erus BioSciences(CHRS) - 2019 Q3 - Earnings Call Transcript

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]