Coherus BioSciences Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 13, 2024

There are 10 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Q4 2023 Coherus Biosciences Inc. Earnings 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.

Operator

Please be advised that today's conference is being recorded. Would now like to hand the conference over to your speaker today, Jamie Taylor, Head of Investor Relations for Coherus.

Speaker 1

Thank you, operator. Good afternoon, and welcome to Coherus Biosciences' 4th quarter and full year 2023 earnings conference call. Joining me today to discuss our results are Denny Lanfear, Chief Executive Officer of Coherus Brian McMichael, Interim Chief Financial Officer Paul Reeder, Chief Commercial Officer Rosh Dias, Chief Medical Officer and Theresa Livalli, Chief Development Officer. Before we get started, I would like to remind you that today's call includes forward looking statements regarding Coherus' current expectations about future events. These statements include, but are not limited to, the following: our ability to advance our pipeline projections of future growth revenue, expenses, headcount and debt levels and the timing of any return to profitability or cash flow positivity.

Speaker 1

All of these forward looking statements involve substantial risks and uncertainties that are beyond our control and 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 inherent in the clinical drug development process 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 statement. With that, I'll turn the call over to Denny.

Speaker 2

Thanks, Jamie, and thank you all for joining us on the call today. I'm pleased to report to you today's strong 4th quarter results, rounding out an important year of transition for Coherus as we sharpened our focus on innovative oncology, positioning the company for new levels of efficiency and growth in 2024 and beyond. Our strategy and our mission are clear to extend the lives of cancer patients. Today, we are delivering on the strategy in every front, positioning Coherus for long term sustainable growth as an oncology company. We believe this strategy creates long term shareholder value as we develop and deliver next generation oncology treatments for patients.

Speaker 2

We continue on the path that we set forward last year, which is to first drive sales growth and revenues across the oncology portfolio with new product launches of UDENYCA and Lactorsi. Secondly, simultaneously reduce our spend and interest costs. 3rd, realign our balance sheet by reducing our debt and advance our high potential pipeline focused on the tumor microenvironment and those complementary with our PD-one. We experienced double digit sales growth in 2023. And I'll let Paul Reeder, our Chief Commercial Officer, discuss continued progress on revenue and share growth in just a moment.

Speaker 2

Let me start with the spending and headcount reductions in 2024. Last year, we began a multifaceted process of driving new efficiencies through headcount reductions, product divestitures and business process integration for greater

Speaker 3

efficiencies. Today, as part

Speaker 2

of this plan to position us for sustainable growth, we are announcing a 30% headcount reduction for 2024 and cost reductions as part of our transformation. We are projecting an SG and A plus R and D spend for 2024 of $250,000,000 to $265,000,000 which is reduced from $301,000,000 in 2023, which itself was reduced from about $400,000,000 in 2022. This reduction was the result of a rigorous evaluation of every role within the company with the objective to reduce or eliminate FTE spend wherever possible. These actions demonstrate that we remain highly committed to returning to profitability as soon as possible and cash flow positivity 2024 remains our goal. Now as previously stated, monetization of ex U.

Speaker 2

S. Rights is one of the cash management levers we seek to use to preserve our capital.

Speaker 3

Accordingly, we have

Speaker 2

agreed with Junshi to defer and reduce $25,000,000 approval milestone payment scheduled for this quarter Q1, 2024. This payment is now bifurcated to 2 parts, dollars 12,500,000 to be paid next quarter Q2, 2024 and additional payment of $12,500,000 to be paid in Q1 2025, such second tranche to be potentially reduced by proceeds from the monetization of Canadian to our Palmet rights. This reflects our strong partnership and high level of cooperation with Yunxi. With respect to realignment of our balance sheet and reduction of debt, we are pleased with the financial outcome for the divestiture of our ophthalmology franchise. Our efforts to strengthen our balance sheet and overall capital structure are progressing well and we recently announced the renegotiated agreement with Pharmakon Advisors, pay down 1 $175,000,000 in term loan debt, decreasing our term loan interest payment burden by roughly 70% moving into the remainder 2024.

Speaker 2

The ophthalmology divestiture also allows us to streamline operations. Today, Coherus is a leaner, more efficient and more nimble organization capable of competing in the marketplace with even greater focus, agility and intensity, tightly focused on being a sustainable and growing oncology company. With Lactoresi, we are gaining predictable and growing high margin revenues from our innovative product and are able to realize the synergies of having 2 adjacent oncology products.

Speaker 4

I want

Speaker 2

to congratulate our R and D and regulatory teams for their success in securing 3 product approvals in 2023 from the FDA. This is a major accomplishment for any company, especially one of our size. The FDA approvals of the UDENYCA auto injector, UDENYCA OnBody injector and Lactorsi and nasopharyngeal cancer have positioned us for further commercial success in 2024, capitalizing on synergies. Each of these products aligns to our vision of oncology leadership and each paves the way for the impressive slate of tumor microenvironment focused immuno oncology assets in our development pipeline. As Doctor.

Speaker 2

Diaz will describe shortly, 1st in class and potential best in class drug candidates have the potential to deliver on our vision of extending patient survival and driving long term shareholder value creation. Now with that, I'll turn it over to my Chief Commercial Officer, Mr. Paul Reeder. Paul?

Speaker 3

Thank you, Denny, and good afternoon, everyone. We ended 2023 with strong momentum to the business. With the divestiture of the ophthalmology franchise, we'll use this momentum in 2024 to hyper focus on our oncology business to drive top line growth of our core oncology assets, UDENYCA and Lactorsy. For the Q4, combined net product revenue was 91,400,000 dollars an increase of 23% over Q3. Full year 2023 net product revenue was 256,600,000 dollars a 22% increase over 2022.

Speaker 3

I'll now speak to each brand and we'll begin with oncology starting with UDENYCA. I'm excited to announce that in Q4, UDENYCA eclipsed 1,000,000 units sold since its launch, a significant and important milestone and demonstration of our customers' belief in UDENYCA and Coherus' continued commitment to cancer patients. Now that both the UDENYCA auto injector and on body presentations are launched, our strategy moving forward is to deliver profitable revenue and market share growth fueled by 3 drivers. 1st, UDENYCA is the only pegfilgrastim brand with 3 device options to meet the unique needs of providers and patients. This strengthens our competitive position and allows us to compete on factors other than price.

Speaker 3

2nd, the launch of UDENYCA On Body, a novel and proprietary state of the art delivery system with pegfilgrastim enabling us to compete now within the entire pegfilgrastim market. And third, we come into 2024 with payer coverage of nearly 2 times that of 2023, opening up access to significantly more patient lives. Our disciplined execution of this strategy is delivering a 3rd consecutive quarter of UDENYCA revenue and demand growth. Q4 net sales were $36,200,000 an increase of 10% quarter over quarter. Total unit demand grew 7% quarter over quarter, driven by increased payer coverage, continued growth of the prefilled syringe presentation and accelerated adoption of auto injector.

Speaker 3

Customer enthusiasm for the UDENYCA auto injector presentation led to a 129% demand growth quarter over quarter. And since commercial launch in May of 2023, 727 accounts have ordered the auto injector presentation. UDENYCA OnBody was launched last month in February. High customer demand for a unique and differentiated OnBody device, coupled with confirmed payer coverage is leading to encouraging demand uptake in these 1st few weeks of launch, with 138 accounts already ordering on body. Based on data from IQVIA, rolling 4 week UDENYCA market share as of March 1 was 26%, representing an increase of 15 market share points versus the same time period in 2023.

Speaker 3

UDENYCA is now a franchise and the only pegfilgrasto brand with 3 presentation offerings now becoming the total solution for oncology providers. With respect to our non core assets, I'll start with Ucimori. Q4, we sold 3,800 cartons, generating net sales of $2,200,000 Full year 2023 net sales were $3,600,000 We continue to expect slower growth for Humira Biosimilars through 2024 till the implementation of the Inflation Reduction Act 2025. Regarding similarly, net revenue in Q4 grew to $52,400,000 an increase of 31% quarter over quarter. Full year 2023 net revenue was $125,400,000 exceeding our guidance of at least $100,000,000 Similarly, market share within the ranivizumab class is 34% in Q4, an increase of 6 market share points quarter over quarter.

Speaker 3

Let me conclude now with LOCTORZY, our other core oncology asset. LOCTORZY plus chemo is the 1st and only FDA approved treatment for recurrent remetastatic MPC in all lines of therapy. We launched January 2 and it's going well, with demand uptake tracking to expectations. For Q4, we recorded $600,000 in sales based on initial wholesaler stocking to support the commercial launch. MPC is a rare cancer and we estimate that the U.

Speaker 3

S. MPC market is valued up to $200,000,000 at peak, consisting of approximately 2,000 recurrent or metastatic MPC patients who are diagnosed each year and are split evenly between those in first line versus second line plus. With LOCTORZY's broad indication in all lines of therapy, we are executing a plan to establish Lactorsi plus chemo as a new standard of care. And our ambition to make Lactorsi available to as many NPDC patients as quickly as possible. Our conviction in achieving this ambition is bolstered by the following.

Speaker 3

1st, we have strong advocacy from the nation's leading opinion leaders in MPC. During the multidisciplinary head and neck cancer symposium, well, just 2 weeks ago, we held over 50 1 on 1 in person meeting with the nation's top opinion leaders and over 90% of them affirmed universally that bloktorzi plus chemo will become the new standard of care at MPC based on its FDA approved indication and the strength of the Phase 3 data that includes significant improvements on progression free and overall survival. 2nd, LOCTORZY has achieved preferred listing on both the ASCO and NCCN and PC guidelines. Raj will speak to this further, but Lactorsi is the only PE-one with a Category 1 designation with NCCN for first line use, a clear differentiator for Lactorsi and a core message in the Lactorsi promotional message campaign. 3rd, we've confirmed payer coverage now to label with payers representing approximately 95% of targeted lives.

Speaker 3

This includes Medicare fee for service. 4th, the innovative tools we deploy to identify MPC patients are bearing fruit. We've invested in and deployed real time claims associated with MPC ICD-ten codes as well as electronic medical record data sources to help identify appropriate NPC patients, be identified of course. These tools alert our field teams in real time when an oncologist has an NPC patient, which then triggers 2 actions. 1st, a locked towards the sales call with that doctor and second, hyper targeted branded digital advertising to that oncologist.

Speaker 3

In terms of early impact, over 60% of accounts that have ordered Lactorsy thus far were sourced from the use of these tools. Last and most important, oncologists are prescribing Lactorsi. Since launch, we've had 59 accounts order Lactorsi comprised of both clinics and hospitals. With respect to the 33 NCCN designated cancer centers, 55% have already added Lactorsy to formulary with the remaining centers in P and T review. And I'm confident we'll have successful outcomes with these centers as well.

Speaker 3

In summary, we're excited to become a trusted partner within the head and neck community and to bring new hope for greater survival for MPC patients nationwide. With that, I'll now hand it over to Raj. Thanks very much, Paul, and good afternoon, everyone.

Speaker 4

The past few months have been an exciting time for LOPTARZI, which remains the foundational element of our immuno oncology portfolio. Following FDA approval on October 27th last year, final overall survival data from the pivotal registration study JUPITER 2 was published in JAMA in November showing a hazard ratio for survival of 0.63 favoring the LOCKTOLISY arm, which represents a 37% risk reduction in mortality in patients living with advanced NPC. This overall survival advantage is not only statistically significant, but also very clinically meaningful as NPC patients have not up until now had any approved treatment options for their disease. Within 6 weeks of approval, LOCTORZY was also included in the NCCN guidelines for NPC by the NCCN head and neck panel with a very strong positioning. First line disease, Loktorsy is listed as a preferred therapy and the only checkpoint inhibitor with category 1 designation, which does reflect the highest level of evidence and also uniformity of the panel member's decision.

Speaker 4

The second line and beyond, LOQTORZI is the only agent listed as a preferred therapy and both designations are very reflective of both strength of the data and the clear unmet medical need. Outside NPC, several additional positive Phase 3 datasets have been published over the past few months, all in high tier journals, including the NEOTOR study in JAMA, showing a positive and profound event free survival benefit favoring toripalumab in perioperative, locally advanced non small cell lung cancer Torchlight in Nature Medicine with a positive progression free survival benefit in triple negative breast cancer and RenaTorch in the annals of oncology showing a PFS benefit in renal cell carcinoma. In addition, positive randomized Phase 2 data in locally advanced gastroesophageal junction carcinoma has also been published recently in Nature Medicine. Been very consistent in our communication that our strategic approach in tumors outside MPC will be in developing toripalumab in combinations of partnerships and therefore these positive data sets across additional tumor types sets us up well for partnerships not only in NPC but also beyond with toripalumab forming the backbone for investigation in combination with other novel investigational agents. A recent example of this was our Inovio partnership where we announced that we will be supplying toripalumab in combination with Inovio's DNA based vaccine directed against HPV positive tumors for investigation in a registration enabling study in locally advanced head and neck squamous cell carcinoma, a tumor type that is complementary to our current indication in NPC.

Speaker 4

Regarding our clinical stage pipeline, we remain excited about the potential combine our novel agents on top of the tauripelinab backbone by targeting both the T cell with tauripelinab and also the tumor microenvironment with our novel agents. The aim will be to make the tumor microenvironment more favorable to antitumor effect and therefore realize potential additive benefit. Regarding CASTOSO KEY TOK, our 1st in class and only clinical stage anti IL-twenty seven molecule, we presented data at ESMA IO in December in advanced non small cell lung cancer, where CABDASA demonstrated monotherapy responses in PD L1 refractory non small cell lung cancer with no safety concerns. These encouraging data position us well for further investigation of CADOSO in this tumor type in combination with tory and we are currently enrolling patients in a new arm in our KADOSA Phase 1b study evaluating KADOSA in combination with tauripalumab in patients with advanced non small cell lung cancer. This study is currently open and we have patients active on study and we anticipate presenting data from this study either later this year or early next year.

Speaker 4

For hepatosolonecarcinoma, we presented CADOVO data in first line HCC at ASCO GI in January with CADOVO in combination with atezo and bev demonstrating an overall response rate of 38% by RECIST and 43% by MResist, including complete responses in 3 subjects. Recall earlier data that we presented from this study last year showed an overall response rate of 27% with only partial responses. So this increase in response rate together with deepening of the responses is very encouraging. Moving forward, we will be investigating Cazdoso in combination with toripalumab and bevacizumab in first line HCC, which we anticipate will start later this year. We're particularly encouraged that the clinical activity observed with our IL-twenty seven antagonist, Cazoso, has in addition to clinical response demonstrated immune activation in liver and lung patients.

Speaker 4

The biomarker work from these two clinical studies have revealed an association of higher levels of IL-twenty seven expression in tumors and CABOSA response. We will continue to evaluate if IL-twenty seven expression is informative for indication selection or if it can improve patient outcomes as a predictive biomarker. Other tumor types besides lung cancer and HCC that have high levels of IL-twenty seven expression, head and neck cancer, gastric cancer and triple negative breast cancer. Octoly has demonstrated activity in several of these tumor types and supports the potential for additional synergies of the Cazoso tau recombination treatment in some of these additional cancers. Finally, CHS-one hundred and fourteen, our CCR8 antibody is nearing completion of the dose escalation stage of our Phase 1 study without any safety concerns.

Speaker 4

Non clinical data presented at SITC last year highlighted the potential for targeting CCR8 to deplete Tregs in the tumor microenvironment to enhance anti tumor response in head and neck squamous cell. Once dose escalation is complete, we plan to expand the study to explore CHS-one hundred and fourteen in combination with toripalumab in patients with head and neck cancer where the biology of the target shows strong disease linkage. I'll now turn it over to Teresa.

Speaker 1

Thank you, Raj, and good afternoon, everyone. I want to once again thank the FDA for taking the approval action in a timely manner and much faster than the BASUFA 6 month time period for the UDENYCA OnBody supplement after our resubmission in October. With both the UDENYCA OnBody approval and approval of Lactorsi for all lines of therapy and all patient subsets of nasopharyngeal carcinoma. The Coherus oncology franchise is well positioned. Bloktorzi is a next generation PD-one inhibitor with potent activation of T cells, including demonstrating significant activity in tumors that are less inflamed.

Speaker 1

Our LOCKTORC mechanism of action paper recently published in Cancer Immunology Immunotherapy describes its potent activity on T cells that is attributed to both high binding affinity for PD-one and its finding at a unique epitope, the FG loop of PD-one. Bloktorsi is the foundation of our IO franchise and we are excited to explore clinical opportunities to extend patient survival with novel combinations, particularly with agents that target mechanisms of PD-one resistance due to immune suppression in the tumor microenvironment. Immune suppressive M2 macrophages have been well characterized to dampen the immune system. Our CHS-one thousand program, an anti ILT4 antibody is on track for IND submission in the Q2 of this year. We will be presenting the preclinical data from our CHS-one thousand program at AACR in April.

Speaker 1

The poster presentation presents the non clinical characterization of CHS-one thousand showing it is an ILT4 selective and potent antibody that promotes an inflammatory immune response. Tumor types with high expression of ILT4 include lung, head and neck, liver, breast and ovarian cancer. In addition to advancing new we have a number of exciting novel external combinations and discussions. Another important partnering initiative is exploring novel combinations with COSDOSO and CHS-one hundred and fourteen. Given their safety profiles, strong line of sight to tumor indications and immune modulation in cancer patients, there are several rational combinations such as bispecific antibodies including T cell engagers, ADCs, targeted therapies and even CAR T therapies.

Speaker 1

I'll now turn the call to Brian.

Speaker 5

Thank you, Theresa, and good afternoon, everyone. I'll briefly review the results for the quarter and the full year. As Paul covered revenues, I will start with costs and expenses. Cost of goods sold increased significantly for the year to $159,000,000 compared to $70,100,000 in the prior year, driven primarily by our non core products. Specifically, in Q4 2023, we recorded a $47,000,000 charge for the write down of slow moving In addition, similarly COGS included a low to mid-fifty percent royalty on gross profits.

Speaker 5

Gross margin for the 4th quarter was 8%. Excluding the $47,000,000 write down, gross margin for the quarter would have been 59%, including the royalty on similarly gross profits mentioned earlier and the mid single digit royalty we pay to UDENYCA we pay on UDENYCA net sales. We ended the year with R and D expense totaling $109,400,000 down $89,900,000 from the prior year. R and D expense for Q4 2023 was $26,400,000 a decrease of $2,700,000 from the same period in the prior year. The declines reflected expenditures in 2022 that did not reoccur in 2023, namely the $35,000,000 of new products that happened during 2023 and savings with reduced headcount.

Speaker 5

SG and A expense for the year was $192,000,000 down from $198,500,000 in the prior year. For the quarter, SG and A expense was $49,500,000 down $4,100,000 8% compared to a year ago. The decrease is primarily reflected savings from lower headcount, partially offset by other costs. For the Q4 of 2023, we reported a net loss of $79,700,000 or $0.71 per share, compared to a net loss of $58,900,000 or $0.76 per share for the same period in 2022. Cash and cash equivalents and investments in marketable securities were $117,700,000 as of December 31, 2023 compared to $192,000,000 at December 31, 2022.

Speaker 5

Our 2023 results included 40.5 $1,000,000 of interest expense. We expect to reduce our cash flow borrowing costs by more than $24,000,000 on an annualized basis following the partial pay down using proceeds from the Zimmerliq divestiture. In addition, we expect to save at least $25,000,000 on an annualized basis in OpEx due to headcount reductions associated with the divestiture and the reduction in force. After factoring in these savings in addition to those expected from the termination of the TIGIT program that we announced in January, Coherus is introducing a 2024 guidance range of combined R and D and SG and A expense of $250,000,000 to $265,000,000 This guidance includes approximately $40,000,000 of stock based compensation expense and excludes the effects of strategic acquisitions, collaborations and investments, the exercise of rights or options related to collaboration programs and any other transactions or circumstances not yet identified or quantified. With that, I'll turn the call back over to Denny.

Speaker 2

Thank you, Brian. Operator, we're ready to open the line up for questions. Thank you. Thank

Operator

you. Our first question comes from Robin Karnauskas with Chuy Securities. You may proceed.

Speaker 6

Hey, this is Nishanth. I'm on for Robin. Thanks for taking our question. So, I have one on UDENYCA and one on Luxorgy. So, with UDENYCA, you continue to increase market share, it's up 7% point quarter over quarter, but however, the sales are up by 10%.

Speaker 6

Can you provide more color, how much was the effect of net selling price reduction this quarter? And for LUXORZY, you mentioned the launch is going well. Can you provide more color as in whether the drug has been used more in frontline or second line setting? Thank you.

Speaker 2

Thank you. Thank you very much. Paul will be happy to address your question with respect to UDENYCA. And then secondarily, the question of launch of first line versus second line for Lactorsi. Paul?

Speaker 3

Yes. Hi, Michel and thanks for your question. Yes, so the effect of the net selling price quarter over quarter was in the mid single digit range. And as I mentioned in my remarks, our focus now that we've launched all and have all three presentations is that we're now going to drive the franchise to profitable market share and revenue growth. And that's going to be our plan in 2024 and beyond.

Speaker 3

We're going to do that because we have now all three presentations, can access the entire market. We've locked in great payer coverage and we've been able to have a competitive ASP. So we're looking forward to a successful 2024 with UDENYCA franchise. Regarding Lactorsa and your question about we getting first line or second line, we're just a couple of months into it. I'll be better able on our Q1 call to give you more specifics.

Speaker 3

But what our intelligence tells us now is we're getting patients across all lines of therapy. And that's not unexpected given that we've got the indication for all lines of treatment. But many of the patients that are just gotten chemo in second line, they're going to get LOCKTORZY immediately now. So we're getting it in both lines, which is great and the launch is going very well. So

Speaker 2

I think as an ancillary

Speaker 3

response to your

Speaker 2

question, Nishan, perhaps Dexeditis like to comment on the selection of Lactoresi as a PD-one for patients diagnosed with MPC? Yes, happy to. So, I can tell

Speaker 4

you as a physician, doctors tend to be very evidence based and data driven. What I will say is that LOCKTOLZY has three things that other checkpoint inhibitors do not have. First of all, we have data from a randomized controlled study. And not only do we have data, we have overall survival data, which is actually the gold standard that oncologists look for. I mentioned the 37% risk reduction in terms of survival advantage with the addition of LOCK2OV.

Speaker 4

Secondly, of course, we have a label, and other checkpoint inhibitors do not have a label. And not only actually, not only do other checkpoint inhibits not have labels, there's no other indicated therapeutic agents for NPC. And thirdly, I'll say to Denny's point, we also have preferred positioning in terms of NCCN guidelines. We are the only category 1 listed agent for first line in terms of immunotherapy. And I think that really does reflect the strength of the data and the confidence in the data in this area of unmet need.

Speaker 2

Thank you, Raj. Thank you for your question, Nishan.

Speaker 6

Thank you.

Operator

Thank you. One moment for questions. Our next question comes from Yigal Nochomovitz with Citigroup. You may proceed.

Speaker 7

Hi, Denny and team. Thank you for taking the questions. On the liver cancer study, I'm just curious, I think the key comp there is IMbrave 150. Nominally, you are above those numbers. Of course, the numbers are small.

Speaker 7

I'm just curious, if you could comment as to how much better you think you'd need to be than the IMBRUV150 benchmark to be on a go forward decision with your triple combo? Thank you.

Speaker 2

Thanks, Yigal. Rex Dias can address that.

Speaker 4

Yes. So you're absolutely right. The IMBRADE data with atezo bev is actually the only atezo bev is the license indication right now. So we've shown a response rate, as I said, of 38%, 43% with mResist. I think we'll be looking at this is the kind of range we're actually looking for further development, right?

Speaker 4

So I think with the data that we presented at ASCO GI in January is exactly what we were looking for. And we will be following up with a further study that's going to start late this year, if we're looking at that triplet combination. Yes.

Speaker 1

And if I can add to that, Yigit, I think in a 30 patient study, the numbers are higher, but it's not an apples to apples comparison. So we were excited, as Rush mentioned, in both the deepening of response and the improvement in response and the study continues to evaluate data. But important in a 30 patient Phase 2 study is also to look at how those responses track with IL-twenty seven biology. So when while the numbers again are small, very provocative that we see an association of IL-twenty seven expression with response. Additionally, this is a program that has shown preclinically that there is strong activity in HCC and multiple models, the biology of IL-twenty seven coming from the tissue resident macrophages, so liver macrophages Cooper cells, it's really one known to dampen the immune response.

Speaker 1

And that activity that was specific in preclinical models to liver cancer and lung cancer translated to humans. So I think that with the biomarker data in the responding patients showing modulation of the IL-twenty seven pathway in association with response and the high levels of IL-twenty seven expression have us incredibly excited to do the taurie as dozo bev combination.

Speaker 4

And maybe one last thing I'll add, safety is always important. We showed a very it's a very clean safety profile as well.

Speaker 1

Very important.

Speaker 2

Thank you, Yigal.

Speaker 7

Okay. Can I ask another one? I was just curious

Speaker 6

on

Speaker 7

CH114. Theresa, you mentioned the dose escalation and then you're going to do the comboatory. I think in your slide deck in early January, you indicated there'd be some data in the first half of the year for the Phase 1. I wasn't sure if that was still the expectation or just help understand that, please? Thank you.

Speaker 1

Yes. We plan to present the dose escalation in the first half of the year at a major medical conference.

Speaker 2

Checking. Thank you.

Operator

Okay. Thank you. One moment for questions. Our next question comes from Colleen Cusi with Baird. You may proceed.

Speaker 6

Hi. Thanks for taking our questions. I think revenue guidance is something you've given in the past. So it looks like you're not providing revenue guidance for 2024. So can you just talk a little bit about that decision and what you think some of the levers are for revenue growth this year?

Speaker 2

Thanks, Colleen. I'll take that one and let Paul back Phil. I think the primary issue is that we have freshly launched the UDENYCA On Body. We're very excited about the enthusiasm that's been received in the market. But the ultimate trajectory of that across 2024 is not yet known.

Speaker 2

It's only been out in the market for about a month. As Paul pointed out, we have seen 129 percent increase with respect to the auto injector uptake and the trailing 4 week data for UDENYCA itself is up north of 25% up from Q4. So that's all very, very compelling. I think that would give us greater certainty with respect to the trajectory and the steepness of the trajectory. Once we get little further into Q1 and get that below us, all the indicators are positive.

Speaker 2

But I think certainly on

Speaker 3

the next call, we'll be able

Speaker 2

to give you some additional information on that. With respect to Lactoresi, as Paul indicated, we're very pleased with the launch. Our digital strategy over the last 2 years of basically developing a relationship with the patient is very, very good. We are very pleased at the uptake, very pleased at P and T committees and how well we're doing there. But I think that's going to take a little bit of time.

Speaker 2

It takes a month or 2 to get on the formulary for a P and T committee in the major hospital someplace on the East Coast or something. So we're happy to do that, but we just would like to look another quarter under our belts before we go ahead and we do projections with respect to revenue. But on the topic of revenue though, I would make one key point for you is the quality of the revenues is just as important, if not more important, as the size of the revenues. And we expect that the margins and the quality of revenues, for example, with Lactorsy and UDENYCA will lead to greater profitability as we go into the backside of the year. And as Paul said, that's really where we're focused.

Speaker 2

We want to drive the top line, but we also really the quality of the revenues especially with a product like Lactorsi, is going to be far better, more stable and more sustainable than your typical biosimilar.

Speaker 6

That's helpful. Thank you. And maybe a follow-up on Zinger comments and just a quick clarification on cash flow positivity. I think you said the goal is cash flow positive in 2024. Can you just clarify, is that guidance for cash flow positive in 2024 or not specifically maybe dependent on revenue or other

Speaker 2

factors? Without being able to predict revenues, I can't really predict cash flow positivity. But I would just make the key point that I think that we've made substantial progress with respect to reducing our SG and A and R and D line even in the face of several launches over the past 12 months, we have reduced our headcount over the past 2 years I mentioned our overall SG and A reductions. So I think that we are running a very, very efficient organization as we focus on oncology. At the same time, we're driving the revenues higher as you can see.

Speaker 2

And then lastly, we're making very good progress reducing our interest costs. Brian recapitulated that for us, but a 70% reduction in our fixed term loan interest costs where we're paying sulfur plus 8, I think that's really very significant. So we're going to continue in this direction and just where those two lines cross, we can't quite predict, but that's our North Star and our guiding light and where we're going.

Speaker 6

That's helpful. Thanks for taking our questions.

Operator

Thank you. One moment for questions. Our next question comes from Michael Nedelkovich with TD Cowen. You may proceed.

Speaker 8

Hi. Thanks for the question. So you have a wealth of opportunities in terms of various combinations and various tumor types and indications where those combinations might be tested. Can you give us a sense of pipeline priorities and when those priorities might translate into discrete gono go trials or even pivotal trials? Thank you.

Speaker 2

Thanks for the question, Michael. I'll let Doctor. Lavalley address that. Teresa?

Speaker 1

Yes, Michael, thanks. As we've talked about with the Kastuzo, the lung cancer study is open. I mean that's a home run kind of strategy, a high bar, given the monotherapy activity of Cazdozo, which was not expected to see in cancer patients. The tory combination should show by data by the end of this year or early next year. We're also looking at earlier lines of treatment based off of the Torrey positive data trial such as NeoTortch to further explore lung cancer.

Speaker 1

The HCC study, we plan to open later this year, so data next year. As we mentioned, the 114, the CCR8 antibody will be presenting in next quarter. So I think the news flow from that plus a number of partnerships, we've already announced the Innovia one. You'll see other ones and that will be generating data next year, so also being presented. And the part that isn't appreciated about torapalumab is Junshi continues to develop it and is now all of their studies are multi regional clinical trials, which would make it acceptable to the FDA.

Speaker 1

And so they have a Phase 3 ongoing with their pipeline. So we'll be watching while we're not part of that study or funding that study, clearly as it gets registered, we have the market share. So we'll be watching for that and that study opened last year. So typical small cell lung cancer Phase 3 metrics, so later in the next couple of years.

Speaker 2

Thanks, Michael.

Operator

Thank you. One moment for questions. Our next question comes from Chris Shaw with JPMorgan Chase. You may proceed.

Speaker 9

Hi, this is Ethan Brown on for Chris Schott. Thanks for taking our questions. Just to start off, can you maybe offer some color on how you're thinking about OpEx looking past 2024 given on one hand you have the pipeline that you're trying to progress and then balancing that against the company's past profitability? And then I have one more question after that.

Speaker 2

I'll let Brian McMichael take a shot at that. Brian?

Speaker 5

Yes. So we're not providing guidance beyond 24 at this time. As we get into as we sort out some of the things we're working on with our capital structure, we'll have a better idea of how we'll move forward from there. And that will inform how we move forward in 2026.

Speaker 2

Yes. I would say after we achieve profitability and cash flow positivity, we intend to stay profitable, if that's your question. I would offer you one other point, which is LYPTORIZI. We expect LYPTORIZI to reach peak sales in 2.5 to 3 years and we further expect continued increase in market share for UDENYCA over the short to medium term. So both of those things will continue to drive top line for us.

Speaker 2

And further, we'll continue to show very high degree of discipline with respect to controlling our expenses in SG and A as you've seen already.

Speaker 9

That's very helpful. Thank you. And then just pivoting over to UDENYCA, is there any color you can offer on how much sales at this point is coming from the auto injector versus the traditional presentation? And maybe more broadly just your expectations for pricing looking to 2024? And maybe more specifically, if you think Coherus is now more insulated versus other players, given you have the whole suite of products approved and in the market?

Speaker 2

Yes, that's a very, very, very, very good question, Barry. It's a very observant nuance. I'll let Paul address that particular issue, the 3 presentations and our ability to have sustainable franchise in the market and support pricing. Paul?

Speaker 3

Yes. Hey, Chris, thanks for your question. So, our whole strategy with UDENYCA, with the 3 presentations is to give the customers choice, so that they can choose the presentation that meets the unique needs of the patient and the doctor. And that's no other brand can do that. We saw pretty impressive growth with auto injector in the 4th quarter, driven largely in the clinic market.

Speaker 3

And that's because now we got nurses that were using it, a great experience with it, liked it, and it's starting to now get its foothold into the workflow in the offices. As it relates to the percent of the AI business to the total UDENYCA, it was still under 10%. So the workhorse continued to be the prefilled syringe presentation. And as we see in 2024, that's all going to take a new shape now that we have our on body device launched as well as the auto injector and the pre fill syringe. But as I mentioned in my remarks, Chris, moving forward in year 6 of this brand's lifecycle, we're getting that second wave of growth.

Speaker 3

Our focus is really going to be around driving profitable revenue and market share growth. And we are confident we're going to do that in 20 20

Speaker 2

It's the other point that I would make is, we've played the long term game here with REGENICA and market as Paul said, We're 6 years in. We invested significantly both in the auto injectors, some $25,000,000 in years past. It took us at least 3 or 4 years to bring forward the OnBody. That was probably a $35,000,000 investment. We underwent a number of years where we had very strong discipline around pricing and ASP Management, consider ourselves good stewards of ASP.

Speaker 2

In the interim, others have exited the market with aggressive pricing. We're still there. The new market entrants really haven't had an impact on the business. And I think that the significant market share increase like the 4 week trailing 25% and our look forward here for 2024 shows that our long term strategy is paying off. We're the only folks that have 3 presentations.

Speaker 2

We're positioned for market stability, sustainability, as we go forward now with PEGSILBRAS and that's where we want to be.

Speaker 5

Thank you guys for the questions.

Operator

Thank you. Turn the call back over to Denny Lanfear for any closing

Speaker 2

remarks. Thank you, operator, and thank you all for joining us on our Q4 full year 2023 call this afternoon. We're pleased with our progress on all fronts to drive our sales higher, strictly control our expenses, reduce our debt and advance our pipeline. We are entering 2024 with strong upward momentum and a clear organizational focus on extending survival for patients with cancer. We look forward to seeing you all at the upcoming investor conferences and on our next call.

Speaker 2

Thank you.

Operator

Thank you for your participation. You may now disconnect.

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Key Takeaways

  • Re-focused on oncology: Completed divestiture of non-core assets, announced a 30% headcount reduction and targets combined SG&A + R&D of $250–265 million in 2024 to drive efficiency and return to profitability and cash-flow positivity.
  • Strong Q4 sales momentum: Q4 net product revenue of $91.4 million (+23% QoQ) and full-year 2023 revenue of $256.6 million (+22% YoY), led by UDENYCA’s third consecutive quarter of growth, over 1 million units sold, 26% market share and rapid uptake of its auto-injector (727 accounts) and OnBody device (138 accounts).
  • Launch of LACTORSI: Introduced as the only FDA-approved treatment for recurrent/metastatic nasopharyngeal carcinoma in all therapy lines, with 59 accounts ordering since launch, ~95% payer coverage and a Category 1 NCCN listing for first-line use.
  • Balance sheet strengthened: Renegotiated term loan to pay down $175 million, reducing interest burden by ~70%, and restructured a $25 million milestone payment to Junshi to preserve cash.
  • Robust IO pipeline: Lead PD-1 inhibitor toripalumab achieved multiple approvals and positive Phase 3 data; anti-IL-27 candidate CADOSO showed monotherapy responses and has combo arms open; CCR8 antibody CHS-114 nears completion of Phase 1 dose escalation.
A.I. generated. May contain errors.
Earnings Conference Call
Coherus BioSciences Q4 2023
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