Coherus BioSciences, Inc. (NASDAQ:CHRS) Q4 2021 Earnings Conference Call February 17, 2022 5:00 PM ET Company Participants Denny Lanfear - President, Chief Executive Officer and Chairman McDavid Stilwell - Chief Financial Officer Paul Reider - Chief Commercial Officer Theresa LaVallee - Chief Development Officer Conference Call Participants Salim Syed - Mizuho Georgi Yordanov - Cowen and Company Chris Schott - JPMorgan Balaji Prasad - Barclays Jason Gerberry - Bank of America Merrill Lynch Douglas Tsao - H ...

Coherus BioSciences January 10, 2022 Copyright ©2022 All Rights Reserved. Forward Looking Statements Except for the historical information discussed today and contained herein, the matters discussed today and set forth in this presentation are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding achieving future cash flows in our biosimilar portfolio; our long term growth; ou ...

Financial Data and Key Metrics Changes - For Q3 2021, the company reported a net loss of $38.5 million on a GAAP basis, with cash flow from operating activities at $13.7 million [21] - Net product revenue was $83 million, a decrease from $88 million in the previous quarter [21] - Cost of goods sold (COGS) as a percentage of net revenue increased due to a write-off of $5.2 million related to inventory that did not meet acceptance criteria, but is expected to decline in Q4 to the mid-teens [22][23] Business Line Data and Key Metrics Changes - UDENYCA net sales were $83 million in Q3, down 6% from Q2, driven by an 8% decline in units sold [16] - Market share for UDENYCA declined from 19% in Q2 to 18% in Q3, with losses primarily in 340B hospitals [16] - Research and development expenses increased to $54.1 million from $38.9 million in the same period last year, reflecting costs to advance the late-stage pipeline [24] Market Data and Key Metrics Changes - The pegfilgrastim market is expected to return to low single-digit growth in Q4 after a modest decline in Q3 [16] - The branded Lucentis market is projected to be $1.3 billion in 2021, with the company preparing to launch its biosimilar [19] Company Strategy and Development Direction - The company aims to launch four products within two years, with a focus on oncology expansion [7] - Plans to launch the UDENYCA on-body injector and biosimilar Lucentis directly upon FDA approval [17][19] - The company is preparing for the commercialization of toripalimab, which has potential as a first-line treatment for nasopharyngeal carcinoma [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming year, anticipating significant revenue growth from new product launches and a diversified portfolio [27][45] - The company expects to leverage existing commercial operations for new launches, which should lead to increased profitability in 2023 [45][47] Other Important Information - The company received an extension for enhanced Medicare reimbursement for UDENYCA through year-end 2022 [15] - The FDA has accepted multiple BLAs for the company's products, with target action dates set for 2022 [9][10] Q&A Session Summary Question: Revenue profile for UDENYCA on-body injector - Management declined to provide specific timing for the on-body injector launch but acknowledged the potential for significant market share capture from Neulasta OnPro [31][32] Question: Pricing and market evolution for PD-1 market - Management indicated that pricing strategies will evolve as the market becomes more competitive, with a focus on doublet and triplet combinations for immuno-oncology [41][43] Question: Timing of profitability - Management believes 2023 will be a pivotal year for profitability as the diversified portfolio comes online [45][47] Question: UDENYCA business and competitive landscape - Management noted that competitive pricing pressures may lead to continued price declines in 2022, but they are focusing on higher-margin segments [51] Question: Lucentis biosimilar market strategy - The company plans to target high-volume Lucentis users while also considering the broader VEGF market [60]

PART I FINANCIAL INFORMATION [Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=ITEM%201%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Unaudited condensed consolidated financial statements for Q3 and nine months ended September 30, 2021 and 2020, including detailed notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased from **$841.6 million** to **$741.7 million**, driven by reduced cash, while liabilities increased and equity decreased Condensed Consolidated Balance Sheet Data (in thousands) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $360,540 | $541,158 | | Total current assets | $673,039 | $767,479 | | Total assets | $741,726 | $841,649 | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $320,348 | $145,653 | | Total liabilities | $610,966 | $560,675 | | Total stockholders' equity | $130,760 | $280,974 | | Total liabilities and stockholders' equity | $741,726 | $841,649 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net loss of **$38.5 million** for Q3 2021 and **$241.4 million** for nine months, driven by lower revenue and increased R&D expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net product revenue | $82,503 | $113,551 | $253,180 | $365,405 | | Research and development | $54,085 | $38,851 | $312,343 | $98,131 | | Selling, general and administrative | $39,925 | $31,984 | $119,661 | $101,386 | | (Loss) income from operations | $(32,787) | $33,716 | $(224,311) | $139,894 | | Net (loss) income | $(38,528) | $27,933 | $(241,375) | $122,536 | | Diluted net (loss) income per share | $(0.49) | $0.33 | $(3.22) | $1.52 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to **$14.9 million**, investing used **$245.9 million** (license fee), and financing provided less cash Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,890 | $121,021 | | Net cash used in investing activities | $(245,900) | $(224,457) | | Net cash provided by financing activities | $50,392 | $218,433 | | Net (decrease) increase in cash | $(180,618) | $114,997 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue recognition, collaboration agreements, and debt obligations - The company is a commercial-stage biotherapeutics company focused on biosimilars and immuno-oncology. Its commercial product is UDENYCA®, and its pipeline includes biosimilars for Humira, Lucentis, and Avastin, as well as the anti-PD-1 antibody toripalimab[42](index=42&type=chunk)[43](index=43&type=chunk) - In February 2021, the company entered into a collaboration with Junshi Biosciences for toripalimab, paying **$150.0 million upfront**. This was accounted for as an asset acquisition, with **$145.0 million recognized as R&D expense** in Q1 2021[79](index=79&type=chunk)[82](index=82&type=chunk) - The company has two series of convertible notes outstanding: **$100.0 million of 8.2% notes due in 2022** and **$230.0 million of 1.5% notes due in 2026**. It also has a **$75.0 million term loan**[89](index=89&type=chunk)[101](index=101&type=chunk)[111](index=111&type=chunk) - **Three customers**, McKesson, AmeriSourceBergen, and Cardinal Health, accounted for **40%**, **40%**, and **19% of revenue**, respectively, for the three months ended September 30, 2021[76](index=76&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=ITEM%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion covers financial results, business strategy, UDENYCA® performance, pipeline, liquidity, and debt [Overview](index=41&type=section&id=Overview) Coherus builds an immuno-oncology franchise funded by its biosimilar business, featuring UDENYCA® and key pipeline candidates - The company's strategy is to build a leading immuno-oncology franchise funded by cash from its commercial biosimilar business[137](index=137&type=chunk) - The FDA has granted **Priority Review** for the toripalimab BLA for nasopharyngeal carcinoma (NPC), with a **PDUFA target action date of April 2022**[139](index=139&type=chunk)[143](index=143&type=chunk) - A BLA for the adalimumab (Humira) biosimilar candidate (CHS-1420) was accepted for review by the FDA in February 2021, with a **user fee goal date in December 2021**. A potential launch is anticipated on or after **July 1, 2023**[148](index=148&type=chunk) - The BLA for the ranibizumab (Lucentis) biosimilar candidate (CHS-201), licensed from Bioeq, was accepted for review by the FDA with an **August 2022 target action date**[150](index=150&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) Detailed comparison of Q3 and nine-month financial results, analyzing revenue, COGS, R&D, and SG&A, noting lower UDENYCA® sales and increased R&D Net Product Revenue Comparison (in thousands) | Period | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30 | $82,503 | $113,551 | $(31,048) | | Nine Months Ended Sep 30 | $253,180 | $365,405 | $(112,225) | - The decrease in net product revenue was primarily due to a decrease in the number of units of UDENYCA® sold[178](index=178&type=chunk) - R&D expenses for the nine months ended Sep 30, 2021, increased by **$214.2 million to $312.3 million**, primarily due to a **$145.0 million license fee for toripalimab** and **$38.2 million in related co-development costs**[188](index=188&type=chunk) - Gross margin decreased from **92% to 74%** for the third quarter and from **93% to 82%** for the nine-month period, year-over-year. This was due to the full recognition of manufacturing costs in COGS (as pre-approval inventory was depleted by March 31, 2021) and a **$5.2 million inventory write-off** in Q3 2021[183](index=183&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2021, the company had **$360.5 million** cash and **$108.2 million** marketable securities, sufficient for 12 months, with debt and cash flow analysis - As of September 30, 2021, the company had **$360.5 million in cash and cash equivalents** and **$108.2 million in investments in marketable securities**[199](index=199&type=chunk) - Management believes current cash, investments, and revenue will be sufficient to fund planned expenditures for at least the **next 12 months**[199](index=199&type=chunk) - Net cash provided by operating activities for the first nine months of 2021 was **$14.9 million**, a significant decrease from **$121.0 million** in the same period of 2020[214](index=214&type=chunk)[215](index=215&type=chunk) - Net cash used in investing activities was **$245.9 million**, primarily due to a **$145.0 million upfront license fee paid to Junshi Biosciences** and purchases of marketable securities[223](index=223&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=ITEM%203%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) Market risk exposure, primarily interest rate risk on cash and marketable securities, is deemed not significant due to short-term investments - The company's primary market risk exposure is to interest rate fluctuations on its cash, cash equivalents, and marketable securities, which totaled **$468.7 million** as of September 30, 2021[230](index=230&type=chunk) - Due to the short-term duration of its investments, management believes the exposure to interest rate risk is not significant and that a **1% movement in market interest rates** would not have a significant impact on the portfolio's value[230](index=230&type=chunk) [Controls and Procedures](index=66&type=section&id=ITEM%204%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2021, with no material changes in internal control - The company's management, including the CEO and CFO, evaluated and concluded that the disclosure controls and procedures were **effective as of September 30, 2021**[231](index=231&type=chunk) - There were no changes in internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[234](index=234&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=69&type=section&id=ITEM%201.%20Legal%20Proceedings) The company reports no material legal proceedings as of the report date - As of the report date, Coherus is not a party to any material legal proceedings[238](index=238&type=chunk) [Risk Factors](index=69&type=section&id=ITEM%201A.%20Risk%20Factors) This section outlines key risks affecting the company's business, including COVID-19, UDENYCA® success, collaborator reliance, regulatory hurdles, competition, manufacturing, IP, and financial risks - The COVID-19 pandemic could harm the business by decreasing sales of UDENYCA®, delaying clinical trials, and disrupting supply chains[240](index=240&type=chunk)[255](index=255&type=chunk) - The company faces significant competition for its products from reference product manufacturers (e.g., Amgen, AbbVie) and other biosimilar developers (e.g., Sandoz, Pfizer, Mylan)[244](index=244&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk) - The business is subject to a multitude of manufacturing risks and relies on third-party manufacturers, including single suppliers for critical services, which could lead to supply disruptions[249](index=249&type=chunk)[354](index=354&type=chunk)[358](index=358&type=chunk) - The company is heavily dependent on the development and success of its product candidates and may be prevented or delayed from commercialization by third-party intellectual property claims and litigation[251](index=251&type=chunk)[252](index=252&type=chunk)[383](index=383&type=chunk) - The company relies on collaborators like Junshi Biosciences, Bioeq, and Innovent for the development, manufacturing, and regulatory data for its in-licensed product candidates[241](index=241&type=chunk)[349](index=349&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=166&type=section&id=ITEM%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is reported as not applicable - Not applicable[560](index=560&type=chunk) [Exhibits](index=166&type=section&id=ITEM%206.%20Exhibits) This section provides an index of exhibits filed with the Quarterly Report on Form 10-Q, including CEO/CFO certifications and iXBRL financial statements - Exhibits filed with the report include certifications from the Principal Executive Officer (**31.1**) and Principal Financial Officer (**31.2**, **32.1**)[563](index=563&type=chunk) - The report includes financial data formatted in inline eXtensible Business Reporting Language (iXBRL)[564](index=564&type=chunk)

Study Overview - JUPITER-06 is a randomized, double-blind, Phase 3 study evaluating Toripalimab plus chemotherapy versus placebo plus chemotherapy for treatment-naive advanced or metastatic Esophageal Squamous Cell Carcinoma (ESCC) [1] - The study included 257 patients in each arm (Toripalimab + Chemotherapy vs Placebo + Chemotherapy) [14] Efficacy Results - The addition of Toripalimab to paclitaxel + cisplatin (TP) chemotherapy showed superior Progression-Free Survival (PFS) compared to TP chemotherapy alone, with a median PFS of 5.7 months versus 5.5 months (HR=0.58, P<0.00001) [25, 16] - The addition of Toripalimab to paclitaxel + cisplatin (TP) chemotherapy showed superior Overall Survival (OS) compared to TP chemotherapy alone, with a median OS of 17.0 months versus 11.0 months (HR=0.58, P=0.00036) [25, 20] - The 1-year Progression-Free Survival Rate was 27.8% in the Toripalimab + Chemo arm versus 6.1% in the Placebo + Chemo arm [16] - The 1-year Overall Survival Rate was 66.0% in the Toripalimab + Chemo arm versus 43.7% in the Placebo + Chemo arm [20] - The 2-year Overall Survival Rate was Not estimable in the Toripalimab + Chemo arm versus 17.5% in the Placebo + Chemo arm [20] Safety - Any Treatment-Related Adverse Events (TRAEs) occurred in 97.3% of patients in both the Toripalimab + Chemotherapy and Placebo + Chemotherapy arms [22] - Grade ≥3 TRAEs occurred in 64.6% of patients in the Toripalimab + Chemotherapy arm versus 56.0% in the Placebo + Chemotherapy arm [22] - Immune-related Adverse Events occurred in 37.0% of patients in the Toripalimab + Chemotherapy arm versus 26.5% in the Placebo + Chemotherapy arm [22]

Coherus BioSciences August 2021 Copyright ©2021 All Rights Reserved. Forward Looking Statements Except for the historical information contained herein, the matters set forth in this primer are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, the risk that the parties are unable to obtain clearance under the Hart-Scott Rodino Antitrust Improvements Act, from the Committee on Foreign Investment ...

Financial Data and Key Metrics Changes - For Q2 2021, the company reported a net loss of $29.9 million on a GAAP basis, with cash flow from operating activities being nearly breakeven at negative $200,000 [25][31] - Net product revenue for UDENYCA was $88 million, an increase from $83 million in the previous quarter, while the cost of goods as a percentage of net revenues increased from the prior quarter [26][27] - The company expects gross margins of around 85% for the full year 2021, with a projection to return to 90% or higher starting in 2024 [28][54] Business Line Data and Key Metrics Changes - UDENYCA's market share declined from 20% to 19% quarter-to-quarter, with wholesaler inventory remaining stable [8][22] - The company anticipates launching four new products in the U.S. over the next two years, expanding its diversified product portfolio [7][34] - The biosimilar pipeline, including candidates for Lucentis, Humira, and Avastin, addresses a combined market opportunity of $28 billion [10][11] Market Data and Key Metrics Changes - The pegfilgrastim market grew approximately 2% quarter-to-quarter, with UDENYCA's share declining primarily from the least profitable segment [22] - The company expects modest revenue growth in the second half of 2021, driven by stability in average selling prices (ASP) compared to competitors [23] Company Strategy and Development Direction - The company is transitioning from a single product biosimilar company to a diversified biopharma company with multiple oncology assets [6][34] - The focus remains on the immuno-oncology market, with toripalimab as a foundational asset, and the company is open to exploring non-immuno-oncology assets [20][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating uncertainties related to COVID-19 and pricing pressures from competitors [23][47] - The company anticipates significant clinical data announcements and regulatory milestones in the coming months [34] Other Important Information - The company received $50 million from Junshi Biosciences for common stock associated with the toripalimab licensing transaction [31] - Research and development expenses for Q2 2021 were $54.8 million, reflecting costs to advance the late-stage pipeline [29] Q&A Session Summary Question: UDENYCA market dynamics and pricing - Management noted that while Amgen is pushing prices down, they are focused on maintaining their ASP and taking market share from the originator [36][37] Question: Commercial build-out for CHS-1420 - The company is conducting market research for sales force structure but does not anticipate substantial increases in commercialization efforts [39][40] Question: ZIEXTENZO market share dynamics - Management indicated that ZIEXTENZO's share gains are primarily from the least profitable segment, and their focus remains on taking share from Onpro [42][44] Question: ASP stability and competitive dynamics - Management confirmed that ASP is currently stable but may change in future quarters due to competitive pricing behavior [46][47] Question: Interchangeability with Humira and market penetration - Management believes that the lack of interchangeability will not significantly impede market penetration and expects to achieve a 10% market share for the Humira biosimilar [52][53]

Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered 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 June 30, 2021 ☐ 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 ...

Financial Data and Key Metrics Changes - For Q1 2021, the company reported a net loss of $173 million on a GAAP basis, while on a non-GAAP basis, it reported a net income of $400,000 or approximately $0.01 per share [52][53] - Net product revenue for UDENYCA was $83 million, a decline from $110 million in Q4 2020 and $116 million in Q1 2020, primarily due to seasonal fluctuations in wholesale inventory and increased allowances and discounts [8][54] - Research and development expenses increased to $203.5 million from $33.1 million in the same period last year, mainly due to a $145 million upfront payment to Junshi Biosciences and other development costs [55] Business Line Data and Key Metrics Changes - UDENYCA maintained a market share of 20%, which remained flat compared to the previous quarter, while the overall pegfilgrastim market grew by 1% [8][10] - The company anticipates revenue growth in the second half of 2021 as treatment patterns normalize post-COVID and pricing trends stabilize [61] Market Data and Key Metrics Changes - The overall pegfilgrastim market experienced a 1% growth in Q1 2021, while UDENYCA's average selling price (ASP) declined by 6% compared to Q4 2020 [8][10] - The company expects to capture at least 10% market share in new biosimilar markets, including Lucentis, Humira, and Avastin, which collectively represent a $28 billion market opportunity [19][20] Company Strategy and Development Direction - The company is focusing on diversifying and growing revenues through investments in biosimilars and immuno-oncology products, leveraging cash flows from biosimilars to enter the $25 billion immuno-oncology market [6][20] - The collaboration with Junshi Biosciences for toripalimab is seen as a transformational step into the immuno-oncology market, with plans for multiple regulatory submissions and clinical trials [28][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about UDENYCA's market share growth as COVID-19 recedes, with expectations for increased sales in the second half of 2021 [61] - The company is preparing for the potential launch of toripalimab and other biosimilars, with significant clinical data and regulatory milestones expected in the coming months [62] Other Important Information - The company ended Q1 2021 with cash, cash equivalents, and marketable securities of $399.5 million, down from $541.2 million at the end of 2020 [57] - The company is increasing its expected operating expenses for 2021 to a range of $370 million to $400 million, excluding the upfront payment to Junshi Biosciences [58][59] Q&A Session Summary Question: Impact of severe weather on Q1 results - Management indicated that while severe weather was a factor, the primary impacts were from inventory changes and pricing pressures [64][66] Question: Demand expectations for UDENYCA - Management suggested that demand could be around $100 million for the first quarter, factoring in inventory adjustments [64][67] Question: Toripalimab's interim data and BLA submission - Management believes the interim data is sufficient for a BLA submission, with no additional studies anticipated [70][71] Question: Normalization of pegfilgrastim usage - Management expects a shift away from Onpro as COVID recedes, which could benefit UDENYCA [77][78] Question: Pricing dynamics for pegfilgrastim - Management noted ongoing pricing erosion but anticipates stabilization as competition increases [79][80] Question: Interchangeability status for biosimilars - Management has not pursued interchangeable status but is open to considering it in the future [111][112]

[PART I FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section provides the company's unaudited financial statements, management's analysis of financial performance, market risk disclosures, and internal control evaluations [Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=ITEM%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's unaudited financial statements, detailing a net loss of **$172,947 thousand** and significant shifts in assets and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $259,489 | $541,158 | | Total current assets | $617,261 | $767,479 | | Total assets | $693,303 | $841,649 | | Total current liabilities | $257,601 | $145,653 | | Total liabilities | $565,632 | $560,675 | | Total stockholders' equity | $127,671 | $280,974 | Condensed Consolidated Statement of Operations (in thousands, except per share data) | Income Statement Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net product revenue | $83,034 | $116,180 | | Total operating expenses | $250,394 | $75,312 | | (Loss) income from operations | $(167,360) | $40,868 | | Net (loss) income | $(172,947) | $35,572 | | Basic net (loss) income per share | $(2.37) | $0.50 | | Diluted net (loss) income per share | $(2.37) | $0.48 | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,367 | $13,477 | | Net cash used in investing activities | $(285,475) | $(1,616) | | Net cash provided by financing activities | $2,439 | $3,923 | | Net (decrease) increase in cash | $(281,669) | $15,784 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies, significant events like the **$150,000 thousand** toripalimab license, and the company's debt structure - Coherus is a commercial-stage biotherapeutics company focused on the **biosimilar and immuno-oncology market** Its commercial product is **UDENYCA®** (pegfilgrastim-cbqv), and its pipeline includes biosimilars for Humira, Lucentis, and Avastin, as well as the anti-PD-1 antibody toripalimab[34](index=34&type=chunk)[35](index=35&type=chunk) - In February 2021, the company entered into a collaboration with Shanghai Junshi Biosciences for toripalimab, paying a **$150,000 thousand upfront fee** This was accounted for as an asset acquisition, with **$145,000 thousand recognized as R&D expense** in Q1 2021[72](index=72&type=chunk)[73](index=73&type=chunk)[75](index=75&type=chunk) - The company discontinued the development of CHS-2020, a biosimilar of Eylea®, in February 2021 This resulted in an **impairment charge of $3,200 thousand** for prepaid manufacturing and an **$8,300 thousand expense** for purchase order cancellations, both recognized within R&D expenses[64](index=64&type=chunk) Debt Structure as of March 31, 2021 (in thousands) | Debt Instrument | Net Carrying Amount | | :--- | :--- | | 1.5% Convertible Notes due 2026 | $223,341 | | 8.2% Convertible Notes due 2022 | $106,987 | | Term Loan | $74,696 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2021 financial results, noting a **$33,146 thousand** revenue decrease and a **$170,385 thousand** R&D expense increase, while confirming sufficient liquidity - The company is investing cash flows from its commercial biosimilar business (UDENYCA®) to build a leading **immuno-oncology franchise**, highlighted by the in-licensing of toripalimab from Junshi Biosciences[147](index=147&type=chunk) Comparison of Operating Results (in thousands) | Metric | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | Net product revenue | $83,034 | $116,180 | $(33,146) | | Cost of goods sold | $7,511 | $6,855 | $656 | | Research and development | $203,492 | $33,107 | $170,385 | | Selling, general and administrative | $39,391 | $35,350 | $4,041 | - The significant increase in R&D expense was primarily due to a **$145,000 thousand upfront license fee** for the collaboration with Junshi Biosciences, compared to a $5,000 thousand fee to Innovent in the prior-year period[187](index=187&type=chunk) - As of March 31, 2021, the company had **$259,489 thousand in cash and cash equivalents** and **$140,000 thousand in marketable securities** Management believes this is **sufficient to fund planned expenditures for at least the next 12 months**[198](index=198&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section addresses the company's market risk exposure, primarily interest rate risk on its **$399,500 thousand** investment portfolio, deemed insignificant - As of March 31, 2021, the company's primary market risk is interest rate risk on its **$399,500 thousand** in cash, cash equivalents, and marketable securities Management considers this risk to be **insignificant** due to the short-term nature of the investments[224](index=224&type=chunk) [Controls and Procedures](index=63&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The company's CEO and CFO concluded that disclosure controls and procedures were **effective** as of the end of the period covered by the report[225](index=225&type=chunk) - There were **no changes** in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[230](index=230&type=chunk) [PART II OTHER INFORMATION](index=66&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides disclosures on legal proceedings and a comprehensive overview of the company's significant risk factors [Legal Proceedings](index=66&type=section&id=ITEM%201.%20Legal%20Proceedings) The company reports no material legal proceedings as of the report date - As of the report date, the company is **not a party to any material legal proceedings**[233](index=233&type=chunk) [Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks including COVID-19 impacts, reliance on UDENYCA®, intense competition, development hurdles, intellectual property litigation, and third-party dependencies - The COVID-19 pandemic poses a **significant risk** to the business, potentially decreasing sales of UDENYCA®, delaying clinical trials, and disrupting supply chains[235](index=235&type=chunk)[247](index=247&type=chunk) - The company faces **intense competition** for UDENYCA® from the reference product (Neulasta®) and other biosimilars, which could prevent significant market penetration and harm financial results[237](index=237&type=chunk)[302](index=302&type=chunk)[307](index=307&type=chunk) - The business is **highly dependent on third parties** for conducting clinical trials and manufacturing products Failure by these third parties to perform could substantially harm development and commercialization efforts[240](index=240&type=chunk)[331](index=331&type=chunk)[336](index=336&type=chunk) - The company is exposed to **risks of infringing third-party intellectual property rights**, which could lead to costly litigation and delay or prevent the commercialization of its product candidates[243](index=243&type=chunk)[378](index=378&type=chunk) - The development of biosimilars is subject to a **complex and evolving regulatory pathway** (BPCIA), which includes an elaborate patent dispute mechanism that could significantly delay or prevent product launches[408](index=408&type=chunk)[439](index=439&type=chunk)