We came across a bullish thesis on Coherus BioSciences, Inc. (CHRS) on Substack by Steve Wagner. In this article, we will summarize the bulls’ thesis on CHRS. Coherus BioSciences, Inc. (CHRS)’s share was trading at $1.05 as of March 11th. CHRS’s trailing P/E was 4.20 according to Yahoo Finance.
A researcher in a lab holding a bispecific antibody, illustrating the leading edge of cancer treatments.
Coherus BioSciences (CHRS) recently reported its Q4 and full-year 2024 earnings, with the primary focus being its ongoing transformation into a pure-play oncology company following the planned divestiture of Udenyca. While the earnings report itself was largely uneventful, several key aspects stand out. Revenue for 2024 grew 4% year-over-year to $267 million, driven by strong Udenyca sales and continued momentum from Loqtorzi. The company reported a net income of $28.5 million, marking a significant turnaround from its $237.9 million loss in 2023. However, Q4 revenue declined to $54.1 million due to asset sales, and the net loss for the quarter improved to $50.7 million from $79.7 million in the prior year. The upcoming Udenyca sale, expected to close in late Q1 or early Q2 2025, will provide CHRS with $250 million in cash, bolstering its balance sheet and extending its cash runway for over two years.
With the company pivoting entirely to oncology, Loqtorzi has become the core growth driver. Q4 sales of Loqtorzi reached $7.5 million, up 29% quarter-over-quarter, with full-year sales hitting $19.1 million. Management remains highly optimistic about Loqtorzi’s future, especially given its FDA approval as the only treatment specifically indicated for NPC and its preferred status in the NCCN guidelines. While analysts raised concerns about potential off-label competition from Keytruda, Coherus believes Loqtorzi’s strong clinical data and regulatory advantage will ensure its widespread adoption. The company has been actively engaging oncologists to raise awareness, and early physician feedback has been positive. If Loqtorzi continues to gain traction, its market potential could exceed initial expectations, with projected peak sales between $150 million and $250 million annually.
The strategic shift to oncology also comes with operational changes, including a 30% workforce reduction post-Udenyca divestiture. About 50 employees will transition to Accord BioPharma, leaving CHRS with approximately 155 employees. This restructuring, alongside the elimination of royalty obligations, will drive cost savings and streamline operations. Management reaffirmed that its projected post-divestiture cash balance of $250 million already accounts for these cost-saving measures, ensuring sufficient capital to fund key clinical programs into 2026.
Beyond Loqtorzi, CHRS is advancing its pipeline, with its IL-27 inhibitor (casdozokitug) entering a randomized Phase 2 trial in hepatocellular carcinoma (HCC). Previous results showed promising efficacy, with a 38% objective response rate and strong progression-free survival data. The trial will enroll 72 patients to optimize dosing and further validate its therapeutic potential. Additionally, CHRS is progressing with CHS-114, a CCR8-targeting therapy, in Phase 1b trials for gastric cancer. These developments position the company for substantial upside if clinical readouts prove favorable.
Despite these positive developments, CHRS management has expressed frustration with the stock’s undervaluation, emphasizing that its cash balance, Loqtorzi growth, and promising pipeline are not being properly reflected in its share price. This disconnect has fueled speculation about a potential M&A deal, as CEO Denny Lanfear hinted at strategic interest during the earnings call. If an acquisition materializes, CHRS could see a significant rerating, but even without an immediate deal, its current valuation appears deeply discounted relative to its growth potential. With multiple catalysts on the horizon, including clinical readouts, commercial traction for Loqtorzi, and potential M&A activity, CHRS presents a compelling investment opportunity with an asymmetric risk/reward profile.
Coherus BioSciences, Inc. (CHRS) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held CHRS at the end of the fourth quarter which was 14 in the previous quarter. While we acknowledge the risk and potential of CHRS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CHRS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.