Q4 2019 Earnings Call

<unk> fourth quarter earnings Conference call. My name is me.

David Arrington: I would now like to turn the call over to David Arrington, Vice President of Investor Relations and Corporate Affairs. Please go ahead.

The conference operator for the call today at this time, all participants are not listen only mode and I do you mind. During this conference call is being recorded I wouldn't like to trying to come over to David Arrington, Vice President of Investor Relations and corporate Affairs. Please go ahead.

David Arrington: Thank you May and good afternoon everyone. After the close of market today, we issued a press release on our fourth quarter and year-end financial results. This release can be found on the Coherus Biosciences website. Joining me for today's call will be Denny Lanfear, Coherus's CEO; Dr. Jean Baret, Chief Financial Officer; Vince Anacetti, Chief Operating Officer; and Thomas Fitzpatrick, Chief Legal Officer. Before we begin our formal remarks, I would like to remind you that we will be making forward-looking statements with respect to product development plans, all of which involve certain assumptions, risks, and uncertainties that are beyond our control and could cause actual results to differ from those. A description of these risks can be found in our most recent filings with the SEC. In addition, Coherus Biosciences does not undertake any obligation to update any forward-looking statements made during the call. I will now turn the call over to Denny.

Thank you may and good afternoon, everyone. After close of market today, we issued a press release on our fourth quarter and your end financial results.

Its release can be found on the Coherus Biosciences website.

Joining me for today's call will be done he went here here's a CEO Dr., John Bray, Chief Financial Officer, Vince and a study Chief operating officer, and Thomas Fitzpatrick, Chief Legal officer.

Before we begin our formal remarks I would like to remind you that we'll be making forward looking statements with respect to product development plans.

All of which involve certain assumptions risks and uncertainties that are beyond our control and could cause actual results to differ from these statements.

A description of these risks can be found on our most recent filings with the FCC.

Addition, coherus biosciences does not undertake any obligation to update any forward looking statements made during the call I'll now turn the call over today.

Dennis M. Lanfear: Thank you, David, and welcome everyone to our Q4 earnings call. Today we will cover four broad areas for you.

Thank you David and welcome everyone to our Q4 earnings call.

Hey, we will cover for broad areas for you.

Dennis M. Lanfear: First of all, I'll review the performance of Udenica, both Q4 2019 and the entire year, with which, of course, we are very pleased. Secondly, we'll discuss the progress of our pipeline, including both our wholly owned, internally developed assets, as well as our in-licensed products. And we will provide you an update with respect to our thinking on our CHS131 small molecule.

First of all I'll review the performance have you done across.

Both Q4, 2019, and the entire year with one of course, we're very pleased.

Secondly will view the progress on our pipeline, including both our wholly owned internally developed assets as well as our in license products.

We will provide you an update with respect to our thinking on our CHS 131 small molecule.

Dennis M. Lanfear: Following that, I'll make a few remarks about the company's further transaction efforts for 2020 before handing it off to our Chief Financial Officer, Jean Verret, who will review our financial performance for the quarter and the year. First, with respect to the company's commercial performance of Udenica, we are very pleased we've met our goal of achieving 20% or more market share by the end of 2019, as guided in our Q2 earnings call last year. These market share gains were achieved across all segments.

Following that ill make a few remarks about the company is further transaction efforts for 2020.

Before handing it off to our Chief Financial Officer, John <unk>, who will review our financial performance for the quarter end the year.

First.

With respect to the company is commercial performance W. delicate we're very pleased with met our goal of achieving 20% or more market share by the end of 2019 as guided in our Q2 earnings call last year.

These market share gains were achieved across all segments.

Dennis M. Lanfear: 340B Hospitals, Non-340B Hospitals, Clinics, and, again, both pre-filled syringe and on-body injector format. During 2019, we made substantial progress with both our national and regional payers, achieving over 95% access for eugenic patients. We believe this performance validates our overarching commercial strategy as conceived prior to launch with our focus on branded biologics positioning and robust, guaranteed supply.

40 be hospitals, non threeforty be hospitals clinics.

Again against both Prefilled syringe and on body injector formats.

During 2019, we made substantial progress with both our national and regional payers achieving over 95% access for you've done a capacious.

We believe this performance validates our overarching commercial strategy as conceived prior to launch.

Focus on branded biologics positioning.

Robust guaranteed supply.

Dennis M. Lanfear: Comprehensive patient support services such as Coherus Complete, as well as individualized contracting to support biosimilar conversion, all in the context of ASP pricing discipline to preserve long-term value. During 2020, you will see the company's commercial efforts continue in a highly integrated and effective manner to pursue additional market share gains. Now, let me make a few remarks with respect to our pipeline.

Comprehensive patient support services, such as Coheres complete.

As well as individualized contracting to support bio similar conversion.

All in the context here, Pete pricing discipline to preserve long term value.

During 2020, you will see the company's commercial efforts continue in a highly integrated and effective manner to pursue additional market share gains.

Now, let me make a few remarks with respect to our pipeline.

Dennis M. Lanfear: One year after launch, the success of Udenica has validated our biosimilar business model. As a result, our pipeline strategy is now focused on leveraging our R&D and commercial strengths in selected therapeutic areas that can provide the greatest value to patients and the healthcare system while also generating the best return for our shareholders. Let me first discuss the company's ophthalmology franchise, with respect to our Lucentis Biosimilar in license from BioAg. We are currently focused on supporting our partner to generate the additional manufacturing data as requested by FDA and expect to resubmit the application upon completion of these efforts and certain regulatory interactions. With respect to our CHS 2020 ILEA biosimilar, we are very pleased with our progress and are now in position to initiate commercial-scale GMP manufacturing efforts in support of the expected phase III clinical trials in 2021, with launch projected in 2025.

One year after launch the success of your Deneke has validated our biosimilar business model.

As a result, our pipeline strategy is now focused on leveraging our R&D and commercial strikes and selected therapeutic areas that can provide the greatest value to patients and the health care system, while also generating the best return for our shareholders.

Let me first discuss the company's ophthalmology franchise.

With respect to our Lucentis biosimilar in license from biotech.

We are currently focused on supporting our partner generate the additional manufacturing data as requested by the FDA and expect to resubmit. The application upon completion of these efforts and certain regulatory interactions.

With respect to our CHF 2020, I live bio similar we're very pleased with our progress and are now positioned to initiate commercial scale GMP manufacturing efforts in support of you expect to phase three clinical trials and 2021 with launch projected 2025.

Dennis M. Lanfear: As we have previously discussed, these products will compete in a $6 billion AntibGF U.S. market with favorable order of entry and competitive dynamics. Optimology is reimbursed under the Buy and Build model, a reimbursement dynamic in which we have demonstrated proficiency in biosimilar market conversion, delivering greater patient access and healthcare system savings. Now, with respect to our immunology franchise and CHS1420, over the past year and a quarter, we have held a series of Type 3 meetings with FDA and have now gained FDA concurrence on the analytical and clinical strategy in support of a BLA filing in the second half of 2020. We've also made good progress with the further development of our manufacturing strategy for this product in preparing for a large-scale launch in mid-2023. As we have discussed previously, we believe this will be an $18 billion market in the U.S. prior to our launch, and we expect to take our fair share of that market as we leverage our biosimilar commercial infrastructure.

As we have previously discussed these products will compete in a 6 billion anti be Jeff U.S. market with favorable order of entry and competitive dynamics.

Ophthalmology is reimbursed under the binds they'll model a reimbursement dynamic in which we have demonstrated proficiency and bio similar market conversion.

Over in greater patient access and health care system savings.

Now with respect to our immunology franchise and see it just working 20 <unk>.

Our humira biosimilar over the past year in a quarter, we have held a series of type three meetings with an FDA.

I have no gain concurrence with F.D.A. on the analytical and clinical strategy, it's important to be L. E filing in the second half 2020.

We've also made good progress, but the further development of our manufacturing strategy for this product and preparing for a large scale watch in mid 2023.

As we've discussed previously we believe this will be an 18 billion dollar market in the U.S.

Prior to our lunch and we expect to take our fair share of that market as we leverage our biosimilar commercial infrastructure.

No as mentioned, we're now focused on oncology ophthalmology and inflammation.

Dennis M. Lanfear: As mentioned, we are now focused on oncology, ophthalmology, and inflammation. We have determined that CHS-131, our small molecule program currently in development at NAICS, while highly valuable, does not align with the company's strategic priorities. And thus, we plan to pursue strategic alternatives for this asset. We believe that focusing on our core biosimilar business in these key therapeutic areas is in the best interest of generating shareholder value. Consistent with this, the company is pursuing additional oncology-focused licensing transactions to further leverage our commercial infrastructure and R&D capabilities. We will, of course, be providing you additional updates on these in 2020 as matters arise. Now, I'll let the company's Chief Financial Officer, Dr. Sean Beret, review the quarter and full year financials.

We have determined that CHS 131, our small molecule program currently in development that well highly valuable does not aligned with the company strategic priorities and thus we plan to pursue strategic alternatives for this asset.

We believe that focusing on our core about similar business and these key therapeutic areas isn't the best interest of generating shareholder value.

Consistent with US the company is pursuing additional oncology focused licensing transactions to further leverage our commercial infrastructure and R&D capabilities.

We will of course be providing additional updates on these over 2020 as matters arise.

No what the company's Chief Financial Officer, Dr. celebrate review, the quarterly and full year financials Joel.

Unknown Executive: Thank you, Denny. I will now review the main financial results for our full year and fourth quarter 2019. First, let me review at a very high level our financial progress since January 1, 2019. We became cash flow positive in the second quarter of 2019, and we have remained cash flow positive for the subsequent two quarters. Our cash flow from operations for the entire year was $28.4 million and $17.7 million for the fourth quarter of 2019. We anticipate that our cash flow from operating activities will remain positive during 2020, both on an annual and quarterly basis.

Thank you Denny I will now review of the main financial result for a full year and fourth quarter 2019.

First let me review at the very top level, our financial progress since January one 2019.

It became casual positive in the second quarter of 2019, and we have remained cash flow positive for subsequent two quarters or cash from operations for the entire year was $28.4 million and $17.7 million over fourth quarter of 2019, we anticipate but our cash flow from operating activities.

Well remain positive during 2020, both on an annual and quarterly basis.

Unknown Executive: Second, our cash position increased steadily through 2019. We started the year with $72.4 million in cash and cash equivalents and ended the year with $177.7 million. The more than $100 million increase is as a result of borrowing $73 million to commercially launch Udenica in January 2019 and generating cash from the sale of Udenica across all healthcare providers. Third, our balance sheet has strengthened considerably.

Second our cash position increased steadily through 2019, we started the year with $72.4 million in cash and cash equivalents and ended the year with $177.7 million more than 100 million.

Always increase as a result of boring $73 million to commercially launched you'd any car in January 2019, and generating cash from the seller for Denny Cal across all health care providers segments.

Third our balance sheet has strengthened considerably.

Unknown Executive: We ended the year with slightly over $400 million in total assets. Unknown Executive, Ashwani Verma, McDavid Stilwell, Paul Reider, Rosh Dias, Bhavin Patel, Jason Gerberry, Bryan McMichael, Coherus BioSciences Inc. Similarly, our working capital more than quadrupled from $51.2 million at the beginning of 2019 to $228 million by the end of the year. Let me review now the main aspects of our income state.

We ended the year with slightly over $400 million in total assets.

The balance buddies up four fold since the beginning of 2019, which was shy of $100 million.

So not only our working capital more been quadrupled from $51.2 million at the beginning of 2019 to 20 and $28 million maybe another year.

Let's now review now the main aspects of our income statement.

Unknown Executive: Net product revenue for the fourth quarter of 2019 was $123.9 million, and cost of goods sold for the same quarter was $7.8 million, resulting in a gross profit margin of 94%. Net product revenue for the full year was $356.1 million, resulting in a gross margin of 95%.

Net product revenue for fourth quarter 2019 was one of them in $23.9 million cost of goods sold probably same quarter $7.8 million, resulting in a gross profit margin or 94% net product revenue from this full year was $356.1 million.

Resulting in a gross margin of 95%.

Unknown Executive: Research on development expenses for the fourth quarter of 2019 were $34.9 million, as compared to $26.7 million for the same period in 2018. The increase in R&D expenses for the quarter, year over year, was mainly due to the expensing of $11.1 million in upfront and milestone payments to Bio-X for the development of Bio-X Lucentis Biosimilar in the fourth quarter of 2019. Only the expenses for the fiscal year 2019 were $94.2 million, as compared to $110.2 million for the same period in 2018. Here, the decrease in only the expenses full year over year was due primarily to the capitalization of Udetica manufacturing costs that had a $33.9 million impact since the approval of Udetica in November 2018. This decrease was offset by an increase of $15.6 million, primarily related to $11.1 million upfront and milestone payments to BioEck and the development of our other biosimilar product candidate.

Research and development expenses for the fourth quarter of 2019 were $34.9 million as compared to $26.7 million was same period in 2018, the increase in R&D expenses for the quarter year over year was mainly used to be expensing of.

$11.1 million in upfront and milestone payments to biotech corporate development, a fight awakes with senses by a similar in the fourth quarter of 2019.

What did the expenses for fiscal year 2019 were $94.2 million, that's compared to $110.2 million over same period in 2019 here a decrease in R&D expenses full year over year was due primarily to the capitalization argued that he can manufacturing costs.

Oh, that's had a $33.9 million impact since you approval of you did he car in November 2018. This decrease was offset by an increase of $15.6 million, primarily related to $11.1 million upfront and milestone payments to bite away and the development of our older biopsy.

Im going to product candidates.

Unknown Executive: Selling General and Administrative Expenses for the 4th Quarter of 2019 were $36.1 million as compared to $33.8 million for the same period in 2018. SG&A for the full year 2019 were $137 million as compared to $94.2 million for the same period in 2018. The increases in SGN expenses for the quarter and the full year-over-year were mainly attributable to an increase in Salesforce personnel and related commercial functions in connection with the commercialization of Udenica. Net income attributable to Coherus for the fourth quarter of 2019 was $39.2 million, or $0.53 per share, on a fully diluted basis, compared to a net loss of $62.6 million, or $0.92 per share, on a Net income attributable to Coherus for 2019 was $89.8 million, or $1.23 per share, on a fully diluted basis, compared to a net loss of $209.3 million, or $3.22 per share, on a basic and fully diluted basis for 2018. Now, I would like to turn the call back to Dennis for his concluding remarks.

Selling general administrative expenses for the fourth quarter of 2019, what $36.1 million as compared to $33.8 million for the same period in 2018 SGN April the full year 2019 were $137 million, that's compared to $94.2 million over same period.

In 2018.

Increases in SGN expenses for the quarter year over year under full year over year, when mainly attributable to an increase in sales force personnel and related commercial functions in connection with the commercialization Denton County.

Net income attributable from credit Suisse square foot part of 2019 was $39.2 million or 53 cents per share on a fully diluted basis compared to a net loss of $62.6 million on 92 cents per share on a basic and fully diluted basis for the same carried in 2018.

Net income attributable to career is for 2019 was $89.8 million or $1.23 per share on a fully diluted basis compared to a net loss of $209.3 million or $3.22 per share on a basic and fully diluted basis for 2018.

Now I would like to turn the call back to that he who is concluding remarks.

Dennis M. Lanfear: Thanks, JV. We are, of course, pleased with our financial and commercial performance, both in Q4 2019 and for the year 2019 overall. And as you've seen, we've achieved over 20% market share. Furthermore, we are pleased with our advancement of the company's mission to increase access to patients and increase savings to the healthcare system. We have in-licensed two biosimilar products, one in ophthalmology and one in oncology, recognizing the highly synergistic characteristics between those two markets and providing further opportunity to leverage our current commercial footprint. Lastly, we believe we are making very good progress in putting in place the company's five-year growth plan and project to have six or more approved products in the portfolio by 2025. We believe the company's success to date is driven by our focus on areas where we have successfully aligned our commercial and R&D capabilities with market opportunity and patient needs. I'm happy now to take any questions you may have as we go, Operator.

Thanks, JB we're of course, please whether our financial and commercial performance. Both in Q4 2019 in the year 2019, overall <unk> and as you've seen we achieved over 20% market share.

Further we're pleased with our advancement of the company's mission to increase access to patients and increased savings the health care system.

We have in license to about somewhere products, one in ophthalmology and one in oncology recognizing the highly synergistic characteristics between those two markets and providing further opportunity to leverage our current commercial footprint.

Lastly, we believe we're making very good progress and putting in place the company's five your growth plan and project to have six or more approved products in the portfolio by 2025.

We believe the company's success today, that's driven by our focus on areas, where we have successfully aligned our commercial in R&D capabilities with market opportunity and patient needs.

I'm happy now to take any questions. You may have is as we go operator.

unknown: Thank you very much, Denny. I'll hand this over to the operator to take questions from the line.

Thank you very much Danny I'll hand, this over to that operator to take a questions from the line.

unknown: Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your first question is from the line of Mohit Bansal. Your line is now open. Mr. Mohit Banzal, your line is now open. Sorry, I think I was on mute.

Ladies and gentlemen, if you have a question at this time lease spreads.

And then number one key touched on California, if your question how.

Are you wish to remove your cell phone. Thank you. Please press the pound key.

Your first question is from the line of Mohit Bansal. Your line is now open.

[noise] [noise] me family when John Your line is now okay.

Sorry, I think I think I wasn't mute the thanks for taking my question on congrats on the progress and launch in 2019.

Mohit Bansal: So thanks for taking my question and congratulations on the progress and launch in 2019. Maybe if we could touch upon Udenica going forward now that it has been a couple of months since you have seen a new player in the market and the other Milan has been talking about more supply. So, what sort of competition are you seeing in the marketplace at this point? And when we try to project or try to think about 2020 and beyond, how should we think about it, Danica? Can it grow from here, or do you think you can maintain the share here?

Maybe if you can touch upon your danica going forward now that it has been a couple of months since you have seen a a new play I didn't know market and Oh God. The Mylan has been talking about more supply so.

What sort of competition you are seeing in the marketplace at this point and when we try to predict or try to think about 2020 and beyond how how should we think about your Danny got a good growth from handle you think you can maintain the share here.

Dennis M. Lanfear: Thanks, Mohit. You know, as you recall, last year, right at launch, we were asked to forecast the entire year. And our reply to that at that time, at a similar point last year, was that once we had enough data points throughout the year, we'd be able to do that. And for 2020, we see further growth for you, Danica, and we're committed to that.

Thanks Mohit.

As you recall last year right at lunch you know we were asked the forecast the entire year.

And our reply to that at that time at it at a similar point last year was that once we have enough data points throughout the year, we'll be able to do that and for 2020, we see further growth for you down again, we're committed to that however, the uncertainties with respect to Sandoz is actual performance and the potential future entrance at this particular point in time.

Dennis M. Lanfear: However, the uncertainties with respect to, you know, Sandoz's actual performance and the potential future entrants, at this particular point in time, we're not able to provide you with an absolute number. I would make the point, though, that there are three biosimilar players, plus the originator, in the market, and... The Udenica users are those that have already converted. And therefore, there's more value to be had in the conversion of the existing NuLasta users, which is the high-priced option, to BioSimil. So that is to say the biosimilar benefit that's primarily derived from converting patients from New Elasta, and thus, we expect the additional market entrance to put additional pressure on New Elasta's share, which is still quite substantial in the market, as you know. Lastly, I would say, with respect to Sandoz, we haven't seen a lot of movement in terms of market share with that.

We're not able to provide you an absolute number.

I would make the point, though that.

There's three biosimilar players plus the originator in the market and.

The u. delicate users are those which have already converted and therefore, there is more value to be had in the conversion of the new lasted existing new last to users, which is the high priced option to a bio similar so that is it say that bio similar benefit that's primarily derived from converting.

<unk> patients from the last stuff and thus we expect the additional market entrants to put additional pressure on new lastest share, which still quite substantial in the market. The as you know.

Lastly, I would say <unk> with respect to Sandoz, we haven't seen a lot of movement in terms of market share thus far with that.

Dennis M. Lanfear: Got it. And if I may ask one more question, regarding your Avastin Bios, a similar candidate, can you just help us understand the timelines here? So the three-way study you have to perform, would you start the study before talking to the FDA or after talking to the FDA? And how much FDA input would be necessary in designing that study versus how much FDA input could change your strategy there?

Got it.

But more regarding your laskin Biosimilar candidate.

So can you just help us understand or the time last here. So the CBS. So do you have to perform would you stop the study before talking to the deal. It after talking to the FDIC and how much Aberdeen would would be necessary in designing that study, let's say is a good idea I did.

Input change was tied to keep that that's what I've got it.

Dennis M. Lanfear: That's what I'm getting.

Dennis M. Lanfear: Well, of course, the FDA input could change one strategy. We believe that it's prudent to review that entire program with the FDA before initiating any studies, even if they were at risk and even if they were modest in cost. We are, of course, continuing our diligence on both those assets, both the avastin asset and the retoxin asset, consistent with our agreement.

Well of course, the F.D.A. input could change one strategy, but we believe that it's prudent to review that entire program with the FDA before initiating any studies evens, they weren't risk and even if they were modest in cost.

We're of course, it continuing our diligence on both those assets both the I've asked in asset and the Rituxan asset a consistent with our agreement and we don't have any further updates for you with respect to advancing those programs at current time spent about a month only since we did that but we'll be happy to update you probably on the next call we'll have a little more to say.

Dennis M. Lanfear: We don't have any further updates for you with respect to advancing those programs. At the current time, it's been about a month since we did that, but we'll be happy to update you on the next call. We have a little more to say about that.

About that.

Unknown Executive: And anything we should think about in terms of R&D spend, which could go up because of this deal, at least in this quarter, any lumpiness in the spend this year?

I didn't think you should think about <unk> in terms of R&D spend a bit could go up because of this deal at least in this quarter I need any lumpiness him to spend this year.

Mohit Bansal: Yeah, we expect R&D expenses to increase somewhat modestly because we're only going to be focused on our in-house molecule, which is CHS2020 for R&D. We're filing CHS1420, so there may be some manufacturing run that needs to be done. So it will increase, but modestly.

Yeah, we expect to R&D.

Expenses to increase a somewhat modestly because we're only going to be focus a our in house, Michael which is citrus a 2024 R&D filing a citrus 14 20, so there maybe some manufacturing run but needs to be done. So you will increase but modestly.

Mohit Bansal: Guys, very helpful. Thank you.

Very helpful. Thank you.

Douglas Dylan Tsao: Thank you, Mohit.

Thank you mean.

Douglas Dylan Tsao: Your next question is from the line of Douglas Tsao. Your line is now open.

Your next question from the line of Douglas Tsao Your line.

Douglas Dylan Tsao: Hi, good afternoon. Thanks for taking the questions. Are you ready to give an update in terms of when you might be in position to launch your own on-pro or sort of extended release delivery device?

Hi, good afternoon, thanks for taking my questions.

Danny just.

Are you ready to give an update in terms of when you might be in position to launch year alone.

Pro or sort of extended release delivery device.

Thanks, Thanks for the question, Doug very much so.

Dennis M. Lanfear: Thanks for the question, Doug, very much. So, I would say that we are very pleased with the progress that we're making on our IonPro device, but no, we are not in a position where we're ready to update the market and project, for example, when it would launch and so on. And we have not disclosed just at what stage of development that product currently is in, and we probably won't say too much about that until we're much closer to the launch window for it, primarily for competitive reasons.

I would I would say that we are very pleased with the progress that we're making other I'm pro device, but no we're not a position where we're ready to update the market and project for example, when it would launches so on and we have we have not discuss.

Close just what state stage of development that product currently is and we probably won't say too much about that until were much closer to the launch window for primarily for competitive reasons.

Douglas Dylan Tsao: Okay.

Dennis M. Lanfear: You know, Denny, just, you know, sort of thinking about your pipeline and sort of going forward, obviously, you've had a lot of success developing products internally, and you've recently become more aggressive from a business development standpoint. Just curious how, when you think about projects that will move the company forward, what's that balance between internally developed biosimilars versus ones that you can in-license that have, you know, to some extent, been

Oh, Okay, you know and Danny just you know sort of thinking about your pipeline and sort of going forward.

Obviously, you've had a lot of success development product internally you recently become more aggressive from a business development standpoint, just curious how when you think about project. The company forward, what's that balance between internally developed bio similars versus ones that you can in license.

That have you know to some extent and de risked by others work.

Dennis M. Lanfear: That's a great question, Doug. You know, I think that it's fair to say that we like the synergy that we are currently pursuing with having in-licensed products in tandem with internally developed products. I think a prime example of that is the Lucentis Biosimilar hand-in-hand with the ILEA Biosimilar. It balances the launch timing, it balances, for example, the economic alignment issues, and so on

And that's that's a great question, Doug you know I think that it's fair to say that we'd like the synergy that we are currently pursuing with having in licensed products.

In tandem with internally developed products.

I think a prime example of that is Lucentis biosimilar hand in hand with that Lee about similar it it balances to launch timing. It balances for example, the economic alignment issues and so on similarly with the done that you deneke wholly owned product strong in the oncology space and so we feel comfortable adding additional.

Dennis M. Lanfear: Similarly, with Udenica, a wholly-owned product, strong in the oncology space, and so we feel comfortable adding additional oncology products that are in-license that may not have all the same sorts of margins due to licensing fees. We think that the return on investment for externally brought in products is very high, and we also feel that leveraging the commercial footprint, both in terms of oncology and ophthalmology, is very wise, as we said, further to the overall strategy of the company. So we look at it very much in that sort of balance. You know, biosimilars cost perhaps $150 million per product to develop, so you probably don't want to take all that risk with every single product. However, in each therapeutic area, you'll certainly have at least one product, if not two products, that you develop yourself internally. If that's very, Okay.

Allergy products that are in license you know that may not have all the same sorts of margins you don't do to licensing fees.

We think that the return on investment for internally.

<unk> externally brought in products is very high and we also feel that leveraging the commercial footprint. Both in terms of oncology in ophthalmology is very wise as we said further to the overall strategy. The company. So we look at it very much and that sort of the balance you know bio similars are perhaps $150 million per product.

Develop so you you probably don't want to take all that risk with every single product wherever and he's therapeutic area. You'll certainly have at least one product is about two products that you develop yourself internally.

That's very helpful.

Douglas Dylan Tsao: Yeah, no, no, no, it is. I mean, so, I guess, does that suggest that you'll be a little bit more selective in the opportunities that you might pursue with an internally developed biosimilar?

Yeah, and then or what is going into <unk> I guess does it does it suggest that you'll be a little bit more selective in the the opportunities that you might pursue with an internally developed a biosimilar.

Well I believe that we have you know we have first of all you know the 2019 launch that you've done Okay. And then we have the 2023 launch of a these meyer about somewhere and then the 2025 launch of idea. So that's three products and what we're projecting is overall.

Dennis M. Lanfear: Well, I believe that we have, you know, first of all, the 2019 launch of eugenics. And then we have the 2023 launch of the Meyerbosimler, and then the 2025 launch of ILEA.

Dennis M. Lanfear: So that's three products. And what we're projecting is overall six products. So three additional licensed products on top of that. So I think that it's less an issue of being selected internally, as I think it is an issue of maximizing the commercial and R&D synergy of bringing these products in, in each of these therapeutic areas, as we find, Okay, great.

Products. So three additional licensed in products on top of that so I I think that it's less than issue of being selected internally.

As I think it is an issue of maximizing the commercial and R&D synergy upbringing. These products and in each of these therapeutic areas as we find them.

Douglas Dylan Tsao: Okay, great. Thank you so much. That's very helpful.

Okay, great. Thank you so much that's helpful.

Your next question is from the line.

Michael: Your next question is from the line of Michael. Your line is now open.

Your line is now open.

Michael: Hey guys, thanks for taking the question.

Hey, guys. Thanks for taking the question maybe just another follow up just sort on on BD and I guess, specifically you have an option with.

Dennis M. Lanfear: Maybe just another follow-up just sort of on BD, and I guess specifically you have an option with a Rituxan Biosimilar. You know, maybe you can just talk about some of the considerations in determining whether you decide, ultimately, to opt in on that or not.

On a rituxan bio similar.

You know maybe you can just talk about somebody at some of that considerations in determining whether you decide ultimately to opt in on that or to pass. Thanks.

Dennis M. Lanfear: Hi Mike. Thanks for the question. That's a good one.

Hi, buying things. Thanks for the question is that that's a good one so I think that in terms of any of these products that you bring in from another country. The very first thing you have to do is you know understand how the FDA is going to view the clinical trials that were performed externally.

Dennis M. Lanfear: I think that in terms of any of these products that you bring in from another country, the very first thing you have to do is, you know, understand how the FDA is going to view the clinical trials that were performed externally, correct? The patient population, the particular protocol that was used, the stage of disease of the patients, the treatment period, the margins, all that. The second thing you have to do is consider how you're going to bridge from the external innovator product, in the case of the innovative products, the Chinese Avastin or the Chinese Rituximab, and how you're going to bridge that to U.S. Avastin and U.S. Rituximab and just what that looks like. What types of studies are you going to do analytically, bioanalytically, and clinically to satisfy the FDA?

Right. The patient population of the particular protocol that was used the stage of disease. Other patients the treatment period. The margins all that the the second thing you have to do is consider how you're going to bridge from the.

External.

And.

Product you know the external innovator product in the case of the Internet products, you know the the Chinese a vast and nor the Chinese we're talking to them and how you're going to bridge that to U.S. sebastien. The new expert talks about and just what that looks like what types of studies are you going to do.

Analytically bio analytically and clinically to satisfy the FDA.

Dennis M. Lanfear: So that is the task that we have set ourselves forward on, in terms of both those products at the current time, and so we don't have any additional updates for you as we're in the middle of that. I'd be happy to take another question on that and discuss our progress on the next call, but that's sort of the gist of the matter and the sort of things that you have to consider when bringing one of these things in from somewhere.

So that that is the tests that we have set ourselves for you know forward on in terms of both those products at the current time and so we don't have additional updates on you is we're in the middle of that happy to take another question on that get our progress on the next call, but that's sort of the just as a matter and sort of things that you have to consider and bringing one of these.

Things and from somewhere else.

Ekaterina: That's helpful for you. Your next question is from the line of Chris Schott. Your line is now open. Hi, this is Ekaterina on behalf of Chris.

That's helpful for you Yep Yep.

Your next question is from the line.

Your line is now open.

Hi, This is a cat arena on for Chris. Thank you for taking your questions. My first question is on you've done a color are you noticing any notable changes and amgen's or hospitals are clinics behaviors with sandoz coming in or is it simply too early to tell given kind of the limited share gains they've made and then my second one is on a vast and can you talk about the competitive win.

Dennis M. Lanfear: Thank you for taking our questions. My first question is about Udenica. Are you noticing any notable changes in Amgen's or hospitals' or clinics' behaviors with Sandoz coming in, or is it simply too early to tell, given the kind of limited share gains that they've made? And then my second one is on Avastin. Can you talk about the competitive landscape for the product and your expectations about how many players you expect there, and does that kind of change your commercial strategy, given the time-to-market disadvantage? Thank you.

Good for the product and your expectations about how many players you expect there and just kind of change I'm you know your commercial strategy kind of given the time to market disadvantage. Thank you.

Dennis M. Lanfear: Yeah, thanks a lot. Katrina, I think that, first of all, with respect to Amgen and the others, we haven't seen a lot of activity that is incongruous, you know, with the defensive strategies and so forth that Amgen put forward in 2019. You know, it's very much an on-pro focused defensive strategy, as you know. With respect to additional competitors, such as Sandoz, I don't believe they have the reimbursement code yet, and I don't believe they'll have that for another quarter or so. I don't believe they'll have it passed through until mid-year, about.

Thanks, a lot Katherine I think that its and first of all with respect to you know Amgen and the others. We I think it's fair to say that we haven't seen a lot of activity, which is in congruency.

With the defensive strategies and so forth that Amgen put forward in 2019, you know, it's very much at uncrowned I'm probe and focus defensive strategy as you know with respect to additional competitors such as Sandoz I don't believe they had the reimbursement code yet and I don't believe we'll have that for another quarter or so.

I'm pleased to have passed through until mid year about so well have to see how that develops and so far we haven't seen of course any substantial inroads with respect to sandoz and nothing that's sort of popped up in the data to us thus far.

Dennis M. Lanfear: So, we'll have to see how that develops. And so far, we haven't seen, of course, any substantial inroads with respect to Sandoz, and nothing that's sort of popped up in the data for us thus far. Now with respect to Avastin, you know it is true that others are ahead and have various strategies in terms of launch, but I don't think that's really going to deter us from going out there and getting our fair share of the market. I believe that we've shown that we can show up third in the market, like we did with Udenica, have a very strong value proposition, understand the customer base, and understand how to go forward with One of the things that we are currently doing since we did the agreement is discussing the OncMab competitive dynamic with customers, understanding their needs, very much along the lines of what we did before we launched Udenica. As you recall, we did over 1,000 interviews, we talked to the payers, we went to various healthcare conferences, and so on. We are currently in that process now, and we'll be fleshing out our strategy for these OncMabs in 2020. But I will assure you, we'll get our fair share of those markets.

Now with <unk> with respect to a vast and you know it is true that others are ahead and have various strategies in terms of launch.

But I don't think that's really going to deter us from going out there and getting our fair share of the market I believe that we've shown that we can show up third in the market like we did with you deneke have a very strong value proposition understand the customer base and understand how to go forward with customer base and be successful one of the things that we are currently doing a sense we've done.

The agreement is discussing the map competitive dynamic with the customers understanding their needs very much along lines of what we did before we launch do deneke as you recall, we did over a thousand interviews, we talked to the payers who went to various health care Congresses and so on we're currently in that process now and will be pushing out our stress.

Gee for these arc mabs over 2020, but I will show you it would get our fair share of those markets.

Ekaterina: Thank you. Your next question is from the line of Salim Syed. Your line is now open.

Thank you.

Your next question from the line of funding.

Okay.

Salim Qader Syed: Hey, thanks so much for the questions, guys. And congrats on all the progress of Denny and the team.

Hey, Thanks, so much for the questions guys and congrats on all the progress and Danny and team. So one for me on accounting and then the second one just on you done that kinda. So JV. One question I had was just on the trade receivables it looks like it's a 141 million for the end of the.

Unknown Executive: So one question for me on accounting, and then the second one just on Eudenica. So, JV, one question I had was just on the trade receivables. It looks like it's at 141 million for the end of the year, which is more than a quarter of sales. It seems like that's a little on the high side versus other companies that I've looked at. Could you maybe just comment on the terms of the trade receivables and how you're thinking about that? And then I'll just follow up with my Identica questions after that. Thanks.

Here, which is more than a quarter of sales and.

It seems like that so little on the high side versus other companies that I've looked at.

Maybe just comment on the terms of [laughter] the trade receivables, how you're thinking about that and then I'll just follow up with my identical questions. After thanks, Yeah. That's it's a good question actually you should look at the trade receivables, but also at the rebates and charge accrual because trade receivable is only in solely from the.

Unknown Executive: It's a good question. Actually, you should look at the trade receivables, but also at the rebates and charge accrual because trade receivables are only and solely from the wholesalers, right? However, we have to disperse rebates and from under a liability account. So we have to look at them combined. The receivables now are coming in between 30 and 60 days. So they're coming on a regular basis. So I expect that the $142 million will be collected by the end of tomorrow.

Wholesalers right I wherever we have to disbursed rebates on and Oh.

From a.

Under a liability accounts, we have to look at them combined.

Those receivables not coming or between 36 days for the coming out on regular basis. We expect the 142 million will be collected by the end of.

Unknown Executive: Is there just a little lumpiness in it because of timing?

Tomorrow or yeah, So just a little Lumpiness and then no the timing or okay. [laughter]. It's just you suggest from the wholesale is high.

Unknown Executive: It's just, this is just from the wholesaler's side, and then you have to use these proceeds, if you will, and then you have to pay the payers, and you have to pay the clinics and hospitals that perform rebates.

On the then you have to put use these proceeds so if you will and then you have to pay the pit payors and you have to pay the clinics and hospitals would outperform rebates.

Unknown Executive: Okay, but generally speaking, are the terms there 30 days or 60 days?

Okay, but generally speaking it's <unk>.

Terms, there is 30 days or 60 then.

Unknown Executive: Some went on for 30 days; some went on for 60 days.

As someone else 30 day, some 60 days.

Unknown Executive: Okay, but nothing longer than 60 minutes.

Okay, but nothing longer than 60, Oh, and that's very current excellent okay.

Unknown Executive: Oh, and then it's very current, actually.

Salim Qader Syed: Okay, got it. And then just on Udenica, if I may, on Udenica, when I look at consensus, consensus seems to be modeling, you know, on a quarter, like a Q1 over Q4 and a Q2 over Q1, sort of slottish sales. And so at the end of the year, you get to something like, you know, 460 for 2020. And in the press release, it mentions that you plan to increase penetration and maintain price, which should imply quarter over quarter growth. So. Are you willing to say that consensus is undermodeling what your qualitative guidance suggests?

Okay got it.

Then just on you done that Kid, Danny if I, if I may on your deneke.

When I look at consensus consensus seems to be modeling on a quarter like Q1 over Q4, and a Q2 over Q1.

Sort of flattish sales and so at the end of the year, you've got to something like 416 for 2020 and the press release. It mentions that you plan to increase penetration and maintain price, which should imply quarter over quarter growth. So.

Are you willing to say that consensus is under modeling what your qualitative guidance suggests.

Dennis M. Lanfear: Well, I appreciate the question, Salim, and I don't mind you asking. But no, I'm not willing to make further comments with respect to the overall consensus at this particular point in time. I think that we are confident we'll have additional share penetration throughout 2020 quarter-to-quarter, although it will probably be, you know, lumpy as things go forward and so on. But, you know, we are uncertain of exactly how the pricing will evolve with respect to the various competitors and so on. You know, Sandoz is going to show up, and so forth. But overall, I think we're going to do quite well as far as maintaining the trajectory of share growth is concerned. But I can't really nail it down for you further than that at this particular point in time.

[laughter] well I appreciate the question, a slim and I don't mind you asking.

But no I'm I'm not willing to make further comments with respect to the.

The overall the consensus at this particular point in time I think that we.

I think that we are confident we'll have additional share penetration throughout 2020 quarter to quarter, probably be lumpy as things go forward and so on but you know we are we are uncertain of exactly how the pricing will evolve with respect to the various competitors.

And so on Sandoz is going to show up and so forth. So, but overall I think we're gonna do quite well as far as maintain the trajectory on share growth, but I can't really nail it down for you further than that at this particular point in time.

Salim Qader Syed: Okay, last one from me, and then I'll hop in the queue again. Some people comment on the Udenica long-term trajectory as being, you know, the bimodal peak or single peak or, you know, when does Coherus assume peak sales? Is there a general framework that you guys think about internally? Because, you know, there's going to be pricing pressure at some point, perhaps, right? I mean, should people be thinking about peak sales here being, you know, two years into launch or three years into launch? Like, how are you guys generally thinking about that?

Okay last one from me and then I'll hop in the queue again.

Some people comment on did you deneke long term trajectory is being you know, it's a bimiodal peak or single peak or when do you. When this coherus assume peak sales.

Is there a general framework that you guys think about internally because you know there's going to be pricing pressure.

Some point, perhaps right you should people be thinking about peak sales here being two years into launch for three years into launched like how do how are you guys are generally thinking about that.

Dennis M. Lanfear: Well, I would observe that the buy and build Medicare Part B space is quite a bit different in terms of financial incentives and overall market structure than, for example, the Part D space. And, you know, one of the things that I would emphasize is that it is not in the interest of any market participant to aggressively cut prices and prematurely diminish their ASP. So I think when some folks have looked at this market, they may not have focused sufficiently on the fact that the market participants, if they wish to have staying power in the market and wish to have a multi-year trajectory with some steadiness in that market, will be conservative in terms of price decreases in the context of trying to gain share, right?

Well I would I would I would observe that the.

The buy and Bill Medicare part B space is quite a bit different in terms of financial incentives and overall market structure than for example, part D space and one of the things that I would emphasize is that it it is not in the interest of any market participant too aggressive.

Lead cut prices and prematurely diminish their ASP. So I think when some folks have looked at it. This market. They may have not focus sufficiently on the fact that the market market participants if they wish to have staying power in the market and wish to have a multiyear trajectory.

With some steadiness in that market will be conservative in terms of price decreases in the context of trying to gain share right. So I think that Oh, well we have not.

Dennis M. Lanfear: So I think that while we have not, I would say sometime in the two to three year time frame, we would probably see peak sales and then a gentle roll-off thereafter. But I think we'll see how things evolve through 2020 to nail that down a little closer for you. But I would again make the point, though, that Medicare Part B is a space where there are incentives to maintain prices and not simply go in and cut prices because there's certainly a cost to that as to how long your product will last in the market.

While we have not.

Guided the street as to how we see the trajectory I would say sometime in the two to three year timeframe, we would probably see a peak sales the and then a gentle roll off thereafter, but yeah, I think we'll see how things evolve through its 2020 to nail that down a little closer for you but.

I would I wouldnt can make the point, though that Medicare part B is a space.

Where they are incentives to maintain pricing and not simply go in and cut pricing because there's certainly a cost to that as a whole on your product will last in the market.

Salim Qader Syed: Okay, this is super helpful. Thanks so much, guys.

Okay Super helpful. Thanks, So much guys.

Thank you recently.

Jason Mccarthy: Your next question is from the line of Jason McCarthy. Your line is now open. Hey guys, thanks for taking the question. This is Michael Acunowicz on behalf of Jason. [inaudible] I'd like to get your, um, idea on the, um..., on the Biosimilar Lucentis launch because I know that one of the key advantages of that in-license was that it basically moved you guys up to the front position. So I'd like to see, with the delay, are you still projecting that you're going to be the first Biosimilar on the market?

Your next question comes the line of Jason Jason Mccarthy. Your line is now open.

Hey, guys. Thanks for taking the question this is Michael Accuen, which on for Jason.

Michael Hi, Mike.

I'd love to get your idea on the on the bio similar deals tend to launch because I know that one of the key advantages.

In life and was that it basically moved you guys up to the front position. So I'd like to see what's the delay or you still projecting that you're going to be the first biosimilar on the market.

Dennis M. Lanfear: Yeah, that's a very fair question. The additional manufacturing work required, you know, that the FDA wanted to see as far as the movement of this piece of equipment, as we indicated earlier, it's like four months' worth of work, and as soon as we schedule that and wrap that up, we can go ahead and get the file resubmitted.

Yeah. That's that's a that's very fair question on the.

The additional manufacturing work required and you know the FDA wanting to see as far as the movement of this piece of equipment. As we indicated earlier is like four months, what the word and assuming he schedule that and wrap that up and go ahead get file resubmitted.

Dennis M. Lanfear: We don't have guidance for you right now as to exactly how fast that can get scheduled, but we're scheduling that sort of as we speak.

We don't have guidance for your right now as to exactly how fast that can get the scheduled we're scheduling that sort of as we speak and so it's difficult to address your question in terms of when do we think I wouldn't say that we believe it will get that that file resubmit. It's certainly within 2020 or would you get an approved in 2021.

Dennis M. Lanfear: And so it's difficult to address your question in terms of, you know, when we think. I would say that we believe that we'll get that file resubmitted certainly within 2020, and you will get it approved in 2021. But I don't have any further granularity for you, fortunately, at this time in terms of actual timing.

But I don't have any further granularity for you. Unfortunately at this time in terms of actual timing for I would tell you.

Michael Thomas Nedelcovych: Alright, well, thank you very much. Yeah, no, it was definitely helpful. I appreciate it.

Alright. Thank you very much nanos definitely helpful. I appreciate it that's all for me though.

Alright very good.

Thank you ladies and gentlemen.

Dennis M. Lanfear: All right, very good.

unknown: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may all disconnect.

Today's conference call. Thank you for your participation and have a wonderful day you May August.

Thank you. Thank you see when the next call Bye bye.

[music].

unknown: Thanks.

unknown: ???

unknown: BF-WATCH TV 2021