Coherus BioSciences, Inc. (NASDAQ:CHRS) Q4 2019 Earnings Conference Call February 27, 2020 4:30 PM ET Company Participants David Arrington - Vice President of Investor Relations & Corporate Affairs Dennis Lanfear - Chief Executive Officer Jean Viret - Chief Financial Officer Vince Anicett - Chief Operating Officer Thomas Fitzpatrick - Chief Legal Officer Conference Call Participants Mohit Bansal - Citigroup Douglas Tsao - H.C. Wainwright Mike Wolff - Baird Ekaterina Knyazkova - JP Morgan Chase & Co Salim Sy ...

Market Overview - UDENYCA® (pegfilgrastim-cbqv) initiated U.S. sales in January 2019, with 2019 U.S. sales for all pegfilgrastim products estimated at $3.2 billion, capturing a 20.5% market share[56]. - The total U.S. sales for pegfilgrastim, bevacizumab, and rituximab products reached approximately $10.8 billion in 2019[54]. - The global market opportunity for biosimilars is expected to grow significantly due to patent expirations of top-grossing biologic drugs and increased demand for high-quality biosimilars[50]. - Avastin achieved approximately $3.2 billion in U.S. sales in 2019, with the company acquiring commercialization rights for Innovent's Avastin biosimilar in January 2020[58]. - Rituxan had estimated U.S. sales of approximately $4.4 billion in 2019, and the company has the option to license Innovent's Rituxan biosimilar in the U.S. and Canada[60]. - The U.S. market opportunity for Lucentis and Eylea combined was estimated at $6.4 billion in 2019, with Lucentis achieving approximately $1.8 billion in U.S. sales[62][63]. - Eylea generated approximately $4.6 billion in U.S. sales in 2019, with the company developing CHS-2020 as an aflibercept biosimilar candidate[65][64]. - Humira's U.S. sales reached approximately $14.8 billion in 2019, with the company expecting CHS-1420 to achieve sales between $500 million to $1.0 billion in the U.S. if approved[68]. - Enbrel's estimated U.S. sales were approximately $5.0 billion in 2019, but the company does not expect to commercialize CHS-0214 in the U.S. before 2028 or 2029 due to patent restrictions[70]. Product Development and Regulatory Approvals - The company anticipates a U.S. commercial launch of CHS-2020 (aflibercept biosimilar) in 2025, following a Phase 3 study initiation in 2021[44]. - The company plans to submit a 351(k) BLA for CHS-1420 (adalimumab biosimilar) in 2020, with a potential launch date on or after July 1, 2023[46]. - The company expects to perform a three-way pharmacokinetic study for the bevacizumab biosimilar prior to submitting a BLA in late 2020 or early 2021[39]. - The Bioeq ranibizumab biosimilar candidate met its primary endpoint in a Phase 3 study but has delayed its BLA submission due to additional manufacturing data requests from the FDA[41]. - The FDA approval process for drugs and biologics is extensive and subject to regulatory changes, impacting product development timelines[112]. - An IND application must be effective before U.S. clinical trials can begin, with a mandatory 30-day waiting period for FDA review[115]. - Clinical trials are conducted in three phases: Phase 1 focuses on safety and dosage, Phase 2 evaluates efficacy and safety in a limited patient population, and Phase 3 assesses overall risk-benefit in a larger population[118]. - The FDA may issue an approval letter for a BLA or NDA, allowing commercial marketing, or a complete response letter indicating that the application is not ready for approval[127]. - The Biologics Price Competition and Innovation Act of 2009 created an abbreviated approval pathway for biosimilars, aiming to reduce development costs and increase patient access[130]. - A biosimilar application must demonstrate biosimilarity through analytical studies, animal studies, and clinical studies[130]. - The FDA requires that the manufacturing processes for both original and biosimilar products comply with cGMP requirements to ensure consistent quality[127]. - The FDA approval for a biosimilar is subject to a 12-year exclusivity period from the first licensure of the reference product[135]. - The first interchangeable biological product receives exclusivity until one year after its commercial marketing or 18 months after a patent infringement suit resolution[136]. - Post-approval marketing of biologics is heavily regulated, with potential penalties for non-compliance including warning letters and pre-clearance requirements[137]. - Manufacturers must maintain compliance with cGMPs, and failure to do so can lead to product recalls or withdrawal of approvals[141]. Financial Performance - For the year ended December 31, 2019, the company reported a net income of $89.8 million, a significant turnaround from net losses of $238.3 million and $209.4 million in 2017 and 2018, respectively[168]. - As of December 31, 2019, the company had an accumulated deficit of $895.0 million, primarily due to substantial investments in product development[168]. - As of December 31, 2019, the company had cash and cash equivalents of $177.7 million, expected to fund operations for the foreseeable future[177]. - The company has incurred significant expenses related to the development of its product candidates, which may increase substantially as it establishes sales and marketing infrastructure[173]. - Future revenue will depend on the market acceptance and pricing of UDENYCA® and other product candidates, as well as reimbursement from third-party payers[172]. - The company faces risks related to its ability to maintain profitability and may need to seek additional funding sooner than planned[179]. - The company has a limited operating history in an emerging regulatory environment, which poses substantial risks to its business[168]. Strategic Partnerships and Agreements - The company has entered into a license agreement with Innovent for the development and commercialization of a bevacizumab biosimilar in the U.S. and Canada[38]. - Coherus entered into license agreements with Selexis SA, with total milestone payments up to €420,000 for two biosimilar products[92]. - The Bioeq Agreement includes an upfront payment of €5.0 million and future milestone payments of up to €25.0 million for the ranibizumab biosimilar[98]. - The Innovent Agreement involves an upfront payment of $5.0 million and up to $40.0 million in milestone payments for the bevacizumab biosimilar[102]. - The Bioeq Agreement's initial term lasts for ten years after the first commercial sale of a licensed product, with potential for unlimited renewal[99]. - Coherus is obligated to share a percentage of gross profits on sales of Bioeq Licensed Products in the low to mid fifty percent range[98]. Market Challenges and Compliance - The company faces significant uncertainty regarding reimbursement status for newly approved therapeutics due to third-party payer scrutiny[155]. - Recent legislative changes have proposed aggregate reductions of Medicare payments to providers by 2% per fiscal year[159]. - Heightened scrutiny over drug pricing has led to Congressional inquiries and proposed legislation for greater transparency in pricing[160]. - The company must navigate complex compliance requirements across multiple jurisdictions, increasing the risk of potential violations[153]. - The third-party coverage and reimbursement status for UDENYCA® is uncertain, and failure to obtain adequate coverage could limit marketing capabilities and revenue generation[193]. - Effective January 2019, CMS assigned a product-specific Q-Code to UDENYCA®, which is necessary for reimbursement, but coverage is not guaranteed and may vary[197]. - The company faces significant uncertainty regarding pricing and reimbursement in international markets due to governmental price controls and cost-containment initiatives[198]. - Increasing efforts by payers to control healthcare costs may limit coverage and reimbursement for UDENYCA® and other product candidates, potentially affecting sales[199]. - Regulatory approvals may come with limitations on indicated uses and requirements for additional clinical trials, impacting commercialization efforts[203]. - The company must comply with extensive regulatory requirements, including Good Manufacturing Practices (cGMP), to maintain product approvals and avoid penalties[201]. - Any failure to comply with regulatory requirements could adversely affect the company's ability to commercialize products and generate revenue[205].

Financial Data and Key Metrics Changes - Net product revenue for Q3 2019 was $111.7 million, representing an annual run rate of nearly $450 million [21] - Gross profit margin for Q3 2019 was 94%, with cost of goods sold at $6.4 million [21] - Net income for Q3 2019 was $47 million, or $0.63 per share, compared to a net loss of $58.8 million, or a loss of $0.87 per share, for the same period in 2018 [25] Business Line Data and Key Metrics Changes - UDENYCA achieved a 20% unit market share in Q3 2019, one quarter ahead of guidance, with expectations for further growth in Q4 [5][7] - The average selling price of UDENYCA declined by approximately 3% quarter-over-quarter, consistent with a 2% decline for Neulasta [7] - The company expects to launch its CHS-1420 Humira biosimilar in mid-2023, targeting a $15 billion market [18][19] Market Data and Key Metrics Changes - The anti-VEGF ophthalmology market is valued at $6 billion, with the Lucentis market being approximately $2 billion [14][15] - The pegfilgrastim marketplace has shown growth, suggesting increased patient access due to biosimilar entrants [9] Company Strategy and Development Direction - The company is focusing on expanding its portfolio into ophthalmology with a licensing agreement for a Lucentis biosimilar, aiming for a 2021 launch [10][14] - The strategy includes leveraging existing commercial infrastructure and expertise from oncology to support the new ophthalmology franchise [16][17] - The company plans to invest cash generated from UDENYCA into additional external product growth opportunities [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving solid financial results and continued growth for UDENYCA, with expectations for a 20% or greater growth in 2020 [26][36] - The company views the current operating environment as favorable for biosimilar adoption, particularly in the inflammation therapeutic area [19] Other Important Information - The company announced a license and settlement agreement with Pfizer related to adalimumab formulations, although details remain confidential [21][45] - Cash and cash equivalents increased to $170.5 million as of September 30, 2019, up from $111.9 million at June 30, 2019 [24] Q&A Session Summary Question: Are there any IP issues with the Lucentis opportunity? - Management indicated there are no unique IP issues and characterized the intellectual property profile of Lucentis as well constrained [31][33] Question: How should R&D spending be viewed going forward? - Management expects R&D spending for Eylea to be around $150 million over three years, similar to the allocation for Lucentis [34][35] Question: What are the expectations for UDENYCA's market share exiting 2019? - Management has not revised guidance for 2019 but expects continued growth in Q4 and a 20% or greater growth in 2020 [36][37] Question: How might new competitors affect the marketplace? - Management acknowledged the expectation of additional competitors but emphasized their strategies to defend market share and the value proposition of their offerings [39][43] Question: Can you provide context around the settlement with Pfizer? - Management stated that the details of the agreement are confidential and did not comment on ongoing conversations with other companies [45][46] Question: What is the manufacturing readiness for the Lucentis product? - Management confirmed that manufacturing must be ready at the time of filing and that they expect to approach the market with a robust supply strategy [49][51] Question: What is the competitive landscape for Lucentis? - Management anticipates at least one other potential biosimilar competitor but does not expect a large number of market entrants due to the complexity of the molecules [58]

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS [Forward-Looking Statements Overview](index=3&type=section&id=Forward-Looking%20Statements%20Overview) This section outlines forward-looking statements in the Form 10-Q, highlighting inherent risks and uncertainties in business, operations, and financial performance. - Forward-looking statements include expectations regarding increasing sales for UDENYCA® in the U.S. and commercialization in Europe[7](index=7&type=chunk) - The company's ability to obtain domestic or global regulatory approvals for product candidates like CHS-1420 (adalimumab biosimilar), CHS-0214 (etanercept biosimilar), and CHS-131 (therapeutic small molecule) is a forward-looking statement[7](index=7&type=chunk) - Financial performance, including maintaining profitability, gross margins, and R&D/SG&A expenses for 2019 and future years, are considered forward-looking statements[9](index=9&type=chunk) PART I. FINANCIAL INFORMATION [ITEM 1. Unaudited Condensed Consolidated Financial Statements](index=5&type=section&id=ITEM%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents Coherus BioSciences' unaudited condensed consolidated financial statements, including balance sheets, operations, and cash flows. [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | (in thousands) | June 30, 2019 | December 31, 2018 | | :--------------- | :------------ | :---------------- | | Cash and cash equivalents | $105,927 | $72,356 | | Investments in marketable securities | $5,991 | $— | | Trade receivables, net | $77,385 | $— | | Inventory | $4,333 | $1,659 | | Total current assets | $205,630 | $84,433 | | Total assets | $240,456 | $99,467 | | Total current liabilities | $61,226 | $33,261 | | Total liabilities | $244,441 | $138,058 | | Total stockholders' deficit | $(3,985) | $(38,591) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in thousands, except share and per share data) | (in thousands, except share and per share data) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net product revenue | $83,433 | $— | $120,531 | $— | | Cost of goods sold | $601 | $— | $2,826 | $— | | Research and development | $18,883 | $26,519 | $37,672 | $51,974 | | Selling, general and administrative | $36,456 | $18,391 | $69,139 | $34,968 | | Income (loss) from operations | $27,493 | $(44,910) | $10,894 | $(86,942) | | Net income (loss) attributable to Coherus | $23,567 | $(43,638) | $3,563 | $(87,935) | | Basic net income (loss) per share | $0.34 | $(0.68) | $0.05 | $(1.42) | | Diluted net income (loss) per share | $0.32 | $(0.68) | $0.05 | $(1.42) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | (in thousands) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $23,567 | $(43,685) | $3,563 | $(87,987) | | Other comprehensive income (loss): | | | | | | Foreign currency translation adjustments, net of tax | $(93) | $226 | $(229) | $213 | | Comprehensive income (loss) attributable to Coherus | $23,474 | $(43,411) | $3,334 | $(87,722) | [Condensed Consolidated Statements of Stockholders' Deficit](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Deficit) Condensed Consolidated Statements of Stockholders' Deficit (in thousands) | (in thousands) | Balances at December 31, 2018 | Balances at June 30, 2019 | | :--------------- | :---------------------------- | :------------------------ | | Common Shares | 68,302,681 | 69,627,148 | | Common Stock Amount | $7 | $7 | | Additional Paid-In Capital | $946,515 | $977,787 | | Accumulated Other Comprehensive Loss | $(282) | $(511) | | Accumulated Deficit | $(984,831) | $(981,268) | | Total Stockholders' Deficit | $(38,591) | $(3,985) | - Net income for the six months ended June 30, 2019, was **$3,563 thousand**, contributing to a reduction in accumulated deficit[16](index=16&type=chunk)[22](index=22&type=chunk) - Issuance of common stock from offerings, stock option exercises, RSU vesting, and ESPP purchases contributed to an increase in Additional Paid-In Capital[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(44,306) | $(69,114) | | Net cash used in investing activities | $(6,381) | $(29,785) | | Net cash provided by financing activities | $84,487 | $101,770 | | Net increase in cash, cash equivalents and restricted cash | $33,571 | $3,084 | | Cash, cash equivalents and restricted cash at end of period | $106,762 | $130,840 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Organization and Operations](index=12&type=section&id=Note%201.%20Organization%20and%20Operations) This note describes Coherus BioSciences as a commercial-stage biotherapeutics company, highlighting UDENYCA® approvals, sales, and liquidity. - Coherus BioSciences, Inc. is a commercial-stage biotherapeutics company focused on the global biosimilar market[34](index=34&type=chunk) - UDENYCA® received regulatory approval from the European Commission on September 25, 2018, and from the U.S. FDA on November 2, 2018, with U.S. sales beginning on January 3, 2019[35](index=35&type=chunk) - As of June 30, 2019, the company had an accumulated deficit of **$981.3 million** and cash, cash equivalents, and short-term investments of **$111.9 million**, believing current resources are sufficient for at least 12 months but may need additional funds[36](index=36&type=chunk) [Note 2. Basis of Presentation and Summary of Significant Accounting Policies](index=12&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note details the basis for preparing unaudited condensed consolidated financial statements, outlining key accounting policies and the adoption of new pronouncements. - The company adopted ASU 2016-02, Leases, on January 1, 2019, using the optional prospective transition method, recognizing **$7.2 million** in right-of-use assets and **$9.2 million** in lease liabilities[78](index=78&type=chunk)[79](index=79&type=chunk) - The adoption of Topic 842 increased total operating expenses by **$82 thousand** for the three months and **$170 thousand** for the six months ended June 30, 2019[80](index=80&type=chunk) - The company is currently evaluating the impact of ASU 2016-13 (Credit Losses), ASU 2017-04 (Goodwill Impairment), and ASU 2018-13 (Fair Value Measurements), which are effective for periods ending December 31, 2020[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [Note 3. Fair Value Measurements](index=18&type=section&id=Note%203.%20Fair%20Value%20Measurements) This note describes the company's fair value measurements for financial assets and liabilities, categorizing them by input levels and detailing valuation techniques. Fair Value Measurements (in thousands) | Financial Assets (in thousands) | June 30, 2019 Total | Level 1 | Level 2 | Level 3 | | :------------------------------ | :------------------ | :------ | :------ | :------ | | Money market funds | $83,326 | $83,326 | $— | $— | | Restricted cash (money market funds) | $835 | $835 | $— | $— | | Corporate notes and commercial paper | $12,573 | $— | $12,573 | $— | | Total financial assets | $96,734 | $84,161 | $12,573 | $— | | Financial Liabilities (in thousands) | | | | | | Contingent consideration | $64 | $— | $— | $64 | - The fair value measurement of contingent consideration (Level 3 liability) uses a probability-weighted discounted cash flow approach, with a **20% risk-adjusted discount rate** and an **8% credit spread**[101](index=101&type=chunk) - The change in fair value of contingent consideration was a **$4 thousand gain** for the six months ended June 30, 2019, significantly lower than the **$3.2 million gain** for the same period in 2018[103](index=103&type=chunk) [Note 4. Inventory](index=21&type=section&id=Note%204.%20Inventory) This note breaks down inventory components, their classification, and the capitalization of UDENYCA® inventory costs post-FDA approval. Inventory Breakdown (in thousands) | (in thousands) | June 30, 2019 | December 31, 2018 | | :--------------- | :------------ | :---------------- | | Raw Materials | $3,911 | $2,851 | | Work in process | $15,587 | $1,576 | | Finished goods | $3,300 | $1,244 | | Total Inventory | $22,798 | $5,671 | | Inventory (current) | $4,333 | $1,659 | | Inventory, non-current | $18,465 | $4,012 | - The company began capitalizing inventory costs for UDENYCA® in November 2018 after receiving FDA approval[52](index=52&type=chunk)[106](index=106&type=chunk) - Prepaid manufacturing costs were **$6.3 million** as of June 30, 2019, expected to convert to inventory within 12 months[107](index=107&type=chunk) [Note 5. Balance Sheet Components](index=22&type=section&id=Note%205.%20Balance%20Sheet%20Components) This note details the composition of property and equipment, net, and accrued liabilities, showing changes between periods. Property and Equipment, Net, and Accrued Liabilities (in thousands) | (in thousands) | June 30, 2019 | December 31, 2018 | | :--------------- | :------------ | :---------------- | | Property and equipment, net | $5,646 | $6,660 | | Accrued clinical and manufacturing | $4,884 | $3,950 | | Accrued other | $3,411 | $3,058 | | Total Accrued liabilities | $8,295 | $7,008 | - Depreciation and amortization expense was **$1.4 million** for the six months ended June 30, 2019, compared to **$1.8 million** for the same period in 2018[109](index=109&type=chunk) [Note 6. Revenue](index=22&type=section&id=Note%206.%20Revenue) This note reports net product revenue from UDENYCA® sales, breaking down revenue by major customers and detailing sales discounts and allowances. Net Product Revenue (in thousands) | Net Product Revenue (in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :--------------------------------- | :------------------------------- | :----------------------------- | | Net product revenue | $83,433 | $120,531 | Revenue by Major Customer (Six Months Ended June 30, 2019) | Revenue by Major Customer (Six Months Ended June 30, 2019) | Percent of Total | | :------------------------------------------------------- | :--------------- | | McKesson | 43% | | AmeriSource-Bergen Corp | 32% | | Cardinal | 23% | | Others | 2% | | Total revenue | 100% | Product Sales Discounts and Allowances (in thousands) | Product Sales Discounts and Allowances (in thousands) | Balance at December 31, 2018 | Activity related to 2019 sales | Payments and customer credits issued | Balance at June 30, 2019 | | :------------------------------------ | :--------------------------- | :----------------------------- | :----------------------------------- | :----------------------- | | Chargebacks and Discounts for Prompt Payment | $— | $65,726 | $(42,368) | $23,358 | | Rebates | $— | $8,593 | $(1,095) | $7,498 | | Other Fees, Co-pay Assistance and Returns | $— | $22,843 | $(9,692) | $13,151 | | Total | $— | $97,162 | $(53,155) | $44,007 | [Note 7. Convertible Notes and Term Loan](index=23&type=section&id=Note%207.%20Convertible%20Notes%20and%20Term%20Loan) This note details the company's long-term debt, including Convertible Senior Notes and a Term Loan, outlining their terms and covenants. Convertible Notes (in thousands) | Convertible Notes (in thousands) | June 30, 2019 | December 31, 2018 | | :------------------------------- | :------------ | :---------------- | | Principal amount | $109,000 | $109,000 | | Unamortized debt discount and debt issuance costs | $(5,112) | $(5,908) | | Net carrying amount | $103,888 | $103,092 | Term Loan (in thousands) | Term Loan (in thousands) | June 30, 2019 | | :----------------------- | :------------ | | Principal amount | $75,000 | | Unamortized debt discount and debt issuance costs | $(1,714) | | Net carrying amount | $73,286 | - The Term Loan bears interest at **7.00% per annum plus LIBOR**, with a reduced rate if UDENYCA® net sales exceed **$250.0 million** for FY2019[127](index=127&type=chunk) - Term Loan covenants require UDENYCA® consolidated net sales not to be lower than **$70.0 million** for FY2019, **$125.0 million** for FY2020, and **$150.0 million** for each fiscal year thereafter[132](index=132&type=chunk) [Note 8. Commitments and Contingencies](index=26&type=section&id=Note%208.%20Commitments%20and%20Contingencies) This note outlines the company's purchase commitments and legal contingencies, including a trade secret settlement with Amgen. Purchase Commitments (in thousands) | Purchase Commitments (in thousands) | Remainder of 2019 | 2020 | 2021 | 2022 | Total | | :---------------------------------- | :---------------- | :--- | :--- | :--- | :---- | | Total obligations | $9,845 | $24,975 | $600 | $600 | $36,020 | - On May 2, 2019, the company settled a trade secret action with Amgen, agreeing to pay a **mid-single digit royalty** on UDENYCA® net product revenue for **five years**, starting July 1, 2019[137](index=137&type=chunk) [Note 9. Leases](index=27&type=section&id=Note%209.%20Leases) This note details operating lease agreements for facilities, including Topic 842 adoption and resulting lease liabilities and assets. Operating Lease Liabilities (in thousands) | Operating Lease Liabilities (in thousands) | June 30, 2019 | | :--------------------------------------- | :------------ | | Other liabilities (current portion) | $2,198 | | Lease liabilities, non-current | $5,977 | | Total operating lease liabilities | $8,175 | - The weighted average remaining lease term is **3.4 years**, and the weighted average operating discount rate is **7.0%** as of June 30, 2019[146](index=146&type=chunk) [Note 10. Common Stock and Stock-Based Compensation](index=28&type=section&id=Note%2010.%20Common%20Stock%20and%20Stock-Based%20Compensation) This note provides information on common stock offerings, ATM program termination, and stock-based compensation expense. - In Q1 2019, the company sold **761,130 shares** of common stock through its ATM Offering Program for **$8.2 million** in net proceeds, with the program terminated on January 19, 2019[148](index=148&type=chunk) Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :---------------------------------------------- | :------------------------------- | :----------------------------- | | Research and development | $2,963 | $6,622 | | Selling, general and administrative | $5,028 | $10,864 | | Total | $7,991 | $17,486 | [Note 11. Net Income (Loss) Per Share Attributable to Coherus](index=28&type=section&id=Note%2011.%20Net%20Income%20(Loss)%20Per%20Share%20Attributable%20to%20Coherus) This note presents the computation of basic and diluted net income (loss) per share, including weighted-average shares and dilutive securities. Net Income (Loss) Per Share Attributable to Coherus | Net Income (Loss) Per Share Attributable to Coherus | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :-------------------------------------------------- | :------------------------------- | :----------------------------- | | Net income (loss) attributable to Coherus (in thousands) | $23,567 | $3,563 | | Basic net income (loss) per share | $0.34 | $0.05 | | Diluted net income (loss) per share | $0.32 | $0.05 | | Weighted-average common shares outstanding (Basic) | 69,479,016 | 69,310,791 | | Weighted-average common shares outstanding (Diluted) | 72,963,972 | 72,281,564 | - Approximately **14.8 million** potential dilutive shares (stock options, RSUs, convertible notes) were excluded from diluted EPS calculation for Q2 2019 due to their anti-dilutive effect[151](index=151&type=chunk) [Note 12. Related Party Transactions](index=29&type=section&id=Note%2012.%20Related%20Party%20Transactions) This note discloses related party transactions, including agreements with Medpace, recruiting services, and Convertible Notes issuance. - The company issued **$25.0 million** in aggregate principal amount of Convertible Notes to certain related party investors in February 2016[116](index=116&type=chunk)[155](index=155&type=chunk) - Recruiting services from a firm where a board member is a partner resulted in **$50,000** in R&D expense and **$1,000** in SG&A expense for the six months ended June 30, 2019[153](index=153&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of financial condition and results, covering business overview, performance, policies, and liquidity. [Overview](index=31&type=section&id=Overview) - Coherus is a commercial-stage biotherapeutics company focused on the global biosimilar market, aiming to be a leader by leveraging expertise in process science, analytical characterization, protein production, and clinical-regulatory development[158](index=158&type=chunk) - UDENYCA® (pegfilgrastim-cbqv) received EU approval on September 20, 2018, and US FDA approval on November 2, 2018, with US sales commencing January 3, 2019[159](index=159&type=chunk) - The company achieved profitability for the three and six months ended June 30, 2019, with net income of **$3.6 million** for the six-month period, a significant improvement from a **$43.7 million** net loss in the prior year period[160](index=160&type=chunk) - Clinical-stage pipeline includes CHS-1420 (adalimumab biosimilar), CHS-0214 (etanercept biosimilar), and CHS-131 (small molecule for NASH); preclinical pipeline includes CHS-3351 (ranibizumab biosimilar) and CHS-2020 (aflibercept biosimilar)[161](index=161&type=chunk)[163](index=163&type=chunk) [Financial Operations Overview](index=33&type=section&id=Financial%20Operations%20Overview) - Net product revenue for the three and six months ended June 30, 2019, was **$83.4 million** and **$120.5 million**, respectively, driven by UDENYCA® sales[175](index=175&type=chunk) - Cost of goods sold primarily includes third-party manufacturing, distribution, and overhead for UDENYCA®, with a portion of manufacturing costs expensed as R&D prior to FDA approval[176](index=176&type=chunk) - Research and development expenses are charged as incurred, including external costs for clinical trials and manufacturing supplies, and internal costs like personnel and facilities, expected to be similar or slightly higher in the remainder of 2019[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - Selling, general and administrative expenses include personnel, allocated facilities, and professional services, particularly for UDENYCA® commercialization, and are expected to remain relatively constant[183](index=183&type=chunk)[223](index=223&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The company adopted ASU 2016-02 (Leases) on January 1, 2019, recognizing operating lease right-of-use assets and liabilities based on the present value of lease payments[188](index=188&type=chunk)[201](index=201&type=chunk) - Revenue recognition follows Topic 606, where revenue from product sales (UDENYCA®) is recognized when the customer obtains control, net of variable consideration for discounts, rebates, and allowances[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - Estimates for product sales discounts and allowances (chargebacks, prompt payment, rebates, co-pay assistance, returns) are based on historical experience, contractual requirements, market events, and forecasted buying patterns[192](index=192&type=chunk) [Recent Accounting Pronouncements](index=36&type=section&id=Recent%20Accounting%20Pronouncements) - ASU 2016-02 (Leases) was adopted on January 1, 2019, recognizing **$7.2 million** in right-of-use assets and **$9.2 million** in lease liabilities[201](index=201&type=chunk) - ASU 2018-07 (Nonemployee Share-Based Payment) was early adopted on January 1, 2019, with no material impact[202](index=202&type=chunk) - SEC amendments (Securities Act Release No. 33-10532) for stockholders' equity analysis were adopted on January 1, 2019, with no material effect[204](index=204&type=chunk) - The company is evaluating ASU 2016-13 (Credit Losses), ASU 2017-04 (Goodwill Impairment), and ASU 2018-13 (Fair Value Measurements), all effective for periods ending December 31, 2020[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Results of Operations (in thousands) | (in thousands) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Change | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | Change | | :--------------- | :------------------------------- | :------------------------------- | :----- | :----------------------------- | :----------------------------- | :----- | | Net product revenue | $83,433 | $— | $83,433 | $120,531 | $— | $120,531 | | Cost of goods sold | $601 | $— | $601 | $2,826 | $— | $2,826 | | Research and development | $18,883 | $26,519 | $(7,636) | $37,672 | $51,974 | $(14,302) | | Selling, general and administrative | $36,456 | $18,391 | $18,065 | $69,139 | $34,968 | $34,171 | | Interest expense | $4,433 | $2,417 | $2,016 | $8,649 | $4,825 | $3,824 | | Other income, net | $558 | $3,642 | $(3,084) | $1,369 | $3,780 | $(2,411) | | Income tax provision | $51 | $— | $51 | $51 | $— | $51 | - Net product revenue for the three and six months ended June 30, 2019, was **$83.4 million** and **$120.5 million**, respectively, due to U.S. sales of UDENYCA® commencing in January 2019[210](index=210&type=chunk)[175](index=175&type=chunk) - Research and development expense decreased by **$7.6 million** (QoQ) and **$14.3 million** (YoY) primarily due to capitalizing UDENYCA® manufacturing costs post-FDA approval, partially offset by increased costs for other biosimilar candidates[214](index=214&type=chunk)[215](index=215&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - Selling, general and administrative expense increased by **$18.1 million** (QoQ) and **$34.2 million** (YoY) due to increased sales force personnel, commercial functions, legal, marketing, and facility-related expenses for UDENYCA® commercialization[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2019, the company had an accumulated deficit of **$981.3 million** and **$111.9 million** in cash, cash equivalents, and marketable securities[239](index=239&type=chunk) - The company believes current available cash, investments, and UDENYCA® sales will fund operations for at least the next 12 months, but may need additional funds[239](index=239&type=chunk) Cash Flows (in thousands) | Cash Flows (in thousands) | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(44,306) | $(69,114) | | Net cash used in investing activities | $(6,381) | $(29,785) | | Net cash provided by financing activities | $84,487 | $101,770 | - Operating cash outflow decreased due to net income, increased accrued rebates, and decreased prepaid manufacturing, despite increases in trade receivables and inventory from UDENYCA® sales[241](index=241&type=chunk)[242](index=242&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) [Off-Balance Sheet Arrangements](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company has not engaged in any off-balance sheet arrangements since its inception[255](index=255&type=chunk) [Contractual Obligations](index=44&type=section&id=Contractual%20Obligations) Contractual Obligations (in thousands) | Contractual Obligations (in thousands) | Total | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | | :------------------------------------- | :---- | :--------------- | :----------- | :----------- | :---------------- | | Long-term debt obligations - Convertible notes | $131,550 | $4,100 | $16,400 | $111,050 | $— | | Long-term debt obligations - Term loan | $112,174 | $3,641 | $14,468 | $46,570 | $47,495 | | Non-cancelable purchase commitments | $36,020 | $9,845 | $25,575 | $600 | $— | | Operating lease obligations | $9,218 | $1,333 | $5,367 | $2,518 | $— | | Contingent payments to InteKrin Stockholders | $64 | $— | $— | $64 | $— | | Total contractual liabilities | $289,026 | $18,919 | $61,810 | $160,802 | $47,495 | [ITEM 3. Quantitative and Qualitative Disclosure About Market Risk](index=45&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section discusses the company's market risk exposure, primarily interest rate risk on short-term cash and marketable securities, deemed not significant. - As of June 30, 2019, the company held **$111.9 million** in cash, cash equivalents, and marketable securities, primarily in money market funds, corporate notes, and commercial paper[260](index=260&type=chunk) - The company believes its exposure to interest rate risk is not significant due to the short-term duration of its cash equivalents and marketable securities, with a **1% movement** in market interest rates not expected to have a significant impact[260](index=260&type=chunk) [ITEM 4. Controls and Procedures](index=45&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details the evaluation of disclosure controls and procedures, concluding their effectiveness and noting new controls for product launch and lease accounting. - The CEO and CFO concluded that the company's disclosure controls and procedures were effective in design and operation as of June 30, 2019[261](index=261&type=chunk) - New internal controls were implemented during the six months ended June 30, 2019, in connection with the product launch and the adoption of Topic 842 (Leases)[265](index=265&type=chunk) PART II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=47&type=section&id=ITEM%201.%20Legal%20Proceedings) This section updates on legal proceedings, including a trade secret settlement with Amgen and patent infringement suits. - On May 2, 2019, Coherus settled a trade secret action with Amgen, agreeing to pay a **mid-single digit royalty** on UDENYCA® net product revenue for **five years** starting July 1, 2019[269](index=269&type=chunk) - A patent infringement suit filed by Amgen (regarding the '707 patent) was dismissed by the U.S. District Court for the District of Delaware and affirmed by the Federal Circuit on July 29, 2019[270](index=270&type=chunk) - On January 24, 2019, Coherus filed a patent infringement suit against Amgen in the U.S. District Court of Delaware, alleging that Amgen's Humira® biosimilar, Amgevita™, infringes Coherus's adalimumab formulation patents[271](index=271&type=chunk) [ITEM 1A. Risk Factors](index=47&type=section&id=ITEM%201A.%20Risk%20Factors) This section details various risks that could materially affect the company's business, financial condition, operations, and prospects. - The company has a limited operating history, incurred significant losses (**$981.3 million** accumulated deficit as of June 30, 2019), and anticipates continued losses, with future profitability dependent on UDENYCA® sales and expense management[275](index=275&type=chunk)[281](index=281&type=chunk) - Commercial success of UDENYCA® and future product candidates depends on market acceptance, adequate third-party coverage and reimbursement, and effective competition against reference products and other biosimilars[298](index=298&type=chunk)[301](index=301&type=chunk)[316](index=316&type=chunk) - Significant intellectual property risks include potential infringement of third-party patents, challenges to the company's own patents, the complexity of BPCIA patent dispute resolution, and difficulty protecting trade secrets[380](index=380&type=chunk)[381](index=381&type=chunk)[394](index=394&type=chunk)[433](index=433&type=chunk) - The company relies heavily on third parties for nonclinical and clinical studies, manufacturing, and supply, posing risks of delays, quality issues, and regulatory non-compliance[337](index=337&type=chunk)[342](index=342&type=chunk)[357](index=357&type=chunk) - Regulatory approval processes are lengthy and unpredictable, with evolving requirements for biosimilars, and failure to demonstrate biosimilarity or obtain full originator labels could adversely affect commercialization[447](index=447&type=chunk)[453](index=453&type=chunk)[454](index=454&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=87&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable, indicating no unregistered sales of equity securities or use of proceeds to report. [ITEM 3. Defaults Upon Senior Securities](index=87&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable, indicating no defaults upon senior securities to report for the period. [ITEM 4. Mine Safety Disclosures](index=87&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable, indicating no mine safety disclosures to report for the period. [ITEM 5. Other Information](index=87&type=section&id=ITEM%205.%20Other%20Information) This item is not applicable, indicating no other information to report for the period. [ITEM 6. Exhibits](index=87&type=section&id=ITEM%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including XBRL financial statements and key legal agreements. - The report includes financial statements formatted in eXtensible Business Reporting Language (XBRL)[526](index=526&type=chunk) - Exhibit 10.1 includes the Confidential Litigation Settlement Agreement and Release, dated April 30, 2019, between Amgen Inc. and Coherus BioSciences Inc[528](index=528&type=chunk)

Coherus BioSciences, Inc. (NASDAQ:CHRS) Q2 2019 Results Conference Call August 1, 2019 4:30 PM ET Company Participants David Arrington - VP, IR and Corporate Affairs Denny Lanfear - CEO Dr. Jean Viret - CFO Jim Hassard - SVP, Marketing and Market Access Thomas Fitzpatrick - Chief Legal Officer Conference Call Participants Mohit Bansal - Citigroup Chris Schott - JP Morgan Ken Cacciatore - Cowen and Company Douglas Tsao - H.C. Wainwright Mike Wolff - Baird Balaji Prada - Barclays Operator Ladies and gentlemen ...

Financial Data and Key Metrics Changes - Net product revenue for Q1 2019 was $37.1 million, with a gross profit margin of 94% [18][22] - Research and development expenses decreased to $18.8 million from $25.5 million in Q1 2018, primarily due to the capitalization of UDENYCA manufacturing costs [19] - Selling, general and administrative expenses increased to $32.7 million from $16.6 million in Q1 2018, attributed to costs associated with the commercialization of UDENYCA [20] - Net loss attributable to Coherus for Q1 2019 was $20 million, or $0.29 per share, compared to a net loss of $44.3 million, or $0.74 per share, for the same period in 2018 [22] Business Line Data and Key Metrics Changes - UDENYCA revenues in Q1 were $37.1 million, aligning with expectations and indicating no abnormal stocking at wholesalers [8][9] - The company is transitioning from a pure development platform to an integrated R&D and commercial growth company, with plans to commercialize additional oncology products [7][14] Market Data and Key Metrics Changes - The company reported good traction across three market segments: community oncology clinics, non-340B hospitals, and 340B hospitals [12] - Approximately 40% of the biosimilar share gain is coming from the Onpro segment, indicating competitive progress in that market [38] Company Strategy and Development Direction - The company aims to achieve a progressive increase in commercialized products and corresponding growth in top-line results in the medium to long term [7] - Coherus is focused on leveraging its commercial infrastructure to in-license potential products and expand its oncology portfolio [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong launch performance of UDENYCA and its ability to penetrate the market effectively [28] - The company anticipates steady growth in sales throughout the year, although it may not be linear [25] - Management emphasized the importance of maintaining a disciplined approach to pricing and contracting in a competitive landscape [26] Other Important Information - Cash and cash equivalents totaled $96.4 million as of March 31, 2019, compared to $95.2 million a year earlier [21] - The company plans to continue supporting pipeline investments essential for future product development success [17] Q&A Session Summary Question: Confirmation on path to profitability and sales growth - Management indicated that sales growth is expected to be steady, with no abnormal stocking affecting the launch [25][28] Question: Insights on competitive landscape and market share stickiness - Management believes that once hospitals adopt a biosimilar, there is a fair amount of stickiness due to the laborious adoption process [32] Question: Clarification on gross margins and pricing strategy - Gross profit margin for Q1 was impacted by a write-down, but future margins are expected to remain above 90% [33] - The pricing strategy focuses on providing cost savings while establishing a compelling value proposition [35] Question: Onpro market dynamics and device development - Management is actively pursuing the Onpro market and recognizes its premium pricing strategy [38] - Development of an on-body device is underway, but no specific timeline has been provided [39] Question: R&D expense baseline and future expectations - R&D expenses are expected to remain relatively flat, with slight increases anticipated towards the end of the year as clinical trials commence [44]

Financial Performance - Net product revenue for the three months ended March 31, 2019, was $37.1 million, compared to $0 in the same period of 2018[16]. - Total operating expenses for the same period were $53.7 million, an increase of 27.8% from $42.0 million in Q1 2018[16]. - The net loss for the three months ended March 31, 2019, was $20.0 million, a significant improvement from a net loss of $44.3 million in Q1 2018[16]. - The company reported a net loss per share attributable to Coherus of $0.29 for Q1 2019, compared to $0.74 in Q1 2018[16]. - The company reported a net cash used in operating activities of $57.0 million for Q1 2019, compared to $33.6 million for Q1 2018, indicating increased cash burn[27]. - The company reported a net gain of $169,000 from foreign exchange for the three months ended March 31, 2019, compared to a net loss of $8,000 for the same period in 2018[37]. Cash and Liquidity - Cash and cash equivalents increased to $81.5 million as of March 31, 2019, up from $72.4 million at the end of 2018[13]. - Total cash, cash equivalents, and restricted cash amounted to $82.35 million as of March 31, 2019, a slight decrease from $82.86 million as of March 31, 2018[45]. - The company raised $8.2 million from the issuance of 761,130 shares of common stock at a weighted average price of $11.17 per share in January 2019[31]. - The company may need to raise additional funds in the future, but there is no assurance that such efforts will be successful[31]. Assets and Liabilities - Total assets as of March 31, 2019, were $186.1 million, compared to $99.5 million at the end of 2018, reflecting a 87% increase[13]. - Total liabilities increased to $224.6 million as of March 31, 2019, from $138.1 million at the end of 2018, representing a 62.5% rise[13]. - The company reported an accumulated deficit of $1.0 billion and cash and cash equivalents of $96.4 million as of March 31, 2019[31]. - Total stockholders' deficit was $38,515,000 as of March 31, 2019, slightly improved from $38,591,000 as of December 31, 2018[13]. Research and Development - Research and development expenses for Q1 2019 were $18.8 million, down from $25.5 million in Q1 2018, indicating a 26.3% decrease[16]. - The company recognized $1.5 million for services rendered by Medpace within research and development expense for the three months ended March 31, 2018[141]. - Research and development expenses include costs for salaries, consultant fees, and clinical trial costs, with all costs charged to expense as incurred[64]. Inventory and Cost of Goods Sold - The total inventory as of March 31, 2019, was $12.0 million, an increase from $5.7 million as of December 31, 2018[94]. - Cost of goods sold for the three months ended March 31, 2019, included a write-off of prepaid manufacturing costs of $1.3 million and $0.4 million for excess and obsolete inventory[62]. - The company began capitalizing inventory costs associated with UDENYCA® after receiving regulatory approval in November 2018[47]. Sales and Marketing - The company aims to continue building its sales and marketing infrastructure for UDENYCA® and expand its product offerings in the biosimilar market[6]. - Coherus initiated U.S. sales of UDENYCA® on January 3, 2019, following regulatory approvals from the European Commission and the FDA[30]. - Revenue from product sales is recognized when a customer controls the product, which occurs upon delivery and acceptance[52]. Debt and Financing - The company entered into a credit agreement for a six-year term loan facility of $75.0 million in January 2019[31]. - The Company entered into a Term Loan agreement for a principal amount of $75.0 million, with an effective interest rate of 10.8% as of March 31, 2019[115][116]. - Future payments on the Term Loan total $114.353 million, with a net carrying amount of $73.124 million after accounting for debt discount and issuance costs[125]. - The Company recognized total interest expense of $1.772 million related to the Term Loan for the three months ended March 31, 2019[124]. Stock and Shares - The weighted-average number of shares used in computing net loss per share attributable to Coherus increased to 69.1 million in Q1 2019 from 60.1 million in Q1 2018[16]. - The total outstanding dilutive potential shares increased to 22,270,300 as of March 31, 2019, up from 18,379,251 as of December 31, 2018[71]. - The company sold 761,130 shares of common stock at a weighted average price of $11.17 per share, generating gross proceeds of $8.5 million in the first quarter of 2019[139].

Financial Data and Key Metrics Changes - Research and development (R&D) expenses decreased by $4.8 million in Q4 2018 compared to the same quarter last year and by $52.2 million in 2018 compared to 2017, primarily due to reduced costs associated with anti-TNF programs [21][22] - Selling, general and administrative (SG&A) expenses increased by $18.9 million in Q4 2018 compared to the same quarter last year and by $22.9 million in 2018 compared to 2017, mainly due to costs related to hiring a sales force for UDENYCA [24] - Net loss attributable to Coherus for Q4 2018 was $62.6 million, or $0.92 per share, compared to a net loss of $49.1 million, or $0.84 per share, for the same period in 2017 [27] Business Line Data and Key Metrics Changes - UDENYCA launch is proceeding as planned, with initial performance aligning with internal projections and a list price approximately 33% below that of Neulasta [7][8] - UDENYCA has been utilized by patients across all three provider segments: oncology clinics, 340B hospital outpatient, and non-340B hospital outpatient facilities [10] - Coverage for UDENYCA is at parity or better compared to Neulasta in over 90% of insurers, including major national payers [11][12] Market Data and Key Metrics Changes - The company has secured coverage among both Medicare and commercial insurers, with no rejected or unpaid claims reported [12] - Some payers have adopted policies to prefer biosimilars, including UDENYCA, over Neulasta, indicating a shift in market dynamics [12][45] Company Strategy and Development Direction - The company aims to leverage its experience from the oncology market to support the launch of its Humira biosimilar CHS-1420, expected in late 2023 [18][19] - The strategy includes a branded service-oriented approach that is believed to be applicable across different therapeutic areas, including ophthalmology [20] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with market reception and alignment among key segments, indicating that the strategic approach is yielding positive results [30] - The company anticipates that additional biosimilar entrants could accelerate market conversion rather than negatively impact its position [32] Other Important Information - Cash and cash equivalents totaled $72.4 million as of December 31, 2018, with an additional $73.1 million raised in January 2019, bringing the pro forma total to $145.5 million [25][26] Q&A Session Summary Question: 2019 revenue expectations and SG&A/R&D run rate - Management indicated that market expectations are consistent with their internal projections and that SG&A expenses will increase in 2019 due to the launch [29][31] Question: Market share and competition - Management noted that they are approaching the entire market and that competition primarily pressures the innovator rather than other biosimilar participants [32] Question: Utilization across market segments - Management stated it is too early to determine segment penetration but confirmed adoption across all three market segments [34][43] Question: Pricing and Onpro device plans - Management refrained from providing specific net pricing guidance but emphasized the value proposition of UDENYCA being 33% below Neulasta [39][41] Question: Insurer policies on biosimilars - Management reported that some insurers are beginning to prefer biosimilars over Neulasta, although this is still a small percentage of the market [44][45]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ☐ 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 ...