erus BioSciences(CHRS) - 2024 Q2 - Quarterly Report

Financial Performance - Net revenue for Q2 2024 was $64.979 million, an increase of 10% from $58.716 million in Q2 2023[11] - Total costs and expenses for Q2 2024 were $85.488 million, down from $93.259 million in Q2 2023, reflecting a reduction of approximately 8%[11] - Loss from operations decreased to $20.509 million in Q2 2024, compared to a loss of $34.543 million in Q2 2023, representing a 40% improvement[11] - The company reported a net income of $89.954 million for the first half of 2024, a significant turnaround from a net loss of $118.598 million in the same period of 2023[11] - Basic net income per share for the first half of 2024 was $0.79, compared to a loss of $1.42 per share in the first half of 2023[11] - Comprehensive loss for Q2 2024 was $12.921 million, an improvement from a loss of $42.888 million in Q2 2023[12] - For the three months ended June 30, 2024, the company reported a net loss of $12.9 million, translating to a basic net loss per share of $0.11, compared to a net loss of $42.9 million and a basic net loss per share of $0.49 for the same period in 2023[129] Expenses and Cost Management - Research and development expenses for Q2 2024 were $21.955 million, slightly down from $23.267 million in Q2 2023[11] - Selling, general and administrative expenses decreased to $35.165 million in Q2 2024 from $45.144 million in Q2 2023, a reduction of about 22%[11] - Stock-based compensation expense for the six months ended June 30, 2024, was $14,550, down from $22,359 in the prior year[18] - Research and development expenses decreased to $21.9 million for the three months ended June 30, 2024, compared to $23.3 million in 2023, primarily due to reduced personnel costs[171] - Selling, general and administrative expenses decreased by $8.2 million in employee and consultant costs and $3.6 million in stock-based compensation, with a net impairment charge of $6.8 million impacting overall expenses[175] Revenue and Sales - The company achieved a gain on sale transactions of $24.085 million in Q2 2024, with no comparable gain in Q2 2023[11] - UDENYCA generated $50.917 million in revenue for the three months ended June 30, 2024, up from $31.729 million in the same period in 2023[37] - Total net revenues for the three months ended June 30, 2024, were $65.0 million, a 10.7% increase from $58.7 million in the same period of 2023[157] - UDENYCA net revenue increased by $19.2 million due to higher demand, while the launches of YUSIMRY and LOQTORZI contributed $3.8 million each during the three months ended June 30, 2024[167] Cash and Liquidity - The company had cash, cash equivalents, and restricted cash of $159,692 at the end of the period, up from $73,360 at the end of June 30, 2023[18] - The company reported a net cash provided by investing activities of $230,419 for the six months ended June 30, 2024[18] - Total cash, cash equivalents, and marketable securities increased to $159.2 million as of June 30, 2024, up from $117.7 million at the end of 2023[181] - As of June 30, 2024, the company had an accumulated deficit of $1.5 billion but believes available cash will be sufficient to meet obligations for at least the next twelve months[191] Debt and Financing - Interest expense for Q2 2024 was $5.334 million, down from $9.943 million in Q2 2023, indicating a reduction of approximately 46%[11] - The Company entered into a senior secured term loan facility of up to $38.7 million, fully funded on May 8, 2024, with net proceeds of $37.5 million used to repay existing indebtedness[91] - The 2029 Term Loan accrues interest at 8.0% per annum plus a three-month SOFR rate, with interest-only payments until maturity on May 8, 2029[93] - The Company incurred $2.2 million in debt discount and issuance costs related to the 2029 Term Loan, amortized over the five-year term[94] - A loss on debt extinguishment of $12.6 million was recorded due to the payoff of the 2027 Term Loans in May 2024[179] Product Development and Launches - Coherus BioSciences launched LOQTORZI® in the U.S. for the treatment of nasopharyngeal carcinoma, developed in collaboration with Shanghai Junshi Biosciences[21] - The product pipeline includes three candidates: CHS1000, casdozokitug (CHS-388), and CHS-114, with additional candidates licensed to Novartis and GSK[23] - The company plans to start the first-in-human clinical study for CHS-1000, an antibody targeting human ILT4, in the coming months after receiving IND approval in Q2 2024[150] - LOQTORZI was approved by the FDA for the first-line treatment of adults with metastatic or recurrent locally advanced nasopharyngeal carcinoma (NPC) on October 27, 2023, and launched in the U.S. on January 2, 2024[145] Sales Transactions and Divestitures - The Company completed the sale of its YUSIMRY franchise for $40.0 million and the assumption of $17.0 million in inventory commitments[22] - Coherus sold its CIMERLI ophthalmology franchise for $170.0 million plus $17.8 million for product inventory and prepaid manufacturing assets[22] - The YUSIMRY Sale on June 26, 2024, generated a net gain of $22.9 million, with upfront cash consideration of $40.0 million and liabilities assumed of $17.0 million[62] - The CIMERLI Sale on March 1, 2024, resulted in a net gain of $153.6 million, including cash receipts of $187.8 million and transaction costs of $7.2 million[64] Legal and Regulatory Matters - The company has an accrual of $6.4 million related to various legal proceedings and claims as of June 30, 2024[117] - The company is evaluating the impact of recent accounting standards updates on its financial statement disclosures[34] Future Outlook - The company expects net revenue in 2024 to be higher than in 2023, driven by growth in UDENYCA and LOQTORZI sales, despite the divestiture of CIMERLI and YUSIMRY[168] - The company anticipates a gross margin improvement in 2024 due to the expiration of certain royalty obligations and the cessation of profit share expenditures following the CIMERLI Sale[171] - Research and development expenses are expected to be lower in 2024 due to cost containment initiatives and the termination of the TIGIT Program[174]