erus BioSciences(US:CHRS)2020-02-27 21:37Market 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].