest if, at any timeduring the five years following the closing of the Business Combination, the Alvotech ordinary share price is at or above a volumeweighted average price (\u201cVWAP\u201d) of $15.00 per share for any ten trading days within any twenty-trading day period, with the otherhalf vesting at a VWAP of $20.00 per share for any ten trading days within any twenty-trading day period. The Predecessor EarnOut Shares are accounted for as derivative financial liabilities in accordance with IAS 32 and will be subject to ongoing mark-to-market adjustments through the consolidated statement of profit or loss and other comprehensive income or loss. The PredecessorEarn Out Shares had a fair value of $227.5 million at the Closing Date and $276.2 million as of 31 December 2022, resulting in$48.7 million of finance costs during the year ended 31 December 2022.The fair value of the Predecessor Earn Out Shares was determined using Monte Carlo analysis that incorporated inputs andassumptions as further described below. The inputs and assumptions associated with the valuation of the instruments aredetermined based on all relevant internal and external information available and are reviewed and reassessed at each reporting date.The following table presents the assumptions and inputs that were used for the model in valuing the Predecessor Earn Out Shares:31 December 202215 June 2022Share price...........................................................................................................................................................$10.00 $9.38Volatility rate.......................................................................................................................................................45.0% 37.5%Risk-free interest rate........................................................................................................................................4.05% 3.4%OACB Earn Out SharesFormer OACB shareholders were granted a total of 1,250,000 Ordinary Shares subject to certain vesting conditions (\u201cOACB EarnOut Shares\u201d). One half of the OACB Earn Out Shares will vest if, at any time during the five years following the closing of theBusiness Combination, the Alvotech ordinary share price is at or above a VWAP of $12.50 per share for any ten trading dayswithin any twenty-trading day period, with the other half vesting at a VWAP of $15.00 per share. The OACB Earn Out Shares areaccounted for as derivative financial liabilities in accordance with IAS 32 and will be subject to ongoing mark-to-marketadjustments through the statement of profit or loss and other comprehensive income or loss. The OACB Earn Out Shares had afair value of $9.1 million at the Closing Date and $10.5 million as of 31 December 2022, resulting in $1.4 million of finance costsduring the year ended 31 December 2022. The fair value of the OACB Earn Out Shares was determined using a Monte Carlo analysis that incorporated inputs andassumptions as further described below. Assumptions and inputs associated with the valuation of the instruments are determinedbased on all relevant internal and external information available and are reviewed and reassessed at each reporting date. Thefollowing table presents the assumptions and inputs that were used for the model in valuing the OACB Earn Out Shares:31 December 202215 June 2022Share price...........................................................................................................................................................$10.00 $9.38Volatility rate.......................................................................................................................................................45.0% 37.5%Risk-free interest rate........................................................................................................................................4.05% 3.4%OACB Warrants Additionally, as part of the Business Combination the Company assumed the 10,916,647 outstanding OACB warrants, onsubstantially the same contractual terms and conditions as were in effect immediately prior to the Business Combination, includingan exercise price of $11.50. Each warrant entitles the holder to purchase one Alvotech ordinary share. The OACB warrants areaccounted for as derivative financial liabilities in accordance with IAS 32 and will be subject to ongoing mark-to-marketadjustments through the consolidated statement of profit or loss and other comprehensive income or loss. The OACB warrantshad a fair value of $11.8 million at the Closing Date and $10.2 million as of 31 December 2022. The fair value of the warrants wasderived from the publicly quoted trading price at the valuation date. The change in fair value of the OACB Warrants resulted in$1.6 million of finance income for the year ended 31 December 2022.Convertible shareholder loansThe fair value of the derivatives associated with the convertible shareholder loans was $485.9 million and $534.7 million at 7December 2021, the date of extinguishment (refer to Note 20 for additional details) and 31 December 2020. Changes in the fairvalue of the financial instruments during the period are recognized in the consolidated statements of profit or loss and othercomprehensive income or loss.The fair value of the derivatives associated with the convertible shareholder loans on 7 December 2021 was determined based onthe number of shares to be issued at the closing of the Business Combination Agreement multiplied by OACB stock price ($9.86). In aggregate, the fair value of the derivative liabilities associated with the convertible shareholder loans and convertible bonds at 31December 2019 was $479.3 million. In 2020, the fair value of the derivative liabilities increased by $55.4 million, resulting inderivative liabilities of $534.7 million at 31 December 2020. In 2021, the fair value of the financial instruments decreased by $48.8million, resulting in derivative liabilities of $485.9 million at 7 December 2021, the date of extinguishment. Included in the changesin fair value of the derivative liabilities is the amortization of a deferred loss associated with the recognition of funding rights at theinception of the convertible shareholder loan with Aztiq. Specifically, at inception, the fair value of the funding rights, determinedusing unobservable inputs, exceeded the transaction price by $15.0 million. The deferred loss was recognized over the 5-year termof the convertible shareholder loan using the straight-line method of amortization. The unamortized deferred loss, which is nettedagainst derivative financial liabilities on the consolidated statements of financial position, was $3.1 million as of 7 December 2021,the date of extinguishment.The Group did not recognize any transfers of assets or liabilities between levels of the fair value hierarchy during the years ended31 December 2022 and 2021.Capital managementThe capital structure of the Group consists of equity, debt and cash. For the foreseeable future, the Board of Directors willmaintain a capital structure that supports the Group\u2019s strategic objectives through managing the budgeting process, maintainingstrong investor relations and managing the financial risks of the Group, as further described below. No changes were made in theobjectives, policies or processes for managing capital during the years ended 31 December 2022 and 2021.Financial risk managementThe Group\u2019s corporate treasury function provides services across the organization, coordinates access to domestic andinternational financial markets, monitors and manages the financial risks relating to the Group\u2019s operations through internal riskreports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk andinterest rate risk), credit risk and liquidity risk.Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inmarket interest rates. The Group\u2019s exposure to the risk of fluctuations in market interest rates primarily relates to the cash in bankthat is subject to floating interest rates.The following table provides an interest rate sensitivity analysis for the effect on loss before tax (in thousands):2022 2021Variable-rate financial liabilities +100.........................................................................................................(186) (65)Variable-rate financial liabilities -100...........................................................................................................186 65 Foreign currency riskForeign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inforeign exchange rates. The Group\u2019s exposure to currency risk arises from financial assets and financial liabilities denominated inother currencies than the presentation currency of the Group.Below are the foreign currencies that have the most significant impact on the Group's operations.Closing rateAverage rateChange2022 2021 2022 2021EUR ....................................................................1.061 1.133 1.052 1.183 (6.4%)GBP ....................................................................1.204 1.350 1.233 1.376 (10.8%)ISK ......................................................................0.007 0.008 0.007 0.008 (8.3%)CHF ....................................................................1.071 1.094 1.047 1.094 (2.1%)INR .....................................................................0.012 0.013 0.013 0.014 (10.1%)The Group\u2019s assets and liabilities that are denominated in foreign currencies as of 31 December 2022 are as follows (in thousands):Assets Liabilities NetEUR ..................................................................................................................................36,420 26,514 9,906 GBP ..................................................................................................................................111 1,538 (1,427)ISK ....................................................................................................................................49,484 109,507 (60,023)CHF ..................................................................................................................................69 7,305 (7,236)INR ...................................................................................................................................11 517 (506)The Group\u2019s assets and liabilities that are denominated in foreign currencies as of 31 December 2021 are as follows (in thousands):Assets Liabilities NetEUR ..................................................................................................................................31,718 15,720 15,998 GBP ..................................................................................................................................180 673 (493)ISK ....................................................................................................................................5,421 148,747 (143,326)CHF ..................................................................................................................................715 7,305 (6,590)A reasonable possible strengthening or weakening of the Group\u2019s significant foreign currencies against the USD would affect themeasurement of financial instruments denominated in a foreign currency and affect equity by the amount shown in the sensitivityanalysis table below. The analysis assumes that all other variables, such as interest rates, remain constant.Year ended 31 December 2022 EUR GBP ISK CHF INR-10% weakening ............................................. (991) (143) (6,002) (724) (51)+10% strengthening ..................................... 991 143 6,002 724 51 Year ended 31 December 2021 EUR GBP ISK CHF INR-10% weakening ............................................. (1,600) (49) (14,333) (659) N/A+10% strengthening ..................................... 1,600 49 14,333 659 N/A",
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"pp-value-84-3": {
"value": "27. Financial instrumentsAccounting classification and carrying amountsFinancial assets as of 31 December 2022 and 2021, all of which are measured at amortized cost, are as follows (in thousands):2022 2021Cash and cash equivalents.............................................................................................................................66,427 17,556 Restricted cash.................................................................................................................................................25,187 10,087 Trade receivables.............................................................................................................................................32,972 29,396 Other current assets........................................................................................................................................5,880 14,518 Receivables from related parties...................................................................................................................1,548 1,111 Other long-term assets...................................................................................................................................4,484 -136,498 72,668 Financial liabilities as of 31 December 2022 and 2021 are as follows (in thousands):2022 2021Borrowings (measured at amortized cost)..................................................................................................764,570 400,911 Derivative financial liabilities (measured at FVTPL)................................................................................380,232 -Other long-term liability to related party (measured at amortized cost)..............................................7,440 7,440 Long-term incentive plan (measured at FVTPL)......................................................................................544 56,334 Trade and other payables (measured at amortized cost).........................................................................49,188 28,587 Lease liabilities (measured at amortized cost)............................................................................................40,532 122,140 Liabilities to related parties (measured at amortized cost)......................................................................1,131 638 Other current liabilities...................................................................................................................................53,664 42,012 1,297,301 658,062 It is management\u2019s estimate that the carrying amounts of financial assets and financial liabilities carried at amortized costapproximate their fair value, with the exception of the Senior Bonds , since any applicable interest receivable or payable is eitherclose to current market rates or the instruments are short-term in nature. Material differences between the fair values and carryingamounts of these borrowings are identified as follows (in thousands): At 31 December 2022Carrying amountFair valueSenior Bonds....................................................................................................................................................530,506 535,167 At 31 December 2021Carrying amountFair valueBonds.................................................................................................................................................................363,100 368,476 Fair value measurementsThe following tables illustrate the fair value measurement hierarchy of the Group\u2019s financial instruments measured to fair value ona recurring basis as of 31 December 2022 (in thousands):2022Level 1 Level 2 Level 3 TotalSenior Bond Warrants....................................................................- - 45,325 45,325 Tranche A Conversion Feature....................................................- - 38,055 38,055 Sr. Bond Interest Rate Feat. (incl. in oth. current assets).......- - 851 851 Predecessor Earn Out Shares.......................................................- 276,200 - 276,200OACB Earn Out Shares................................................................- 10,500 - 10,500OACB Warrants..............................................................................10,152 - - 10,15210,152 286,700 84,231 381,083 The Group did not recognize any transfers of assets or liabilities between levels of the fair value hierarchy during the years ended31 December 2022 and 2021.The Group recognized derivative financial liabilities related to the equity conversion rights in the convertible bonds as well as theequity conversion rights, warrant rights and funding rights in the convertible shareholder loans as of 31 December 2020. Thesederivative financial liabilities were extinguished during the year ended 31 December 2021. Refer to Note 20 for additional detailson the extinguishment. Tranche A Conversion Feature As noted in Note 20, in connection with the Convertible Bonds the Group classified the Tranche A Conversion Feature as anembedded derivative liability due to the variability created by conversion rates resulting from the tranche being denominated inISK. The conversion feature had a fair value of $24.9 million and $38.1 million as of 20 December 2022 and 31 December 2022,respectively. The change in fair resulted in $13.2 million of finance costs for the year ended 31 December 2022.The fair value of the Tranche A Conversion Feature was determined using a lattice model that incorporated inputs andassumptions as further described below. The inputs and assumptions associated with the valuation of the instruments aredetermined based on all relevant internal and external information available and are reviewed and reassessed at each reporting date.The following table presents the assumptions and inputs that were used for the model in valuing the Tranche A ConversionFeature:31 December 20 December 20222022Stock price...........................................................................................................................................................$10.00 $8.00Conversion price................................................................................................................................................$10.00 $10.00Volatility rate.......................................................................................................................................................45.0% 45.0%Risk-free interest rate........................................................................................................................................4.2% 4.0%Dividend yield....................................................................................................................................................0.0% 0.0%Risk yield.............................................................................................................................................................19.3% 18.6%Senior Bond WarrantsAs part of the Senior Bonds agreement (see Note 20), the Group agreed to issue penny warrants to the Bondholders that areissuable if certain events occur. The contingently issuable Senior Bond Warrants include two tranches:\u2022 One tranche representing 1.5% of the fully diluted ordinary share capital if the aggregate amount of the net proceeds of all newequity issuances received by the Company on or before 15 December 2022 is less than $75.0 million, as defined in the SeniorBonds agreement.\u2022 One tranche representing 1.0% of the fully diluted ordinary share capital if the aggregate amount of the net Proceeds of all newequity issuances received by the Company on or before 31 March 2023 is less than $150.0 million, as defined in the Senior Bondsagreement.The Senior Bond Warrants are accounted for as derivative financial liabilities in accordance with IFRS 9 and IAS 32 and will besubject to ongoing mark-to-market adjustments through the consolidated statement of profit or loss and other comprehensiveincome or loss. The Senior Bond Warrants had a fair value of $15.4 million on 16 November 2022. The fair value was determinedusing the Finnerty model along with the publicly quoted trading price of Ordinary Shares and probability of the contingent eventsoccurring at the valuation date. Probabilities associated with the instruments are determined based on all relevant internal andexternal information available and are reviewed and reassessed at each reporting date.On 31 December 2022, the Company issued 4,198,807 warrants, with an exercise price of $0.01, representing the first tranche ofSenior Bond Warrants. The issued warrants, along with the remaining tranche of contingently issuable warrants had a fair value of$45.3 million as of 31 December 2022. The Group recognized $29.9 million in finance costs resulting from the change in fair valueof the Senior Bond Warrants.Predecessor Earn Out SharesAs part of the Business Combination, Predecessor shareholders were granted a total of 38,330,000 Ordinary Shares subject tocertain vesting conditions (\u201cPredecessor Earn Out Shares\u201d). One half of the Predecessor Earn Out Shares will vest if, at any timeduring the five years following the closing of the Business Combination, the Alvotech ordinary share price is at or above a volumeweighted average price (\u201cVWAP\u201d) of $15.00 per share for any ten trading days within any twenty-trading day period, with the otherhalf vesting at a VWAP of $20.00 per share for any ten trading days within any twenty-trading day period. The Predecessor EarnOut Shares are accounted for as derivative financial liabilities in accordance with IAS 32 and will be subject to ongoing mark-to-market adjustments through the consolidated statement of profit or loss and other comprehensive income or loss. The PredecessorEarn Out Shares had a fair value of $227.5 million at the Closing Date and $276.2 million as of 31 December 2022, resulting in$48.7 million of finance costs during the year ended 31 December 2022.The fair value of the Predecessor Earn Out Shares was determined using Monte Carlo analysis that incorporated inputs andassumptions as further described below. The inputs and assumptions associated with the valuation of the instruments aredetermined based on all relevant internal and external information available and are reviewed and reassessed at each reporting date.The following table presents the assumptions and inputs that were used for the model in valuing the Predecessor Earn Out Shares:31 December 202215 June 2022Share price...........................................................................................................................................................$10.00 $9.38Volatility rate.......................................................................................................................................................45.0% 37.5%Risk-free interest rate........................................................................................................................................4.05% 3.4%OACB Earn Out SharesFormer OACB shareholders were granted a total of 1,250,000 Ordinary Shares subject to certain vesting conditions (\u201cOACB EarnOut Shares\u201d). One half of the OACB Earn Out Shares will vest if, at any time during the five years following the closing of theBusiness Combination, the Alvotech ordinary share price is at or above a VWAP of $12.50 per share for any ten trading dayswithin any twenty-trading day period, with the other half vesting at a VWAP of $15.00 per share. The OACB Earn Out Shares areaccounted for as derivative financial liabilities in accordance with IAS 32 and will be subject to ongoing mark-to-marketadjustments through the statement of profit or loss and other comprehensive income or loss. The OACB Earn Out Shares had afair value of $9.1 million at the Closing Date and $10.5 million as of 31 December 2022, resulting in $1.4 million of finance costsduring the year ended 31 December 2022. The fair value of the OACB Earn Out Shares was determined using a Monte Carlo analysis that incorporated inputs andassumptions as further described below. Assumptions and inputs associated with the valuation of the instruments are determinedbased on all relevant internal and external information available and are reviewed and reassessed at each reporting date. Thefollowing table presents the assumptions and inputs that were used for the model in valuing the OACB Earn Out Shares:31 December 202215 June 2022Share price...........................................................................................................................................................$10.00 $9.38Volatility rate.......................................................................................................................................................45.0% 37.5%Risk-free interest rate........................................................................................................................................4.05% 3.4%OACB Warrants Additionally, as part of the Business Combination the Company assumed the 10,916,647 outstanding OACB warrants, onsubstantially the same contractual terms and conditions as were in effect immediately prior to the Business Combination, includingan exercise price of $11.50. Each warrant entitles the holder to purchase one Alvotech ordinary share. The OACB warrants areaccounted for as derivative financial liabilities in accordance with IAS 32 and will be subject to ongoing mark-to-marketadjustments through the consolidated statement of profit or loss and other comprehensive income or loss. The OACB warrantshad a fair value of $11.8 million at the Closing Date and $10.2 million as of 31 December 2022. The fair value of the warrants wasderived from the publicly quoted trading price at the valuation date. The change in fair value of the OACB Warrants resulted in$1.6 million of finance income for the year ended 31 December 2022.Convertible shareholder loansThe fair value of the derivatives associated with the convertible shareholder loans was $485.9 million and $534.7 million at 7December 2021, the date of extinguishment (refer to Note 20 for additional details) and 31 December 2020. Changes in the fairvalue of the financial instruments during the period are recognized in the consolidated statements of profit or loss and othercomprehensive income or loss.The fair value of the derivatives associated with the convertible shareholder loans on 7 December 2021 was determined based onthe number of shares to be issued at the closing of the Business Combination Agreement multiplied by OACB stock price ($9.86). In aggregate, the fair value of the derivative liabilities associated with the convertible shareholder loans and convertible bonds at 31December 2019 was $479.3 million. In 2020, the fair value of the derivative liabilities increased by $55.4 million, resulting inderivative liabilities of $534.7 million at 31 December 2020. In 2021, the fair value of the financial instruments decreased by $48.8million, resulting in derivative liabilities of $485.9 million at 7 December 2021, the date of extinguishment. Included in the changesin fair value of the derivative liabilities is the amortization of a deferred loss associated with the recognition of funding rights at theinception of the convertible shareholder loan with Aztiq. Specifically, at inception, the fair value of the funding rights, determinedusing unobservable inputs, exceeded the transaction price by $15.0 million. The deferred loss was recognized over the 5-year termof the convertible shareholder loan using the straight-line method of amortization. The unamortized deferred loss, which is nettedagainst derivative financial liabilities on the consolidated statements of financial position, was $3.1 million as of 7 December 2021,the date of extinguishment.The Group did not recognize any transfers of assets or liabilities between levels of the fair value hierarchy during the years ended31 December 2022 and 2021.Capital managementThe capital structure of the Group consists of equity, debt and cash. For the foreseeable future, the Board of Directors willmaintain a capital structure that supports the Group\u2019s strategic objectives through managing the budgeting process, maintainingstrong investor relations and managing the financial risks of the Group, as further described below. No changes were made in theobjectives, policies or processes for managing capital during the years ended 31 December 2022 and 2021.Financial risk managementThe Group\u2019s corporate treasury function provides services across the organization, coordinates access to domestic andinternational financial markets, monitors and manages the financial risks relating to the Group\u2019s operations through internal riskreports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk andinterest rate risk), credit risk and liquidity risk.Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inmarket interest rates. The Group\u2019s exposure to the risk of fluctuations in market interest rates primarily relates to the cash in bankthat is subject to floating interest rates.The following table provides an interest rate sensitivity analysis for the effect on loss before tax (in thousands):2022 2021Variable-rate financial liabilities +100.........................................................................................................(186) (65)Variable-rate financial liabilities -100...........................................................................................................186 65 Foreign currency riskForeign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inforeign exchange rates. The Group\u2019s exposure to currency risk arises from financial assets and financial liabilities denominated inother currencies than the presentation currency of the Group.Below are the foreign currencies that have the most significant impact on the Group's operations.Closing rateAverage rateChange2022 2021 2022 2021EUR ....................................................................1.061 1.133 1.052 1.183 (6.4%)GBP ....................................................................1.204 1.350 1.233 1.376 (10.8%)ISK ......................................................................0.007 0.008 0.007 0.008 (8.3%)CHF ....................................................................1.071 1.094 1.047 1.094 (2.1%)INR .....................................................................0.012 0.013 0.013 0.014 (10.1%)The Group\u2019s assets and liabilities that are denominated in foreign currencies as of 31 December 2022 are as follows (in thousands):Assets Liabilities NetEUR ..................................................................................................................................36,420 26,514 9,906 GBP ..................................................................................................................................111 1,538 (1,427)ISK ....................................................................................................................................49,484 109,507 (60,023)CHF ..................................................................................................................................69 7,305 (7,236)INR ...................................................................................................................................11 517 (506)The Group\u2019s assets and liabilities that are denominated in foreign currencies as of 31 December 2021 are as follows (in thousands):Assets Liabilities NetEUR ..................................................................................................................................31,718 15,720 15,998 GBP ..................................................................................................................................180 673 (493)ISK ....................................................................................................................................5,421 148,747 (143,326)CHF ..................................................................................................................................715 7,305 (6,590)A reasonable possible strengthening or weakening of the Group\u2019s significant foreign currencies against the USD would affect themeasurement of financial instruments denominated in a foreign currency and affect equity by the amount shown in the sensitivityanalysis table below. The analysis assumes that all other variables, such as interest rates, remain constant.Year ended 31 December 2022 EUR GBP ISK CHF INR-10% weakening ............................................. (991) (143) (6,002) (724) (51)+10% strengthening ..................................... 991 143 6,002 724 51 Year ended 31 December 2021 EUR GBP ISK CHF INR-10% weakening ............................................. (1,600) (49) (14,333) (659) N/A+10% strengthening ..................................... 1,600 49 14,333 659 N/A",
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"value": "Credit riskCredit risk it the risk that a counterparty will not fulfill its contractual obligations under a financial instrument contract, leading to afinancial loss for the Group. The maximum credit risk exposure for the Group\u2019s financial assets as of 31 December 2022 and 2021is as follows (in thousands):2022 2021Cash and cash equivalents ............................................................................................................................66,427 17,556 Restricted cash ................................................................................................................................................25,187 10,087 Other assets .....................................................................................................................................................44,884 66,344 136,498 93,987 The Group\u2019s cash and cash equivalents and restricted cash are deposited with high-quality financial institutions. Managementbelieves these financial institutions are financially sound and, accordingly, that minimal credit risk exists. The Group has notexperienced any losses on its deposits of cash and cash equivalents and restricted cash yet monitors the credit rating of thesefinancial institutions on a periodic basis.Other assets primarily consist of other current assets, as described in Note 18, and trade receivables and contract assets recognizedin connection with the Group\u2019s performance pursuant to its contracts with customers, all of which are large multinationalpharmaceutical companies. There are no significant amounts past due as of 31 December 2022 and 2021 and the Group concludesthat any expected credit losses with respect to these assets is immaterial.",
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"value": "Liquidity riskLiquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilitiesthat are settled by delivering cash or another financial asset.Contractual maturities of financial assets and liabilities as of 31 December 2022 are as follows (in thousands):Within one One to twoFinancial assets year years Thereafter TotalNon-interest bearing .....................................................................40,400 - - 40,400 Variable-interest bearing ...............................................................66,427 - 29,671 96,098 Total financial assets .....................................................................106,827 - 29,671 136,498 Financial liabilitiesNon-interest bearing .....................................................................104,366 - 7,984 112,350 Fixed-interest bearing - Borrowings ..........................................45,757 66,308 896,921 1,008,986 Derivative liabilities .......................................................................- - 380,232 380,232 Variable-interest bearing - Borrowings ......................................25,259 8,036 59,109 92,404 Total financial liabilities ................................................................175,382 74,344 1,344,246 1,593,972 Contractual maturities of financial assets and liabilities as of 31 December 2021 are as follows (in thousands):Within one One to twoyear years Thereafter TotalFinancial assetsNon-interest bearing .....................................................................29,396 - - 29,396 Variable-interest bearing ...............................................................17,556 - 10,087 27,643 Total financial assets .....................................................................46,952 - 10,087 57,039 Financial liabilitiesNon-interest bearing .....................................................................71,237 - 63,774 135,011 Fixed-interest bearing - Borrowings ..........................................16,663 33,235 500,675 550,573 Variable-interest bearing - Borrowings ......................................3,041 3,035 1,117 7,193 Total financial liabilities ................................................................90,941 36,270 565,566 692,777 Refer to Note 13 for the maturity analysis of the Group\u2019s undiscounted lease payments.",
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"value": "28. Supplemental cash flow informationSupplement cash flow information for the year ended 31 December 2022 and 2021 is included below (in thousands).Non-cash investing and financing activities 2022 2021Acquisition of property, plant and equipment in trade payables...........................................................4,131 3,812 Acquisition of intangibles in trade payables and other current liabilities.............................................4,075 - Right-of-use assets obtained through new operating leases....................................................................9,583 18,871 Addition of the Facility through Aztiq Convertible Bond......................................................................115,005 - Non-cash issuance of Aztiq Convertible Bond.........................................................................................80,000 - Equity issued through conversion of borrowings.....................................................................................32,200 346,043 Acquisition of other intangible assets through financing agreements..................................................- 461 ",
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"value": "29. Subsequent eventsThe Group evaluated subsequent events through 1 March 2023, the date the consolidated financial statements were available to beissued.On 25 January 2023, the Company issued an additional $10.0 million in Tranche B Convertible Bonds. Holders of the Tranche BConvertible Bonds may elect, at their sole discretion, to convert all or part of the principal amount and accrued interest intoAlvotech Ordinary Shares at a conversion price of $10.00 per share on December 31, 2023, or June 30, 2024. The conversionfeature will be accounted for as an embedded derivative and classified as equity.On 10 February 2023, the Company completed a private placement equity offering of $137.0 million, at current ISK exchangerates, of its Ordinary Shares, par value $0.01 per share, at a purchase price of $11.57 per share. The Shares are expected bedelivered from previously issued ordinary shares held by Alvotech\u2019s subsidiary, Alvotech Manco ehf. As a result of proceeds raisedfrom the private placement offering, the Company extinguished the liability related to the Senior Bond Warrants resulting in thepotential issuance of penny warrants representing 1.0% of the fully diluted ordinary share capital (see Note 20). This will beaccounted for as an extinguishment of a financial liability in the consolidated statement of profit or loss and other comprehensiveincome or loss.On 17 February 2023, the first tranche of OACB Earn Out Shares vested resulting in the issuance of 625,000 Ordinary Shares. Theissuance of Ordinary Shares for the first tranche will be accounted for as an extinguishment of a financial liability in theconsolidated statement of profit or loss and other comprehensive income or loss.On 27 February 2023, the Group and Teva signed an amendment to the licence & development agreement. As part of thatamendment, the Group agreed to provide future financial consideration to Teva to assist with the cost of launching and marketingthe licensed biosimilar products.Subsequent to 31 December 2022, Senior Bond Warrant holders elected to exercise their warrants. As a result, 3,014,189 OrdinaryShares were issued in exchange for the exercising of the penny warrants. The Company received an immaterial amount of cash andwill recognize the transaction as an extinguishment of the derivative financial liabilities. The difference between the equity issuedand carrying value of the derivative financial liabilities will be recognized in the consolidated statement of profit or loss and othercomprehensive income or loss. Subsequent to 31 December 2022, holders of the OACB Warrants exercised their warrant rights for an exercise price of $11.50 forthe rights to one Ordinary Share per warrant. The exercises result in the issuance of 271,150 Ordinary Shares and cash proceeds of$3.1 million. The Company will recognize the transaction as an extinguishment of the derivative financial liabilities. The differencebetween the equity issued and carrying value of the derivative financial liabilities will be recognized in the consolidated statement ofprofit or loss and other comprehensive income or loss.",
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