Coherus BioSciences, Inc. (NASDAQ:CHRS) Q1 2023 Earnings Call Transcript

Coherus BioSciences, Inc. (NASDAQ:CHRS) Q1 2023 Earnings Call Transcript May 8, 2023

Coherus BioSciences, Inc. misses on earnings expectations. Reported EPS is $-0.75 EPS, expectations were $-0.57.

Operator: Good day and thank you for standing by. Welcome to the Coherus Biosciences Q1 2023 Earnings Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker, Marek Ciszewski of Investor Relations for Coherus BioSciences. Please go ahead.

Marek Ciszewski: Thank you, Crystal and good afternoon everyone and thank you for joining us. We issued a press release earlier today announcing our financial results for the first quarter of 2023. This release can be found on the Coherus BioSciences website and is also attached to our Form 8-K. Today’s call includes forward-looking statements regarding Coherus’ current expectations about future events. These statements include, but are not limited to, our ability to gain approval for multiple new products and launch them, the ability of the FDA to complete all required inspections in China are our BLA for toripalimab necessary for approval, expectations about demand, timing of our ability to gain market share for any of our approved products, expectations about future revenues and expenses and the timing of any return to profitability.

All 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 forward-looking statements. These statements are not guarantees of future performance and are subject to substantial risks and uncertainties 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 statements. First quarter 2023 results are not necessarily indicative of results for future periods. With me on today’s call are Denny Lanfear, our CEO; Dr. Theresa Lavallee, Chief Development Officer; Dr. Rosh Dias, Chief Medical Officer; Paul Reider, Chief Commercial Officer; and McDavid Stilwell, Chief Financial Officer.

And I will now turn the call over to Denny.

Denny Lanfear: Thank you, Marek, and thank you all for joining us on our Q1 2023 call. In Q1, we set the stage for revenue growth over the rest of the year. As we plan for and execute multiple product launches across our diversified pipeline throughout 2023, transitioning from a single product company, one with 6 products or presentations, including our first immunooncology agent, toripalimab. This quarter, we executed strongly on the launches and growth catalysts in support of emerging pipeline. This progress includes, first, the Q-code for CIMERLI which was implemented at the beginning of April. Demand is now increasing as expected. UDENYCA auto-injectors now ready for launch later this month. A key driver for market share increased this year.

We are ready to launch YUSIMRY, our Humira biosimilar in July, having gained all the requisite approvals and built inventory. Manufacturing facility inspection to support toripalimab is now scheduled for later this month. We expect the approval and launch of the UDENYCA on-body injector later in 2023, strengthening the franchise positioning and driving additional share gains. Following my opening remarks, Paul Reider, our Chief Commercial Officer, will update you on the impact of the CMS signed Q-code on CIMERLI sales start of the second quarter, which we expect to drive sales starting in Q2, accelerate revenue growth throughout 2023. I will then further update you on the Q1 2023 UDENYCA sales and our launch plans for our newly approved UDENYCA auto-injector.

Dr. Theresa Lavallee, our Chief Development Officer, will update you on the status of the toripalimab inspections, the BLA review and our progress on bringing tori manufacturing to the U.S. along with other pipeline developers. Chief Medical Officer, Dr. Rosh Dias will then update on the new toripalimab clinical data being presented at ASCO as well as progress on our TIGIT toripalimab combination studies and our ILT4 program. As you know, we have been very tightly focused on actively managing expenses without jeopardizing our product sales potential. McDavid Stilwell, our Chief Financial Officer, who will provide you some additional detail on measures taken during Q1 to reduce operating expenses, to sharpen our focus on ensuring the success of our product launches, key revenue drivers that we anticipate will return the company to profitability in 2024.

And with that, I will turn the call over to Paul Reider, our Chief Commercial Officer. Paul?

Paul Reider: Thank you, Denny and good afternoon. I will provide you with an update this afternoon on the expansion of our commercial product portfolio. The potential launches of four products in 2023, we expect to drive top line revenue growth this year going forward. I will start with CIMERLI, a fully interchangeable Lucentis biosimilar launched in the fourth quarter last year. Our strategic approach to the market is first: maximize the conversion, existing Lucentis business, which currently represents 1 million units annually; and second, grow share through new patient starts or conversion from other anti-VEGF products. While the complete label with interchangeability has been well received by retinal specialists, giving them the confidence that they can safely transition currently treated Lucentis patients with CIMERLI.

We expect the same clinical outcomes. Use of the miscellaneous J-code has hindered adoption and conversion billing under a miscellaneous code is prone to errors, interrupting payment flows. And even if executed correctly, the result in payment delays of 2 months or more, which disrupts practice cash flows. We expected slower start to CIMERLI sales until the activation by CMS of our permanent product-specific Q-code which enables electronic automated billing thus providing faster payments with much higher certainty. Accordingly, we focused our efforts in Q1 when obtaining the permanent Q-code from CMS and getting it deployed across ophthalmology practices and payers. Those efforts are bearing fruit. The payer front as of April 30, over 90% of target payers have confirmed loading the Q-code.

With respect to billing and reimbursement using the Q-code, new providers have reported receiving full reimbursement within 14 days of electronic billing. We are now seeing the expected increase in demand. Through the month of April, we have shipped over 7,200 demand which represents about 72% of the entire Q1 2023 unit sales. Also during Q1, we doubled the number of accounts that ordered CIMERLI to 185. And of those, 54% have reordered. Of these ordering accounts CIMERLI market share was 20%, which reinforces the potential of CIMERLI once accounts begin adopting. As momentum built in Q1 prior to deploying the Q-code, doctors are reporting that they are seeing the same clinical outcomes for CIMERLI that they would expect to see with Lucentis.

So, CIMERLI is successfully establishing an excellent safety and efficacy track record with retinal specialists. This helped fuel the doubling of demand in Q1, resulting in an average ranibizumab market share for the quarter of 4.1% compared to 2.4% in the prior quarter. At the same time, inventory levels on hand were higher at year end given Q4 was the launch quarter and have begun to normalize and for the first quarter, sales of CIMERLI was $6.2 million compared to $6.95 million for Q4. Reordering reflects new patient starts and conversion from other products. And with the chronic nature of the disease and frequency of injections, this results in a compounding growth trajectory. Therefore, we continue to expect that in 2023, CIMERLI revenues will exceed $100 million.

I will now turn to our oncology franchise, starting with UDENYCA and the launch plans for the two new presentations this year. As you know, pegfilgrastim pre-filled syringe segment is increasingly competitive as reflected by continued price erosion. Accordingly, our strategy is not to compete solely on price, but to launch additional presentations that provide a differentiated value proposition to patients and providers, filling the unmet needs in the market with the objective to regain share. The past year, we told you that we would sacrifice share to preserve pricing power for these future presentation launches as all product presentations are linked to the same average selling price and we maintain a strong ASP on which to launch our two new innovative presentations this year.

We plan to launch UDENYCA auto-injector later this month. This presentation represents the first innovation in the pegfilgrastim Class 8 and customer receptivity has been overwhelmingly positive. This confirms that there is a large market segment unserved by Neulasta Onpro, the on-body device, which still retains 43% of the market. UDENYCA auto-injector provides convenience, administration flexibility, independence and certain delivery in under 10 seconds. Autoinjector thus provides providers and patients a highly desired alternative to Onpro and has the potential to drive market share increase over the coming quarters. Q1 2023 was our last quarter competing with one undifferentiated presentation. And UDENYCA net sales were $26 billion, declined from the prior quarter, resulting from four key factors: first, a market share decline of 1% from the prior quarter to 11.5%, a 9% decline in net selling price required to maintain a competitive position in pre-filled syringe segment, higher wholesale inventory levels at the end of Q4, which have now normalized; and finally, a non-recurring $1.7 million charge resulting from a contingent liability arising from the dispute.

Going forward, we believe the UDENYCA franchise is well-positioned to regain market share beginning in the second half of 2023. UDENYCA is now the only pegfilgrastim brand, with both pre-filled syringe and auto-injector presentations. Later this year, if the on-body injector is approved, we will be the only pegfilgrastim brand with all three product presentations. This will provide a path for maximum market penetration and market share growth this year. We expect our next oncology launch to be toripalimab, if approved. We cover some of our launch plans next. Launching the company’s first immunooncology product is a critical step forward in the advancement of our bio franchise. Our mission is to extend cancer patient survival and to offer new hope to patients and nasal pharyngeal carcinoma is an excellent example.

Today, NPC patients have no FDA-approved treatments, including IO therapies and therefore constitutes a high unmet. Toripalimab is a next-generation PD-1 inhibitor. A different proof will be the first and only PD-1 inhibitor in the U.S. indicated for relapsed metastatic nasopharyngeal carcinoma, establishing a new standard of care in all lines of therapy including first line. As such, we feel confident that toripalimab plus chemo will gain a dominant market share and estimate the NPC market opportunity could reach $200 million at peak. Preparation for toripalimab’s commercial launch, we are executing on a number of pre-launch activities. We created and launched npcfax.com, which is designed to be a primary source of disease state information for patients and their caregivers to learn about NPC.

The sister site for healthcare professionals is also launched. Npcfacts.com allows patients and their caregivers to join our community, enabling us to share disease state education that is tailored to each patient at each stage of NPC disease progression. Our aspiration is to identify and appropriately engage with all NPC patients in the U.S. by the end of the year. We continue to train our oncology sales force, so they will be ready at launch to educate doctors of toripalimab’s differentiated mechanism of action and the impressive patient survival benefit, demonstrated at NPC irrespective of PD-L1 expression status. Finally, we will launch a peer-to-peer educational program featuring the nation’s leading opinion leaders in the field of head and neck cancers and NPC and we look forward to engaging with these KOLs at the upcoming ASCO.

A sub-modest marketing investment will be required to identify patients and educate physicians and providers on the benefits of toripalimab. Our oncology commercial capabilities were built to scale with significant overlap between UDENYCA customers and toripalimab targeted prescribers. Therefore, the launch of toripalimab is being efficiently integrated into our existing oncology commercial infrastructure. We are ready to launch toripalimab upon approval and expect to successfully address the entire NPC patient population across all lines of therapy and irrespective of PD-L1 expression status. I will end with YUSIMRY, our Humira biosimilar, which is on track to launch in July. Market feedback confirms that price, robust supply and product presentation are the key criteria used to making formulary decisions and YUSIMRY is well-positioned to compete on each of these criteria.

YUSIMRY will have a state-of-the-art auto-injector presentation. It includes our proprietary non-stinging citrate-free formulation and a 29-gauge needle for maximal patient comfort. We will have substantial supply volumes at launch with hundreds of thousands of YUSIMRY units ready for distribution in July. We are confident in our ability and our commercial approach and we look forward to updating you in more detail on our strategy on our August call after we launch. In summary, we are now at the inflection point of our growth story and five ongoing and new product launches will drive top line revenue over the next 3 years. I will now turn the call over to Theresa Lavallee. Theresa?

Theresa Lavallee: Thank you, Paul and good afternoon everyone. Let me begin with an update on our toripalimab inspections and projected approval. As you know, due to COVID travel restrictions in China, the PDUFA date was missed for toripalimab NPC application in December 2022. In January, the travel restrictions related to the COVID-19 pandemic were eliminated and the inspection is now scheduled for the second half of this month, May. We wish to thank our partner, Junshi Biosciences for their thorough and diligent preparation efforts to make the inspection a success. With respect to the sufficiency of the clinical data to support the MPC BLA, we note again that the FDA granted toripalimab breakthrough therapy designation as there are no approved treatments for MPC.

The agency has consistently recognized this unmet need and stated MPC warrants regulatory flexibility. The review of the BLA is now substantially complete. The FDA conducted an extensive remote regulatory clinical assessment and did not identify any deficiencies. We continue to work with FDA to complete the clinical site inspections. Toripalimab is a next-generation PD-1 with a differentiated mechanism of action and has demonstrated an impressive survival benefit in multiple tumor types in combination with chemotherapy, irrespective of PD-L1 status. Based on these observations, we conducted mechanistic studies to better understand the basis of this differentiation. We have just completed preclinical studies for journal submission demonstrating that toripalimab has higher potency on T-cell activation compared to pembrolizumab.

These data further support the evolving understanding in the field that PD-1 antibodies are not all the safe or necessarily equivalent. And we plan to present our findings at a scientific meeting later this year. We believe that this makes toripalimab an ideal foundation for our IO pipeline as well as a combination agent for non-Coherus novel compounds. Thus, we are actively seeking additional development opportunities to expand toripalimab’s use beyond MPC, with combinations, as Dr. Dias will describe. I am also pleased to report that Coherus’ regulatory and manufacturing teams continue to execute at a very high level. In the first quarter, we gained approval for the YUSIMRY auto-injector as well as the facility change for large-scale manufacturing.

Additional approvals included the UDENYCA auto-injector presentation, the fourth approval of the quarter. UDENYCA’s BLA supplement for the on-body injector presentation is progressing well and we look forward to approval this year. Lastly, regarding tech transfer of the toripalimab manufacturing to the United States, I can report that we’ve recently successfully completed the large-scale engineering rent needed to onshore manufacturing supply. We plan to execute the process qualification lots this fall and have prioritized these efforts. I’ll now turn it over to Dr. Rosh Dias, our Chief Medical Officer, for a clinical update on the Coherus IO pipeline. Rosh?

Rosh Dias: Thanks very much, Theresa and good afternoon everyone. Toripalimab continues to form the backbone of our immunooncology franchise. We believe that the publication of pivotal data across nasopharyngeal carcinoma, non-small cell lung cancer, and esophageal squamous cell carcinoma in top two journals, continuing positive data sets being released across multiple tumor types, together with its differentiated mechanism of action will position toripalimab effectively as a partner of choice of combinations. Several toripalimab datasets across multiple tumor types and tumor settings have been accepted for presentation at the upcoming ASCO 2023 annual meeting. These include data in non-small cell lung cancer with final overall survival and biomarker analysis CHOICE-01, the first-line non-small cell study, as well as entry of survival data from NEOTORCH in the perioperative treatment of Stage 2/3 non-small cell lung cancer being presented.

Metastatic or recurrent triple-negative breast cancer data will be presented from the TORCHLIGHT study. We will also be presenting the final overall survival analysis of 202 registration study in the subline treatment, recurrent or metastatic NPC on Monday, June 5, which shows clinically and statistically significant results. This will build upon the positive progression-free survival data presented in Nature Medicine in 2021 and at the 2021 ASCO plenary session and which forms the basis of our BLA submission in NPC. With respect to our internal pipeline, we remain excited about our Phase 1/2a toripalimab TIGIT study is currently active in the U.S. with anticipated results next year. In addition, our ILT4 asset remains on track as we proceed towards IND submission towards the end of this year.

I will now turn it over to David Stilwell, our Chief Financial Officer. David?

McDavid Stilwell: Thank you, Rosh. Today, we reiterate our prior financial guidance for 2023. We project revenue growth from accelerating CIMERLI sales and with the launches this year of toripalimab and CIMERLI and the UDENYCA auto-injector and on body injector. For the full year, we expect to book at least $275 million in net sales, with at least $100 million of CIMERLI net product revenue. In the first quarter, we took measures to reduce operating expenses with a reduction in force and the rescoping of the toripalimab joint development committee. Along with other measures we implemented last year, we have significantly reduced expected 2023 R&D and SG&A expenses to a range of $315 million to $335 million. This range excludes non-recurring milestones in upfront payments, and it includes approximately $50 million in non-cash stock compensation expense.

During the start of the year, we requested and obtained a waiver for the revenue covenant of our term loan through the first two quarters of 2023, recognizing that the CIMERLI Q code would not be available until April 1 and that the UDENYCA auto-injector would not launch until May. From my review today of first quarter financial results, I’ll touch on just a few highlights as the details are in the press release, 8-K and 10-Q we filed this afternoon. Net loss for the first quarter of 2023 was $75.7 million or $0.96 per share. On a diluted basis, compared to a net loss of $96.1 million or $1.24 per share on a diluted basis for the same period in 2022. We incurred approximately $4.9 million to non-recurring charges in connection with the restructuring in March 2023.

Net revenue for the first quarter of 2023 was $32.4 million and included $26.2 million of net sales of UDENYCA and $6.2 million in sales of CIMERLI. Net sales of UDENYCA were reduced by a $1.7 million charge for a contingent liability related to resolving a dispute. Net revenue declined compared to the same quarter 1 year ago ergo, primarily due to a decrease in the number of units of UDENYCA sold as well as a lower net realized price. Cost of goods sold was $16.9 million during the first quarter of 2023. Recall that UDENYCA COGS includes a mid-single-digit royalty on net sales payable through the first half of 2024, and CIMERLI COGS includes a low to mid-50% royalty on gross profits. COGS in the first quarter of 2023 included two non-recurring items, a $3 million contract modification fee with one of our manufacturers and a $2.7 million write-off of inventory that was damaged during processing at one of our manufacturers.

Research and development expense for the first quarter of 2023 was $34.2 million, significantly lower than the year ago quarter when we reported $47.9 million in R&D expenses after excluding a $35 million license fee paid to Junshi Biosciences for the TIGIT-antibody, CHS-006. R&D expense for the first quarter of 2023 included $3.6 billion in costs associated with the recent reduction of force. Selling, general and administrative expense for the first quarter of 2023 was $49.2 million, roughly equivalent to the $48.8 million in SG&A expenses for the same period in 2022. SG&A expenses are primarily driven by commercialization activities to support current UDENYCA and CIMERLI sales and costs incurred in preparation for multiple anticipated new product launches in 2023.

We SG&A expense for the first quarter of 2023 included $1.3 million in costs associated with the recent reduction of force. Cash, cash equivalents and investments in marketable securities were $128.1 million as of March 31, 2023 compared to $191.7 million at year-end. Cash burn was elevated in the first quarter of 2023 by headcount related costs specific to the quarter and was further impacted by introductory payment terms for the CIMERLI launch, which delayed cash receipts for product sales. We expect the timing of cash receipts to normalize in the second half of the year. In 2023, we are focused on ensuring the success of our new product launches and generation of the anticipated revenue growth. We will continue to maintain tight control over our operating expenses as we aim toward a potential return to profitability in 2024.

I’ll now turn the call back to Denny.

Denny Lanfear: Thank you, McDavid, and thank you all for joining us on our Q1 2023 earnings call. Now in summary Q-code is active see the impact in the second quarter. We look forward to accelerating some of these sales throughout the year. On the UDENYCA front, our launch later this month of a new innovative product presentation, UDENYCA auto-injector, will provide patients and physicians with a unique option to differentiate UDENYCA in the pegfilgrastim market driving share gains Development of our immunooncology franchise is progressing well. Toripalimab, our foundational asset and anchor continues in study after study demonstrates strong efficacy and safety across multiple tumor types. For the next-generation PD-1 physicians Coherus ideally is the partner of choice for those developing combination treatments with their own proprietary agents and a number of cancers.

The manufacturing inspection scheduled this month, we’re optimistic that approval in the first indication nasopharyngeal cancer will occur in Q3. Lastly, the thoughtful in this cost and expense control, we’ve significantly reduced our 2023 expenses by about $100 million to about $325 million and we will continue to look for more efficiencies and savings as we progress our efforts to drive revenue increases while controlling expenditures to achieve profitability in 2024. Operator, we are ready for the questions.

Q&A Session

Operator: Thank you. Our first question comes from the line of Robyn Karnauskas of Truist Securities. Your line is now open.

Robyn Karnauskas: Hi, thanks for the question. And congrats on getting the manufacturing inspection that’s great news. So I have two quicker questions. I’ll be really brief. So on tori, it seems like there was a press release by your partner Junshi around small cell lung cancer, which has typically been very difficult to treat with second inhibitors, given the cold tumor. So I had a few questions on that. What are your thoughts on like why tori worked given the differentiated epitope and MOA do you think is driving the response? And then how does this change your overall strategy with where you talked about partnering going forward? It seems like this would be a pretty big deal if it works in SDLC, so talk a little bit about how much collaboration interest there is and how where people are at this new dataset? And then I have one on UDENYCA.

Denny Lanfear: Thank you, Robyn, for that question. Yes, we were very pleased to see the small cell data announcement this morning. I’ll let Dr. Lavallee address the issues. So mechanism of action or toripalimab, I’ll subsequently have Dr. Dias address your secondary question, which is of the potential combination in these other indications, including small cell agents, Theresa?

Theresa Lavallee: Yes. Thanks, Robyn. We are excited to see another positive Phase 3 clinical study with toripalimab and particularly in a difficult tumor that has not shown benefit with some other PD-1 antibodies. This positive survival results are consistent with our preclinical studies showing that toripalimab has more potent activation of T cells compared to pembrolizumab and I think that really at up well to really think about combinations, call it, rush, expand further.

Rosh Dias: Yes. Thanks, Theresa. Thanks, Robyn, for the question. So I think you’re quite right. First of all, looking at small cell lung cancer, I think there is a real unmet need here. It represents about 15% to 20% of all lung cancers, extensive stage, continues to have a pro-prognosis and the current therapies that are out there continue to have marginal benefit. So with that in mind, I think we are very excited about the benefits both PFS and OS, just as I think you know, were co-primary endpoints. And I think if we look at the overall space, we – I think this stage continues to add to the breadth of the data available across multiple different tumor types. As we mentioned for lung alone, we have Choice 01 now in non-small cell lung cancer, JIE via TORCH in perioperative and now small cell lung cancer all showing positive results.

I do think that this sets up really well for combinations across small cells, but also other forms of lung cancer and then also additional genotype without additional data set.

Denny Lanfear: Robyn, just an additional remark with respect to this, when we selected toripalimab from a broad array of available PD-1 agents some 3 years ago, we consistently saw outperforming other agents, such as pembro and various in vitro and cell-based studies, although we didn’t quite understand all the implications of it now. I think it’s very rewarding, first of all, to see the mechanism of action story readout as Dr. Lavallee indicated, but it’s also now very rewarding to see this readout in several cancers where toripalimab that continues, as we said, to demonstrate really a very potent track record here as far as efficacy. With that, I think you had a follow-up question on UDENYCA, perhaps, you said.

Robyn Karnauskas: Yes. And one small one, I mean, given that it’s an Asian-based study, I mean I’m sure that doctors will be super excited to see the detailed data. Do you have any sense of whether the publication or presentation on that – and the identical question is really about the auto-injector and the fact that you’re going to have the auto-injector or the on-body device and the pre-filled syringes. I’m just trying to get a better sense of how do payers view the auto-injector what are you getting as an early read on the interest for this auto injector and that’s being differentiated now? And then it’s really – given you a three, and just help us tease out like how do we think about these three products taking share in different markets? Thanks.

Denny Lanfear: That’s a great question. So I’ll let Paul frame that out for you. First of all, with the differentiated value proposition is for the auto-injector compared to the various dosage forms, which are on the market today and then secondarily, some of the progress that we’re making with the payers on that front, Paul.

Paul Reider: Hey, Robyn, thanks for your question. Yes, we’re excited to launch the auto-injector later this month, and we expect it will cause some market share stabilization this quarter and then really increased growth in the second half of the year. I think with the auto-injector enables us to do in the market is to now compete in both the in-clinic segment against the competitive pre-filled syringe competitors. But it also enables us to now compete more effectively in the at-Home segment where Onpro still has 43% share. And it will do that because of the patient benefits. There is really three important ones. First is the auto-injector will give patients more dependence over their injection experience. So essentially, they’ll be able to inject when and where they desire.

And the second is ease of use. So this can be delivered in less than 10 seconds as opposed to where the body for an entire day and navigating through a 45-minute injection time. And then the third is flexibility to the patients who live far away or can’t come back to the office, you can simply do this – so we believe it’s going to be able to penetrate all segments of the market and our payer coverage is actually coming online very nicely. Where we have coverage today, we’ve got confirmed coverage for auto-injector and over 90% of those plans. So the team is now working with customers, getting it on formularies and we will be ready to launch in few months.

Robyn Karnauskas: Thank you.

Operator: Thank you. Our next question comes from the line of Salim Syed with Mizuho. Your line is now open.

Salim Syed: Great. Good afternoon, guys. Thanks for the questions. I guess a couple for me, if I can, one on perhaps toripalimab and then another on UDENYCA. On tori, Paul, you mentioned that you believe on NPC, you can reach a peak sales number around $200 million. I know you haven’t disclosed your pricing framework here, but by my math, that would suggest something about like a $85,000 net price per patient? Just curious if you could point us in the right direction if that’s ballpark is correct based on your $200 million peak if you were to actually be able to get into all patients, all lines?

Denny Lanfear: Let me first take that one, Salim. We – as a matter of policy, we don’t comment on pricing on products, which are not approved. So after we have the product approved, we will be happy to revert there on projected pricing. But as Paul said in his remarks, we will have both first line and other lines of care. And we do have about, I think, 2,500-plus patients per year. But we’re happy to chat a little bit about pricing approval.

Salim Syed: Okay. Great. Maybe if I – maybe if you could comment a little bit then on, I guess, I’ll just ask my second question on toripalimab. Maybe you can comment a little bit on the warehousing. It sounded like you guys are trying to build a registry of patients for MPC with your website. Can you just maybe give us an idea how many patients are currently in the registry and how many you plan to warehouse prior to approval? Thank you.

Paul Reider: Yes. Even rare cancer, the only company and brand that’s going to be entering the space, launching npcfaxs.com was really the work of our market intelligence and our customer knowledge where we found that doctors and patients really don’t have a qualified centralized place to go to get information about NPC. And so that was the real driving force there. Now adding a community where we can invite patients and their caregivers the join enables us to now educate them. And we will understand if they are local, localized or if they are metastatic, and we can then communicate with them appropriately. So we’re going to be turning up the media around that to really start cranking up the noise level there. We will be having our field team through appropriate disease state efforts, share the website with the accounts directly.

So they can actually hand this out in their patients as they come in. So we will be reporting out on actual numbers on that. But so far, we like what we’re seeing there.

Denny Lanfear: I would add the additional comment, Salim, that if approved, we will be the only agent approved by FDA for this terrible disease. We feel that we have a responsibility to reach out to these patients and find these patients and educate them. These patients are otherwise progressing without toripalimab. And as Rosh indicated, the benefits of toripalimab treatment are really substantial and so we feel a tremendous responsibility to reach out to these patients and let them know their home.

Salim Syed: Okay, thank you so much, guys. Thank you.

Operator: Thank you. Our next question comes from the line of Mike Nedelcovych from TD Cowen. Your line is now open.

Mike Nedelcovych: Thank you for the questions. I have two on toripalimab. The first, and you hinted this already a little bit, but I’m curious if you have a sense of whether there is any off-label use of other checkpoint inhibitors in that you may have to displace once toripalimab is approved. I realize there is no approved checkpoint inhibitor. And then secondly, when you think beyond NPC we see given a potentially differentiated mechanism of action and a potentially differentiated clinical profile that the world is your oyster. How will you go about selecting the next set of indications to advance in the pivotal trial? Thank you.

Denny Lanfear: Mike, thank you very much for the question. I’ll let Dr. Dias address your first question and then Dr. Lavallee can address the mechanism of actual questions subsequently. Rosh?

Rosh Dias: So just – thanks for the question. So I’ll just reiterate a couple of points that we mentioned earlier. So first of all, there are no approved therapies for nasopharyngeal carcinoma in the U.S. So what that means for the current standard of treatment is typically chemotherapy, gemcitabine cisplatin typically. Even though there is not an indication for other immunotherapies. There is the NCCN does include a couple of other therapies as potential treatment, but that importantly actually is on the basis of our data set because there are no positive data sets in the NPC other immunotherapies or an indication.

Denny Lanfear: Theresa, can you comment on how the mechanism of action brings forward other potential combination of therapies with toripalimab or ILT4 and so on.

Theresa Lavallee: Yes. I am seeing the increase in potency on T-cells, which is related to the true mechanism to be able to activate antitumor immunity and seen across three large Phase 3 studies, the NPC that are two, the CHOICE-01 non-small cell lung cancer study and the Jupiter-06, the ESCC study that was published in cancer cells that toripalimab in frontline studies in combination with chemotherapy works irrespective of PD-L1 status and really lends itself to combinations to really target mechanisms of resistance in those tumor types. So, our pipeline includes ILT4, which is looking at backer pages, which is a known resistant factor in diseases such as small cell lung cancer. So, we will be looking at the disease positioning based on the mechanisms.

And as we have stated a few times, we are really engaged with a number of other companies that have compounds with Phase 2 data to help us position or in disease based on a strong clinical hypothesis. So, I think later this year, you will be seeing the nice development plan there.

Denny Lanfear: Thanks for your question Mike.

Mike Nedelcovych: Thank you.

Operator: Please standby for our next question. Our next question comes from the line of Douglas Tsao of H.C. Wainwright. Your line is now open.

Douglas Tsao: Hi. Good afternoon. Thanks for taking the questions. Just question on CIMERLI from me, I am just curious in terms of the accounts that have adopted it are they switching all their ranibizumab volume to CIMERLI, or are they typically still splitting it between CIMERLI and Lucentis?

Denny Lanfear: Thanks for your question, Doug. Paul, do you want to take that one?

Paul Reider: Thanks Doug. Yes. As of today, for source of business from a patient standpoint, is coming from a combination of new patient starts as well as conversions from other anti-VEGF therapies, including Lucentis. So, we expected this, and that’s what we are seeing in the market.

Denny Lanfear: Do you have a follow-on question, Doug?

Douglas Tsao: Yes. Also just in terms of YUSIMRY’s launch, I am just curious, do you have a sense or have you been able to start to make some progress or finalize agreements with payers because from that seems to be a real focus of your strategy just given the fact that you are not going to really be promoting into those indications.

Denny Lanfear: Well, I think it’s fair to say that the focus of any Humira biosimilar market participant competitor will be payers insofar as payers and PBMs are the primary determiners of formulary selection for this product. That being said, we have also previously indicated that we won’t be making any comments regarding pricing for the payer conversations until after the launch in July. So, that’s a fair question for our August call, which we will talk about Q2. But no further comment on that particular point at this point.

Douglas Tsao: Okay. Great. Thank you.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Balaji Prasad of Barclays. Your line is now open. Balaji, are you there. Your line is open.

Denny Lanfear: Let’s move on to the next question operator, please.

Operator: Yes. I will. Thank you. Please hold for our next question. Our next question comes from the line of Ash Verma of UBS. Your line is now open.

Ash Verma: Hi there. Congrats on the progress. Thanks for taking my questions. I had one on tori and one on YUSIMRY. So, on toripalimab, maybe I missed this, like from FDA’s point of view, is the key determination in the NPC approval, just the site inspection or does FDA still need to make up its mind, whether it will or will not adopt regulatory flexibility as it looks for a China study PD-1. And I am just curious, I know that there has been a paper that was published in Lancet a couple of years ago, where they commented on NPC and FEC being these indications of high unmet need. Do you have like a confirmation from the FDA if that’s not an issue anymore? Does that apply to any other indications? That’s my first question.

And then on second, so CIMERLI, so I think you mentioned the mid-single digit royalty to be paid until mid-2024, just wanted to understand if I heard that correctly. So, is that like a industry standard term that you got and there is no royalty that you need to pay after 2024? It’s just like based on your launch timeline?

Denny Lanfear: Hi. Let me take the last one first, okay. But McDavid stated was that we had a low-single digit royalty on UDENYCA up to 2024, not CIMERLI. So CIMERLI, it’s a different financial arrangement and in which we have a royalty profit split with our licensing, slightly different, if that’s clear. With regards to your question on regulatory flexibility, I will let Dr. Lavallee address the issue of what comprises regulatory flexibility for the FDA, what the status of that is and the consistency of their comments, particularly as it applies to FEC. And Theresa?

Theresa Lavallee: Yes. Thanks Ash. It’s complex, but they – as you stated, they have enumerated several times NPC warrants regulatory flexibility, both in the Lancet Oncology article and the New England Journal of Medicine article. And the way that they look at it is several fold, one on the epidemiology of the disease, improved available therapies, and the applicability to U.S. medical practice. And so NPC is one that really if you will, get out of jail cart free on all of those boxes, particularly given the lack of approved treatments and the profound benefit that we have observed with toripalimab both in combination with chemotherapy in the front-line study in monotherapy and second and later lines. The only thing when you miss a PDUFA date without a letter, it usually just means the FDA can’t compete what they need to do, and they have said repeatedly about not being able to travel to China last year due to the COVID-19 travel restrictions.

And I think what speaks volumes is even in the pink sheet a couple of weeks ago, the FDA stated they had not reinstated doing inspections in China. They had told us repeatedly given the breakthrough therapy designation and the meaningful clinical benefit that we would see at the front of the list, the fact that ours is scheduled this month, those who were at the front of the list. And I don’t think they would be using their resources to go places where they had worries.

Denny Lanfear: Externally and internally, FDA has been very, very, very consistent that nasopharyngeal cancer or its regulatory flexibility.

Ash Verma: Yes. That’s great to hear. Thank you so much.

Operator: Thank you for your question. Please standby for our next question. Our next question comes from the line of Chris Schott of JPM.

Chris Schott: Hi. Great. Thanks so much for the questions. The first one was just on UDENYCA. I am just trying to get my hands around the, I guess flow-through of the competitive dynamics for the traditional presentation and how insulated basically the auto-injector and on-body opportunities are from that. So, obviously companies in a much, much improved competitive position with these approvals. But I guess does the more competitive environment for the traditional product impact the opportunity for the new presentations, or do you view them as almost like kind of separate markets as the – as we think about kind of where pricing could shake out, etcetera, for these?

Denny Lanfear: Thanks Chris. I will let Paul reply to your question with respect to PFS and auto-injector presentations, the competitive dynamics. Paul?

Paul Reider: Yes. Chris, so when you think about the progress to market, it’s bifurcated into two segments. There is the in-office segment where the – largely the patients come back to the office, and that’s predominantly been where the prefilled syringe presentations have been competing. The auto-injector can be used in that in-office setting based on nurse and patient preference that we build under the same Q-code and reimbursed through the same ASP. So, the differentiated device enables us to compete there. And the other part of – and that’s 57% of the market. The at-home segment where Onpro has largely had a dominant share is where the auto-injector will be able to offer a new alternative. And in that case, it will be on the differentiation and the type of patient experience that the patient can realize using a simple, easy-to-use auto-injector versus wear in the on-body device.

So, then when we add the on-body if approved later this year, now we will have the total solution for customers. So, whether they are in the office, whether they are at-home, whatever they are in a hospital or a clinic, they will have three presentations to meet the unique needs of the providers and the patients. So, we believe that will put us in a strong competitive position with the franchise and will enable us to grow share later this year and in the coming years.

Chris Schott: Great. And can I just follow-up on the auto-injector versus on-body. I guess of those two opportunities, what do you see is the bigger opportunity? Because it seems like one is kind of a unique presentation to Coherus versus the other is obviously a large segment of the market that you will be the only kind of competitor, I guess versus Amgen.

Paul Reider: Yes. Well, listen, we are going to launch at the end of this month, and we will really see how customer receptivity unfolds here, but we are very, very excited about based on what we have heard now. I think at the end of the day, Chris, what’s going to happen is patients are going to choose what type of experience they want and the nurses are going to be key constituents, helping to identify which if it’s the auto-injector or the on-body, that’s going to best fit them. So, we want to be the brand that offers all three so that we are positioned strongly. So, depending upon whatever the patient and the doctor scratch, we want to be the total solution.

Denny Lanfear: One additional point I would make, though, Chris, is that with an on-body system, it has to be filled by the nurse, attach to the patient, activate it. The patient walks around with this for 24 hours. There is about a three-hour period that the patient is set aside for the injection and then there is a 45-minute injection period in which the patients basically do anything. And there is a sense, we think with the patients of a loss of control, your therapy is controlling you, right. And people are living with cancer, right. So, it’s very attractive for a patient to be able to be administered with an auto-injector at the time of their choosing. So, I think that’s a very powerful patient empowerment that has – have seen very strong receptivity in the market.

To your question as to which segment it will take the most from, I think it will probably take share from non-PFS that is say out by it’s a new segment. But also the PFS, it’s generally a new un-served segment.

Chris Schott: Great. And then just last one for me. I know you kind of commented on pricing on the biosimilar Humira side of the market until it launches. But just any observations or surprises or thoughts at all on the, I guess the market formation so far with the first biosimilar that’s launched, or is that generally trending as you would have anticipated for these, I guess first three months or four months in the market?

Denny Lanfear: I think it’s a fair question, but I believe that the jury is out at this point. I think we have only had one team launch the results have been made public and so on. I think you just have to really see I don’t think market formation has really started for the Humira biosimilar market. I don’t think it will until after the July date and/or so another – some other market interest come in. But I think that’s the point where you start to see things settle.

Chris Schott: Great. Thanks so much.

Denny Lanfear: Thanks Chris.

Operator: Thank you. Please standby for our last question. Our last question comes from the line of Jason Gerberry from Bank of America. Your line is now open.

Unidentified Analyst: Hey guys. This is Bhavin on for Jason. So, two questions for me. The first one is – so we have seen the first price increase for UDENYCA in tandem with the auto-injector launch. Should we expect to see pricing sort of steady state from here, or are there more price increases to come as the new formats come to market? And then the second question is going back to your March 2022 Investor Day, where you set 2026 targets. How are you thinking about the 10% market share goal that leads to a $1.2 billion target as you transition to the commercial launch phase for multiple products? Thank you.

Denny Lanfear: Thanks for your question. With respect to UDENYCA pricing, do I understand correctly that you stated there was a price increase with the additional process?

Unidentified Analyst: Yes. From data?

Denny Lanfear: So, you mean the ASP increase that just occurred?

Unidentified Analyst: Yes.

Denny Lanfear: Okay. Paul, could you explain?

Paul Reider: Yes, sure. Just to clarify, UDENYCA list price for the auto-injector will be the same price as the prefilled syringe, which is about a 35% discount to Neulasta. As it relates to the ASP, you are correct that in the second quarter, we did have a 4% increase in our ASP, which puts it amongst the highest of the established brands in the class, including the innovator. So, higher ASP leads to higher reimbursement. So, that’s why we have been very disciplined with management on ASP in preparation for these new presentation launches.

Denny Lanfear: With respect to YUSIMRY question and market share, I would point out that this market is developing consistent with our expectations. The readouts that we got 1 year to 2 years ago from payers about what was important to them., that is to say, pricing scale, robustness of supply, the auto-injector patient comfort that’s playing out pretty much as planned. We deliberately spent about $45 million to move into very large-scale manufacturing. That’s an approval that Dr. Lavallee and team got last quarter. So, I think we are well prepared in terms of scale for competing at 10%-plus as we go forward. And just how long it takes us to get to that sort of benchmark in the market, we will have to see given the dynamics. But we – I can say that we are totally geared up in all aspects of that with the device, with the scale and with our cost structure for YUSIMRY.

Unidentified Analyst: And then if I can have one follow-up, do you have any line of sight into competitor biosimilar Lucentis launches over the next 12 months to 18 months?

Denny Lanfear: Paul, do you want to take that question?

Paul Reider: Yes. We are only aware of one competitor ranibizumab biosimilar and from what we understand, they are not looking for a launch until 2024 based on the public statements.

Denny Lanfear: I think the key issue, though, to keep in mind with CIMERLI and Lucentis biosimilar market is the impact on the Q-code that we garner deployed on April 1st. I had the opportunity in the last couple of weeks to go out and visit a number of customers and discussed with them firsthand whatever barriers to adoption they may have had with CIMERLI and so on. And every single one of those customers, and I think I saw four different practices in four different states. And I talked to at least 30 to 50 physicians continue within those practices. And they are all very enthusiastic about the impact of the Q-code, and its impact on their cash flow, their ability to be certain about reimbursement. So, I think that’s why you are seeing the acceleration in the market share and the uptake and some of the things even that we see some additional data came out today and on April utilization.

So, I think that follows directly from the Q-code for our previous remarks. And direct feedback to me from the customers indicate that’s the case also.

Unidentified Analyst: Okay. Thanks so much.

Operator: Thank you. At this time, I would like to turn it back to Denny Lanfear, the CEO of Coherus BioSciences for closing remarks.

Denny Lanfear: Thank you operator and thank you everyone for joining us today. As you heard, 2023 will be an exciting year of catalyst for Coherus, and we look forward to keeping you all updated on our progress. We will be at the Bank of America Conference this week, and we will be at UBS following that later this month. Talk to you all soon. Bye-bye.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.