Coherus Oncology Q2 2024 Earnings Report

Coherus Oncology EPS Results

• Actual EPS: -$0.20
• Consensus EPS: -$0.30
• Beat/Miss: Beat by +$0.10
• One Year Ago EPS: N/A

Coherus Oncology Revenue Results

• Actual Revenue: $64.98 million
• Expected Revenue: $57.08 million
• Beat/Miss: Beat by +$7.90 million
• YoY Revenue Growth: N/A

Coherus Oncology Announcement Details

• Quarter: Q2 2024
• Date: 8/8/2024
• Time: N/A
• Conference Call Date: Thursday, August 8, 2024
• Conference Call Time: 5:00PM ET

Coherus Oncology (NASDAQ:CHRS) is a commercial-stage biopharmaceutical company focused on the development, manufacturing and commercialization of biologic therapies for oncology support and immuno-oncology. Founded in 2010 and headquartered in Redwood City, California, Coherus specializes in biosimilar versions of established oncology agents as well as novel immunotherapy candidates.

The company’s lead marketed products include Udenyca (pegfilgrastim-cbqv) and Fulphila (pegfilgrastim-jmdb), biosimilars to Amgen’s Neulasta, which are designed to reduce the incidence of infection in patients undergoing myelosuppressive chemotherapy. These pegfilgrastim biosimilars have received approval from the U.S. Food and Drug Administration and are distributed through a network of specialty pharmacies and wholesalers, supporting patients in the United States and select international markets.

Beyond supportive-care biologics, Coherus Oncology maintains a pipeline of immuno-oncology candidates, including anti-PD-1 and anti-CTLA-4 monoclonal antibodies in clinical development. The company’s research and development efforts are aimed at advancing therapies for melanoma, non-small cell lung cancer and other solid tumors, with partnerships and licensing agreements that extend its global reach and facilitate late-stage clinical trials across North America, Europe and Asia.

Coherus operates its own manufacturing facilities to support both development and commercial supply, ensuring scalable production capabilities. Richard E. Fair serves as President and Chief Executive Officer, leading a management team with deep expertise in biologics development and oncology commercialization. Under this leadership, Coherus continues to expand its product portfolio and broaden patient access to high-quality oncology therapies.

Coherus Oncology Q2 2024 Earnings Call Transcript

Key Takeaways

• Coherus’ strategic shift to oncology drove a 10% year-over-year increase in Q2 revenue to $65 million despite divesting its ophthalmology biosimilar earlier in the year.
• UDENYCA net sales rose 60% year-over-year to $50.9 million in Q2, the franchise captured 29% market share and benefits from three delivery options that differentiate it in the pegfilgrastim market.
• LOQTORZI net revenue nearly doubled quarter-over-quarter to $3.8 million, achieved Category 1 NCCN and ASCO guideline status, secured ~100% payer coverage and a permanent J-code for streamlined billing.
• The company ended Q2 with $159 million in cash and equivalents, paid off its $250 million term loan, reduced R&D and SG&A expenses and narrowed its net loss to $0.11 per share.
• Coherus advanced its pipeline with a CHMP positive opinion for torapalumab in NPC and esophageal carcinoma and is enrolling clinical studies for novel immuno-oncology assets casdosoquetag, CHS-114 and CHS-1000.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Coherus BioSciences Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jami Taylor, Head of investor relations. Please go ahead.

[Jami Taylor, Head of Investor Relations at Coherus BioSciences]

Thank you, operator. Good afternoon, and welcome to Coherus BioSciences Second Quarter 2024 Earnings Conference Call. Joining me today to discuss our results are Denny Lanfear, Chief Executive Officer of Coherus, Bryan McMichael, Chief Financial Officer, Paul Reider, Chief Commercial Officer, Dr. Rosh Dias, Chief Medical Officer, and Dr. Theresa LaVallee, 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: expectations for the timing of future clinical studies, expectations about future partnerships, projections of future revenue and expenses. 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.

[Jami Taylor, Head of Investor Relations at Coherus BioSciences]

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 file 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. And now I'll turn the call over to Denny.

[Dennis Lanfear, CEO at Coherus BioSciences]

Thank you, Jami. Good afternoon, everyone, and thank you for joining us. Today, we're pleased to share updates from the second quarter of twenty twenty-four, a period in which we made definitive progress in executing upon our plan to align all aspects of our business to a focus on oncology. Our strategic focus on oncology is proving its merit. With streamlined operations and a recently streamlined portfolio, we grew total sales 10% year-over-year in the second quarter, from $59 million to $65 million, even without CIMERLI, the ophthalmology biosimilar we divested earlier this year. UDENYCA is delivering impressively as LOQTORZI builds very nicely. As our Chief Commercial Officer, Paul Reider, will describe shortly, the three presentations within our UDENYCA franchise continue to expand our opportunities in the marketplace.

[Dennis Lanfear, CEO at Coherus BioSciences]

As the only brand offering three presentation options, pre-filled syringe, the autoinjector, and the ONBODY injector, we hold a clear competitive advantage that we believe will endure and increase over the long term. Our average selling price remains consistently strong and our market share is growing. As an oncology company, our mission is to extend the survival of patients with cancer. Central to the fulfillment of that mission is LOQTORZI, our first commercial immuno-oncology agent, which demonstrated a profound survival advantage in the data supporting its FDA approval late last year for the treatment of nasopharyngeal carcinoma. The launch of LOQTORZI continues to proceed according to plan, and Paul will provide further updates on this during our call today. Beyond our commercial portfolio, we maintain our strong conviction in our pipeline of innovative immuno-oncology drug candidates.

[Dennis Lanfear, CEO at Coherus BioSciences]

We are advancing clinical studies across areas of clear unmet medical need, including head and neck cancers, non-small cell lung cancer, and hepatocellular carcinoma. Dr. Theresa LaVallee, our Chief Development Officer, and Dr. Rosh Dias, our Chief Medical Officer, will describe these studies further on our call today. I'm especially pleased to report today that as a direct result of our continued efforts to manage our cash, reduce both our debt and headcount, Bryan McMichael will report that we ended Q2 with $159 million on the balance sheet, positioning us well for the second half of this year and beyond. I'd like to congratulate Bryan on the exceptional skill and leadership he has demonstrated since taking the role as interim CFO earlier this year.

[Dennis Lanfear, CEO at Coherus BioSciences]

As announced in our press release this morning, Bryan has now been appointed to the Chief Financial Officer role at Coherus, and with my support, the full support of the board of directors. Bryan's deep financial expertise, honed throughout his time at Gilead Sciences and further demonstrated since his arrival at Coherus a few years ago, gives me great confidence. My confidence extends to our product portfolio. LOQTORZI, plus our competitively positioned pipeline, represents long-term value creation for shareholders. The pace of executing our strategy has been brisk, and we have strong momentum carrying us forward into the quarters ahead. And now with that, I'll turn the call over to Paul.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Thank you, Denny, and good afternoon, everyone. Our focused execution in oncology is delivering results. I am pleased to report a fifth consecutive quarter of top-line revenue growth for UDENYCA.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Strong progress on LOQTORZI following its second quarter of commercial launch. Regarding the quarter's performance, total net revenue was $65 million, which included $58.5 million from sales of marketed products, and $6.3 million from a nonrecurring upfront cash payment received for the out-licensing of LOQTORZI's rights in Canada. Q2 UDENYCA net revenue was $50.9 million, a 19% increase quarter-over-quarter, and a 60% increase over Q2 2023. LOQTORZI net revenue nearly doubled to $3.8 million in Q2, compared to $2 million in Q1. I'll now speak in more detail about each brand, starting with LOQTORZI. First half 2024, the top priority was setting up LOQTORZI to become the future standard of care in NPC. We remain very confident in achieving this ambition. LOQTORZI offers unprecedented efficacy for NPC patients.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Like all new product launches, requires substantial groundwork to ensure providers have access to LOQTORZI. Pleased to report that many operational milestones have been achieved, setting LOQTORZI up for future growth. Some examples of these include, first, LOQTORZI was included in NCCN, ASCO, and Clinical Pathways guidelines. In NCCN, LOQTORZI is the only PD-1 with a category 1 designation for first-line use, and the only preferred regimen in second-line plus. Second, payer coverage has now been confirmed on nearly 100% targeted medical benefit lives in health plans, including Medicare Fee-for-Service, Medicare Advantage, and national and regional commercial plans. Third, product-specific permanent J-code has been granted by CMS and took effect July 1st, which will enable electronic billing and faster, more predictable reimbursement for providers. Fourth, among the top academic research hospitals, LOQTORZI is now accessible in all 33 NCCN institutions.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

With the foundation now set to enable broad access to LOQTORZI, our efforts are solely focused on driving new patient starts in the LOQTORZI-eligible patient segments. We believe constitute approximately 2,000 patients annually. I'll now speak in more detail about the NPC patient populations, the progress we made in Q2, and our priorities for the second half of 2024. NPC patients within the LOQTORZI-eligible indications include three patient segments. First, those with recurrent locally advanced disease. Majority of NPC patients are diagnosed in the local or locally advanced setting. Here, patients are diagnosed at early stages and receive radiation or chemo plus radiation as their first treatment, with many patients being cured. These patients drop out of the NPC treatment pool unless they experience local recurrence at any point in time. Then they become LOQTORZI eligible and will receive LOQTORZI plus chemotherapy.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

These patients account for approximately one-third of the 2,000 who are LOQTORZI eligible. The second patient segment are those with first-line metastatic disease, which could be metastatic recurrence from early-stage disease or de novo metastatic. These patients account for approximately one-third of the 2,000 who are LOQTORZI eligible. Historical treatment for these two patient subpopulations include chemotherapy or a combination of chemo plus off-label PD-1 treatment. Real-world data shows current off-label PD-1 use of approximately 25% segment. This is important in the near term from a sales ramp perspective, as we do not expect the patients currently on an off-label PD-1 regimen will be switched to LOQTORZI if the patient is already responding to treatment. Now, the third patient segment is second-line plus with metastatic disease. These patients account for the remaining one-third of LOQTORZI-eligible patients and will receive LOQTORZI as monotherapy.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Patients in the first two segments I described are our primary focus for the following two reasons. First, based on the results of the JUPITER-2 trial, these are the patients who can derive the greatest survival benefit. And second, these patients are likely to deliver the longest duration of treatment, which is a key driver of LOQTORZI's revenue ramp over time. In Q2, the total number of LOQTORZI-treated patients more than doubled by an estimated 100 new patients, and real-world data shows two key findings. First, a minority of drug-treated NPC patients are new to treatment in any given quarter, so it will take time for us to acquire these new patients. Second, we are acquiring our targeted patient types, with 40% of LOQTORZI patients being treated in the locally advanced setting, and approximately 75% of total LOQTORZI patients being treated in combination with chemotherapy.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

These real-world data, combined with the current off-label PD-1 use, confirms our view that LOQTORZI will follow a steady revenue ramp in the near term, fueled by new patient acquisition, with sustained growth over time driven by duration. 80% of long-term value is from early line continuing patients, which we estimate will take 3 years-4 years to fully materialize. Overall, the launch is progressing well, and we remain confident that LOQTORZI will achieve a dominant market share position in the NPC market that we estimate to be valued at $150 million-$200 million. In the near term, our priorities are focused on three revenue drivers: driving new patient share, strong HCP patient identification, ensuring LOQTORZI messaging is delivered at the time of treatment decision, and optimizing the duration of LOQTORZI treatment. Now, regarding UDENYCA.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

UDENYCA delivered another quarter of revenue growth, driven by continued strong execution and fueled by three drivers. First, the commercial launch of UDENYCA ONBODY. Second, UDENYCA is the only pegfilgrastim brand with three device options to meet the unique needs of providers and patients. And third, broad payer coverage, which opens access to significantly more patient lives. As for key performance indicators for the quarter, UDENYCA franchise demand grew 25% quarter-over-quarter. All three product presentations grew in the quarter, with ONBODY representing 60% of the total unit growth. ONBODY and autoinjector ended the quarter at 13.5% and 10% of the total SKU mix, respectively. Franchise market share was 29%, an increase of four market share points quarter-over-quarter.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Regarding the launch of UDENYCA ONBODY, we're very pleased with the launch performance to date, and customer receptivity continues to be very positive. Fueling customer adoption are innovative and differentiated features, such as UDENYCA ONBODY's 5-minute injection time, compared to the 45-minute delivery time for Neulasta Onpro. In summary, our long-term strategy for UDENYCA is delivering as planned, and we expect continued revenue growth over the second half of 2024. I'll now turn the call to Dr. Theresa LaVallee. Theresa?

[Theresa LaVallee, Chief Development Officer at Coherus BioSciences]

Thank you, Paul, and good afternoon, everyone. Firstly, we congratulate our partner, Junshi Biosciences, for continued progress with advancing toripalimab development. The Committee for Medicinal Products for Human Use, or CHMP in Europe, adopted a positive opinion recommending approval of LOQTORZI, a next-generation PD-1 inhibitor for the first-line treatment of patients with nasopharyngeal carcinoma in combination with cisplatin and gemcitabine. And secondly, for the first-line treatment of adult patients with unresectable, advanced, recurrent, or metastatic esophageal squamous cell carcinoma in combination with cisplatin and paclitaxel. The CHMP positive opinion is based on data from the phase III study, JUPITER-2 for NPC and JUPITER-6 for esophageal squamous cell carcinoma, demonstrating statistically significant and clinically meaningful improvements in survival in these two indications. Importantly, while toripalimab has demonstrated efficacy in these studies, toripalimab safety profile is consistent with the PD-1 inhibitor class.

[Theresa LaVallee, Chief Development Officer at Coherus BioSciences]

If approved, this will expand marketing of toripalimab beyond the U.S. into the EU. This potential approval is important to further demonstrate the efficacy and safety of toripalimab, as well as the quality of the drug and clinical data sets. For our tumor microenvironment targeting pipeline, we have global rights, and as we look to develop these assets in combination with toripalimab, EU approval will facilitate future approvals with novel agents, executing on our combination strategy for toripalimab indication expansion. Furthermore, while the U.S. FDA will not accept phase III single-country data for approval, they have stated on several occasions the data sets will support contribution of components. Development of our novel pipeline and tumor types where toripalimab has data may simplify any phase III study design.

[Theresa LaVallee, Chief Development Officer at Coherus BioSciences]

In China, toripalimab now has 10 marketed indications following the recent approval of toripalimab in combination with paclitaxel for the first-line treatment of recurrent or metastatic triple-negative breast cancer, based on the phase III TORCHLIGHT data. Toripalimab is a foundational asset in the Coherus pipeline and now is being evaluated in Coherus-sponsored clinical studies with casdozokitug, an anti-IL-27 antagonist, and with CHS-114, an anti-CCR8 antibody preferentially targeting tumor-resident immune suppressive T regulatory cells. In addition to our internal development and our partner Junshi's development, we have several partnership discussions ongoing and look forward to the potential to progress and advance these exciting clinical studies. For our internal efforts, casdozokitug development with toripalimab continues. Tomorrow, at the IO Summit Conference in Philadelphia, we have an oral presentation on the strong data package supporting development in HCC.

[Theresa LaVallee, Chief Development Officer at Coherus BioSciences]

While inhibiting cytokines is a validated approach in inflammatory diseases with multiple approved antibodies, casdozokitug is the first cytokine antagonist to show safety, immune activation, and monotherapy responses in cancer patients. In preclinical models, blocking IL-27 results in immune activation in brain, liver, and lung. Preclinical tumor models only show antitumor activity in response to IL-27 inhibition in liver and lung models. Three different HCC mouse models, carcinogen-induced, NASH-induced, or Hepa 1-6 HCC cell line, show antitumor response to IL-27 inhibition. Further, in liver cancer, Junshi has recently announced the positive results from a phase III study of toripalimab in first-line hepatocellular carcinoma in combination with bevacizumab. These results will be important in supporting the randomized phase II study of casdozokitug in combination with toripalimab and bevacizumab in first-line HCC for efficacy, safety, and relative contribution data.

[Theresa LaVallee, Chief Development Officer at Coherus BioSciences]

Our second key pipeline asset, CHS-114, a highly selective cytolytic anti-CCR8 antibody, continues to progress in the clinic. Eliminating immune suppressive Treg cells in the tumor has been attempted by the field, evaluating several approaches, but with the problem of depleting Treg cells broadly, leading to autoimmune toxicity and also depleting T cells and thus limiting antitumor activity. The CHS-114 clinical data demonstrating peripheral depletion of CCR8-positive Treg cells and not depleting Treg cells broadly establishes proof of mechanism in cancer patients. CCR8-positive Treg cells have a high prevalence and density in a number of solid tumors, with the highest levels in head and neck, gastric, and cervical cancer. For this reason, our CHS-114 dose expansion in the phase I study is evaluating head and neck cancer and includes pre- and on-treatment biopsies to evaluate Treg depletion in the tumor.

[Theresa LaVallee, Chief Development Officer at Coherus BioSciences]

At ASCO this year, one of the experimental therapeutics presentation that impressed me most was by LaNova Medicines, evaluating their CCR8 antibody, LM-108, in combination with toripalimab in advanced gastric cancer patients. We were encouraged by these early clinical data showing an acceptable safety profile and an overall response rate of 36.1%, which we believe demonstrates proof of principle for CCR8 targeting in combination with toripalimab in a tumor type expected to show benefit. Lastly, to update you on the internal development of our discovery agent, I am proud of the Coherus CHS-1000 ILT4 team for submitting a quality IND package to the FDA that has been accepted, and we plan to advance CHS-1000 to clinic to establish single-agent safety and rapidly move into combination with toripalimab for treatment of solid tumors.

[Theresa LaVallee, Chief Development Officer at Coherus BioSciences]

It is designed to block ILT4 activity and promote an active or pro-inflammatory immune response. The ILT receptor family modulates the activity of the innate and adaptive immune system and plays a role in innate immune cell mechanisms that lead to tumor escape and PD-1 resistance. This is a promising target and a potent antibody that Coherus discovered. I'll now turn the call to Dr. Dias, our Chief Medical Officer. Rosh?

[Rosh Dias, Chief Medical Officer at Coherus BioSciences]

Thank you, Theresa. LOQTORZI, with a profound survival advantage demonstrated in nasopharyngeal carcinoma and its accompanying approval across all lines of therapy for NPC, continues to form the foundation of our IO franchise and, in addition, continues to demonstrate efficacy outside NPC, most recently in first-line hepatocellular carcinoma patients with a published phase II toripalimab, bevacizumab phase III in Clinical Cancer Research and the phase III HEPATORCH study, meeting its primary endpoints of PFS and OS, as Theresa has pointed out. We've been clear in articulating 3 very distinct strategies for further development of our IO franchise, including development of LOQTORZI outside NPC. Firstly, combination with our internal IO pipeline of the competitively well-positioned assets, as well as the casdozokitug and CHS-114....

[Rosh Dias, Chief Medical Officer at Coherus BioSciences]

Secondly, combinations with external partners at the discovery or close to discovery stage, where we would provide toripalimab in combination with partner companies' early-stage assets, where the partner company would fully fund development. And thirdly, combinations with external partners at a later phase III stage of development of novel agents, trials of registration intent, where again, we would provide toripalimab for combination with partner companies' late-stage assets, and where again, the partner company would fully fund development. This strategic approach enables effective resource allocation focused towards our internal pipeline development, and I'm pleased to report that we're making good progress on all three fronts. Casdozokitug, our IL-27 targeting antibody, continues to progress to plan in our combination study with toripalimab, second to fourth line, non-small cell lung cancer.

[Rosh Dias, Chief Medical Officer at Coherus BioSciences]

As a reminder, this is intended to be followed by a phase III randomized controlled trial in second-line non-small cell lung cancer. We're also on track to start the first-line HCC combination study with toripalimab in quarter four this year, building upon the impressive triplet combination data presented at ASCO GI at the start of this year. CHS-114, our CCR8 targeting antibody, has completed dose escalation and is now progressing through indication expansion into head and neck cancer, both as monotherapy and in combination with toripalimab. Data from the dose escalation portion of the study was presented at ASCO in June, showing an acceptable safety profile with no dose-limiting toxicities, PK dose proportionality, proof of mechanism with depletion of peripheral CCR8-positive Tregs, and a disease control rate of 47% in an advanced solid tumor population that was heavily pretreated.

[Rosh Dias, Chief Medical Officer at Coherus BioSciences]

Our partner programs incorporating toripalimab in early stage with ENB Therapeutics, collaboration with the Cancer Research Institute in ovarian cancer, as well as the later-stage multinational programs in combination with BTLA in limited stage small cell lung cancer, and with the Inovio vaccine in the HPV-positive early stage head and neck cancer, continue to plan, with the latter, in particular, being in the same physician group of head and neck oncologists who also treat NPC. We look forward to announcing further partnerships over the coming months. And with that, I'll hand over to Bryan McMichael, Chief Financial Officer. Bryan?

[Bryan McMichael, CFO at Coherus BioSciences]

Thank you, Rosh, and good afternoon, everyone. Following the summary of revenues provided by Paul, I will focus on the rest of the P&L and cash. Cost of goods sold for Q2 2024 was $28.4 million, compared to $24.8 million in Q2 last year. The increase was driven primarily by increased demand for UDENYCA and non-recurring costs related to CIMERLI. Q2 marked the first full quarter following the divestiture of CIMERLI, a product that had a significant gross profit share in the mid-50% range, taken before internal commercial expenses. In addition, the mid-single-digit royalty on UDENYCA net revenues payable to Amgen expired this past July first. R&D expense totaled $22 million and decreased $1.3 million and 6% from Q2 a year ago. The decrease was driven primarily by lower headcount.

[Bryan McMichael, CFO at Coherus BioSciences]

Additionally, decreases came from costs not recurring for programs terminated in previous periods and divested products, partially offset by investments in our current pipeline. SG&A totaled $35.2 million and decreased $10 million and 22% compared to Q2 in the prior year. The decrease primarily reflects savings from lower headcount, expenses for divested products that did not recur, and our ongoing cost reduction efforts. Interest expense of $5.3 million decreased $4.6 million and 46% compared to Q2 in the prior year. Q2 2024 was the first quarter we started to see savings from the full payoff of our $250 million principal amount term loan, which occurred during the quarter.

[Bryan McMichael, CFO at Coherus BioSciences]

The Q2 2024 net loss was $12.9 million, or $0.11 per diluted share, compared to a net loss of $42.9 million, or $0.49 per diluted share for the same period in 2023. Non-GAAP net loss per share, which excludes the gain on divestiture of CIMERLI, was $16.4 million, or $0.14 per diluted share in Q2 2024, compared to $32.8 million, or $0.38 per diluted share for the same period in 2023. Cash, cash equivalents, and investments in marketable securities were $159.2 million as of June 30, 2024, compared to $117.7 million at year-end.

[Bryan McMichael, CFO at Coherus BioSciences]

As a reminder, during the quarter, we paid off $250 million in term loan, as I mentioned earlier, entered into a new $38.7 million term loan due May 2029, sold revenue rights for $37.5 million, and received $40 million and $6.3 million in exchange for the sale of CIMERLI and the out-license of the Canadian rights to LOQTORZI, respectively. Today, we are reiterating our expected range of combined 2024 R&D and SG&A expenses of $250 million-$265 million. This guidance includes approximately $40 million of stock-based compensation expense and excludes certain business development activities. These strong quarterly results are the outcome of tremendous execution on the part of our team. With that, I will turn the call back over to Denny for closing remarks.

[Dennis Lanfear, CEO at Coherus BioSciences]

.Thank you, Bryan. I'm happy to report today we are executing very well on our four-part plan to deliver shareholder value. First, as Paul described, driving the top line. Secondly, as Bryan's described, controlling our operating expenses. Third, as Theresa and Rosh described, advancing our pipeline of tumor microenvironment-focused assets. And lastly, making substantial improvements in our capital structure. We're proud of our accomplishments over the second quarter, and we remain dedicated to our mission of extending the survival of cancer patients. Now happy to open the line for questions. Operator?

[Operator]

As a reminder, if you'd like to ask a question at this time, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question will come from the line of Yigal Nochomovitz with Citi.

[Analyst at Citi]

Hi, this is Ashok on for Yigal. Thanks for taking my questions, and congrats on the quarter. I just had a few on the LOQTORZI launch in NPC. Could you give us any color on, on which types of patients you're, you're treating? Are they primarily newly diagnosed patients, or are you seeing switches from, you know, other patients on off-label PD-1s? And then, and, on the same topic, where are you with the payer coverage, access, and how should we think about the J-code as an inflection point for sales growth this year? Thanks.

[Dennis Lanfear, CEO at Coherus BioSciences]

Hey, Ashok, thank you very much for your questions. Paul, do you wanna cover the issue of the NPC launch and whether we've bumped into any switching problems, and secondarily, the payer coverage question?

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Yeah, sure. Thanks for your question. So the NPC launch is delivering in line with our expectations. The patient share that we're seeing is really a very heterogeneous mix, as we expected. We've got patients, you know, in later lines of therapy, and these patients are getting LOQTORZI as monotherapy, but they're gonna have shorter durations because they're gonna be second, third, fourth-line. We're also very encouraged to be seeing patients in these early launch periods of the early line patients. And these patients are very, very important because these are the patients who will have longer durations of treatment. And as these patients continue quarter-over-quarter, that long duration, that's how we see the, you know, the revenue ramp over the long term.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

But in the short term, we see it as a, you know, as a steady ramp, you know, as we work through this heterogeneous mix of patients, and that patient mix begins to stabilize. As it relates to the payer coverage, we have virtually no payer, you know, issues right now. We've got now nearly 100% of the targeted payer, medical benefit lives across Medicare fee-for-service, the national and regional, health plans, both on commercial and the Medicare Advantage. So, we are very, very pleased with the unrestricted coverage we have in NPC right now. And as it relates to the J-code, your question was, you know, is it gonna be a, an inflection point? You know, the way that we see the J-code here is really enabling the electronic billing and faster, more predictable reimbursement for providers.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

So I wouldn't necessarily characterize it as a significant immediate revenue inflection per se, but certainly, its availability will remove any operational barrier in any account that, you know, doesn't allow for use of products until the J-code is in effect. So I think we're really set from an access standpoint now moving into the second half of the year and feel very encouraged that those—any of those impediments are behind us.

[Dennis Lanfear, CEO at Coherus BioSciences]

Paul, can you

[Analyst at Citi]

Got it.

[Dennis Lanfear, CEO at Coherus BioSciences]

Just comment a bit with respect to the issue of the switch, and I think, which was one of Ashok's questions, and then secondarily, progress on the NCCN formularies?

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Yeah, sure. You know, as I mentioned in my prepared remarks, any patient that is currently on an off-label PD-1 or PD-1 chemo regimen, you know, we don't, we don't believe that they're going to switch if the patient is responding to treatment. That being said, what we've seen in the real-world data here in just the first couple quarters is that we are seeing patients who have been rechallenged after prior PD-1 treatment. And usually, the off-label PD-1 was typically prescribed in the earlier line of treatment in combination with chemotherapy. And therefore, you know, by the time the patient was retreated with LOQTORZI, you know, the patient had already progressed to a later line. So in these cases, you know, we would expect a shorter duration of LOQTORZI use.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

That being said, we're encouraged, you know, that doctors are willing to consider retreatment with PD-1 failures, and, and that patients were, you know, or that payers were approving the product. So those are, those are encouraging signs. And then, as it relates to the access on the NCCN institutions, we've now, you know, got, accessibility to LOQTORZI on all 33 NCCN institutions. So, you know, again, that, that, you know, operational milestone was achieved here in the second quarter.

[Analyst at Citi]

Thanks very much.

[Operator]

Our next question will come from the line of Brian Cheng with JP Morgan Chase & Co.

[Brian Cheng, Analyst at JP Morgan Chase & Co,]

Hey, guys. Thanks for taking our question this afternoon. Maybe just one on UDENYCA unit growth that you saw this past quarter. You mentioned that most of the unit growth came from ONBODY, so we're just trying to better understand the dynamics here. You know, can you tell us a little bit more about, you know, the biggest contributor that's driving the uptick across all the presentations this past quarter? And more importantly, how sustained do you think this momentum that we're seeing today across all three presentations? Thanks.

[Dennis Lanfear, CEO at Coherus BioSciences]

Thanks, Brian. Great question. Paul, do you want to address the issue of the SKU mix and the growth across the quarter for Brian?

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Sure. Thanks for your question, Brian. Let me start just by reiterating, you know, our goal for the UDENYCA franchise, and that's to maximize the long-term profitability and sustainability of the franchise. You know, Brian, and our investments to bring these innovative device presentations to market, combined with our consistent strong execution, is really what's, you know, delivering these results. UDENYCA now is strongly positioned in the pegfilgrastim market. And, you know, we said multiple times that once we launch these new devices, you know, we're going to drive market share gains. And, you know, that's what you're seeing. We're delivering on that promise. You know, and these market share gains, you know, are coming basically in the last 5 quarters from an 11% share to 29% share.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

We remain confident that UDENYCA will continue to grow in the second half of 2024, and it's going to be fueled by three of these growth drivers, Brian. The first is the commercial launch of ONBODY, and that's really because we now can compete head-to-head and access the entire pegfilgrastim market. And secondly, the payer coverage, which, you know, nearly doubled in 2024 compared to 2023, so that opens up significantly more patient lives. And then the third is our discipline management of ASP, and that's really important, you know, for our customers, providers, payers, etc., hospitals, because it provides them greater predictability, which they value. So moving forward in the second half of the year, you know, we still are very confident that the franchise is going to grow.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

All three product presentations grew in Q2, but we see the ONBODY device as really being the driving force of the growth in the second half of the year, largely because of the accessibility, you know, to the entire market. That being said, we are still seeing nice uptake in the prefilled syringe and the autoinjector presentations, and we're finding now that customers are really able to now choose amongst the presentations that fit their unique needs and the needs of their patients. So we remain very confident in the second half of the year and the continued growth of the franchise.

[Dennis Lanfear, CEO at Coherus BioSciences]

Thanks, Paul.

[Brian Cheng, Analyst at JP Morgan Chase & Co,]

Great. Thank you for asking. Thank you.

[Operator]

Our next question will come from the line of Douglas Tsao with H.C. Wainwright.

[Douglas Tsao, Analyst at H.C. Wainwright & Co]

Hi, good afternoon. Thanks for taking the question. Just-

[Dennis Lanfear, CEO at Coherus BioSciences]

Hi, Doug, can you repeat your question? We can't hear you.

[Operator]

It looks like Doug may have disconnected. We'll move to the next question.

[Dennis Lanfear, CEO at Coherus BioSciences]

Okay.

[Operator]

Next question will come from the line of William Maughan with Truist Securities.

[William Maughan, Analyst at Truist Securities]

Hi, congrats on the quarter. We had a couple questions here. We were wondering, what differences would you expect to see from using tori versus atezo in the triplet for HCC? And given that a bunch of your pipeline targets don't have precedence of approval in the US, which permutation and indication do you envision as your next Phase III after HCC?

[Dennis Lanfear, CEO at Coherus BioSciences]

Great. Dr. Theresa LaVallee, the company's Chief Development Officer, is with us today. Theresa, can you comment on the question of LOQTORZI with the triplet?

[Theresa LaVallee, Chief Development Officer at Coherus BioSciences]

Yeah. So for the HCC study, looking at toripalimab plus bevacizumab, casdozokitug, and obviously in a phase III study, we would compare it with atezo-bev. The differences, obviously, are PD-L1 versus PD-1. The, the data set for tori-bev from Junshi in a phase III study has been reported positive, but we're waiting to see the data. There was a phase II study that was published showing overall response rate and PFS that was numerically higher than what was seen with the IMbrave150, atezo-bev phase III study. So based on the data there, we would expect tori to be well suited and positioned to go against atezo, and then, of course, adding casdozokitug should add increased benefit. So really extending the survival for those first-line HCC patients without an increase in toxicity, really good tolerability to date.

[Theresa LaVallee, Chief Development Officer at Coherus BioSciences]

In terms of the second question was, could you repeat that? I'm sorry, was it about the next study that we...

[William Maughan, Analyst at Truist Securities]

Yeah. What combination or what triplet, doublet, and what indication is your gut feel, I guess?

[Theresa LaVallee, Chief Development Officer at Coherus BioSciences]

... Yeah, so in development right now, we're building off of the activity that's been observed in the early phase studies for casdozokitug, both in non-small cell lung cancers. So as Rosh mentioned, we're actively enrolling in the second to fourth-line non-small cell lung cancer study with casdozokitug and toripalimab. We'd also like to look in other areas in non-small cell lung cancer, given the strong disease linkage there. And then the HCC study is on deck to open later this year.

[Dennis Lanfear, CEO at Coherus BioSciences]

Rash has some additional comments, with respect to this question for you also. Rash, go ahead.

[Rosh Dias, Chief Medical Officer at Coherus BioSciences]

Yes, thanks very much for your question. Just one, one point to add to your first question on potentially some of the differences between atezo and also tori. So one thing that we do know is that the ADA, the anti-drug antibodies with atezo is reasonably high, probably in the 40% range, whereas we also know for toripalimab, it's, it's in the single digit range. So I think that's one additional consideration I'd add to what Theresa already mentioned about the, the atezo and the, and, the tori.

[William Maughan, Analyst at Truist Securities]

Great. Thank you so much.

[Operator]

Our next question will come from the line of Douglas Tsao with H.C. Wainwright.

[Douglas Tsao, Analyst at H.C. Wainwright & Co]

Hi, good afternoon. Sorry about that earlier. Just curious, your perspectives on now that you're all in the NCCN centers, how much of the market is there versus patients being treated in the community setting? And how quickly or how long do you think it will take to penetrate the sort of broader community for the NPC market?

[Dennis Lanfear, CEO at Coherus BioSciences]

Thanks for the question, Doug. Paul, do you wanna give Doug a little insight on the patient proportion split in NCCN and the uptake projection?

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Yeah, sure. Thanks for your question, Doug. You know, we, you know, we believe that about 60% of all the NPC in the United States is treated in, you know, some kind of academic NCCN type of setting of care. 40%, you know, is still in the, in the community. And after the first couple of quarters, our LOQTORZI business is about 2/3 in the hospital. So it's, you know, it's tracking, you know, very closely to that in, you know, in, uh, in relation to their, you know, to the overall treatment. You know, I think as it relates to the uptake in the community setting, you know, Doug, with a rare cancer, you know, a lot of these oncologists in the community might be, you know, seeing NPC, you know, one, maybe two patients a year.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

It's a rare cancer, as you know. So, you know, what we've got, you know, to do and our plans are all focused on, you know, is continually engaging with these community oncologists that are treating NPC. And so when they get that patient that's LOQTORZI eligible across one of those three patient segments that I described, you know, we've got that LOQTORZI message, and we've got everything set up to get that new patient start. So, you know, that's where, you know, our complete focus is right now in the second half of the year is really to drive the new patient acquisition across both segments, community and the NCCN and academic institutions. And I believe we're gonna make great progress there as the year unfolds.

[Douglas Tsao, Analyst at H.C. Wainwright & Co]

Great, that's really helpful. And Paul, maybe just on UDENYCA, I'm just curious, you know, you guys have had a really nice recovery in terms of share and, and a rebound in terms of revenue performance. I'm just curious, you know, are there particular segments where you're having more success with the ONBODY and, and autoinjector or, or pre-filled, just your overall portfolio products, you know, versus the other, or is it pretty widespread right now?

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Yeah, Doug, with UDENYCA, you know, we're seeing growth across all segments of the business. You know, when I talked to you last in May on the Q1 call, we were only a few weeks into the call, and most of the uptake at that time was in the clinics. You know, now we're seeing it across all segments of the business. Autoinjector, if there's one segment where that's probably being used more than the other, it's gonna be in the clinics. But essentially, the entire franchise is, you know, growing. And ONBODY, we're still, you know, only one full quarter in, but we're really, really pleased with the penetration it's making across all the segments. So I think that's where we're gonna continue to see the growth in the second half of the year.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

We're very confident in that.

[Douglas Tsao, Analyst at H.C. Wainwright & Co]

Okay, great. Congrats on the progress.

[Dennis Lanfear, CEO at Coherus BioSciences]

Thanks, Doug.

[Operator]

Our next question will come from the line of Mike Nedelcovych with TD Cowen.

[Michael Nedelcovych, Analyst at TD Cowen]

Great, thank you for the question. I just have one on toripalimab. Can you remind us what milestones and/or royalties are owed to Junshi based on your current indication? And what obligations do you have to them, relative to the development path for toripalimab, so the various combinations that you plan to test? Thank you.

[Dennis Lanfear, CEO at Coherus BioSciences]

Oh, great question, Mike. So, Junshi gets a $25 million approval milestone, which we have paid half, so we paid $12.5 million. The other $12.5 million is due in Q1 2025. Secondarily, Junshi gets a 20% royalty on net sales, which is pay-as-you-go. With respect to your cost, with cost sharing, question in the development programs, we are not obligated to share costs, for example, of the toripalimab plus BTLA program, which is going into a segment of small cell lung.

[Dennis Lanfear, CEO at Coherus BioSciences]

So, one of the advantages of our development strategy, as Rosh pointed out in his prepared remarks, is that we sought deliberately to have others develop products and go into pivotal trials and pay for those pivotal trials, and then when the label gets done by the FDA, we can sell into these commercially. So our objective is to line up a number of these. We have, I think 2 now, one with Junshi and one with Inovio. We'll continue to focus on that over the next 6-12 months. You'll probably see more of those. But we think this is a very effective strategy for development that reduce costs. So no, we're not obligated for further development unless we choose to.

[Michael Nedelcovych, Analyst at TD Cowen]

Got it. And does the royalty extend to potential future approvals in other indications, potentially in combination with your in-house assets?

[Dennis Lanfear, CEO at Coherus BioSciences]

The royalty extends to any toripalimab sold in the United States, regardless of indication, whether it's NPC or lung or gastric or whatever. It's just simply a straightforward royalty on toripalimab sales.

[Michael Nedelcovych, Analyst at TD Cowen]

Okay.

[Dennis Lanfear, CEO at Coherus BioSciences]

We're not obligated to pay any royalty, of course, on any Junshi assets.

[Michael Nedelcovych, Analyst at TD Cowen]

Okay. And then are there any, are there any associated milestone payments at all, or is it all those in the agreement you announced?

[Dennis Lanfear, CEO at Coherus BioSciences]

There's some additional sales milestones down the road. However, we don't even feel that those are really relevant because most of those milestones were constructed at a time when we expected to have much larger indications, such as non-small cell lung and a number of things there. You know, indications will take a bit to get to. So we don't think those are really economically relevant to the modeling.

[Michael Nedelcovych, Analyst at TD Cowen]

Got it. Thanks a lot.

[Dennis Lanfear, CEO at Coherus BioSciences]

Thank you, Mike.

[Operator]

Our next question will come from the line of Colleen Kusy with Baird.

[Colleen Kusy, Analyst at Robert W. Baird & Co. Incorporated]

Great, good afternoon. Congrats on the progress. Thanks for taking our questions. For UDENYCA, can you comment on what's been resonating with prescribers when choosing the ONBODY, and what do you think is gonna be kind of the big growth drivers for ONBODY adoption? And then I have a couple of development follow-up questions.

[Dennis Lanfear, CEO at Coherus BioSciences]

Great. Paul, do you want to talk a little bit about our experience in the field, the reaction to the customer base with ONBODY and the growth drivers for Colleen?

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

Yeah, Colleen, thanks for your question. I think what's really resonating, you know, among our customers is the innovative and differentiated features of UDENYCA ONBODY. Probably the most, you know, common, you know, feedback we've been getting from customers is how much they appreciate the 5-minute injection time for UDENYCA ONBODY, compared to the 45-minute injection time for the innovator. Yeah, that, that doesn't sound like it would be, you know, that important, but for a patient, you know, the next day that has to, you know, wait for this injection to occur, you know, 5 minutes, it, it's, it's done, and they can then get on with their day and their lives. And so that's been one of the most important differentiated features. I think the other drivers too, Colleen, is really what I mentioned in my prepared remarks.

[Paul Reider, Chief Commercial Officer at Coherus BioSciences]

You know, we have, you know, now broad payer coverage, so it's, it's highly accessible to more patients. And equally as important is our stable ASP. So you set everything else aside, and having a predictable ASP, which drives, you know, provider reimbursement, it's, it's very, very valuable. So you put the total value proposition together, innovative device features, broad payer coverage, you know, a consistent and stable ASP, and now you have a UDENYCA value proposition that customers, you know, are really driving towards. And so, you know, we are, we are very pleased with the, you know, with the launch progress, and, you know, we're very confident, you know, in the second half of the year and our continued performance there.

[Colleen Kusy, Analyst at Robert W. Baird & Co. Incorporated]

Got it. That's helpful. Thank you. And then, can you just comment for casdozokitug plus toripalimab in lung- in non-small cell lung cancer, can you comment on when we might be able to expect data from that? And then for the triplet study that's gonna be starting soon in HCC, can you advise, does that have a control arm, and what you're hoping to learn from that study before starting the phase III?

[Dennis Lanfear, CEO at Coherus BioSciences]

Thanks, Colleen. I'll let our Chief Medical Officer, Dr. Rosh Dias, take that one. Rosh?

[Rosh Dias, Chief Medical Officer at Coherus BioSciences]

Hi, Colleen. Thank you for the question. So your first question was on non-small cell lung cancer. Just as a very quick reminder, obviously, this builds upon the data that we presented at ESMO IO at the end of last year, showing a couple of monotherapy responses in PD-L1 refractory subjects. So, the ongoing study is in combination with toripalimab, so toripalimab plus casdozokitug, in second to fourth-line non-small cell lung cancer. This study is recruiting very well, and continues to recruit, and we anticipate results in next year, essentially in 2025. The second question was on hepatocellular carcinoma. So we are on track to start the HCC study late this year, which is what we've communicated previously. Obviously, this builds upon the very encouraging data presented at ASCO GI earlier this year.

[Rosh Dias, Chief Medical Officer at Coherus BioSciences]

You asked about the design. So first of all, we will be looking at a couple of doses. So the current standard of care, obviously, is atezolizumab, and our phase III study will look at the comparison against that current standard of care. But prior to that, we will look at a couple of doses of casdozokitug in combination with toripalimab, and then also look at a contribution of components, so probably a third arm as well. And then once we've done that, we'll move on into the phase III, as we've discussed.

[Colleen Kusy, Analyst at Robert W. Baird & Co. Incorporated]

Great. That's helpful. Thanks for taking our questions.

[Dennis Lanfear, CEO at Coherus BioSciences]

Questions around that, Colleen?

[Operator]

That concludes today's question and answer session. I'd like to turn the call back to Denny Lanfear for closing remarks.

[Dennis Lanfear, CEO at Coherus BioSciences]

Thank you, Operator. Thank you all for joining us this afternoon for our call. As I indicated in my prepared remarks, we're very pleased with the company's progress, broadly here in Q2. We're looking forward to another good quarter in Q3, and we look forward to seeing you all at the investment conferences. Bye-bye.

[Operator]

This concludes today's conference call.

[Operator]

Goodbye.

[Operator]

Thank you for participating. You may now disconnect.

Participants

Executives

• Dennis Lanfear, CEO

Analysts

• Brian Cheng, Analyst at JP Morgan Chase & Co
• Bryan McMichael, CFO at Coherus BioSciences
• Colleen Kusy, Analyst at Robert W. Baird & Co. Incorporated
• Douglas Tsao, Analyst at H.C. Wainwright & Co
• Jami Taylor, Head of Investor Relations at Coherus BioSciences
• Michael Nedelcovych, Analyst at TD Cowen
• Paul Reider, Chief Commercial Officer at Coherus BioSciences
• Rosh Dias, Chief Medical Officer at Coherus BioSciences
• Theresa LaVallee, Chief Development Officer at Coherus BioSciences
• William Maughan, Analyst at Truist Securities
• Analyst at Citi