erus BioSciences(US:CHRS)2019-05-10 02:11Financial 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]