Coherus BioSciences Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 2, 2023

There are 12 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Coherus Biosciences Second Quarter 2023 Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to your speaker today, Marek Cieszewski. Please go ahead.

Speaker 1

Thank you, Corey, and good afternoon, everyone, and thank you for joining us. We issued a press release earlier today Announcing our financial results for the Q2 of 2023. This release can be found on the Coherus Biosciences website It is also attached to the Form 8 ks that we filed with the SEC today. Today's call includes forward looking statements regarding Coherus' current expectations about future events. These statements include, but are not limited to, our ability to gain approval for multiple new products and launch them, Projections of expenses and revenues, projections of future market share for any product, our expectations for market opportunity for any indication, Our expectations about completing the merger with Surface Oncology, timing of our return to being cash flow positive and expectations about our future portfolio prioritization.

Speaker 1

All of these forward looking statements include substantial risks and uncertainties that are beyond our control It could cause actual results, performance or achievements to differ from those implied by the forward looking statements. These statements are not guarantees of future performance and are subject to substantial risks and uncertainties, including risks and uncertainties about our ability to complete the merger with Surface Oncology I'll realize the anticipated benefits of that transaction that are discussed in our press release that we issued today as well as the documents that we filed with the SEC. Forward looking statements provided on the call today are made as of this date, and we undertake no duty to update or revise any forward looking statements. Q2 2023 results are not necessarily indicative of results of future periods. With me on today's call are Denny Lenfear, CEO of Coherus Doctor.

Speaker 1

Teresa LaValle, Chief Development Officer Doctor. Rosh Diaz, Chief Medical Officer Paul Reeder, Chief Commercial Officer and McDavid Silvo, Chief Financial Officer. I will now turn the call over to Dave.

Speaker 2

Thank you, Marek, and thank you all for joining us today on our Q2 2023 earnings call. This past quarter, we continued to make good progress on our strategy of innovative veno oncology company, funded by revenues from FDA approved products. Pursuant to that objective, the company demonstrated strong Specifically, We signed a merger agreement with Service Oncology, a high science, clean edge IO company that shares our vision that impacting the tumor microenvironment Potentially represents the next step change in therapeutic benefit beyond checkpoints. In a moment, our Chief Development Officer, Doctor. Livalle will recap for you Mechanism of action synergies for toricelmab and SERP assets 388-one hundred and fourteen, the anti IL-twenty seven mAb and anti CCRA, Matt.

Speaker 2

We'll also update you on our own proprietary asset, ILT4, which continues toward IND filing. With respect to development, Teresa and Raj Dias, our Chief Medical Officer, will recap for you projected timing data Emerging from various ongoing studies across the pipeline. This will update you of course on the potential tauroblam approval. Now with respect to commercial performance, we saw strong execution across the products and the presentation this quarter With net product revenues of $58,500,000 almost 2x Q1. Our UDENYCA strategy to manage average selling price To support follow on presentation launches of the auto injector and on body device has been successful.

Speaker 2

We launched UDENYCA Auto Injector in April and are pleased with the market reception. We continue to project UDENYCA on body approval and launch this year. Regarding similarly, as you recall, the reimbursement Q code was deployed April 1 and we projected a subsequent increase in market uptake. This has now occurred. And Paul Reeder, our Chief Commercial Officer, will provide additional background color.

Speaker 2

Additionally, we have successfully launched Tuzimari, our HUMIRA biosimilar with a highly innovative pricing addressing unmet access needs, providing low cost alternative to high priced competitors. Finally, our Chief Financial Officer, McDavid Stilwell, We'll report on our financial position, provide additional color on how the SERP merger will allow us to produce our projected spending over the 2023, 2025 planning period. We continue to focus sharply on holding the line with expenses, while driving the top line. It's our objective to reach cash flow positive in 2024. And now with that, I'll hand over to Paul.

Speaker 2

Thanks, Denny, and good afternoon, everyone. We are now at the midpoint, our 18 month 5 product launch up. Three products have launched over the last 9 months and we are executing plans to launch 2 more by the end of the year. Our total number of marketed assets will have increased from 1 to 6 over an 18 month time period. We believe these product launches will drive top line revenue growth over the coming years.

Speaker 2

Combined similarly and UDENYCA net revenue For Q2, it was $58,500,000 an increase of 81% over Q1. I'll now speak to each brand and we'll start with similar or biosimilar to Lucentis. Our strategic approach to the market First, to maximize the conversion of existing Lucentis business and second, to grow share through new patient starts and conversion from other anti VEGF products. The primary catalyst to similarly sales acceleration With the product specific Q code, which was successfully implemented on April 1st, this facilitates seamless, Timely billing and reimbursement for retinal practices. Similarly, net sales in Q2 were $26,700,000 compared to $200,000 in Q1 driven by quadrupling of demand quarter over quarter.

Speaker 2

Similarly, market share within the ranibizumab class Also more than quadrupled to 17% in Q2 compared to 4.1% in Q1. During Q2, we increased the cumulative number of accounts that ordered similarly by 75% The 321 and of those 72% have reordered. New accounts continue to grow in the 1st 3 weeks of July With another 91 accounts ordering similarly, bringing our total to now 412. In Q2, market share among ordering accounts was 45%, which reflects the potential of Zimmerli once accounts begin adopting. Reordering reflects new patient starts and conversions from other products.

Speaker 2

And with the chronic nature of the disease And frequency of injections, this results in compounded growth. Therefore, we continue to expect the 2023 several net revenues and will exceed $100,000,000 I'll now turn to UDENYCA. UDENYCA net revenue grew 21% quarter over Quarter $31,700,000 compared to $26,200,000 in Q1. This increase was driven primarily by a 10% increase in overall demand for our base prefilled syringe business. UDENYCA market share in Q2 was 12.2%, Up from 11.5% in the prior quarter.

Speaker 2

These share gains have continued in July. As you know, the pegfilgrastim pre filled storage segment has been increasingly competitive. Our strategy has been to balance price and share In order to maintain a strong ASP in advance of our launches of 2 new presentations with the longer term objective to regain share, We launched the UDENYCA auto injector commercially in June and this presentation represents the first innovation The PEGF will grasp in 8 years and addresses a large market segment unserved by Neulasta Onpro, Amgen's on body device, which still retains 42% of the margin. Later this year, we anticipate launching our 3rd presentation, UDENYCA On Body Injector, if approved, which will compete directly with Neulasta Onpro. We believe the UDENYCA franchise is well positioned to regain market share beginning in the second half of twenty twenty.

Speaker 2

Turning now to Ucimri, our biosimilar of HUMIRA. The high cost of adalimumab treatment is a problem for the healthcare system and for many patients. Our patient centric strategy is to provide Ucimri at a single transparent low price. We launched Ucimri on July 3rd at a list price of $9.95 per carton for 2 auto injectors, representing a discount of more than 85% to HUMIRA. We are working with multiple partners to make Ucimri available to patients.

Speaker 2

Nucymbri is available for sale through retail channels, including the Mark Cuban Cost Plus Drugs Company and through its Team Cuban card, and independent retailers nationwide. We are also working with specialty pharmacy partners such as Superior Biologics, Services more than 1,500,000 patients across the country. We expect to sign on more distribution And PBM partners in the coming months. The adalimumab market is highly competitive and HUMIRA retains formulary position during this Market formation period of nearly all PBM and health plan formularies. We expect steady growth for biosimilars for 2024 And then significant acceleration of biosimilar albuminib adoption is the implementation of the Inflation Reduction Act in 2025.

Speaker 2

We continue to target up to 10% unit share of the adalimumab market for Ucimori coming into 2026 to 2027 timeframe. Our low Usimori operating expenses will allow us to generate good Usimori operating margins and enable us to compete for the long term I'll now provide an update on torpalaamax. Launching the company's first immuno oncology product is a critical step forward in the advancement of our bio franchise. Our mission is to extend cancer patient survival, offering new hope to patients. Nasopharyngeal carcinoma is an excellent example.

Speaker 2

Today, the approximately 2,000 NPC patients diagnosed annually in the U. S. Have no FDA approved treatments, including biotherapies. NPC clearly constitutes a high unmet need. Torpalaamab is a next generation PD-one inhibitor and if approved will be the 1st and only PD-one inhibitor in the U.

Speaker 2

S. Indicated for relapsed or metastatic nasopharyngeal carcinoma. It is the impressive final overall survival data presented at ASCO And feedback from the top head net KOLs with whom we engaged in the conference, we believe torapalumab plus chemotherapy We'll establish a new standard of care at NPC in all lines of therapy, including first line and will be practice change. We feel confident for ophthalmab plus chemo will gain a dominant market share and estimate the NPC market opportunity at peak could reach up to $200,000,000 During our Q1 call, I announced the launch of npcfax.com, which is designed to be a primary source of C state information for patients and their caregivers to learn about MPC. We've also launched a sister site for healthcare professionals.

Speaker 2

Our aspiration is to identify and appropriately engage With all NPC patients or their caregivers in the U.

Speaker 1

S. By the end

Speaker 2

of the year, I'm pleased to report that since launch, We've enrolled over 1500 NPC patients and caregivers into our community. We will be ready to launch Educate doctors on torpalaamab's differentiated mechanism of action and the impressive overall survival benefit Demonstrated in MPC and irrespective of PD L1 expression status, we are ready to launch torapalumab directly upon potential approval. The significant overlap between UDENYCA customers and torapalumab targeted prescribers, The launch of torapalumab is being efficiently integrated into our existing oncology commercial infrastructure. With that, I'll now hand it over to Teresa.

Speaker 3

Thank you, Paul, and good afternoon, everyone. Let me begin with our regulatory update to date. Coherus continues to demonstrate Excellent drug development execution from preclinical studies through regulatory approval of new products And we then pass on to our commercial colleagues to deliver to the market. A year ago, we projected 5 new product launches Through year end 2023, we are now more than halfway towards that target. Similarly was approved last August with interchangeability.

Speaker 3

The Usimare auto injector presentation and manufacturing scale up supplements We're both approved in Q1 2023 and we launched the drug in July. UDENYCA auto injector, the first Innovation in the pegzilgrastin market in 8 years was approved in March 2023 and launched in June and the FDA review of the UDENYCA on body injector supplement is progressing towards anticipated approval later this year. Additionally, the torapalumab BLA for NTC review now has all required elements Completed or scheduled. The clinical site inspection is planned to be completed by early September And the manufacturing inspection was completed by the FDA in May with only a few observations that were all readily addressable. We want to thank the FDA for prioritizing this breakthrough therapy BLA with the scheduling of these on-site inspections.

Speaker 3

We still believe an FDA approval decision is possible in Q3, but in the absence of a PDUFA date at the deadline, It is possible the FDA action may take into the Q4 of 2023. Given there are no approved treatments For MPC patients in the United States and the very positive statistically significant and clinically meaningful overall survival data presented at As well as breakthrough therapy designation for torapalumab and MCC, we are hopeful the FDA will act in a timely manner following the inhibitor with potent activation of T cells, including demonstrating clinically meaningful activity in tumors that are less inflamed, Such as triple negative breast cancer. Orapalumab is the foundation of our IO franchise and we are excited to For clinical opportunities to extend patient survival with novel combination, particularly with agents that target elements of the tumor microenvironment That have been shown to cause PD-one resistance. With our recent announcement of the signing of the merger agreement with Surface Oncology And our in house developed ILP4 antibody, we are assembling a compelling novel IO pipeline. 2 well characterized immune suppressive cell types are macrophages and Treg cells.

Speaker 3

SRF-three eighty eight targeting IL-twenty seven, an immune suppressive cytokine that dampens immune activation of lymphoid cells such as T cells, T cells and NK cells is secreted in many tumors by M2 macrophages. CHS-one thousand, an antibody directed at ILT4 and M2 macrophages, causes macrophages when polarized With the merger with surface, we will have SRF-one That is to say, it was designed to target Treg specifically in the tumor microenvironment and not systemically, and thus the potential to reactivate antitumor immunogenicity without broad autoimmune side effects. Combining each of these agents with torapalumab has strong mechanistic rationale and preclinical data to show improved Anti tumor activity. Each of these programs has a rich scientific data set to indicate which tumor type These mechanisms are most prevalent in, including lung, head and neck, liver and breast cancers. We look forward to the Surface Oncology merger closing later this quarter and to hosting an investor event in the 4th quarter to discuss Our portfolio prioritization and development plans.

Speaker 3

I'll now turn the call to Raj.

Speaker 4

Thanks very much, Theresa, and good afternoon, everyone. With respect to toripanumab, several strong data sets were presented at ASCO in June Together, these showcase the consistency of activity of toripalumab as the next generation PD-one. We remain excited about its potential to form the backbone of combinations with other novel agents, particularly with our merger, SIRFS Oncology. I'd like to let ASCO include it. First of all, the final overall survival analysis of our pivotal study in nasopharyngeal carcinoma The significant benefit in overall survival in toripalumab arm with a hazard ratio of 0.63, the consistent effect on overall survival across all PD L1 states.

Speaker 4

This is of course particularly important as there are no currently approved immunotherapies in NPC. Updated datasets were also presented in non small cell lung cancer, the final overall survival analysis of Pivotal Choice 1 study comparing chemotherapy plus or minus taurine showing a hazard ratio of 0.73 favoring the taurine arm As well as positive data in the NEOTOR study, a large Phase 3 perioperative non small cell lung cancer study showing a hazard ratio of 0.4 for event free survival favoring the Tori arm. Finally, Dave from Torchlight was also presented at ASCO showing a statistically significant benefit in triple negative breast cancer. Earlier this year, our partner, Junshi, also announced that the Phase 3 study of tau ri in the small cell lung cancer was positive with results anticipated to be presented late this year. Tuncie will also be running a large multinational Phase 3 study With an anticipated start later this year, set to include U.

Speaker 4

S. Sites exploring toripalumab in combination with their PTLA antibody as consolidation therapy limited stage small cell lung cancer. This will be the 1st multi regional registration study for toriparumab that includes U. S. Patients and this is a great example of how combination treatments across tumor types could enable broader Registration opportunities for toricelumab in the U.

Speaker 4

S. Regarding our TIGIT, our Phase IIIa study looking at the tory TIGIT combination Currently active in the U. S. And will generate data in U. S.

Speaker 4

Subjects with this novel IO combination. We noted the encouraging Morpheus data at ASCO, Evaluating atezo bevfidigit combination in HCC or hepatocellular carcinoma, a tumor type We were planning for the expansion phase in our current Phase 12a study given the high disease linkage with high PVR expression. HTC is also an indication and has shown promising activity with SRF-three eighty eight. Evolving TIGIT data From other competitive programs, we'll continue to inform our further development of this combination as we had previously stated. Regarding our recent merger with Surface Oncology, we are very excited about the potential to combine the surface assets with toripalumab.

Speaker 4

SRF-three eighty eight, the IL-twenty seven asset, has shown encouraging activity both as monotherapy non small cell lung cancer as well as in combination Checkpoint inhibitors in hepatocellular carcinoma. Importantly, responses have been shown in prior PD-one experience as well as PD L1 lung subjects. We anticipate presentation of the full available data sets in quarter 4 this year for the monotherapy data in non small cell And quarter 1 next year for the combination data in HCC. After we complete our surface merger, we will have the opportunity to work with a wider portfolio, targeting now not only the T cell, but also the tumor microenvironment with the potential synergies that, that could bring to improve patient benefit. We'll look at this broad portfolio of the coming weeks with an eye on As to how to best invest in and prioritize these assets, taking into account timeline, the competitive environment, Unmet medical needs and potential patient benefits, probability of technical and regulatory success, costs and other factors.

Speaker 4

We look forward to sharing more specific clinical plans across assets and tumor types later in the year. I'll now turn the call over to our Chief Financial Officer, David Stilwell. David? Thank you, Raj.

Speaker 2

Today, we reiterate our earlier financial guidance for 2023. We project revenue growth from accelerating SimRimy sales and the launches of Usimy, the UDENYCA auto injector and once approved The UDENYCA On Body Injector and Toric Panamax. For the full year, we expect to record at least $275,000,000 in net sales with at least $100,000,000 of similarly net product revenue. We continue to tightly manage our expenses And even with the expected addition of surface oncology related operating expenses in the Q4, we anticipate meeting our prior 2023 guidance range $315,000,000 to $335,000,000 for our combined R and D and SG and A expenses. This range excludes any upfront or milestone collaboration payments or the cost of the surface oncology merger.

Speaker 2

For my review of Q2 financial results, I'll touch on just a few highlights as the details are in the press release, 8 ks and 10 Q that we filed this afternoon. Net revenue was $58,700,000 during the 3 months ended June 30, 2023, representing an 81% increase over the prior quarter. This included $31,700,000 of net sales of UDENYCA And $26,700,000 of net sales of Zimmerli as well as approximately $200,000 in royalties we received from a license to our adalimumabab formulation. Cost of goods sold for the 3 months ended June 30, 2023 With $24,800,000 Recall that UDENYCA COGS includes a mid single digit royalty on net sales payable through the first half of 2024 and similarly COGS includes a low to mid-fifty percent royalty on gross profits. We continue to focus on keeping tight control on operating costs and research and development expense For the 3 months ended June 30, 2023, 2022 was $23,300,000 $41,600,000 respectively.

Speaker 2

The significant decline in R and D expense compared to the prior year quarter primarily resulted from the reduction in scope The taurupenumab collaboration agreement and also the capitalization of certain Qsymmari costs into inventory in 2023 that were expensed in R and D during the Q2 of 2022. We are beginning to realize the savings from the cost cutting program we announced earlier this year, Primarily as a result of reduced headcount, selling, general and administrative expense declined. SG and A was reduced to $45,100,000 in Q2 2023 from $51,300,000 The Q2 of 2022. With higher revenue and lower expenses, We reported a lower net loss for the Q2 of 2023, dollars 42,900,000 or $0.49 per share, Compared to a net loss of $50,200,000 or $0.65 per share for the same period in 2022. We expect operating losses will continue to moderate as product revenues increase and as we continue to constrain operating expenses.

Speaker 2

Cash, cash equivalents and investments in marketable securities were $144,700,000 as of June 30, 2023, compared to $191,700,000 at December 31, 2022. We expect the Surface Oncology merger to add $20,000,000,000 to $25,000,000,000 in cash to our balance sheet at closing. We have also stated that the merger will reduce our R and D expenses through 2025 By approximately $50,000,000 compared to budget, I'll now provide a bit more detail on our assumptions supporting that assertion. Prior to the surface deal, our major planned R and D activities through the 2025 planning period included a large Phase 3 clinical trial to expand torapenemab label beyond in BC. We also planned a Phase onetwo clinical trial to evaluate CHS-six, Our TIGIT targeted antibody in combination with furopamimab followed by initiation of a Phase twothree registration study as well as completion of pre IND activities for our ILP antibody and a Phase onetwo clinical trial.

Speaker 2

Additionally, we have planned to advance 2 other preclinical programs to IND. Following the completion of the surface We plan a portfolio prioritization project to determine which programs are most promising and competitively positioned. We currently expect that we will advance SRF-three eighty eight in combination with torapalumab for second line non small cell lung cancer. SRF-one hundred and fourteen in combination with torapalumab for first line head and neck cancer as well as certain other projects That makes the cut. Multiple programs will not make the cut and those we plan to stop Do not initiate or to gate pending additional competitor data and we will provide additional details at our investor event in the Q4.

Speaker 2

We're focused on ensuring the success of our new product launches and generation of the anticipated revenue growth. And we will continue to maintain tight control over our operating expenses as we aim toward a potential return to being cash flow positive over the course of 2024. I'll now hand the call to Denny Thank you, McDavid. We're pleased with our progress this quarter. We're happy now to take your questions.

Speaker 2

Operator, please proceed.

Operator

Thank you. We will now conduct the question Our first call comes from the line of Yigal Nakhomovich of Citigroup. Yajal, you're on.

Speaker 5

Hi, Denny and team. Thanks. Regarding UDENYCA, could you talk about the relative attribution of the auto injector, which was launched in the middle of the quarter and whether you're seeing a mix shift away from the prefilled syringer, The auto injector is growing share as well. And then more generally, once you get the OBI on the market as well, could you provide any broad comments around The relative split in the market between prefilled syringe, auto injector and the OBI? Thanks.

Speaker 2

Thank you for the question. I'll have Paul Reeder, our Chief Commercial Officer, address that for you. I'll just preface his remarks by saying, however, that we View UDENYCA, of course, is our foundation product in the face of our sales. And so our efforts in bringing forward all these various Presentations is really to solidify revenue stream for the mid and long term with Thank you, Danica. And with that said, I'll let Paul go ahead and answer your more specific questions regarding relative contribution of Auto injector, PFS and future of our body.

Speaker 2

Paul? Yes. Thank you, Denny. Thanks for your question, Nigel. So just to recap, the market here is about 42% in the at home market And then the other 58% in the in office segment.

Speaker 2

The PFS operates in the in office segment today. So the launch of the auto injector and the OBI is going to enable the UDENYCA franchise to really target that 42% Of the market that's dominated now by Onpro that equates to about 550,000 units per year. So in June, because we just launched the auto injector in June, we were still working through payer coverage. We're working through getting it on formularies, the operational aspects. So it was relatively minor contribution to the overall UDENYCA business in Q2 and over the course of the second half of the year and into 2024, we will now have 3 presentations to attack the entire market and the auto injector and OBI will enable us 2 shots on goal into that 42% of the Onpro.

Speaker 2

It's hard to project right now, Nigel, what the actual split is going to be until we get all three into the market And we see what the payer coverage is going to look like, the competitive dynamics. And suffice it to say, we feel very, very Encouraged about our opportunity to be able to differentiate the 3 presentations and grow share over the course of the second half of the year and into 2024.

Speaker 5

Thanks. And then just 2 other quick ones on SIMR. We obviously have very, very strong performance in the Q2 following the Q code. Can Can you just comment briefly on how much of that was contributed from inventory or stocking? And then on the broader question, just of the sales projected to the whole company, You reiterated the guidance of at least 275%.

Speaker 5

Obviously, you were 10% above the upper end of guidance this quarter. Are you thinking about raising the guidance for the full year? Thanks.

Speaker 2

Paul, would you, We'll take we'll give you one out of those 2, Nigel, and then we'll move on to another caller. Go ahead, Paul. Can you just answer the question of the summer lease sales, Yes. So Nigel, as we reported And expected the activation of the Q2 was going to unlock the reimbursement hurdle and that occurred. So All of the sales increase for Zimmerli was driven by the quadrupling of demand.

Speaker 2

And while you do see maybe some higher levels of inventory, which is normal when you're in a high Launch acceleration period like we are now. So when you have dozens and dozens of new accounts ordering regularly, You're going to see the wholesalers keeping inventory, but that those sales were driven largely by demand growth and market share growth organic into the business. As it relates to the guidance, we're as McDavid mentioned, we're maintaining guidance of $275,000,000 for the year with at least $100,000,000 coming from Synchrony. Yes. I would say that we yes, I would say that we feel Very good about the traction that we're getting in the market.

Speaker 2

Presumably in Q2, we like forward trajectory that we're seeing with With respect to that, the market uptake, I think that we've had critical mass with respect to similarly. We've administered more than 65 1,000 doses. And I think once you earn the trust of the ophthalmologist and they have confidence in the company and confidence in the product, I think you're in a better position. So I think that we definitely have some strong momentum going into the second half of the year with Semly.

Speaker 5

Thank you very much.

Operator

Thank you very much. Thank you very much. Standby. Our next question comes from Robyn Karnauskas of Truist Securities. Robyn, your line is open.

Speaker 6

Great. Thank you and congrats on all the progress this quarter. I guess my main question is, Teresa, maybe you can Give us a little bit more color about what is entailed for these on-site inspections that are scheduled and what logistically has to happen for the FDA? That'd be my first question, and then I have a follow-up.

Speaker 3

Yes. Thanks, Robin. So For approvals, there are always multiple inspections. Usually don't hear about them. They just happen in the background.

Speaker 3

With the COVID related travel restrictions to China, it's been more burdensome. So the manufacturing inspection happened, as you know, in May. We did have a remote Regulatory assessment of the clinical sites done already and we will have Then the clinical site inspections are pretty straightforward and much more streamlined than a manufacturing inspection. And then it's a matter of compiling the different divisions, assessments and coming up with an action. So typically, you work towards a PDUFA date, which is the deadline that brings everyone together and We'll be collaborating closely with our RPM to try to get this done as quickly as possible, Given how long it's taken to get all of these things scheduled.

Speaker 3

What I will say is that the FDA did honor their word If I get saying that we would be at the front of the line and for both the manufacturing and the clinical inspections, we are one of the first And for that, I am very grateful.

Speaker 6

Yes. I was just to elaborate on that. So they have to go over to China again and they've already scheduled the exact date. So I assume that they won't have the delay that they had before like they're set. The following was just you mentioned market share on Boudenica going from 11% to 12.2%.

Speaker 6

Now with the on Bhatti, with the auto injector, can you just talk a little bit about the cadence of how quickly that auto injector might contribute to Jake, should there be like a steady stream of share increase or would you think it's more like back end loaded? Thanks.

Speaker 2

Yes. Thanks for your question, Robin. Yes, I think with UDENYCA auto injector, it's likely to expect more of a steady increase Over the second half of the year, as we continue to get payer access on board and start working on the operational implementation, Particularly in the hospital segments where you got to get through P and T committees and then get them into the order sets and the EMR. Hospitals don't move quick, so that takes a little bit of time. But again, the most important thing is there's been really positive Receptivity by the customers for having an alternative to Onpro for patients that want to go home, Have an at home injection experience and the auto injector fits that need.

Speaker 2

So really it's just working through the operational and And the payer access issues that we will continue to work on over the course of the quarter and the second half of the year.

Speaker 6

Great. Congratulations, guys. Thank you.

Speaker 2

Thanks, Robin. Just also with respect to the auto injector, Paul may comment further, but I think that we put between 1,005,000 training devices of the auto injector out in the field, that one, Paul? We have and Robin you've seen me demonstrate that as well. So yes, the market receptivity is very high and Great job by the tech ops team to provide a device that's so easy and flexible to use for patient convenience at home.

Operator

Thank you very much. One moment for our next question. Our next question comes from Michael Novakovic of TD Cowen. Michael, your line is open.

Speaker 2

Hi, all. Thank you for

Speaker 1

the question. I know it's early days, but I'm curious if you could give us a sense of how the eSIM relaunch is doing so far? And did the actions of any of your biosimilar competitors surprise you? And then I'm also specifically curious how your Collaboration with Cost Plus Drugs is going so far. Do you see any early indicators that this channel could perhaps be more meaningful for you, Sumire, than you initially thought or that you might want to expand the collaboration to other products.

Speaker 2

Thank you, Michael for the question. I'll put that one over To Paul Reeder, I would say that we generally speaking, we felt that the market did not need Another high cost alternative in this market, we felt the best place to be competitive was a low cost alternative. The product has only been launched, Less than a month or maybe a month as of now. So I think it's fairly early days with respect to a market formation Or to make conclusions about how the market is going, Paul may have some additional color for you on your other topics. Paul?

Speaker 2

Yes. Thanks, Denny, and thanks for your question, Michael. As a matter of role, I don't typically comment on the actions Our competitors, what we really focused on was where we felt the opportunity was in this market and that's to bring Transparent low price product to address this exorbitant problem of the cost of adalimumab treatment. And our decision to partner with Mark Cuban's cost plus drug company really centered around two reasons. Number Both Mark Cuban and Coherus are innovators and we consider biosimilar adalimumab entry As an ideal opportunity to partner together to innovate within the highest drug category in the United States.

Speaker 2

2nd, We both share a mission to offer patients safe affordable medicines at transparent prices and we simulates this ideally into that model. How this unfolds over the course of the year as we expand the coverage in the distribution network and Educate providers, employers, healthcare systems about Ucimori and its price point is something that We're executing upon in earnest and I think we'll be able to report more on our performance in our Q3 call. And Michael, just some additional comments, Doug, with Paul's remarks. We view the build towards our target 10% market share and the long term trajectory up to 26% to 27%. So we don't think this is a market where You come and have very, very high sales out of the gate.

Speaker 2

We think this market is going to build over time. And our strategy is to build this market up Over time as we go forward, formulary access with the innovator in 2023 limits how much we can do this year. I think starting next year and then more significantly into 2025, I think we'll see a lot more traction there. So I would just manage your expectations Got

Speaker 4

it. Thank you.

Operator

Thank you very much. One moment for our next question. Our next question comes from Douglas Tsao of H. C. Wainwright.

Operator

Douglas, your line is open.

Speaker 7

Hi, good afternoon. Thanks for taking my questions. So, Denny, maybe following up on that last question or your last comment, You expect this to take place over time and sort of being realistic about The contracting situation with AbbVie for 2023, does that suggest that your own strategy, you have an that it will evolve and that while you have not necessarily been that active with some of the large payers Or PBMs in 2023 that over time you will look to increase your penetration there? Thank you.

Speaker 2

Thanks, Doug. AbbVie has been in this market for a long time. They own this market. They're the innovator. And I think there is significant incentives for AbbVie to continue to have significant market share as the market turns towards biosimilars this year.

Speaker 8

My point simply is that's just going

Speaker 2

to take some time to work through all that. The IRA is going to show up in 2025. I think that'll be important event for traction. But I would say a smoother more linear trajectory for a market like this as opposed to The acceleration, for example, that we're seeing under similarly, right, where you get something like Q codes and there's significant No opportunity to move the market more quickly. So I think each of these markets are just a little different and I just think the trajectory is going to be a Little flatter more over time, but I think it'll pick up like that 24% to 25% ish.

Speaker 7

Okay. And then just a quick follow-up in terms of UDENYCA, it Sounds like most of the growth just came from the prefilled syringe. Do you have any comment what drove, I mean, we finally it seemed that we started to see it's Great to see that product start to move in the right direction again.

Speaker 2

I'll let Paul take that one, Doug. I think that the I think the graph of market is very dynamic, with people coming in and out and so forth. But I think we've effectively managed Our average selling price for that market to be attractive. We maintain a very high average selling price there and I think that has yielded benefits And we'll continue to update, I think, across the additional presentations. Paul, any further comment on the performance of the PFS in Q2 or?

Speaker 2

Yes, Doug. I think it's a combination of things that Denny mentioned, but also having additional presentation launches Has created opportunities for the UDENYCA franchise where we didn't have before. And so whether that's with payers or whether that's with Clinics or hospitals, they see the value in having device options. Plus I think and I won't go into this for competitive reasons, but Outstanding execution by the commercial team on strategies that are driving organic demand And that's bearing fruit and we expect that to continue in the second half of the year. So I think it's a great testament that year 5 into the lifecycle, We're seeing the 2nd win for UDENYCA and with the device options, we continue to expect market share growth in the second half here and beyond.

Speaker 7

Okay, great. Thank you.

Operator

Thank you very much. One moment for our next question. Next question comes from the line of Balaji Prasad. You

Speaker 3

are up.

Speaker 9

Good evening. This is Xiao on for Pilates. Thanks for taking our questions. Just a quick one on taurit. Seems like your partner Junshi announced that it was approved in If the OS and PFS are both better than current first line options in the U.

Speaker 9

S. For extensive stage small cell lung cancer, Such as TAEZO, would you consider changing your product strategy with TAE as it could potentially fulfill an And if I remember correct, the FDA has granted tau re open drug designation back in April 2022, which was after the Lilly ODAC.

Speaker 5

Thank

Speaker 2

you. Thanks for that question. That's a very interesting observation that's expected also. Raj Dyer, our Chief NUC Officer, I'll be able to answer just that for you, Raj.

Speaker 4

Thanks for the question. I said in my comments that the small cell lung cancer data was positive. We're yet to actually present the data. So we anticipate that will be presented later this year. As you know, the current standard is etoposide platinum in terms of the Current standard therapy plus or minus dervo or atezo based on actually a very marginal overall survival benefit for those 2 I O agents.

Speaker 4

I think as we look at the U. S, our strategy is I mentioned the fact that we will be Initiating a earlier stage study in small cell lung cancer that's in limited stage, and that's it with our combination. So really outside NPC, our major focus will be with combinations. We do view toripalumab as a very good PD-one next generation, which really will form the foundation of combination therapy. So that's really our strategy as we look into indications over and above Our current and APC indication.

Speaker 2

I think it's really an excellent point. The Orpelimab continues to demonstrate really strong efficacy with a great safety profile in a number of settings, monotherapy or Adjunctual with chemotherapy. We think that sets it up very, very well for combinations. We have keen interest in pursuing combinations with a number of products Post approval of the MPC indication, for example, ADCs or other combination of agents. So we expect to be busy on the deal front.

Speaker 2

Once Tore gets approved to really more broadly proliferate it to use into oncology.

Speaker 9

Got it. Very helpful. Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Chris Schott at JPMorgan. Chris, your line is open.

Speaker 10

Great. Thanks very much. Just 2 for me. Just going back to biosimilar HUMIRA in the market. I appreciate This will take some time just given AbbVie's positioning, etcetera.

Speaker 10

But I guess I'm still trying to get my hands around, do you kind of think of this as Payers and kind of the channel making annual decisions about either what product they're going to cover or how they're going to approach this? Or do you think this is a market That's in flux where you can see kind of multiple decisions being made in a given year, just as we're trying to kind of evaluate the evolution of this. And second question, I just want to make sure I've got my hands around this. I guess just following the Surface acquisition and with the portfolio reorg, can you Just a little bit, just as we think about kind of 2024 OpEx relative to 2023, just directionally, is that a similar level of spend? Is it up next year?

Speaker 10

Is it down? I'm just trying to kind of balance some of the synergies you're talking about relative to what the baseline expense might have been otherwise. Just any directional color would be kind of appreciated there. Thank

Speaker 2

you. Thanks, Chris. So let me take the first one with respect to the summary and the Thank you, Myra, about a similar story and then I'll let McDavid Stowell address your questions about the SERP for York over the next year with the Directions on the spend. I think that it's very, very early days with respect to the Humira biosimilar opportunity. There's a lot of people in the market.

Speaker 2

There is a diversity of pricing strategies, diversity of channel strategies going forward. There's folks who have high and medium sort of WACC and low WACC and so on. So I think that market formation is going to take a while for this to sort of shake out. So I really wouldn't make any conclusions about that maybe until we get into Sure. And see how things are kind of going.

Speaker 2

I think it's just way too early to say or call winners or losers. With respect to the SERP pre org and its impact on spend, I'll send that one over to McDavid Stilwell for comment. Yes. So Chris, I think it's too early for us to be putting out there a direction For where R and D spend is going specifically in 2024. I will tell you though that we are beginning to reap the benefits The cost cutting programs will be put into place this year and we are intensely focused on constraining the expense line throughout this company And we are also intensely focused on returning to being cash flow positive over the course of 2024.

Speaker 2

All of that is very much top of mind for us as we operate this company and as we make decisions About R and D programs. And we look forward to updating everybody in the Q4 after we've had our portfolio prioritization program Post closing of the surface oncology acquisition. And I think that will be the most relevant time point to be able to provide some more information. I'll just give you one more on that one, a little more color, Chris, is that we do not anticipate starting any expensive Phase 3s next Sure. Those with the way the portfolio is positioned, those are your rolled into 2025 when we anticipate having additional revenues to support that.

Speaker 2

So we're not going to go out and hang out really expensive Phase 3 studies to make 100 of $1,000,000 of commitments, right. As David pointed out, We're really focused on driving the business back to profitability and cash flow positivity next year. And so we're going to start there. Yes. They also the other point I would make is we have a very strong track record here of delivering on our projections for spending control.

Speaker 2

Last year we said we'd take Our $435,000,000 spend down about 3.25 percent. We've done that. We did a riff and we said we'd recognize savings. We've done that. We've gone ahead and delivered on what we said on the spending side.

Speaker 2

And so I think you'll see us continue with that sort of very, very tight discipline. We don't have a lot of additional heads that we're going to add, maybe just a few with respect to the service oncology merger. So I think we're relatively tight fisted when

Speaker 10

Great. Appreciate the color. Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Jason Gerberry. Jason, your line is open.

Speaker 11

Hey, guys. This is Bhavan Patel on for Jason. Two questions for me. First on LUCENTIS, as you look at the market opportunity, are you seeing any surprises In terms of pricing, brand share retention or just the shift of market to other treatment alternatives? And then the second on gross margins, Maybe if you can provide some commentary on how you see gross margins in the second half of twenty twenty three and in 2024.

Speaker 11

Looks like we're seeing step downs even absent the one time inventory costs. So just wanted to get some thoughts on how we should think about that moving forward? Thank you.

Speaker 2

Thanks. We're actually very pleased with the way the Lucentis biosimilar similarly market is Shaping up for us. I had the opportunity to attend the American Cythea, a retinal specialty in Seattle, like my entire commercial team did last weekend. We made a presentation there. And what really Struck me about that was the way Coviris really is being embraced by the ophthalmologist as a very, very solid partner.

Speaker 2

As I indicated earlier, we have over 65,000 injections now. And the ophthalmology market is 1 in which doctors have long term relationship with their patients. They have these patients 10, 15, 20 years. And that means there's trust. And what that translates to is that these ophthalmologists have to in a very similar fashion trust manufacturers and the companies.

Speaker 2

They had issues with new products that have come in. So they really want to make sure that any product that shows up is safe and efficacious for their patients. What this means is that you have to sort of get a critical mass of administrations under your belt and then they know that it's Safe and efficacious product and working well. We've done that. And then they will adopt into your practice.

Speaker 2

And now we've seen that too as Paul recited. So, overall, we think that's going very well. I think Paul reiterated places where we're focused in terms of gaining the scripts. Paul? Yes.

Speaker 2

I think that getting through the Q code was really the primary barrier that opened up A lot of practices that are ready to adopt biosimilars that just wanted the ability to bill electronically and not take on that manual process. So I think what we're seeing in the market now is a real optimism around The role that biosimilars can play in the market and what similarly brings to them in the ranibizumab class is a product that is interchangeable, which means that they can feel confident that they can switch a stable lucentis patient to similarly and get the same results. And that level of confidence in the safety is really bearing out now in the experience that the doctors are seeing. They told us Last week, on multiple occasions that the product is delivering on the clinical profile. All of that now Just breeds continued optimism for adopting similarly and it will help to contribute to Share gains in the second half of the year.

Speaker 2

So I think we're really getting our stride here. Yes. I think just one last remark for Hanover

Speaker 4

and McDavid. I think

Speaker 2

the interchangeability is really important. This is a non glycosylated molecule. So this is really an amino acid sequence And we have exactly the same amino acid sequence, exactly the same formulation, exactly the same excipients and buffers and pH and so on. So this is really the same product being administered. So I think that gives the Physicians and ophthalmologists, a lot of comfort and confidence.

Speaker 2

As Paul said, we're now past the reimbursement issue with acute care. So I think we're rather bullish on that. McDavid, do you want to follow-up the other question? Sure. And our gross margin is obviously going to be a function of the Product mix and the cost of goods of the various products, as similarly sales increased, similarly has a larger influence on the Overall gross margin and similarly cost of goods includes a low to mid-fifty percent royalty on gross profits.

Speaker 2

So as the product revenue mix evolves, so will the gross margin. And next year, UZIVRI and torpedomab will have Increasingly influential roles in the overall gross margin as well. And however, next year the identical Royalty comes up, Greg? Exactly. The Utimica royalty, the mid single digit royalty that we pay on Utimica net sales will roll off In July of 2024.

Speaker 2

So that will be advantageous. That will. Thank you. Thank you for your question.

Operator

Thank you. Please stand by for our final question. Our final question comes from the line of Ash Verma from UBS. Ash, your line is open.

Speaker 8

Hey, guys. Thanks for taking my question. So just wanted to ask about the pricing on biosimilar Humira. Do you think this type of aggressive pricing is a one off or does this set the template for you to price future products going forward? And is this type of level of discount that you can get to for existing products much faster now versus what you were previously thinking?

Speaker 8

So, it just would be helpful to get some comments on that. Thanks.

Speaker 2

Thanks Ash. So, I think that each of these products have to be priced specifically for the market that they're in. And our conclusion as I indicated before with respect to the Meyer Bostimer pricing is, we really didn't need another high priced, high WACC Competitor in the market. So we felt this was the right place to go and we think the strategy for this market is unique. You build from the bottom up with a very low price.

Speaker 2

That does not apply to the other markets. That does not apply to oncology or to PD-1s or even to UDENYCA. We have the highest one of the highest ASPs over 5 years with Edenica. So I think this particular pricing strategy It is unique to what's going on over on the Humira biosimilar side of the business, which That is part of the key and a number of other moving parts.

Speaker 6

Great. Thanks.

Operator

Thank you very much. At this time, I would now like to turn the conference call back to Denny Lanphier for closing remarks.

Speaker 2

Thank you, operator. Thank you all for joining us on our Q2 2023 call. We're pleased with the progress that we've made so far. We look forward to seeing you on our next call, it should be sometime in November. We further look forward to seeing you at Analyst Day, which will probably be in Late November, December timeframe, post merger closure.

Speaker 2

Thank you. Bye bye.

Speaker 1

Thank you. This concludes today's conference call.

Operator

You may now disconnect.

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Key Takeaways

  • Coherus reported $58.5 million in Q2 net product revenues—an 81% increase over Q1—driven by Simrimi (ranibizumab) and UDENYCA sales, and reiterated full‐year net sales guidance of at least $275 million with $100 million from Simrimi.
  • Simrimi captured a 17% market share in the ranibizumab class in Q2 after the April 1 Q‐code implementation, quadrupling demand quarter‐over‐quarter and expanding to 412 ordering accounts.
  • UDENYCA net revenues grew 21% sequentially to $31.7 million, supported by the April launch of an auto‐injector presentation and anticipation of an on‐body injector approval and launch by year‐end.
  • The company launched its HUMIRA biosimilar, Ucimri, on July 3 at a disruptive $9.95 list price (over 85% discount) via Cost Plus Drugs and specialty pharmacy partners, targeting up to 10% market share by 2026–27.
  • Coherus signed a Q3 merger agreement with Surface Oncology to combine toripalimab (a next‐generation PD‐1 inhibitor) with Surface’s tumor‐microenvironment assets, aiming for a portfolio event in Q4 and eventual cash‐flow positivity in 2024.
A.I. generated. May contain errors.
Earnings Conference Call
Coherus BioSciences Q2 2023
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