On November 8, 2022 Coherus BioSciences, Inc. ("Coherus" or the "Company", Nasdaq: CHRS), reported financial results for its fiscal third quarter ended September 30, 2022 and recent business highlights (Press release, Coherus Biosciences, NOV 8, 2022, View Source [SID1234623391]):
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RECENT BUSINESS HIGHLIGHTS
CIMERLI (ranibizumab-eqrn), was approved in August 2022 by the U.S. Food and Drug Administration (FDA) as a biosimilar product interchangeable with Lucentis (ranibizumab injection), with 12 months of interchangeability exclusivity. Coherus launched CIMERLI on October 3, 2022.
CIMERLI achieved leading biosimilar market share within the first four weeks of launch, and 2023 net sales of CIMERLI are projected to exceed $100 million.
Toripalimab, a PD-1 inhibitor for the treatment of nasopharyngeal carcinoma, is under review by FDA, with a biologics license application (BLA) target action date of December 23, 2022. Thus far, travel restrictions related to the COVID-19 pandemic have hindered the FDA’s ability to complete inspections in China. Coherus and partner Junshi Biosciences are currently engaged in discussions with the FDA regarding opportunities to complete the inspections.
"We are pleased with the launch of our new revenue growth driver, CIMERLI, which builds on the success we demonstrated with UDENYCA, our first product, that also rapidly overtook a large, first-to-market competitor. This is the first of four product launches transforming Coherus into a multi-product company. In 2023, we plan to launch YUSIMRY, our FDA-approved Humira biosimilar, and upon FDA approval, toripalimab and our UDENYCA on-body injector presentation," said Denny Lanfear, Coherus’ Chairman and Chief Executive Officer. "Given projected topline growth from these launches and prudent expense management, we are targeting a return to profitability in 2024."
THIRD QUARTER 2022 FINANCIAL RESULTS
Net revenue, consisting primarily of net sales of UDENYCA, was $45.4 million and $82.5 million during the three months ended September 30, 2022 and 2021, respectively, and $165.7 million and $253.2 million during the nine months ended September 30, 2022 and 2021, respectively. The decline in both periods was primarily due to a decrease in the number of units of UDENYCA sold as well as a lower net realized price due to increased competition.
Cost of goods sold (COGS) was $35.2 million and $21.3 million during the three months ended September 30, 2022 and 2021, respectively, and $55.9 million and $45.5 million during the nine months ended September 30, 2022 and 2021, respectively, reflecting decreases in the number of units of UDENYCA sold as well as a reserve taken in the third quarter 2022 of $26.0 million against inventory at risk of expiration. COGS for the third quarter and first nine months of 2021 included the write-down of $5.2 million of inventory that did not meet Coherus’ acceptance criteria. UDENYCA COGS also includes a mid-single digit royalty on net sales payable through the first half of 2024.
Research and development (R&D) expense for the three months ended September 30, 2022 and 2021 was $45.8 million and $54.1 million, respectively. The decrease was driven by lower development costs, which was partially offset by higher compensation expense. For the nine months ended September 30, 2022 and 2021, R&D expense was $170.3 million and $312.3 million, respectively. The decrease was primarily due to the $136.0 million upfront license fee paid to Junshi Biosciences in 2021, which was partially offset by the $35.0 million option exercise fee for CHS-006 in the first quarter of 2022.
Selling, general and administrative (SG&A) expense was $44.8 million and $39.9 million during the three months ended September 30, 2022 and 2021, respectively, and $144.9 million and $119.7 million during the nine months ended September 30, 2022 and 2021, respectively. The increases were primarily driven by higher commercialization expenses in preparation for the commercial launch of CIMERLI in 2022 and multiple new product launches anticipated in 2023, including, of toripalimab, YUSIMRY, and the on-body injector presentation of UDENYCA.
Net loss for the third quarter of 2022 was $86.7 million, or $(1.11) per share on a basic and diluted basis, compared to a net loss of $38.5 million, or $(0.49) per share on a basic and diluted basis for the same period in 2021. Net loss for the first nine months of 2022 was $232.9 million, or $(3.00) per share on a basic and diluted basis, compared to a net loss of $241.4 million, or $(3.22) per share on a basic and diluted basis for the first nine months of 2021.
Non-GAAP net loss for the third quarter of 2022 was $74.4 million, or $(0.96) per share on a basic and diluted basis, compared to non-GAAP net loss of $26.6 million, or $(0.34) per share on a basic and diluted basis for the same period in 2021. Non-GAAP net loss for the first nine months of 2022 was $187.7 million, or $(2.42) per share on a basic and diluted basis, compared to non-GAAP net loss of $189.5 million, or $(2.53) per share on a basic and diluted basis for the first nine months of 2021. Beginning in the first quarter of 2022, the Company no longer regularly excludes upfront and milestone-based license fee payments from its non-GAAP financial information. To conform to this change, the prior period non-GAAP financial information has been recast to include upfront and milestone-based license fee payments. See "Non-GAAP Financial Measures" below for a discussion on how Coherus calculates non-GAAP net loss and a reconciliation to the most directly comparable GAAP measures.
Cash and cash equivalents were $286.8 million as of September 30, 2022, compared to $417.2 million at December 31, 2021.
2022 R&D and SG&A Expense Guidance
Coherus is revising the guidance range of combined 2022 R&D and SG&A expenses from $375 – $395 million to a range of $375 – $385 million. This guidance includes $55 million to $60 million of stock-based compensation expense and excludes the $35 million license fee paid in the first quarter of 2022 for CHS-006 as well as a potential $25 million milestone payable upon FDA approval of the toripalimab BLA for nasopharyngeal carcinoma. This financial guidance also excludes the effects of any potential future strategic acquisitions, collaborations or investments, the exercise of rights or options related to collaboration programs, and any other transactions or circumstances not yet identified or quantified. This guidance is subject to a number of risks and uncertainties. See Forward-Looking Statements described in the section below.