Coherus BioSciences, Inc. (NASDAQ:CHRS) Q1 2023 Earnings Conference Call May 8, 2023 5:00 PM ET Company Participants Marek Ciszewski - Investor Relations Denny Lanfear - Chief Executive Officer Theresa Lavallee - Chief Development Officer Rosh Dias - Chief Medical Officer Paul Reider - Chief Commercial Officer McDavid Stilwell - Chief Financial Officer Conference Call Participants Robyn Karnauskas - Truist Securities Salim Syed - Mizuho Mike Nedelcovych - TD Cowen Douglas Tsao - H.C. Wainwright Ash Verma - ...

PART I. FINANCIAL INFORMATION [Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=ITEM%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Coherus BioSciences, Inc. for the quarterly period ended March 31, 2023, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, accompanied by detailed notes on accounting policies, revenue, debt, and collaborations Condensed Consolidated Balance Sheet Summary (in thousands) | Balance Sheet Items | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$402,426** | **$480,847** | | Total Current Assets | $315,926 | $381,234 | | **Total Liabilities** | **$598,933** | **$618,265** | | Total Current Liabilities | $123,407 | $138,694 | | Term Loans | $245,718 | $245,483 | | Convertible Notes | $225,900 | $225,575 | | **Total Stockholders' Deficit** | **($196,507)** | **($137,418)** | Condensed Consolidated Statement of Operations (in thousands) | Income Statement Items | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Revenue | $32,436 | $60,115 | | Total Costs and Expenses | $100,181 | $141,040 | | Loss from Operations | ($67,745) | ($80,925) | | **Net Loss** | **($75,729)** | **($96,084)** | | **Net Loss Per Share (Basic & Diluted)** | **($0.96)** | **($1.24)** | Condensed Consolidated Statement of Cash Flows Summary (in thousands) | Cash Flow Activities | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($68,732) | ($54,045) | | Net cash provided by (used in) investing activities | $17,526 | ($35,615) | | Net cash provided by (used in) financing activities | $3,804 | ($1,855) | | **Net decrease in cash, cash equivalents and restricted cash** | **($47,402)** | **($91,515)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results for the quarter ended March 31, 2023, detailing strategy, business updates, product pipeline, financial performance analysis, liquidity, capital resources, and critical accounting estimates [Overview](index=37&type=section&id=Overview) Coherus outlines its strategy as a commercial-stage biopharmaceutical company focused on building a leading immuno-oncology franchise, funded by its diversified portfolio of three FDA-approved biosimilars, and discusses the status of its Biologics License Application (BLA) for toripalimab - The company's core strategy is to build a leading immuno-oncology franchise funded by net sales from its portfolio of FDA-approved biosimilars[89](index=89&type=chunk)[226](index=226&type=chunk) - The commercial portfolio includes three FDA-approved biosimilars: UDENYCA® (pegfilgrastim-cbqv), CIMERLI® (ranibizumab-eqrn), and YUSIMRY™ (adalimumab-aqvh), which is planned for a U.S. launch on or after July 1, 2023[89](index=89&type=chunk)[254](index=254&type=chunk) - The BLA for toripalimab remains under review by the FDA. An on-site inspection of the manufacturing facility in China, required for approval, was scheduled for May 2023 after being delayed due to COVID-19 travel restrictions[227](index=227&type=chunk) [Business Update](index=39&type=section&id=Business%20Update) This section highlights significant corporate events from early 2023, including a workforce reduction in March, an agreement with Klinge Biopharma for exclusive U.S. commercialization rights to a biosimilar candidate for Eylea® in January, and the utilization of its At-The-Market (ATM) offering to raise net proceeds of $7.2 million in the first quarter - On March 3, 2023, the company committed to a workforce reduction impacting approximately **50 employees** to focus resources on strategic priorities, resulting in restructuring charges of **$3.9 million** in cash expenses and **$1.0 million** net non-cash stock-based compensation expense[258](index=258&type=chunk) - Entered into a term sheet with Klinge Biopharma for exclusive U.S. commercialization rights to FYB203, a biosimilar candidate to Eylea®, with an expected upfront payment of approximately **€30 million** in cash and stock[140](index=140&type=chunk)[232](index=232&type=chunk) - During Q1 2023, the company sold **1,131,450 shares** of common stock under its ATM Offering, receiving net proceeds of **$7.2 million**[9](index=9&type=chunk)[235](index=235&type=chunk) [Products and Product Candidates](index=41&type=section&id=Products%20and%20Product%20Candidates) The company details its product portfolio across three main therapeutic areas: Oncology, focusing on the UDENYCA® franchise and toripalimab development; Immunology, with the planned U.S. launch of YUSIMRY™ in July 2023; and Ophthalmology, with CIMERLI® launched in October 2022, also noting the discontinuation of certain development programs - **Oncology:** The FDA approved the UDENYCA autoinjector (AI) on March 3, 2023, with a commercial launch planned for Q2 2023. The BLA for toripalimab remains under review[231](index=231&type=chunk)[236](index=236&type=chunk)[292](index=292&type=chunk) - **Immunology:** The company plans to launch YUSIMRY™, its Humira biosimilar, in the U.S. on or after July 1, 2023[239](index=239&type=chunk)[265](index=265&type=chunk) - **Ophthalmology:** CIMERLI®, a biosimilar interchangeable with Lucentis, was commercially launched in the U.S. on October 3, 2022[240](index=240&type=chunk)[266](index=266&type=chunk) - **Discontinued Programs:** Development was discontinued for the bevacizumab (Avastin) biosimilar candidate (May 2022) and the preclinical immuno-oncology program CHS-3318 (October 2022)[242](index=242&type=chunk)[299](index=299&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial performance for the three months ended March 31, 2023, versus the same period in 2022, highlighting decreased net revenue due to lower UDENYCA® sales, increased cost of goods sold, and a substantial decrease in research and development expenses Financial Performance Comparison (in thousands) | Metric | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $32,436 | $60,115 | $(27,679) | | Cost of Goods Sold | $16,874 | $9,370 | $7,504 | | Gross Margin | **48%** | **84%** | - | | R&D Expense | $34,154 | $82,917 | $(48,763) | | SG&A Expense | $49,153 | $48,753 | $400 | | Interest Expense | $9,712 | $8,969 | $743 | - The decrease in net revenue was primarily driven by a reduction in UDENYCA® units sold and a lower average net selling price due to competition. This was partially offset by **$6.2 million** in net revenue from the CIMERLI® launch[340](index=340&type=chunk) - R&D expense decreased by **$48.8 million**, primarily because Q1 2022 included a **$35.0 million** upfront payment to license CHS-006 and higher co-development costs for toripalimab[288](index=288&type=chunk)[289](index=289&type=chunk)[343](index=343&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2023, Coherus had $128.1 million in cash, cash equivalents, and marketable securities, with total debt obligations of $471.6 million, and management believes existing capital resources will be sufficient to fund operations for at least the next twelve months Liquidity and Debt Summary (as of March 31, 2023, in thousands) | Item | Amount | | :--- | :--- | | Total Cash, cash equivalents and marketable securities | $128,089 | | **Total debt obligations** | **$471,618** | | 2027 Term Loans (Net Carrying Value) | $245,718 | | 2026 Convertible Notes (Net Carrying Value) | $225,900 | - The company believes its available capital resources will be sufficient to fund planned expenditures and meet obligations for at least the next twelve months from the financial statement issuance date[347](index=347&type=chunk) - **Net cash used in operating activities was $68.7 million** for Q1 2023, primarily due to a **net loss of $75.7 million**, adjusted for non-cash items and changes in operating assets and liabilities[20](index=20&type=chunk)[359](index=359&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily interest rate risk from its variable-rate 2027 Term Loans and foreign currency exchange rate risk from Euro-denominated purchases and royalty payments, which the company hedges using derivative contracts - **Interest Rate Risk:** The company has **$250.0 million** in principal outstanding on its variable-rate 2027 Term Loans. A hypothetical **100 basis point** increase in the interest rate could result in up to a **$2.5 million** increase in annual interest expense[24](index=24&type=chunk) - **Foreign Currency Risk:** The company is exposed to fluctuations in the U.S. Dollar to Euro exchange rate due to CIMERLI inventory purchases and royalty payments denominated in Euros. The company uses foreign exchange option contracts to economically hedge this exposure[25](index=25&type=chunk)[121](index=121&type=chunk) - The fair value of the company's fixed-rate 2026 Convertible Notes is also subject to fluctuation with changes in interest rates and the company's stock price[364](index=364&type=chunk)[378](index=378&type=chunk) [Controls and Procedures](index=64&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section confirms that an evaluation of the company's disclosure controls and procedures was conducted under the supervision of the CEO and CFO, concluding their effectiveness as of March 31, 2023, with no material changes to internal control over financial reporting during the first quarter of 2023 - Based on an evaluation as of March 31, 2023, the President and Chief Executive Officer and the Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[336](index=336&type=chunk) - There were no changes in internal control over financial reporting during the first quarter of 2023 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[39](index=39&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=66&type=section&id=ITEM%201.%20Legal%20Proceedings) This section refers to Note 8 of the financial statements for information on legal proceedings, specifically detailing a demand letter received in April 2022 from Zinc Health Services, LLC, asserting a claim of approximately $14.0 million related to UDENYCA sales, for which the company has an accrual of $6.4 million as of March 31, 2023 - In April 2022, the company received a demand letter from Zinc Health Services, LLC, claiming approximately **$14.0 million** related to UDENYCA sales from October 2020 through December 2021[243](index=243&type=chunk) - As of March 31, 2023, the company had an accrual of **$6.4 million** related to legal matters, which includes its estimated liability to resolve the Zinc demand[187](index=187&type=chunk)[216](index=216&type=chunk) [Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) This section provides a comprehensive overview of the principal risks and uncertainties that could materially and adversely affect the company's business, financial condition, and results of operations, categorized into financial condition, product launch and commercialization, competition, reliance on third parties, intellectual property, product development, compliance, and general business risks - The company has a limited history of profitability and has incurred significant net losses, including a **net loss of $75.7 million** for the quarter ended March 31, 2023, and had an **accumulated deficit of $1.4 billion**[46](index=46&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk) - The commercial success of products like UDENYCA, CIMERLI, and the planned launch of YUSIMRY faces significant competition, pricing pressure, and depends on market acceptance by physicians and payers[43](index=43&type=chunk)[369](index=369&type=chunk) - The company relies heavily on third-party collaborators, such as Junshi Biosciences for toripalimab, and contract manufacturers, making it vulnerable to delays, regulatory issues, or performance failures by these partners[383](index=383&type=chunk)[431](index=431&type=chunk) - Regulatory approval for product candidates like toripalimab is uncertain and subject to delays, particularly due to the FDA's need to conduct foreign inspections of manufacturing facilities in China[29](index=29&type=chunk)[370](index=370&type=chunk) [Risks Related to Our Financial Condition and Capital Requirements](index=70&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Capital%20Requirements) This subsection details financial risks, including a limited history of profitability with significant net losses and an accumulated deficit of $1.4 billion, the uncertainty of achieving future profitability, the need for additional funding, and potential limitations on the ability to use net operating loss (NOL) carryforwards - The company has a limited history of profitability, incurring a **net loss of $75.7 million** in Q1 2023 and having an **accumulated deficit of $1.4 billion** as of March 31, 2023[46](index=46&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk) - The company anticipates needing additional capital to fund planned operations. Failure to obtain necessary funding may force delays, limitations, or termination of product development and commercialization efforts[797](index=797&type=chunk)[800](index=800&type=chunk) - The ability to use net operating loss (NOL) carryforwards and other tax attributes may be limited by Section 382 "ownership change" rules, potentially affecting future cash flows[801](index=801&type=chunk)[833](index=833&type=chunk) [Risks Related to Launch and Commercialization of our Products and our Product Candidates](index=75&type=section&id=Risks%20Related%20to%20Launch%20and%20Commercialization%20of%20our%20Products%20and%20our%20Product%20Candidates) This subsection outlines the risks associated with commercializing the company's products, including the uncertainty of generating meaningful revenue, critical but not guaranteed market acceptance, challenges related to pricing, coverage, and reimbursement due to healthcare reform measures, and ongoing regulatory scrutiny post-approval - The commercial success of existing and future products depends on market acceptance by physicians, patients, and third-party payers, which is uncertain[369](index=369&type=chunk)[839](index=839&type=chunk) - The strategic shift to building an immuno-oncology franchise, funded by the biosimilar business, involves significant execution risk, including managing new regulatory pathways and relying on partners like Junshi Biosciences[403](index=403&type=chunk)[842](index=842&type=chunk) - Healthcare reform measures, particularly the Inflation Reduction Act of 2022 (IRA), may increase costs, affect pricing, and create significant uncertainty for the business[596](index=596&type=chunk)[628](index=628&type=chunk) - Approved products remain subject to extensive ongoing regulatory scrutiny for manufacturing, labeling, and marketing, and failure to comply can result in significant penalties or withdrawal of approval[30](index=30&type=chunk)[815](index=815&type=chunk)[846](index=846&type=chunk) [Risks Related to Competitive Activity](index=89&type=section&id=Risks%20Related%20to%20Competitive%20Activity) This subsection details the intense competition Coherus faces, with its biosimilar products competing against reference products and other biosimilars, toripalimab entering a crowded immuno-oncology market if approved, the potential for competitors to develop more effective or less costly therapies, and the risk of significant price competition for products like YUSIMRY - The company's biosimilar products (UDENYCA, CIMERLI, YUSIMRY) and product candidates face significant competition from both the reference products and other biosimilars, which could limit market penetration[43](index=43&type=chunk)[417](index=417&type=chunk) - Toripalimab, if approved, will compete in a crowded U.S. market with several established anti-PD-1/PD-L1 antibody drugs from major pharmaceutical companies like Merck, BMS, and Genentech[449](index=449&type=chunk) - Competitors may develop more advanced or effective therapies, and originator companies may develop improved versions of their products, which could render Coherus's products obsolete or less competitive[400](index=400&type=chunk)[423](index=423&type=chunk) - The large number of potential competitors for YUSIMRY (adalimumab biosimilar) is expected to result in intense price competition upon its planned launch in July 2023[398](index=398&type=chunk) [Risks Related to Reliance on Third Parties](index=99&type=section&id=Risks%20Related%20to%20Reliance%20on%20Third%20Parties) This subsection highlights the company's significant dependence on third parties, including contract research organizations (CROs) for clinical studies and third-party manufacturers for product supply, creating risks related to regulatory compliance, quality assurance, supply disruptions, and the potential for harm if partners like Junshi Biosciences and Bioeq fail to perform - The company relies on third-party CROs for clinical studies and is responsible for ensuring their compliance with regulations like GCP; failure by CROs could lead to unreliable data and regulatory delays[431](index=431&type=chunk)[462](index=462&type=chunk) - Coherus depends on third-party manufacturers, often single-source, for clinical and commercial supply, creating risks of supply disruption, regulatory non-compliance (cGMP), and delays if a manufacturer needs to be replaced[433](index=433&type=chunk)[435](index=435&type=chunk)[464](index=464&type=chunk) - The company is dependent on partners like Junshi Biosciences (for toripalimab) and Bioeq (for CIMERLI) for drug supply and commercialization, and any failure or dispute with these partners could adversely affect business outcomes[436](index=436&type=chunk)[438](index=438&type=chunk) [Risks Related to Intellectual Property](index=111&type=section&id=Risks%20Related%20to%20Intellectual%20Property) This subsection covers the complex intellectual property risks faced by the company, including potential infringement of third-party patents leading to costly litigation or delayed commercialization, the complexity of the BPCIA patent dispute resolution process, risks related to protecting its own intellectual property and trade secrets, and potential claims of wrongful use of confidential information from former employees - The company's commercial success depends on avoiding infringement of third-party patents, and it faces risk of litigation that could be costly and delay or block product commercialization[486](index=486&type=chunk)[518](index=518&type=chunk) - The Biologics Price Competition and Innovation Act (BPCIA) patent dispute resolution mechanism is complex and could significantly delay or prevent the launch of biosimilar products in the U.S[502](index=502&type=chunk)[538](index=538&type=chunk) - The company may be subject to claims that its employees have wrongfully used or disclosed trade secrets from former employers, such as Amgen, which could result in litigation and damages[530](index=530&type=chunk) - Failure to comply with obligations under in-license agreements (e.g., with AbbVie, Genentech) could result in the loss of critical rights to commercialize products like YUSIMRY and CIMERLI[564](index=564&type=chunk) [Risks Related to the Discovery and Development of Our Product Candidates](index=124&type=section&id=Risks%20Related%20to%20the%20Discovery%20and%20Development%20of%20Our%20Product%20Candidates) This subsection details the inherent risks in the drug development process, including the company's heavy dependence on the clinical and regulatory success of its product candidates, the lengthy and unpredictable approval process, potential non-acceptance of foreign clinical data by the FDA, challenges in demonstrating biosimilarity, and the high failure rate of candidates in clinical trials - The company is heavily dependent on the successful development, regulatory approval, and commercialization of its product candidates, but there is no assurance any will receive approval[124](index=124&type=chunk)[539](index=539&type=chunk) - The regulatory approval process is lengthy and unpredictable. The BLA for toripalimab received a CRL and remains under review, with approval contingent on a successful FDA inspection in China[542](index=542&type=chunk)[546](index=546&type=chunk) - The FDA may not accept clinical data generated outside the U.S., particularly from a single country like China, which is a key risk for toripalimab whose supporting trials were conducted there[29](index=29&type=chunk)[792](index=792&type=chunk)[803](index=803&type=chunk) - Demonstrating biosimilarity to reference products is a significant challenge, and failure to do so to the satisfaction of regulatory authorities would prevent approval and commercialization[579](index=579&type=chunk) [General Risk Factors](index=154&type=section&id=General%20Risk%20Factors) This subsection covers a broad range of other risks, including operational risks from international business, reputational and cost risks from increasing investor focus on ESG factors, business disruption risks from natural disasters, geopolitical events, high costs of operating as a public company, cybersecurity threats, and compliance challenges with evolving data privacy laws - The company's international operations, particularly its collaboration in China, expose it to risks including changing regulations, political instability, and difficulties in managing foreign operations[655](index=655&type=chunk)[681](index=681&type=chunk) - Increasing focus on Environmental, Social, and Governance (ESG) factors by investors imposes additional costs and reputational risks[656](index=656&type=chunk)[684](index=684&type=chunk) - Information technology systems are vulnerable to cyberattacks, which could lead to data breaches, disruption of development programs, and significant liabilities. The risk is heightened by geopolitical tensions[712](index=712&type=chunk)[744](index=744&type=chunk) - The company is subject to complex and evolving global data protection laws (e.g., GDPR, CCPA), and failure to comply could result in significant fines and reputational harm[748](index=748&type=chunk)[765](index=765&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=178&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that Coherus did not repurchase any of its equity securities during the first quarter ended March 31, 2023, but notes that 289,944 shares were surrendered to satisfy minimum tax withholding obligations from employee stock-based awards - During Q1 2023, **289,944 shares** were surrendered to Coherus to satisfy minimum tax withholding obligations in connection with the vesting or exercise of stock-based awards[756](index=756&type=chunk) [Defaults Upon Senior Securities](index=178&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The company reports that this item is not applicable for the period - Not applicable[757](index=757&type=chunk) [Mine Safety Disclosures](index=178&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The company reports that this item is not applicable for the period - Not applicable[757](index=757&type=chunk) [Other Information](index=178&type=section&id=ITEM%205.%20Other%20Information) The company reports that this item is not applicable for the period - Not applicable[757](index=757&type=chunk) [Exhibits](index=178&type=section&id=ITEM%206.%20Exhibits) This section provides an index of the exhibits filed as part of the Quarterly Report on Form 10-Q, including an amendment to a loan agreement, an executive severance plan, and required officer certifications - Lists the exhibits filed with the Form 10-Q, including amendments to agreements, compensatory plans, and officer certifications[757](index=757&type=chunk)[758](index=758&type=chunk)

• Pursue other registration opportunities • TIGIT, ILT4, other combinations Combination therapy provides best opportunity to extend patient survival • Establish toripalimab as SOC in NPC upon approval anticipated in 2023 Platform for Combination Development CIMERLI™ Tracking to the UDENYCA® Success Story Agenda Featured at plenary session External Scientific Validation Progression-Free Survival by BIRC per RECIST v1.1 17 Toripalimab has demonstrated compelling NPC treatment effect; BLA PDUFA Dec 23, 2022 mi ...

Financial Data and Key Metrics Changes - The company ended the year with $192 million in cash, cash equivalents, and marketable securities [1] - For Q4 2022, the company reported a net loss of $58.9 million and a full-year net loss of $291.8 million on a GAAP basis [25] - Net revenue for Q4 was $45.4 million, with CIMERLI generating $6.9 million in sales [27][25] - Projected total combined SG&A and R&D GAAP operating expenses for 2023 are estimated to be between $315 million and $335 million, a reduction of nearly $100 million compared to previous guidance [30][77] Business Line Data and Key Metrics Changes - CIMERLI, the first interchangeable biosimilar to Lucentis, achieved a market share of 2.4% by the end of Q4 2022, with sales of $7 million [81] - UDENYCA net sales for Q4 were $38.3 million, reflecting an 8% decline in demand and a 14% decline in net selling price [84][85] - The company anticipates CIMERLI revenues to exceed $100 million in 2023 [81] Market Data and Key Metrics Changes - The pegfilgrastim market has become increasingly competitive, with significant price discounts from market participants [75] - The company confirmed coverage on 100% of Medicare fee-for-service lives for CIMERLI, enhancing reimbursement pathways [82] Company Strategy and Development Direction - The company aims to create long-term shareholder value through immuno-oncology products while funding development with biosimilar sales [45] - The strategy includes launching multiple products in 2023, such as CIMERLI, UDENYCA, and Toripalimab, while managing expenses to achieve profitability by 2024 [31][73] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the approval of Toripalimab for nasopharyngeal carcinoma, highlighting the unmet need in the market [65] - The company is focused on expense management without jeopardizing product launches, aiming for profitability in 2024 [73][115] Other Important Information - The FDA granted Toripalimab Breakthrough Therapy designation, recognizing the unmet need for patients with MPC [65] - The company has streamlined the U.S. development plan for Toripalimab, significantly reducing clinical trial expenses [66][3] Q&A Session Summary Question: What is the visibility on YUSIMRY's positioning with payers? - Management indicated that clarity on YUSIMRY's formulary positioning will be available post-launch in July [10][38] Question: Can you elaborate on the cost savings and where they are coming from? - Cost savings are derived from reductions in headcount, development expenses, and manufacturing expenses, with a focus on operational efficiency [109][133] Question: How will the Q-code impact CIMERLI's sales? - The Q-code is expected to enhance electronic billing processes and accelerate reimbursement, serving as a catalyst for growth starting in Q2 2023 [81][125] Question: What are the expectations for Humira biosimilar revenues in 2023? - Management stated that clarity on Humira biosimilar revenues will not be available until after the July launch, as the market dynamics are still evolving [40][127] Question: How does the company plan to address the NCCN coverage for Toripalimab? - The company plans to submit additional data sets for NCCN coverage after receiving NPC approval [104][134]

[PART I](index=5&type=section&id=PART%20I) This section details the company's business operations, product portfolio, market opportunities, strategic collaborations, regulatory environment, human capital, and key risk factors [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Coherus BioSciences is a commercial-stage biopharmaceutical company shifting its focus to building an immuno-oncology franchise, funded by its portfolio of three FDA-approved biosimilars: UDENYCA®, CIMERLI®, and YUSIMRY™. The company's pipeline is led by toripalimab, an anti-PD-1 antibody under FDA review. The business operates in a highly regulated and competitive environment, relying on strategic collaborations for development, manufacturing, and commercialization, and actively manages its intellectual property portfolio - The company's core strategy is to build a leading immuno-oncology franchise funded by cash flow from its diversified portfolio of FDA-approved biosimilar therapeutics[12](index=12&type=chunk)[68](index=68&type=chunk) - Coherus has three commercially approved biosimilar products: UDENYCA® (pegfilgrastim-cbqv), CIMERLI® (ranibizumab-eqrn), and YUSIMRY™ (adalimumab-aqvh). CIMERLI was launched in October 2022, and YUSIMRY is planned for launch on or after July 1, 2023[31](index=31&type=chunk) - The company's lead immuno-oncology candidate, toripalimab, has a Biologics License Application (BLA) under review by the FDA for nasopharyngeal carcinoma (NPC). The review has been delayed due to the FDA's inability to conduct a required on-site inspection of the manufacturing facility in China due to COVID-19 travel restrictions[13](index=13&type=chunk)[56](index=56&type=chunk) UDENYCA® Net Product Sales (2020-2022) | Year | Net Product Sales (USD Million) | | :--- | :--- | | 2022 | $203.8 | | 2021 | $326.5 | | 2020 | $475.8 | - In January 2023, Coherus entered into a term sheet with Klinge Biopharma for exclusive U.S. commercialization rights to FYB203, a biosimilar candidate for Eylea® (aflibercept), involving an upfront payment of approximately €30 million in cash and stock[16](index=16&type=chunk)[33](index=33&type=chunk) [Products and Product Candidates](index=7&type=section&id=Products%20and%20Product%20Candidates) Details the company's therapeutic product portfolio across oncology, immunology, and ophthalmology, including biosimilars and pipeline candidates - The company's portfolio is structured across three main therapeutic areas: Oncology, Immunology, and Ophthalmology[36](index=36&type=chunk)[37](index=37&type=chunk)[56](index=56&type=chunk) - **Oncology:** Includes UDENYCA®, toripalimab (anti-PD-1), CHS-006 (anti-TIGIT), and CHS-1000 (anti-ILT4). The company is developing additional presentations for UDENYCA, including an on-body injector (OBI) and an autoinjector (AI), to compete with Neulasta Onpro®[17](index=17&type=chunk)[18](index=18&type=chunk)[34](index=34&type=chunk)[58](index=58&type=chunk) - **Immunology:** Features YUSIMRY™, a biosimilar of Humira® (adalimumab), approved in December 2021 with a planned U.S. launch on or after July 1, 2023[59](index=59&type=chunk) - **Ophthalmology:** Includes CIMERLI®, a biosimilar to Lucentis®, which was launched in the U.S. on October 3, 2022, with 12 months of first interchangeable exclusivity[31](index=31&type=chunk)[60](index=60&type=chunk) - The company has discontinued several development programs to focus resources, including CHS-305 (Avastin biosimilar) in May 2022 and CHS-3318 (anti-CCR8) in October 2022[32](index=32&type=chunk)[44](index=44&type=chunk)[67](index=67&type=chunk) [Market Opportunity](index=8&type=section&id=Market%20Opportunity) Assesses the market size and growth potential for the company's key therapeutic areas and products U.S. Market Size for Key Therapeutic Areas (2022) | Therapeutic Area / Product | 2022 U.S. Net Sales (Approx.) | | :--- | :--- | | Anti-PD-L1 Antibodies | $21.6 billion | | Pegfilgrastim Products | $1.3 billion | | Lucentis® | $1.1 billion | | Humira® | $18.6 billion | - The U.S. market for anti-PD-L1 antibodies is projected to grow to approximately **$30.3 billion by 2025**[38](index=38&type=chunk) - The company aims to expand its UDENYCA market opportunity by launching an on-body injector (OBI) presentation, targeting the **46% of the pegfilgrastim market** currently held by Neulasta Onpro®[62](index=62&type=chunk) [Collaboration and License Agreements](index=11&type=section&id=Collaboration%20and%20License%20Agreements) Outlines the company's strategic partnerships for product development, commercialization, and intellectual property rights - **Junshi Biosciences:** Coherus paid **$150.0 million upfront** for exclusive rights to toripalimab in the U.S. and Canada, with obligations for a **20% royalty on net sales** and up to **$380.0 million in milestones**. The agreement also includes options for other immuno-oncology candidates like CHS-006 (anti-TIGIT), for which a **$35.0 million option exercise fee** was paid in March 2022[83](index=83&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - **Bioeq AG:** Coherus has exclusive U.S. commercialization rights for CIMERLI®. The agreement involves profit sharing with Bioeq in the low to mid-fifty percent range. A **€2.5 million milestone** was paid in 2022 upon FDA approval[105](index=105&type=chunk)[106](index=106&type=chunk) - **AbbVie Inc.:** Settlement and license agreements grant Coherus global, non-exclusive, royalty-bearing rights to commercialize YUSIMRY™, with the U.S. license period commencing on July 1, 2023[52](index=52&type=chunk)[104](index=104&type=chunk) - **Klinge Biopharma:** A binding term sheet was signed for exclusive U.S. commercialization rights to FYB203 (Eylea® biosimilar). The deal includes an upfront payment of **~€30 million**, milestone payments, and profit sharing[87](index=87&type=chunk)[114](index=114&type=chunk) [Government Regulation](index=14&type=section&id=Government%20Regulation) Describes the extensive regulatory framework governing the company's pharmaceutical products, including FDA approval pathways and healthcare laws - The company's products are subject to extensive regulation by the FDA under the Public Health Service Act (PHSA) and the Federal Food, Drug, and Cosmetic Act (FFDCA), covering all stages from development to post-market surveillance[90](index=90&type=chunk)[91](index=91&type=chunk) - Biosimilar products follow an abbreviated licensure pathway under Section 351(k) of the PHSA, requiring demonstration of high similarity to a reference product without clinically meaningful differences in safety, purity, and potency[99](index=99&type=chunk)[149](index=149&type=chunk) - The Biologics Price Competition and Innovation Act (BPCIA) provides a **12-year exclusivity period** for new biologic reference products, during which the FDA cannot approve a biosimilar application[152](index=152&type=chunk) - The company is subject to healthcare laws including the federal Anti-Kickback Statute, False Claims Act, and price reporting requirements for programs like Medicaid and Medicare, which can result in significant penalties for non-compliance[137](index=137&type=chunk)[160](index=160&type=chunk)[188](index=188&type=chunk) - The Inflation Reduction Act of 2022 (IRA) introduces significant changes, including Medicare price negotiations, inflation-based rebates, and a new Part D discounting program, which are likely to have a significant impact on the pharmaceutical industry and the company's business[191](index=191&type=chunk)[438](index=438&type=chunk) [Human Capital Management](index=24&type=section&id=Human%20Capital%20Management) Provides an overview of the company's workforce, including employee numbers, recent reductions, and diversity initiatives - As of December 31, 2022, the company had **359 full-time and part-time employees**, all located in the United States[193](index=193&type=chunk) - In March 2023, the company committed to a workforce reduction of approximately **20%** (impacting ~60 employees) to focus resources on strategic priorities[172](index=172&type=chunk) - The company emphasizes diversity and inclusion, reporting that as of year-end 2022, ethnically diverse employees represented approximately **41% of the workforce**, and women comprised **51%**[175](index=175&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks, including a history of net losses and uncertainty of future profitability, heavy reliance on the commercial success of a few products, and the challenges of transitioning to an immuno-oncology focus. Key risks stem from intense competition, regulatory hurdles such as potential FDA rejection of clinical data from China for toripalimab, manufacturing and supply chain dependencies on third parties, and potential intellectual property disputes. Furthermore, healthcare reforms like the Inflation Reduction Act and the ongoing impacts of the COVID-19 pandemic could adversely affect pricing, market access, and overall financial performance - The company has a limited history of profitability, incurring net losses of **$291.8 million in 2022** and **$287.1 million in 2021**, with an accumulated deficit of **$1.3 billion** as of December 31, 2022[213](index=213&type=chunk)[235](index=235&type=chunk) - A significant risk is the FDA's potential non-acceptance of clinical trial data conducted exclusively outside the U.S., such as the trials for toripalimab conducted in China, which could delay or prevent approval[221](index=221&type=chunk)[224](index=224&type=chunk)[261](index=261&type=chunk) - The company faces intense competition for its products. UDENYCA competes with Amgen and other biosimilar manufacturers; CIMERLI competes with Roche/Genentech; and toripalimab, if approved, will compete with established anti-PD-1/PD-L1 drugs like Keytruda® and Opdivo®[227](index=227&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk) - Coherus is highly dependent on third parties for critical functions, including CROs for clinical trials and CMOs for manufacturing. Any failure by these partners to perform their duties could substantially harm the business[1](index=1&type=chunk)[207](index=207&type=chunk)[295](index=295&type=chunk) - Healthcare reforms, particularly the Inflation Reduction Act (IRA), introduce uncertainty and could negatively impact drug pricing, reimbursement, and the economic rationale for developing biosimilars[229](index=229&type=chunk)[451](index=451&type=chunk) - The strategic shift to an immuno-oncology focus presents execution risks, requiring new expertise, reliance on the Junshi Biosciences partnership, and navigating different regulatory pathways compared to biosimilars[181](index=181&type=chunk)[251](index=251&type=chunk)[269](index=269&type=chunk) [Item 1B. Unresolved Staff Comments](index=70&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - Not applicable; the company has no unresolved staff comments[693](index=693&type=chunk) [Item 2. Properties](index=70&type=section&id=Item%202.%20Properties) The company's principal executive offices are located in Redwood City, California, under a lease expiring in September 2024. Its analytical and process development laboratory is in Camarillo, California, with a lease expiring in May 2027. Management believes these facilities are adequate for current needs - The company's headquarters are leased in Redwood City, CA (expiring Sept. 2024), and its laboratory facilities are leased in Camarillo, CA (expiring May 2027)[720](index=720&type=chunk) [Item 3. Legal Proceedings](index=70&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 8 of the financial statements - The information for this item is incorporated by reference to Note 8, "Commitments and Contingencies," in the financial statements[694](index=694&type=chunk) [Item 4. Mine Safety Disclosures](index=70&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[694](index=694&type=chunk) [PART II](index=70&type=section&id=PART%20II) Encompasses market information for common equity, management's discussion and analysis of financial performance, market risk disclosures, and financial statements [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=70&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Coherus's common stock is listed on The Nasdaq Global Market under the symbol "CHRS". As of February 28, 2023, there were approximately 26 stockholders of record. The company has never paid cash dividends and does not anticipate doing so in the foreseeable future. During the fourth quarter of 2022, no equity securities were repurchased by the company, although some shares were surrendered to satisfy tax obligations related to stock-based awards - The company's common stock trades on The Nasdaq Global Market under the ticker symbol "CHRS"[695](index=695&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[696](index=696&type=chunk) - No shares were repurchased by the company in Q4 2022. However, **15,364 shares** were surrendered by employees to cover tax withholding obligations from stock awards[726](index=726&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=71&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, Coherus reported net revenue of **$211.0 million**, a decrease from **$326.6 million in 2021**, primarily due to lower UDENYCA® sales and pricing pressure, partially offset by the launch of CIMERLI®. The company incurred a net loss of **$291.8 million**. Research and development expenses decreased significantly to **$199.4 million** from **$363.1 million in 2021**, mainly due to a large one-time licensing payment in the prior year. Selling, general, and administrative expenses increased to **$198.5 million**. The company ended the year with **$191.7 million** in cash, cash equivalents, and marketable securities, and believes it has sufficient capital to fund operations for at least the next twelve months Financial Performance Comparison (2022 vs. 2021) | Metric | 2022 (USD thousands) | 2021 (USD thousands) | Change (USD thousands) | | :--- | :--- | :--- | :--- | | Net Revenue | $211,042 | $326,551 | $(115,509) | | Cost of Goods Sold | $70,083 | $57,591 | $12,492 | | R&D Expense | $199,358 | $363,105 | $(163,747) | | SG&A Expense | $198,481 | $169,713 | $28,768 | | Net Loss | $(291,754) | $(287,100) | $(4,654) | - The decrease in net revenue was primarily driven by a lower number of UDENYCA® units sold and a reduction in net selling price due to competition. This was partially offset by **$6.9 million** in net revenue from the CIMERLI® launch in October 2022[796](index=796&type=chunk) - The significant decrease in R&D expense was mainly due to a **$145.0 million upfront payment** to Junshi Biosciences in 2021, compared to a smaller **$35.0 million option exercise payment** in 2022[782](index=782&type=chunk) - Cost of goods sold increased, and gross margin decreased from **82% in 2021 to 67% in 2022**, largely due to a **$26.0 million inventory write-down** for UDENYCA® inventory at risk of expiration[781](index=781&type=chunk)[798](index=798&type=chunk) - As of December 31, 2022, the company had **$191.7 million** in cash, cash equivalents, and marketable securities, and total debt obligations of **$471.1 million**[804](index=804&type=chunk) [Liquidity and Capital Resources](index=94&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's financial position, cash flow, debt, and ability to fund future operations - The company believes its existing cash, cash equivalents, marketable securities, and projected cash from product sales and its ATM offering will be sufficient to fund operations for at least the next **12 months**[826](index=826&type=chunk) Cash Flow Summary (2022 vs. 2021) | Cash Flow Activity | 2022 (USD thousands) | 2021 (USD thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(241,124) | $(37,432) | | Net cash used in investing activities | $(166,850) | $(138,410) | | Net cash provided by financing activities | $54,326 | $51,879 | - In 2022, the company secured a senior secured term loan facility of up to **$300.0 million**, drawing down **$250.0 million** across three tranches (A, B, and D)[733](index=733&type=chunk)[808](index=808&type=chunk) - The company established an At-The-Market (ATM) offering to sell up to **$150.0 million** of common stock. As of Dec 31, 2022, it had raised net proceeds of **$6.5 million** from this facility[757](index=757&type=chunk)[805](index=805&type=chunk) - As of December 31, 2022, the company had non-cancelable purchase commitments of **$68.8 million**[837](index=837&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=99&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk, credit risk, and foreign currency risk. Interest rate risk primarily affects its variable rate debt; a hypothetical 100 basis point increase could raise annual interest expense by up to $2.5 million. Credit risk is managed through a diverse investment policy and monitoring customer creditworthiness. Foreign currency risk is mainly from Euro-denominated purchases of CIMERLI® inventory and royalty payments - The company is exposed to interest rate risk on its **$250.0 million** in variable rate 2027 Term Loans. A hypothetical **100 basis point (1%) increase** in interest rates would increase annual interest expense by up to **$2.5 million**[876](index=876&type=chunk) - Credit risk is concentrated in cash, investments, and trade receivables. This risk is mitigated by investing in a diverse range of high-quality securities and monitoring customer credit[849](index=849&type=chunk)[875](index=875&type=chunk) - Foreign currency exchange risk exists due to Euro-denominated purchases and royalty payments for CIMERLI® from its partner Bioeq[877](index=877&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=100&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The audited consolidated financial statements for the year ended December 31, 2022, show total assets of **$480.8 million**, total liabilities of **$618.3 million**, and a total stockholders' deficit of **$137.4 million**. The company reported a net loss of **$291.8 million** for the year. Key notes detail revenue recognition policies, collaboration agreements with partners like Junshi Biosciences and Bioeq, debt obligations including term loans and convertible notes, and commitments for future manufacturing purchases Consolidated Balance Sheet Summary (as of Dec 31, 2022) | Account | Amount (USD thousands) | | :--- | :--- | | **Assets** | | | Cash, cash equivalents, and marketable securities | $191,681 | | Total Current Assets | $381,234 | | **Total Assets** | **$480,847** | | **Liabilities & Equity** | | | Total Current Liabilities | $138,694 | | Term loans & Convertible notes | $471,058 | | **Total Liabilities** | **$618,265** | | **Total Stockholders' Deficit** | **$(137,418)** | Consolidated Statement of Operations Summary (Year ended Dec 31, 2022) | Account | Amount (USD thousands) | | :--- | :--- | | Net Revenue | $211,042 | | Total Costs and Expenses | $467,922 | | Loss from Operations | $(256,880) | | **Net Loss** | **$(291,754)** | | **Net Loss Per Share (Basic & Diluted)** | **$(3.76)** | [Item 9A. Controls and Procedures](index=125&type=section&id=Item%209A.%20Controls%20and%20Procedures) Based on an evaluation as of December 31, 2022, the company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective. Management's annual report on internal control over financial reporting also concluded that these controls were effective. The independent registered public accounting firm, Ernst & Young LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[532](index=532&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO 2013 framework[1190](index=1190&type=chunk) - The independent auditor, Ernst & Young LLP, issued an unqualified opinion, stating that the company maintained effective internal control over financial reporting as of December 31, 2022[534](index=534&type=chunk) [PART III](index=129&type=section&id=PART%20III) Incorporates information on directors, executive compensation, security ownership, and related party transactions by reference to the proxy statement [Items 10, 11, 12, 13, and 14](index=129&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%2C%20and%2014) The information required for Items 10 through 14, which cover Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, Certain Relationships and Related Transactions, and Principal Accounting Fees and Services, is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders, to be filed with the SEC within 120 days of the fiscal year-end - Information for Part III (Items 10-14) is incorporated by reference from the company's definitive proxy statement, which will be filed with the SEC within **120 days** after the fiscal year ended December 31, 2022[540](index=540&type=chunk)[1172](index=1172&type=chunk) [PART IV](index=130&type=section&id=PART%20IV) Contains the list of exhibits and financial statement schedules filed with the annual report [Item 15. Exhibits and Financial Statement Schedules](index=130&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements filed under Item 8 and includes an index of all exhibits filed with or incorporated by reference into the Form 10-K. Key exhibits include corporate governance documents, material contracts such as license and loan agreements, and certifications by the CEO and CFO - This section contains the list of financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K[566](index=566&type=chunk)

Coherus BioSciences, Inc. (NASDAQ:CHRS) Q3 2022 Earnings Conference Call November 8, 2022 5:00 PM ET Company Participants Marek Ciszewski - Senior Vice President, Investor Relations Denny Lanfear - Chief Executive Officer Theresa Lavallee - Chief Development Officer Rosh Dias - Chief Medical Officer Paul Reider - Chief Commercial Officer McDavid Stilwell - Chief Financial Officer Conference Call Participants Salim Syed - Mizuho Douglas Tsao - HC Wainwright Georgi Yordanov - Cowen Steve Boland - Bank of Amer ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36721 Coherus BioSciences, Inc. (Exact name of registrant as specified in its charter) Delaware 27-3615821 (State or ot ...

Coherus BioSciences, Inc. (NASDAQ:CHRS) Q2 2022 Earnings Conference Call August 4, 2022 5:00 PM ET Company Participants Marek Ciszewski – Investor Relations Denny Lanfear – Chief Executive Officer Rosh Dias – Chief Medical Officer Paul Reider – Chief Commercial Officer McDavid Stilwell – Chief Financial Officer Conference Call Participants Ken Cacciatore – Cowen and Company Douglas Tsao – H.C. Wainwright & Company Jason Gerberry – Bank of America Ash Verma – UBS Operator Ladies and gentlemen, thank you for ...

PART I FINANCIAL INFORMATION [Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=ITEM%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents Coherus BioSciences' unaudited condensed consolidated financial statements as of June 30, 2022 [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2022, shows a decrease in total assets to $546.0 million from $679.3 million at the end of 2021, primarily due to a reduction in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $275,484 | $417,195 | | Total current assets | $446,784 | $602,323 | | Total assets | $546,003 | $679,334 | | **Liabilities & Stockholders' Equity (Deficit)** | | | | Total current liabilities | $140,754 | $165,327 | | Term loans | $196,037 | $75,513 | | Convertible notes | $224,928 | $332,767 | | Total liabilities | $568,632 | $581,608 | | Total stockholders' equity (deficit) | $(22,629) | $97,726 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss of $50.2 million for the three months ended June 30, 2022, and $146.2 million for the six-month period, driven by decreased revenue and R&D fluctuations Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $60,151 | $87,643 | $120,266 | $170,677 | | Total costs and expenses | $104,164 | $111,807 | $245,204 | $362,201 | | Loss from operations | $(44,013) | $(24,164) | $(124,938) | $(191,524) | | Net loss | $(50,150) | $(29,900) | $(146,234) | $(202,847) | | Basic and diluted net loss per share | $(0.65) | $(0.40) | $(1.89) | $(2.73) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $104.1 million for the six months ended June 30, 2022, resulting in a net decrease in cash of $141.7 million Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(104,082) | $1,179 | | Net cash used in investing activities | $(36,495) | $(261,890) | | Net cash (used in) provided by financing activities | $(1,134) | $49,291 | | **Net decrease in cash** | **$(141,711)** | **$(211,420)** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's strategy, revenue recognition, debt obligations, and significant collaborations, including the FDA approval of CIMERLI in August 2022 - The company's strategy is to develop and commercialize innovative cancer treatments funded with cash generated from its diversified portfolio of FDA-approved therapeutics[33](index=33&type=chunk) - On August 2, 2022, the FDA approved **CIMERLI** (ranibizumab-eqrn), a Lucentis biosimilar, with a commercial launch planned for October 2022[33](index=33&type=chunk)[123](index=123&type=chunk) - In March 2022, the company paid **$35.0 million** to exercise its option to license **CHS-006**, an anti-TIGIT antibody, from Junshi Biosciences[66](index=66&type=chunk) - In January and March 2022, the company drew down **$200 million** from new 2027 Term Loans to repay its 2025 Term Loan and 2022 Convertible Notes[80](index=80&type=chunk)[85](index=85&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance and strategic direction, highlighting decreased revenue, pipeline progress, and new debt financing [Overview and Business Update](index=38&type=section&id=Overview%20and%20Business%20Update) The company is a commercial-stage biopharmaceutical firm focused on funding its immuno-oncology franchise with cash from its FDA-approved biosimilars - The company's strategy is to build a leading immuno-oncology franchise funded with cash generated through net sales of its diversified portfolio of FDA-approved therapeutics[126](index=126&type=chunk) - The FDA approved **CIMERLI** (ranibizumab-eqrn) in August 2022 as a biosimilar interchangeable with Lucentis, with a commercial launch planned for early October 2022[127](index=127&type=chunk)[142](index=142&type=chunk) - The FDA accepted the resubmission of the BLA for **toripalimab** and set a PDUFA action date for December 23, 2022, with a launch planned for Q1 2023 if approved[127](index=127&type=chunk)[134](index=134&type=chunk) - In May 2022, the company discontinued development of **CHS-305**, an Avastin biosimilar candidate licensed from Innovent[127](index=127&type=chunk)[143](index=143&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) Net revenue decreased by $50.4 million for the six months ended June 30, 2022, primarily due to lower UDENYCA sales, while R&D expenses significantly decreased Comparison of Results (in thousands) | Line Item | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Net revenue | $120,266 | $170,677 | $(50,411) | | Cost of goods sold | $20,647 | $24,207 | $(3,560) | | Research and development | $124,528 | $258,258 | $(133,730) | | Selling, general and administrative | $100,029 | $79,736 | $20,293 | | Loss on debt extinguishment | $6,222 | $0 | $6,222 | - The decrease in R&D expense for the six months ended June 30, 2022, was primarily due to a **$145.0 million** upfront payment for the Junshi Biosciences collaboration in 2021, partially offset by a **$35.0 million** option exercise payment for **CHS-006** in 2022[175](index=175&type=chunk) - The increase in SG&A expense was primarily due to a **$17.6 million** increase in personnel, consulting, and marketing expenses to support product sales and upcoming launches[179](index=179&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2022, the company had $275.5 million in cash and $1.2 billion accumulated deficit, with new term loans and significant contingent milestone obligations - As of June 30, 2022, the company had cash and cash equivalents of **$275.5 million** and total debt obligations of **$421.0 million**[185](index=185&type=chunk)[187](index=187&type=chunk) - In January 2022, the company entered into a new senior secured term loan facility for up to **$300.0 million**, and has drawn **$200.0 million** as of March 31, 2022[191](index=191&type=chunk) - The company has potential future milestone payments of **$380.0 million** for **toripalimab** and **$255.0 million** for **CHS-006** to Junshi Biosciences, and **€12.5 million** to Bioeq for **CIMERLI**[202](index=202&type=chunk) - With the FDA approval of **CIMERLI** on August 2, 2022, the company will be required to pay Bioeq a milestone payment of **€2.5 million**, subject to certain manufacturing and supply criteria[202](index=202&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=65&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company is exposed to interest rate risk from its variable rate debt, with a hypothetical 100 basis point increase potentially raising annual interest expense by $2.0 million - The company has **$200.0 million** in variable rate debt outstanding under its 2027 Term Loans[222](index=222&type=chunk) - A hypothetical **100 basis point** increase in interest rates could increase annual interest expense by up to **$2.0 million**[224](index=224&type=chunk) [Controls and Procedures](index=67&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes in internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[225](index=225&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[228](index=228&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=68&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is evaluating a demand letter from Zinc Health Services, LLC, claiming approximately $14 million related to UDENYCA sales - In April 2022, Coherus received a demand letter from Zinc Health Services, LLC, asserting a claim for approximately **$14 million** related to **UDENYCA** sales from October 2020 through December 2021[115](index=115&type=chunk) - The company is evaluating the claim, has not made an accrual, and cannot reasonably estimate the potential loss, if any[115](index=115&type=chunk) [Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including limited profitability, product dependence, regulatory hurdles, manufacturing reliance, intellectual property litigation, and substantial debt obligations - The company has a limited history of profitability and may not achieve it again, having incurred a net loss of **$146.2 million** for the six months ended June 30, 2022[253](index=253&type=chunk) - The FDA's acceptance of clinical data generated outside the U.S., particularly from China for **toripalimab**, is a key risk, as the FDA may not accept the data, delaying development plans[234](index=234&type=chunk)[269](index=269&type=chunk) - The company faces significant competition for its biosimilar products from reference product manufacturers and other biosimilar companies, and for its immuno-oncology candidates from established players like **Merck** and **BMS**[239](index=239&type=chunk)[311](index=311&type=chunk)[316](index=316&type=chunk) - The company is highly dependent on third parties for manufacturing, clinical trials (CROs), and commercialization partnerships (e.g., **Junshi Biosciences**, **Bioeq**), exposing it to risks of non-performance, supply disruption, and regulatory non-compliance[244](index=244&type=chunk)[339](index=339&type=chunk)[345](index=345&type=chunk) - The company's debt agreements contain restrictive covenants, including a requirement to maintain minimum trailing twelve-month net sales, which starts at **$200 million** and increases over time[499](index=499&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=178&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase equity securities in Q2 2022, but 58,771 shares were surrendered to satisfy tax withholding obligations from stock-based awards - During Q2 2022, **58,771 shares** were surrendered to Coherus to satisfy tax withholding obligations from stock-based awards[587](index=587&type=chunk) [Exhibits](index=178&type=section&id=ITEM%206.%20Exhibits) This section provides an index of exhibits filed with the Quarterly Report on Form 10-Q, including an amendment to the Loan Agreement and required certifications - An amendment to the Loan Agreement dated April 7, 2022, was filed as an exhibit[590](index=590&type=chunk) - Certifications by the Principal Executive Officer and Principal Financial Officer as required by the Securities Exchange Act are included[590](index=590&type=chunk)

Coherus BioSciences, Inc. (NASDAQ:CHRS) Q1 2022 Earnings Conference Call May 5, 2022 4:30 PM ET Company Participants McDavid Stilwell - CFO Denny Lanfear - President, CEO, and Chairman Paul Reider - CCO Theresa LaVallee - CDO Conference Call Participants Balaji Prasad - Barclays Jason Gerberry - Bank of America Georgi Yordanov - Cowen and Company Operator Good day, and thank you for standing by. Welcome to the Coherus Biosciences Inc. First Quarter 2022 Earnings Conference Call. At this time, all participan ...