Q2 2020 Coherus BioSciences Inc Earnings Call

My name is all right I'll be a conference all paid up for the call today.

Nora: This is Nora, and I'll be your conference operator for the call today. As a reminder, this conference call is being recorded. I would now like to turn the call over to David Errington, Coherus Investor Relations and Corporate Affairs. Please go ahead.

As a reminder, this conference calls being recorded.

I would not like to turn to cold over to David Harrington cause he always Investor Relations incorporate affairs. Please go ahead.

Thank you <unk> and good afternoon, everyone. After closest market today, we issued a press release on our second quarter financial results.

David Errington: Thank you, Nora, and good afternoon, everyone. After the close of market today, we issued a press release on our second quarter financial results. This release can be found on the Coherus Biosciences website. Joining me for today's call will be Dennis Lanfear, Coherus' CEO; Dr. Jean Verret, Chief Financial Officer; Thomas Fitzpatrick, Chief Legal Officer; and Chris Thompson, Executive Vice President, SAIL.

This release can be found on the coheres Biosciences website.

Joining me for today's Cosby's, any landfair well here's the CEO.

Dr Jones, Murray Chief Financial Officer.

Thomas Patrick Chief Legal Officer, and Chris Thompson Executive Vice President itself.

Before we begin or formal remarks, I would like to remind you that we will do.

David Errington: Before we begin our formal remarks, I would like to remind you that we will be making forward-looking statements, including risks and uncertainties related to the impact of the COVID-19 pandemic on Coherus's business and results of operations. In addition, other forward-looking statements, such as our plans and expectations regarding our ongoing commercialization of Udentica, the Product Candidate Pipeline, Product Development Plans, Financial Projections, and the Use of Capital, 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 in the earnings press release and our latest SEC filing. Please also note that the non-GAAP financial measures included in our press release should be used to help you understand Coherus's business performance and should not be a substitute for your review of our GAAP financial measures. The GAP to non-GAP reconciliations are also provided in the Earnings Press release. I will now turn the call over to Denny.

Uh-huh, including risks and uncertainties related to the impact of Kobe 19 pandemic.

[noise] coheres this business of operation.

Condition other forward looking statements such as our plans and expectations regarding our ongoing commercialization if you'd just be deneke product candidate pipeline product development plans.

[noise] projection tend to use a capital olive which involve certain assumptions risks and uncertainties that are beyond our control and could use actual results to differ from these statements.

Ah description of these risks can be found in earnings press release, and our latest S. E. C filings. Please also note that the non gap financial measures included in our press release should be used to help you understand coheres it's Susan.

You should not be a substitute for your review of our gap financial measures.

The gap to non gap reconciliations are also provided and the earnings press release.

Now turn the call over to Danny.

Thank you David Good afternoon, everyone today's call well first review for you Ah results for the second quarter of 2020.

Dennis M. Lanfear: Thank you, David. Good afternoon, everyone.

Dennis M. Lanfear: On today's call, we'll first review our results for the second quarter of 2020 and, in doing so, provide you with some context with respect to COVID considerations and how our strategies, competencies, and capabilities allowed us to successfully navigate the market uncertainty. We'll then update you on pipeline development as we advance our efforts to become a multi-product growth company, addressing $30 billion in market opportunity over our five-year planning horizon. We'll recap for you our strategy to leverage our demonstrated commercial strengths into ophthalmology, intaminology, and therapeutic areas. Lastly, we will provide some color and how we see the remainder of 2020 developing with respect to our oncology. Thank you, Mark, and provide financial insights on our cash use over the short-term planning period.

And in doing so provide you with some context with respect to Kobe considerations and how are strategies competencies and capabilities allowed us to successfully navigate the market uncertainty.

Well then update for you are pipeline development as we advance our efforts to become multi product growth company.

Dressing 30 billion and market opportunity over a five year planning horizon.

Well recap for your strategy leverage are demonstrated commercial strengths into the ophthalmology and I'm analogy therapeutic markets.

Lastly, we will provide some color and how we see the remainder of 2020 developing with respect to our oncology Pegfilgrastim markets.

[noise] provide financial inside center cashews over the short term planning period.

What else today, we have Chris Thompson R V P. A sir our executive V P itself.

Dennis M. Lanfear: With us today, we have Chris Thompson, our VP of sales, our executive VP of sales, who will provide our commercial update in color, and Jean Veret, our CFO, who will provide our financial update. Let me start with our top-line Q2 2020 financial results. We are pleased to report that net product revenue for the quarter was $136 million, exceeding our expectations. Earnings were $0.70 per share, and non-GAAP earnings were $0.81 per share, both on a diluted basis.

Who will provide our commercial update and color.

<unk> are CFO, who will provide our financial updates.

Let me start with our topline Q2, 2020th financial results. We are pleased to report that net product revenue for the quarter was 136 million exceeding our expectations.

Earnings were 70 cents per sure and non gap earnings 481 cents per sure <unk>.

Both on a diluted basis.

We increased our cash cash equivalents and investments to 456 million.

Dennis M. Lanfear: We increased our cash, cash equivalents, and investments to 456 million. For the quarter, our commercial strategy and strong execution successfully mitigated COVID's potential impact on unit sales. After a brief pause at the beginning of the crisis in March and April, market share growth has now resumed. We believe the strong performance this quarter further validates the commercial capability which enabled us to deliver such strong launch results last year and gives us high confidence that we will do so very well commercially with our ophthalmology and immunology product candidates. I want to thank the entire Coherus team for their very fruitful efforts in a tough market environment. Now, with respect to our second quarter results, I would remind you that on our last call, we made three predictive statements as we actively managed risk. Respect to Coase.

For the quarter, our commercial strategy and strong execution successfully mitigated coke with the potential impact on your itself.

And after a brief pause at the beginning of the crisis in March and April.

Market share growth has not resumed.

We believe the strong performance this quarter further validates the commercial capability, which enabled us to deliver such strong launch results last year and gives us high confidence that we will do so very well commercially with our ophthalmology and an analogy product candidates.

I Wanna, Thank the entire coheres team for they're very fruitful efforts in a tough market environment.

Now with respect to our second court results I would remind you that on the last call. We made three predictive statements as we actively managed risk with respect Dakota.

First we observe that there was a coven driven delay for patient referrals from college treatment, which could persists through the second quarter and beyond.

Dennis M. Lanfear: First, we observed that there was a COVID-driven delay in patient referrals for oncology treatment, which could persist through the second quarter and beyond. We also reported and observed an uptick in the use of Nelasta Onpro in certain COVID hotspot regions, but we projected that it would be transient based on feedback from customers in those regions. Lastly... We shared that we believed Udeneca's demand would continue to grow through 2020 as cancer patients and providers continue to benefit from the value provided by Udeneca. So, let me review the data and how these dynamics played out in the PECFO-Grafton market for Q2.

We also reported and observed an uptick in use a new last time I'm prone certain Kobe hotspot regions.

And we projected that it would be a transient based on feedback from customers in those regions.

Lastly.

We sure do we believed you've done a kid's room and would continue to grow through 2020, [noise] cause cancer patients and providers continued to benefit from the value provided by your deneke.

So let me review the data and how these dynamics played out in the Pegfilgrastim market for cute too.

[noise] decalogy market in general and the Pictographs and market in particular proved to be very resilient as providers in hospitals found ways to identify new patients and treat patients already diagnosed.

Dennis M. Lanfear: The oncology market in general, and the pegtograstin market in particular, proved to be very resilient, as providers and hospitals found ways to identify new patients and treat patients already diagnosed. Recent IQVIA data has shown a strong rebound among new patients. New patient diagnoses increased to 96% of baseline by the end of June, a backup from a mid-COVID nadir of about 70%. Peckville-Grafton demand is growing, and we believe the new NCCN ASCO guidelines have had a positive, supportive impact from existing patients, as we anticipated on our last call. The Pegville-Gradston market has remained strong, with quarter-over-quarter unit growth in the low single digits, consistent with previous quarters. Additionally, market data suggests new LASTA's overall share is declining again, as hospitals have adapted to the COVID environment. We have seen a modest ASP decline in the market, reflecting our price dis- Let me address the reasons we believe the Pegfield-Graston market has proven to be resilient in the second quarter, and specifically, two dynamics at play here.

Recent I Q V. A data has shown a strong rebound with new patients.

New patient diagnoses increased 296% of baseline by the end of June.

[noise] up from a mid Kobe, neither of about 70 per cent.

Pegfilgrastim demand as growing and we believe that new N C. C N as cold guidelines I've had a positive supportive impact from existing patient as we anticipated on our last call.

The Pegfilgrastim market has remains strong with quarter over quarter unit growth and then a low single digits consistent with previous quarters.

Additionally market data suggests new last is overall sure is declining again is hospitals have adapted to the cove it environment.

We have seen him modesty is P. A decline in the market, reflecting a price discipline.

Let me address the reasons, we believe that takes a grasp the market has proven to be resilient and the second quarter and specifically to dynamics I play here.

Dennis M. Lanfear: First, cancers typically grow very fast, and treatment delay is dangerous to patients. Therefore, cancer patients requiring chemotherapy are now seeking treatment. Referrals are stabilizing to normal levels across most regions. Additionally, providers are adjusting to the needs of oncology patients through new measures and service delivery paradigms that ensure the continuity of their operations and patient safety. The dynamic is relatively straightforward. Patients depend on cancer care for their lives, and health care providers are committed to providing this essential care. The result for the second quarter in the face of COVID was less moderation and demand for PEGFO-Graston usage than some had anticipated, in a clear demonstration of the robustness of the market, COVID notwithstanding. Now, I turn the call over to Chris Thompson, who will make a few comments about our commercial performance.

[noise] cancers, typically grow very fast and treatment delay is dangerous to patients.

Therefore cancer patients requiring chemotherapy are now seeking treatment referrals or stabilizing to normal levels across most regions.

Second providers are adjusting to the needs of oncology patients through new measures and service delivery paradigms, the insurer continuity of their operations in patient safety.

The dynamic is relatively straightforward.

Patients depend on cancer care for their lives in healthcare Provider's, we're committed to providing this essential care.

The result for the second quarter in the face of Kobe was left moderation in demand and Pegfilgrastim usage, then some had anticipated.

And a clear demonstration other robustness of the market cope with notwithstanding.

Now, let me turn the call over to Chris Thompson will make a few comments about our commercial performance crisp.

Chris Thompson: Thank you. Thank you, Denny, and welcome, everyone. In the second quarter, we saw sales growth across all market segments. Recall that a core strategy for Udenica is to pursue growth in all segments equally, balancing our efforts across. For Q2, there was a favorable shift in unit demand to the clinic business, whereas last quarter in Q1, we reported that we sold more units on a relative basis to the 340B hospital segment. Additionally, we have sufficient supply to meet any current and future demand levels across all segments. Furthermore, because Udenica is a Made in America product, we are able to ensure continuity of supply as we are not reliant on a global supply chain.

Thank you thank you Danny and welcome everyone.

The second quarter, we saw sales growth across all market segments recall that of course strategy for Ya deneke is to pursue growth and all segments equally balancing our efforts across them.

Four Q too there was a favorable shifted unit demand to the clinic business, whereas last quarter and Q1, we reported that we sold more units on a relative basis to the 340 be hospital segment.

Additionally, we have sufficient supply to meet any current and future demand levels across all segments.

Because you're deneke is a made in America product, we were able to ensure continuity of supply because we're not reliant on a global supply chain.

Chris Thompson: We continue to be thoughtful in our approaches to pricing and contracting, our dual objectives being relative ASP stability and profitability optimization. The reason our commercial organization has demonstrated such aptitude and resilience in the face of COVID is our deep proficiency in strategic planning and execution. As Benny has said before...

Continue to be thoughtful and our approaches to pricing and contracting or dual objectives being relative asp's stability and profitability optimization.

The reason our commercial organization has demonstrated such aptitude and resilience in the face of Covid is are deep proficiency and strategic planning and execution.

Then you said before.

Chris Thompson: The key to being successful in the biosimilar business is to be a biosimilar company. As the only U.S. pure-play biosimilar company, we believe that we have a unique perspective on how to optimize a biosimilar business. It does this by leveraging a deep understanding of the market by offering a customer-centric value proposition that addresses their expectations and needs. And second, it does this through superior organizational execution, delivering this value to the market on a segment-by-segment basis. And third, by providing branded benefits with biosimilar value through quality supply and rational contracting. Knowing the needs of our customers, then responding with a meaningful approach is a core tenet of our branding choice without compromise. Our services are embodied in a unique program called Coherus Complete. Let me offer a small example of one of them, our co-pay assistance program.

Kita being successful in the Biosimilar business just to be a Biosimilar company.

Is the only U S. Pure play Biosimilar company, we believe that we have a unique perspective on how to optimize our biosimilar business first it's by leveraging Ah deep understanding of the market by offering a customer centric value proposition that addresses their expectations of needs.

Second is through superior organizational execution, delivering this value to the market segment by segment basis, and third is by providing branded benefits with biosimilar value with quality supply and rational contracting.

Knowing the needs [noise], knowing the needs of our customers than responding with a meaningful approach as a court tennis of our branding choice without compromise.

Our services are embodied in a unique program called Cohere is complete.

Let me off for a small example of one of them are co pay assistance program.

Chris Thompson: Our approach to co-pay assistance provides immediate help to patients with out-of-pocket costs. This financial assistance has become a much-appreciated component of our services for patients and providers who need it most during these challenging times. It is because of services like this as part of a comprehensive branded approach to biosimilars that we had the best pharmaceutical launch in 2019 based on IQVIA sales data. The success of the Udenica launch was recently recognized by the Healthcare Distribution Alliance, who awarded Coherus the Diana Award for the category of Best New Product Introduction in the Biotechnology Pharmaceutical Product Sector in 2019. In other recognition, Premier, a long-time GPO leader in hospitals, They honored Coherus as a winner of the Annual Horizon Award. This award recognizes suppliers that consistently provide support at the highest levels of partnership, customer service, value creation, clinical excellence, and commitment to lower costs. We are all very proud of these achievements and thank HDA and Premier for these awards. We are confident that we will be well prepared to replicate this success with future launches of our pipeline products in ophthalmology and immunology. Back to you, Denny.

Our approach to co pay assistance provides immediate help to patients with out of pocket cost. This financial assistance has become a much appreciated component of of our services for patients that providers, who need at most during these challenging times.

Because of services like this is part of a comprehensive branded approach to the Biosimilars that we have had the best pharmaceutical launched in 2019 based on I Q V. A sales data.

The success of the identical launch was recently recognized by the health care distribution Alliance rewarded coheres The Diana Award for the category, our best New product introduction, and the biotechnology pharmaceutical product sector and 2019.

And other recognition premier a long time G. P O leader in the hospital segment honored coheres as a winter of the annual Horizon Award.

This award recognizes suppliers that consistently provide support at the highest levels of partnership customer service value creation clinical excellence and commitment to lower costs.

We're all very proud of these achievements and thank the H D. A premier for these awards, we're confident that will be well prepared to replicate the success with future launches of our pipeline products and ophthalmology and immunology back to your Daddy.

Thank you Chris now, let me turn to our longterm growth and discuss the companies internally developed pipeline and partner products.

Dennis M. Lanfear: Thank you, Chris. Now, let me turn to our long-term growth and discuss the company's internally developed pipeline and partner products. I'm pleased to report that we have made significant progress across our product pipeline and in support of our strategy to have six FTA-approved biosimilars on the market by the end of 2025. With respect to our ophthalmology franchise, I'll remind you that we have two biosimilars in the pipeline. One for Lucentis, in license from BioEc, in the fourth quarter of 2019, and one for ILEA, our fully owned and internally developed CHS 2020 product candidate. Regarding the Lucentis biosimilar, our partner BioAcc is proceeding with the FDA-required activities to resubmit the BLA in the fourth quarter of this year. We are pleased with the inflammation safety of this new biosimilar leucine.

I'm pleased to report that we've made significant progress across our product pipeline and and as part of our strategy to have six FTA approve biosimilars on the market by the end of 2025.

With respect to our ophthalmology franchise I'll remind you that we have two biosimilars in the pipeline.

One four lucentis and license from biotech in the fourth quarter of 2019.

And one four eylea are fully own and it's really developed CH S 2020 product candidate.

Regarding lucentis Biosimilar, a partner biotech is proceeding with the F. D. A required activities to resubmit, the BLA and the fourth quarter of this year.

We are pleased with the inflammation safety of this new Biosimilar lucentis.

And our trial, both the control arm and Biosimilar arm, where comparable to each other and with very low inflammation rates performed meaningfully better than the original phase three lucentis trial.

Dennis M. Lanfear: In our trial, both the control arm and the biosimilar arm were comparable to each other and, with very low inflammation rates, performed meaningfully better than the original Phase III Lucentis trial. With respect to CHS 2020, our clinical manufacturing and other development efforts are on schedule to enable Phase 3. Clinical Start in 2021.

With respect to CHS 2020.

Clinical manufacturing and other development efforts around scheduled to enable faith Street.

Clinical start in 2021.

We expect this study to support both U S and European approval.

Dennis M. Lanfear: We expect this study to support both U.S. and European approval and further expect to initiate activities to identify a potential European partner in the second half of this year, with respect to the commercial opportunity for these products. I would note that the ophthalmology market represents an additional $6 billion in market opportunity for the company, which can be efficiently accessed with incremental commercial investment. Furthermore, Ophthalmology shares similar market dynamics to Oncology, where we have demonstrated success. Just like the U.S. Biologics oncology market, the U.S. Biologics ophthalmology market is a buy and build Medicare Part B segment, but with a higher Medicare patient population. This market also comprises a highly concentrated prescriber base consisting of about 450 accounts representing about 80% of business volume.

N further expect to initiate activities to identify potential European partner and the second half of this year.

With respect to the commercial opportunity for these products I would note that the ophthalmology market represents an additional 6 billion and market opportunity for the company, which can be efficiently accessed with an incremental commercial endorsement.

Furthermore.

Ophthalmology shares similar market dynamics, two oncology, where we have demonstrated success.

Just like the U S biologics oncology market. The U S. Biologics ophthalmology market is a buying bill Medicare Park be segment, but with a higher Medicare patient population.

This market also comprises a highly concentrated prescriber base consisting of about 450 accounts, representing about 80% of the business volume.

Thus.

We believe that are successful lunch, you deneke and a strong expertise in areas up market accessing contracting.

Dennis M. Lanfear: We believe that our successful launch of Udenica and our strong expertise in areas of market access and contract negotiations positions us favorably for commercial success with our ophthalmology biosimilar. We expect Coherus to then have a significant role in biosimilar market formation. Now, let me make a few comments about CHS1420, our internally developed biosimilar candidate to Humira that addresses an $18 billion market. We expect this to be a competitive environment, which is a positive for us, as we have a demonstrated proficiency in executing in highly competitive environments. There is substantial market share to be taken from the University, and we expect payers to play a key role in product selection decisions, and they will be highly receptive to competitive overtures from biosimilars.

Physicians us favorably for commercial success, we're up with our ophthalmology Biosimilars.

We expect coheres type of significant roll, then and Biosimilar market formation.

No let me make a few comments about CHS 14, 20 or internally developed Biosimilar Kennedy Myra.

The address is 18 billion dollar market <unk>.

We expect this to be a competitive environment, which is a positive for us.

We have a demonstrated proficiency and executing and highly competitive environment.

There is substantial market share it would be taken from the innovator.

And we expect Payors to play a key role and products selection decisions.

And they will be highly receptive to competitive overtures from biosimilars.

We are currently honing or commercial strategies to address value drivers for the various segments and value chain constituents.

Dennis M. Lanfear: We are currently honing our commercial strategies to address value drivers for the various segments and value chain constituents. We expect to file the BLA in the fourth quarter of this year, and we are confident in our ability to outperform after our projected July 2023 product launch. Lastly, with respect to oncology, our Avastin Biosimilar N license from InnoVent Biologics, we continue productive engagement with InnoVent and to advance towards a BLA filing. Activities include FDA-required interactions supporting the initiation of a three-way PK study using the innovator Avastin from the United States and China, compared to the innovator Avastin-BioSemmar. Now I'll let the company's Chief Financial Officer, Jean Bray, summarize our second quarter financials. Jean?

We expect to file the BLA in the fourth quarter of this year and we are confident in our ability to outperform after are projected July 2023 product launch.

Lastly, with respect to oncology are are asked them biosimilar in license from invent biologics, we continue productive engagement with <unk> into advanced towards a BLA finally.

Activities include FTA required interaction supporting the initiation of a three way PK study using the interview ever have asked and from the United States in China compared to inoffensive asked about somewhere.

No I'll, let the company's Chief financial Officer Jen brain.

<unk>, our second quarter financials, Sean.

Unknown Executive: Thank you, Denny, and welcome everybody. I will now review the main financial results for the second quarter of 2020. Net product revenue was $136 million, with non-gap net income of $68 million and diluted non-gap earnings per share of $0.81. Net product revenue included a $13 million favorable revision of our payor rebate estimate recorded in the second quarter of 2020. Net revenue for the second quarter of 2019 was $83 million, with a non-GAAP net income of $32 million and diluted non-GAAP earnings per share of $0.43. Research and development expenses for the second quarter of 2020 were $26 million, compared to $19 million for the same period in 2019. Selling, general, and administrative expenses for the second quarter of 2020 were $34 million, compared to $36 million for the same period in 2019, when we were in the second quarter of our Udini catalog.

Thank you Danny and welcome everybody.

I will now review of a main financial results for a second quarter of 2020 <unk>.

That product revenue was hundred and 36 million with non gap net income of 68 million diluted none gap earnings per share of 81 cents.

Perfect revenue included the 13 million favorable revision of I pay a rebate estimate recorded in the second quarter of 2020.

Net revenue for second quarter of 2019 $83 million with a non gap been income 32 million and I really none gap earnings per share of 43 cents.

Research and they've been expenses for a second quarter of 2020 or $26 million compared to 90 million probably <unk> in 2019, selling general I'm gonna be afraid of expenses for a second quarter of 2020, whereas $34 million compared to 36 million probably same period and 2019 when we were.

And the second quarter of our you didn't <unk>.

We anticipate that's R&D and SG&A expenses combined together within range between $285 million and $310 million for a full year fiscal year 2020, excluding upfront or milestone payments from any potential new collaborations.

Unknown Executive: We anticipate that R&D and SG&E expenses combined together will range between $285 million and $310 million for the full fiscal year 2020, excluding upfront or milestone payments from any potential new collaboration. For the second half of the year, we are projecting relative SG&A expense stability, while R&D expense will increase as we file and prosecute the CHS1420 Humira Biosimilar BLA, scale up manufacturing to meet launch demand, and initiate the Phase III programs for CHS2020 and ILEA Biosimilars. We started our second quarter with $193 million in cash, cash equivalents, and investments and ended the quarter with $456 million. The $263 million increase is primarily due to generating $60 million in net cash from operating activities and receiving $223 million in net proceeds from issuing convertible debt notes, offset by purchasing $18 million in capped call options related to these convertible notes.

For the second half of the year, while protecting relative SG&A expense stability, while R&D expense will increase as we fall and prosecute CHS 14, 20, Humira Biosimilar BLA scaleup in manufacturing to meet launched demand and initiate the phase three programs for <unk> 2020 or I'll.

[noise] Biosimilar.

We started a second quarter with 193 million in cash cash equivalents and investments and ended the quarter with $456 million.

For 263 million increase is primarily due to generating 60 million net cash from operating activities and receiving $223 million in that proceeds from issuing convertible that notes offset by purchasing $18 million. It kept colds options really need to these convertible notes.

Now back to you Danny.

Thank you John let me make a few points.

Pegfilgrastim market has proven to be robust and looking ahead to Q3, and you're and while we expect that they will be local effects from covid resurgence as we believe the overall market will remain resilient due to hospitals and clinics adapting to the treatment environment.

Local in time limited disruptions aside the overall market is growing in terms of units bolstered by the new NCC N ASKO guidance.

Unknown Executive: Now, back to you, Denny.

Dennis M. Lanfear: Thank you, John. I'll make a few points. The Peckfield-Graston market has proven to be robust, and looking ahead to Q3 and year-end, while we expect that there will be local effects from COVID resurgences, we believe the overall market will remain resilient due to hospitals and clinics adapting to the treatment environment. Local and time-limited disruptions aside, the overall market is growing in terms of units, bolstered by the new NCCN ASCO guidance. The innovator still has 70% of the market, and despite competitive activity increasing, we believe there is room to grow market share in a price-responsible way. With both our 2019 launch and our Q2 2020 performance, our commercial team has demonstrated itself to be highly capable of delivering strong results in challenging environments.

The innovators still has 70% sure and despite competitive activity, increasing we believe there is room to grow market share in a price responsible way.

With both are 2019 lunch and our Q2 2020 performance our commercial team has demonstrated themselves to be highly capable of delivering strong results and challenging environments.

Thus, we expect continued success and the second half of the year, although the market conditions with Kobe remain fluid.

Thanks to your Deneke success, we aren't as strong financial position to support our pipeline growth trajectory with additional biosimilar launches expected it oncology ophthalmology and immunology over the next few years.

We believe these therapeutic areas will leverage coheres his strengths.

<unk> Our award winning commercial infrastructure.

Increasingly access for patients savings to the health care system, while continuing to generate growth and shareholder value over the long term.

Dennis M. Lanfear: Thus, we expect continued success in the second half of the year, although the market conditions with COVID remain fluid. Thanks to Udenica's success, we are in a strong financial position to support our pipeline growth trajectory with additional biosimilar launches expected in oncology, ophthalmology, and immunology over the next few years. We believe these therapeutic areas will leverage Coherus' strength, including our award-winning commercial infrastructure to increase access for patients. Savings to the health care system while continuing to generate growth and shareholder value over the long term. Operator, we'll now open the line for questions.

Operator, when I opened the line for questions.

Thank you.

I'd like to open to mine for questions. We can do you ask you you're telling me to <unk> to enable time for everyone soccer crashing any press Taiwan on your Touchtone telephone any of your question has been answered all you wish team will get yourself from the queue. This press donkey.

First question is from the line of Michael's a big Yeah line is open.

Hey, guys. Thanks for taking the question and congrats on the strong quarter.

unknown: Thank you. At this time, I'd like to open the line for questions. We kindly ask you to limit yourself to one question each to enable time for everyone. To ask a question, you may press star 1 on your touch-tone telephone. And if your question has been answered or you wish to remove yourself from the queue, please press pound 3. The first question is from the line of Michael Zubaird. Your line is open.

Just a question related to your Deneke dynamics. Then you mentioned there was a sort of relative shift to the clinics this quarter compared to last quarter, where you saw sort of a relative shift at 340 B.

340 be segment just curious if you can talk about what what specifically is driving that dynamic or is it just from seasonality and maybe how we think about those dynamics going forward.

Michael Thomas Nedelcovych: Hey guys, thanks for taking the question and congrats on the strong quarter. Just a question related to Udenica dynamics. I think Denny you mentioned there was a sort of relative shift to the clinics this quarter compared to last quarter, where you saw a sort of relative shift to the 340b, 340b segment. Just curious if you can talk about what specifically is driving that dynamic or is it just some seasonality and maybe how we think about those dynamics going forward.

Thanks for the question, Mike and I think that the each each segment has a tendency to have been flow quarter to quarter as we described earlier.

We also describe that.

We tend to push on segments that are lagging behind a bit.

Four Q1, we had a little more and the 340 be segment.

Clinics came back slightly in Q tube.

But overall this is just natural of course, a business. So I wouldn't worry about it too much going forward, we expect things to remain stable throughout the rest of the year.

Chris Thompson: Thanks for the question, Mike. I think that each segment has a tendency to ebb and flow from quarter to quarter, as we described earlier. We also mentioned that we tend to push on segments that are lagging behind a bit. For Q1, we had a little more in the 340B segment. The clinics came back slightly in Q2. But overall, this is just the natural course of business, so I wouldn't worry about it too much. Going forward, we expect things to remain stable throughout the rest of the year.

Got it that's helpful. And then maybe just some other dynamics you were seeing.

During the second quarter with respect to competition maybe.

Have you seen any changes from Sandoz more recently and then you've also got Pfizer in the mix now so.

Any thoughts on what you're seeing from Pfizer or how to think about competition.

Back half of the year. Thanks.

So thanks, Mike for that question.

As it relates specifically to Pfizer.

Chris Thompson: Got it. That's helpful.

Chris Thompson: And then maybe just some other dynamics you were seeing during the second quarter with respect to competition. Maybe you've seen any changes from Sandoz more recently? And then you've also got Pfizer in the mix now. So any thoughts on what you're seeing from Pfizer or how to think about competition in the back half of the year? Thanks.

They really haven't.

Fisher Alley launch so to speak so so we haven't seen a lot of activity by them in the marketplace, but we fully expect that that there'll be out there.

And as it relates to Sandos.

We've seen very little uptake with them, but.

They do have a code.

We're ready for the competition.

Chris Thompson: So thanks, Mike, for that question. You know, as it relates specifically to Pfizer,

Pfizer.

They're codes are yet to come so it'll probably be a little bit of time before we start to see activity from them.

Chris Thompson: They really haven't officially launched, so to speak, so we haven't seen a lot of activity by them in the marketplace, but we fully expect that they'll be out there. And as it relates to Sandoz, we've seen very little uptake with them, but they do have a code, so we're ready for the competition. Pfizer, their codes are yet to come, so it'll probably be a little bit of time before we start to see activity from them.

Great. Thank you and congrats again on the quarter.

Thank you thank you Mike.

Your next question comes from the line of Ken cause he I thought I have called in and company you're lying is open.

Hey, guys. Congrats on all the progress and success question Danny on the prepared remarks that much I might've missed heard it but I think you said that for you Biosimilar Lucentis, you're seeing inflammation rates that are in line with the phase three original phase three Lucentis program, it's my understanding that.

Chris Thompson: Great, thank you, and congrats again on the quarter.

Chris Thompson: Thanks.

Over the years, they've refined the the formulation and they have the inflammation rates now under 1% and all the clinical studies. So can you can you give us specifically your inflammation rates.

Chris Thompson: Thank you, Mike.

Chris Thompson: Thank you.

Chris Thompson: Thank you, Mike.

Ken Casciatore: Your next question comes from the line of Ken Casciatore of Coven & Company. Your line is open.

Dennis M. Lanfear: Hey guys, congratulations on all the progress and success. A question, Denny, on the prepared remarks. I might have misheard it, but I think you said that for your biosimilar lucentis, you're seeing inflammation rates that are in line with the phase three, original phase three lucentis program. It's my understanding that over the years they've refined the formulation, and they have inflammation rates now under 1% in all the clinical studies.

At your experience, let me yeah, I think that I think that you may have misheard that can what we pointed out and are prepared remarks is that the inflammation rates with the phase three of our Lucentis, we're less than the information rates originally seen.

With Lucentis during the clinical trials.

So can you give us a sense of of kind of what you're seeing now that we know that lucentis inflammation rates I think are often sub 1% can you.

Dennis M. Lanfear: So can you?

Dennis M. Lanfear: Yeah, I think that you may have misheard that, Ken. What we pointed out in our prepared remarks was that the inflammation rates with phase three of our Lucentis were less than the inflammation rates originally seen with Lucentis during its clinical trials.

Give us a sense of that.

Yeah.

They are in that range I don't have those exact grades, but yes. They are in the range of 1% or less.

And I would also send out that yeah, let me just point out that the that the rates between the Lucentis Biosimilar and little incentives, we're very much the same.

Dennis M. Lanfear: Can you give us a sense of kind of what you're seeing now that we know that lucentis inflammation rates, I think are often sub 1%, can you give us a sense of that?

Okay. That's great. That's wonderful and then in terms of I know with the pandemic. It's I think it's probably hard for you to get over to Europe, but can you just talk about what you all are doing to help them Bioethical long I know the experience that you all have instead of working through sometimes difficult situations. So just trying to understand what level of engagement you have as they they.

Dennis M. Lanfear: Yeah, they are in that range. I don't have those exact rates, but yes, they are in the range of 1% or less. Okay. And I would also point out that, yeah, let me just point out that the rates between the Lucentis Biosimilar and Lucentis were very much the same.

Dennis M. Lanfear: Okay, that's great. That's wonderful.

Try to kinda solves and move forward.

We have significant engagement with respect to to buy a work and it's contract manufacturing organization as you pointed out our team has substantial experience in manufacturing Biosimilars in particular, we have experience and manufacturing Lucentis biosimilars. So there's been robust engagement on a week.

Dennis M. Lanfear: And then, in terms of the pandemic, it's, it's, I think it's probably hard for you to get over to Europe, but can you just talk about what you all are doing to help them BioEc along? I know the experience that you all have and kind of working through sometimes difficult situations to just try and understand what level of engagement you have as they try to kind of solve problems and move forward.

Basis, there's a strategic meetings with higher levels of management slightly less frequently I'm on several of those meetings from time to time myself, we monitor that very closely.

Dennis M. Lanfear: We have significant engagement with respect to BioWAC and its contract manufacturing organization. As you point out, our team has substantial experience in manufacturing biosimilars. In particular, we have experience in manufacturing Lucentis biosimilars.

Pleased with the progress that they're making.

That work is not yet done will be able to update you on the next call, but there has been I think full engagement from cohere is with respect to leveraging or manufacturing expertise to move that product to the BLA filing an Q for this year.

Dennis M. Lanfear: So there's been robust engagement on a weekly basis. There are strategic meetings with higher levels of management, slightly less frequently. I'm in several of those meetings from time to time myself.

Great Congrats guys keep it up.

Thanks, Ken Thanks.

Your next question comes from the lineup when he'd been salad Citigroup airline yourself then.

Dennis M. Lanfear: We monitor that very closely. We are pleased with the progress that they're making. That work is not yet done. We'll be able to update you on the next call. But there has been, I think, full engagement from Coherus with respect to leveraging our manufacturing expertise to move that product to the BLA filing in Q4 this year.

Great. Thanks for taking my question Congrats on all the progress is that maybe so Danny you mentioned that prepared remarks that.

Cute quadruple quadrupled pegfilgrastim there was a growth of single digits could you. Please comment on the grilled thoughts.

<unk> <unk> been wasn't wallet.

Nine with the market there.

Dennis M. Lanfear: Great, congrats guys, keep it up. Thanks, Ken.

And also like we saw that for the last the envelope. It was a market share green so once it's coming.

Mohit Bansal: Your next question comes from the line of Mohit Bansal of Citigroup. Your line is open.

Dennis M. Lanfear: Great, thanks for taking my question and congrats on all the progress as well. Maybe, Danny, you mentioned in the prepared remarks that Q, quarter over quarter for Paxil-Rastin, there was a growth of low single digits. Could you please comment on the growth of Eugenica, if there was volume growth in line with the market there? And also, like we saw with Nulasta Enpro, there was a market share gain. So, was it coming at the cost of Biosimilus or just prefilled Nulasta? Thank you.

Oh by a similar so I'll just speakers Nebraska.

Thank you.

Hello.

Let me let me take the last part first and then I'll, let Chris Thompson, our executive VP of sales take your.

First part of your question.

What's important.

Terms of the takeaway here is that we indicated on the Q1 call that.

Uptick would be transitory was subject to the Covid first wave and would walk through the market. That's what we saw as Covid went through and people became more depth dealing with Covid. We saw pro share receipt I think it's down from up 60% down to around 56.

Dennis M. Lanfear: Let me take the last part first and then I'll let Chris Thompson, our Executive VP of Sales, take the first part of your question. I think what's important in terms of the takeaway here is that we indicated on the Q1 call that Ampro Uptick would be transitory and was subject to the COVID first wave and would wash through the market. That's what we saw.

Percent.

If I'm correct.

There is a.

Growth of the market year over year of about 3% in terms of Pegfilgrastim units and I think that we saw a growth quarter over quarter of about two 4% between Q1 and cute too.

Dennis M. Lanfear: As COVID went through and people became more adept at dealing with COVID, we saw Ampro share a receipt, I think it's down from off 60% down to around 56% if I'm correct. There is a growth of the market year-over-year of about 3% in terms of peg fill grassed-in units. And I think that we saw growth quarter-over-quarter of about 2.4% between Q1 and Q2. Did you have any further, did that help Mohamed?

And then did you have a further help mohan.

Was that wasn't the number for new Danny colors Beckman dressing.

That's the Pegfilgrastim market overall.

Okay. So can you comment on that you Danica, let's see I mean.

Quite a little quarter, if you have still gaining sure Oregon for knowledge to just brain damage, which is probably infecting it.

Well keep in mind that sure happy to do so keep in mind that we ended the year about 20% market shares we guided <unk>.

Dennis M. Lanfear: Was that the number for Nutanica or Packville Gardens?

We went up to.

Dennis M. Lanfear: That's the Pegfield-Grafton market overall.

To about 20% to 23% in the February March timeframe pre Kobe, we had a very very strong first part of the year and then as we went into Covid. We dip down went down I think even south of 20% maybe I saw 19% during that period of time, we've now successfully reverse that our exit sure of Q too.

Dennis M. Lanfear: Okay, so can you comment on Eudanica per se, I mean, year over year or quarter over quarter if you are still gaining share, or for now, it is just the pandemic which is probably impacting it?

Dennis M. Lanfear: Well, keep in mind that, sure, happy to do so. But keep in mind that we ended the year with about 20% market share as we guided. We went up to about 22 to 23% in the February-March timeframe pre-COVID. We had a very, very strong first part of the year. And then as we went into COVID, we dipped down, went down, I think, even south of 20%; maybe I saw 19% during that period of time. But we've now successfully reversed that. Our exit share of Q2 was 22%, which I think is quite good. We're very happy with that performance.

22%, which I think is quite good we're very happy with that performance and our observation here of course, a mark has just become more adept dealing with Kobe.

I would say that we remain confident in our ability to continue to grow sure. However.

There's some short term uncertainty in the face of competition and some other things, including Kogut for the second half. So it makes it difficult for us to project actual end of year sure.

For the for the for the product.

Lastly, though I think the kidney other key takeaway for you.

Dennis M. Lanfear: And our observation here, of course, the market has just become more adept at dealing with COVID. We, I would say that we remain confident in our ability to continue to grow share, you know, however, there's some short-term uncertainty in the face of competition and some other things, including COVID for the second half. So it makes it difficult for us to project actual end-year share for the product. Lastly, though, I think that the other key takeaway for you, Mohit, is that there's still 70% innovator's share of new elasta in two dose forms to go after. So I think that's an attractive market for us.

Mohit is there's still 70% innovators sure a new last two doses forms to go after so I think that's that's <unk>.

Tractive market for us.

So that he has the thank you Danny.

Thanks.

Next question comes from the line of Jason Guberniya Bank of America, you line or something.

Good evening guys. Thanks for taking my question.

I really wanted to just touch base, which you can on how you were thinking about the point capital here for the next wave of Biosimilars.

It seems like it's pretty heavily skew three oncology side of the arena Alright, I got in the past you guys had said you feel like you're pretty well stocked to go after the ocular ophthalmology opportunity, but thinking kinda longer term.

Dennis M. Lanfear: Very helpful. Thank you, Danny. Thanks, Mohit.

Your thoughts regarding internal R&D investment versus external efforts to to go after the next wave of Biosimilars, which.

Jason Matthew Gerberry: The next question comes from the line of Jason Gerberry at Bank of America. Your line is open.

Dennis M. Lanfear: Hey, good evening, guys. Thanks for taking my question. I really wanted to just touch base, if you can, on how you're thinking about deploying capital here for the next wave of biosimilars, which seems like it's pretty heavily skewed to the oncology side of the arena. And I know in the past, you guys have said you feel like you're pretty well-stocked to go after the ocular or the ophthalmology opportunity. But thinking kind of longer term, your thoughts regarding internal R&D investment versus external efforts to go after the next wave of biosimilars, which would probably be the 2025 to 2030 market entry type of opportunity? Thanks.

It would probably be the 2025 to 2030 market entry type of opportunities. Thanks.

Great.

Great question, let me take that therapeutic area Biotherapeutic area.

First of all with respect to.

Immunology and.

Inflammation and Jumeirah, we don't believe that it's required to have an additional product added.

So we intend to launch Myra and have that to be our soul information at this time not to say that we wouldn't focus on an additional product. If it came by but we don't have plans to deploy capital as you as your questions and that particular directions with respect to up the <unk>.

Dennis M. Lanfear: Great question. Let me take that therapeutic area by therapeutic area. First of all, with respect to immunology and... inflammation and Humira, we don't believe that it's required to have an additional product added there.

Having the two primary bed Jeff's I think is what you want to do if I didn't have them, both and only had one that I would probably be telling you that I would be obtaining the other but I don't see further additions to the ophthalmology portfolio in terms of for example, innovative products or other biosimilars.

Dennis M. Lanfear: So we intend to launch Humira and have that be our sole inflammation product at this time, not to say that we wouldn't focus on an additional product if it came along, but we don't have plans to deploy capital, as you questioned, in that particular direction. With respect to ophthalmology, you know, having the two primary VEGFs is what you want to do. If I didn't have them both and only had one, I would probably be telling you that I would be obtaining the other.

With respect to oncology, we feel that this area is very well positioned for us to deliver.

On our mission and our value proposition <unk>.

We focus on delivering healthcare savings to the system and increasing access to patients and if you look across oncology and immuno oncology I think that there is ample opportunities to do that so you'll probably see us continue to focus in oncology with respect to our new product efforts.

And capital deployment that being said keep in mind that we are spending second half of this year next year on certain exercises to 14 20, the humor about similar with respect to manufacturing and we're also focusing on the phase three four.

Dennis M. Lanfear: But I don't see further additions to the ophthalmology portfolio in terms of, for example, innovative products or other biosciences. With respect to oncology, we feel that this area is very well positioned for us to deliver on our mission and our value proposition. We focus on delivering health care savings to the system and increasing access to patients. And if you look across oncology and immuno-oncology, I think that there are ample opportunities to do that. So you'll probably see us continue to focus on oncology with respect to our new product efforts and capital deployment. That being said, keep in mind that we are spending the second half of this year and next year on certain exercises for 1420 to Humira Valsima with respect to manufacturing. And we're also focusing on phase three of ILEA CHS 2020, which will certainly consume capital between now and 2025. Is that all?

Eylea, CHS 2020, which will certainly consumed capital between now and 2025.

Does that help.

Yes, that's great if I could just to clarify so.

You mentioned immuno oncology.

But it seems like there's a ton of development activity around follow on P. D. One.

Molecules.

And China, but yet there's this tension going on with made in the USA product.

Who knows what it'll come Nevada purchase them more near term politicize type of dynamic, but as you think about shopping for external assets in the in the I O space.

Is that crossing your radar in terms of having something that's developed locally to be able to supply the U S. Margaret which is your focus.

Well I think that you make exactly exactly the correct point.

I'll spare you a a dissertation on available.

Dennis M. Lanfear: Yeah, that's great. And if I could just clarify, you mentioned immuno-oncology. There seems like there's a ton of development activity around follow-on PD-1 type molecules developed in China, but yet there's this tension going on with made-in-the-USA products. Who knows what will come of that or if it's just a more near-term politicized type of dynamic. But as you think about shopping for external assets in the I.O. space, is that crossing your radar in terms of having something that's developed locally to be able to supply the U.S. market? Which is your focus?

That's across various global Geography's and therapeutic areas, but I will say that we are focused with U S products.

We strongly believe in U S manufacturing and made in America. That's that's our positioning and we believe that very strongly so any products that we were.

Two in license or develop.

We would absolutely insist on U S manufacturing such as you saw us to with our innovate avast and we are able to manufacture that post tech transfer in the United States.

Okay, great. Thanks, so much.

Next question is from the line of course is shot.

[noise] Yeah line is open.

Dennis M. Lanfear: Well, I think that you make exactly the correct point. You know, I'll spare you a dissertation on available assets across various global geographies and therapeutic areas, but I will say that we are focused on U.S. products. We strongly believe in U.S. manufacturing and "Made in America." That's our positioning, and we believe that very strongly. Any products that we were to in-license or develop, we would absolutely insist on U.S. manufacturing, such as you saw us do with our Inovit Avastin. We are able to manufacture that post-tech transfer in the United States.

Great. Thanks, So much just just two quick ones here first on you deneke and expectations on price as we move into the second half of the year.

Do you expect price to remained relatively stable. So you think about market dynamics I'm, just thinking about sandos now with their code Mayland Relaunching.

Should we think about a little bit of a stepped on him price or do you think we can kind of maintain where we are.

My second one was just a little bit more elaboration as we think about a vast and the commercial kind of approach for product like that I guess when you're not at market formation are you going to get a different approach to going to market or do you think a lot of the same principles that works. So what would <unk> can be kind of re applied with a vast and even if you're not you know kind of want the first one is to market there.

Dennis M. Lanfear: That's great. Thanks so much.

Christopher Thomas Schott: The next question is from the line of Chris Schott of J.B. Morgan. Your line is open.

Christopher Thomas Schott: Great, thanks so much. Just two quick ones here.

Thanks, so much.

Great Good questions, Chris Let me, let me take the first question first with respect the price it's difficult for us to predict the the pricing behavior of competitors, who have not yet acted so we haven't seen pfizer come in and take action or or take sure. They don't have a code.

Christopher Thomas Schott: First, on Udenica and expectations for price as we move into the second half of the year. Do you expect price to remain relatively stable as we think about market dynamics? I'm just kind of thinking about Sandos now with their code, and Mylan kind of relaunching.

Christopher Thomas Schott: Should we think about a little bit of a step down in price, or do you think we can kind of maintain where we are? My second one was just a little bit more elaboration as we think about Avastin and the commercial kind of approach for a product like that? I guess when you're not in market formation, are you going to take a different approach to going to market? Or do you think a lot of the same principles that worked so well with Udenica can be kind of reapplied with Avastin even if you're not one of the first ones to market there? Thanks so much.

Or really set any price.

We've seen sandoz in the market. They do have a code, but we haven't seen any sort of market share taken by Sandoz. So we are a bit uncertain of their pricing strategies and so on overall, though I think it's fair to say that as more competitors come into the market.

There will be more of an emphasis on very on price. Certainly however, I would I would also point out though that it is not simply a matter of price in these markets right. We have the highest biosimilar price we have the largest biosimilar market sure it's important to deliver value to these.

Markets. They are not primarily and only price driven alright, and this leads then to your second question with respect to Avastin, we expect to deliver substantial value to the vast and market. When we launch we expect to do well there.

Dennis M. Lanfear: Great. Good questions, Chris. Let me take the first question first.

Dennis M. Lanfear: With respect to price, it's difficult for us to predict the pricing behavior of competitors who have not yet acted. So we haven't seen Pfizer come in and take action or take share. They don't have a code or really set any price.

I think as a Biosimilar company, we are uniquely focused on delivering value that market participants expect and we've successfully done that we've done that with our launch we've done that and Q2 in the face of Covid and we're going to do that with our future products also so I would just disabuse and the notion that somehow prices the only thing.

Dennis M. Lanfear: We've seen Sandoz in the market. They do have a code, but we haven't seen any sort of market share taken by them. So we're a bit uncertain of their pricing strategies and so on. Overall, though, I think it's fair to say that as more competitors come into the market, there will certainly be more of an emphasis on price. However, I would also point out, though, that it is not simply a matter of price in these markets. We have the highest biosimilar price, yet we have the largest biosimilar market share. It's important to deliver value to these markets, so they are not primarily and only price-driven.

Matter, it's it's certainly important it's it's necessary required, but our track record speaks to our ability to understand the need to the market the needs of our customer base and deliver holistic value and that is why we have been successful.

Thank you.

Your next question comes from the line of Banacci Press line of Barkley's. Your line is okay.

Yes, Hi, this is Steven Entre Blahsy, thanks for taking my questions.

I was wondering if he's a.

Just a follow up on your prepared remarks, you commented on modest Aspie declines in the market. Just wondering if you could quantify that and then I have a follow up question.

Dennis M. Lanfear: And this leads then to your second question with respect to Avastin. We expect to deliver substantial value to the Avastin market when we launch. We expect to do well there.

Well.

We have seen about I think let me see.

We came out at a whack price when we launched last year of 41 75 in January of 19.

Dennis M. Lanfear: I think as a biosimilar company, we are uniquely focused on delivering value that market participants expect, and we've successfully done that. We did that with our launch. We've done that in Q2 in the face of COVID, and we're going to do that with our future products also. So I would just disabuse you of the notion that somehow price is the only thing that matters. It's certainly important. It's necessary. It's required. But our track record speaks to our ability to understand the needs of the market, the needs of our customer base, and deliver holistic value, and that is why we have been successful.

Bye.

Q3 of 2020, we were down to 34 O. Six I think so that's a published day is P decline of about 18%.

<unk> is going to declining quarter to quarter.

As we've discussed before or.

Objective an expectation in the long run as to preserve ASB and preserve value and we while we won't get into the nitty gritty of pricing and contacting strategies overall were satisfied with how we're doing it as being we think we're doing quite well.

Okay, great. Thank you and then I'm wondering if you could also provide any update on your development of your own body device that would compete with new last Ontario. Thank you.

Christopher Thomas Schott: Thank you.

Balaji V. Prasad: Your next question comes from the line of Balaji Prasad of Barclays. Your line is open.

Dennis M. Lanfear: Hi, this is Steven on behalf of Balaji. Thanks for taking our questions. I was wondering if you could just follow up on your prepared remarks. You commented on modest ASP declines in the market. I was wondering if you could quantify that and then have a follow-up question.

Sure well [laughter].

That's the question, that's always asked and never answered.

Gently.

Longstanding policy is not to provide details on our on body device program, primarily due to competitive reasons, which of course, you can understand but I can confirm that we continue to make good progress there.

Dennis M. Lanfear: Well, we have seen about, I think, let me see. We came out at a WAC price when we launched last year of $4,175 in January of 2019, and by Q3 of 2020, we were down to 3,406, I think. So that's a published ASP decline of about 18%. You know, ASP is gonna decline quarter to quarter. As we've discussed before, our objective and expectation in the long run is to preserve ASP and preserve value. And we, while we won't get into the nitty gritty of, you know, pricing and contacting strategies, overall.

However, I would also point out that <unk> range offer superior value. Both in terms of the bolt originator dosing format, and we think that there's additional market share to be captured from both those formats in the future.

Alright. Your next question comes from the lineup Greg Gilbert Trust Securities. Your line is open.

Thank you Danny let me ask the PD one question a different way.

Most folks assumed 2028 is the year, where we see potential competition tied to VIP for the market leaders.

Dennis M. Lanfear: Okay, great. Thank you.

Do you think there's a way to consider strategy that is different from that timeline.

Dennis M. Lanfear: Thank you. And then I'm wondering if you could also provide some...

Perhaps not a straightforward biosimilar strategy.

Dennis M. Lanfear: I'm wondering...

Dennis M. Lanfear: body device that would compete with the new Elasta On Pro. Thank you.

So maybe in the U S. And then secondly, how're you feeling about your chances of having another meaningful oncology launch in the next couple of years I guess, that's more of a beady pipeline question.

Dennis M. Lanfear: Sure, well, that's the question that's always asked and never answered, unfortunately. Our long-standing policy is not to provide details on our on-body device program, primarily due to competitive reasons, which you can understand. But I can confirm that we continue to make good progress. However, I would also point out that Udenica's pre-filter range offers superior value, you know, both in terms of the, you know, both originator dosing format. And we think that there is additional market share to be captured from both those formats in the future.

Great Great questions. Let me, let me take the P. D. One question first so it's certainly the case that the P. D. One segment.

Is large it's growing I think it's going to be something in the order of $25 billion in the U S. In 2025 going forward.

So if you look at.

Just that segment and you look at.

Delivering potential value and access to patients.

I think that it fits inside that box as you pointed out.

Greg Gilbert: All right. Your next question comes from the line of Greg Gilbert of Trust Securities. Your line is open.

The Biosimilar PD ones arrived somewhat later.

Dennis M. Lanfear: Thank you. Let me ask the PD one question another way. Most folks assume 2028 is the year where we see potential competition tied to VIP for the market leaders. Do you think there's a way to consider a strategy that is different from that timeline, perhaps not as straightforward as a similar strategy, but made in the U.S.? And secondly, how do you feel about your chances of having another meaningful oncology launch in the next couple of years? I guess that's more of a BD pipeline question.

This decade late.

829 ish. So I think that you have to be fairly sophisticated and nuanced. If you were develop a P. D. One strategy.

With respect to other products.

I think that there was a number of products that could be either developed or approved or otherwise commercialized over the planning periods between now and say.

2025 ish, but it's probably best for me not to speculate for you, which products those are and which ones would be more attractive than others, but I think yes. There are products that we could bring forward for a significant launch sometime in the in that timeframe.

Greg Gilbert: Great, great questions. Let me take the PD one question first. So it's certainly the case that the PD one segment is large, it's growing, and I think it's going to be something in the order of $25 billion in the US in 2025 going forward. So if you look at just that segment and you look at, you know, delivering potential value and access to patients, I think that it fits inside that box. As you point out, the biosimilar PD-1s arrived somewhat later in this decade, late, you know, 28-ish, 29-ish. So I think that you have to be fairly sophisticated and nuanced if you were to develop a PD-1 strategy.

Let me sneak wanted for John if I could or for you to any of your comments about growing sure for the remainder of the year for you Deneke and a price responsible way.

That you expect you deneke sales to go higher than the coming quarters.

Well our focus is on the things that we can control right. We can we can target market share pursue sure and grow sure we've done that.

Two fair degree pricing is something that your your competitors have.

Dennis M. Lanfear: With respect to other products, I think that there are a number of products that could be either developed or approved or otherwise commercialized over the planning period between now and, say, 2025-ish. But it's probably best for me not to speculate for you which products those are and which ones would be more attractive than others. But I think, yes, there are products that we could bring forward for a significant launch sometime in that time frame.

A bit to say about so that has to be considered so overall price and sure. We'll give you sales were reticent to project sales not knowing the behavior of the competitors with respect to pricing, but as we indicated.

We feel that we can continue to come out of Q too and perform as we have I think we're doing we're doing very well in the face of Covid an existing competition.

And continuous and share growth.

But.

Dennis M. Lanfear: Great. And let me sneak one in for John, if I could, or for you, Denny. Your comments about growing share for the remainder of the year for Udenica in a price-responsible way mean that you expect eugenic cells to go higher in the coming quarters.

<unk>.

Translates to revenues.

Four 2020th is another issue I would I would like to be able to give you more color in a bigger commitment there with respect to share growth cost 2020, but given covid, that's a little tough to do.

Dennis M. Lanfear: Well, our focus is on the things that we can control, right? We can target market share, pursue share, and grow share. We've done that. To a fair degree, pricing is something that your competitors have. All that translates to revenues for 2020 is another issue. I would like to be able to give you more color and a bigger commitment with respect to share growth across 2020, but given COVID, that's a little tough to do. I'd be happy to revisit that on the next call.

Happy to revisit that though in the next call.

Thank you for your time.

Sure.

Your next question comes from the line of public Salop, H feeling right you lines open.

Good afternoon, thanks for taking the questions I mean.

Danny I guess.

Staying to the topic of the pipeline if we look at what you have.

You should be pretty busy from a commercial standpoint between now and 2025 when you plan to launch Eylea. So do you see a need to add products between now and then or do you think given your sort of growth aspiration that you are pretty good shape until you have the ability to wait a little bit longer.

Dennis M. Lanfear: Thank you for your time.

Dennis M. Lanfear: Sure.

Douglas Dylan Tsao: Your next question comes from the line of Douglas Tsao of HC Wainwright. Your line is open.

Dennis M. Lanfear: Hi, good afternoon. Thanks for taking the questions. I mean, Denny, I guess, sort of... Staying to the topic of the pipeline, if we look at what you have. Transcribed by https://otter.ai

Thanks things your question.

Dennis M. Lanfear: Thanks for your question, Doug. That's a great question.

Great question. So let me let me first talk about ophthalmology, that's a space that we have I think fairly high expectations. For then it's a 6 billion dollar market opportunity all in.

Dennis M. Lanfear: So let me first talk about ophthalmology. That's a space that we have, I think, fairly high expectations for. It's a $6 billion market opportunity all in. And we have proficiency in Medicare Part B, Buy, and Bill, as you know. I think there's a marginal increase in internal resources to address that. Our footprint is projected to be 20 to 25 in terms of sales team members out on the ground for that particular product. So I think it's one in which we have...

And we have proficiency in Medicare part P by and bills, you know I think there's a marginal increase and internal resources to address that are footprint is projected to be 20 to 25 in terms of.

Sales team members out on the ground.

That particular project. So I think it's wondering which we have <unk>.

Dennis M. Lanfear: Significant leverage of our commercial capabilities with respect to 1420, on that end of the business, that's a Medicare Part D problem; we probably would have to focus a little more on the payer side of the business and what we have built out, that is to say more emphasis internally on sort of billing out our payer proficiencies. But that means that our oncology franchise really can take, has additional bandwidth to take some additional products, right? These are highly capable people, highly motivated, and every time I get in front of them to speak, they always ask me, "where's the next product in oncology?" So they're raring to go, and I think there's considerable bandwidth on the oncology side with our oncology account managers, our regional directors, and our various team members who could very easily take another product and move it forward.

Substantial leverage.

Of our commercial capabilities with respect to 14 20 on that into the business. That's a Medicare part D problem <unk>.

<unk>, probably would have focused a little more on the payers side of the business and what we have felt out that is to say more emphasis internally.

On on sort of Billy now to the are pair of Proficiencies, but.

That means that are oncology franchise really can take has additional bandwidth to take some additional products Ryan.

These are highly capable people highly motivated every time I get in front of them to speak they always ask me, whereas whereas the next product in oncology. So they're raring to go and I think there's considerable bandwidth there on the oncology side with our oncology account managers in a regional directors.

Various team members, who could very easily take another product and move it forward.

Douglas Dylan Tsao: Danny, I mean, obviously, you've sort of referenced and expressed some openness to pursuing an innovative product, potentially, in addition to biosimilars, you know, given some of the potential IP challenges, etc. I mean, would a 505D2 strategy, similar to what Teva pursued with Granix, be something you'd be interested in considering in the oncology space?

And Danny I mean, obviously, you sort of reference.

Express some openness pursuing an innovative product potentially in addition to biosimilars.

Getting some of the potential IP challenges et cetera, I mean, with a 5052 strategy.

Similar to what Tyva pursued with grand accident, but that'd be something you'd be interested in considering it in the oncology space.

Alright, well I think I think that it's a fair point, Doug I would not rule out five O five be too and.

Dennis M. Lanfear: Well, I think that it's a fair point, Doug. I would not rule out a 505B2.

Dennis M. Lanfear: And, you know, from time to time, folks have come by and knocked on the door and shown us one of those two things. Nothing there so far has passed muster for us in terms of things that we would take in-house and commercialize. But, sure, we would be open-minded.

From time to time folks have come by and knocked on the door and showed US one of those two things nothing there. So far has passed muster for us in terms of things that we would take in house and commercialized, but sure we would be open minded.

Douglas Dylan Tsao: Okay, great. Thank you so much. Thanks, Doug.

Okay, great. Thank you so much.

Thanks.

Douglas Dylan Tsao: Thanks Doug.

The next question comes from the line of sudden in Seattle Mizuho. Your line is open.

Salim Qader Syed: The next question comes from the line of Salim Syed of Mizzou Hall. Your line is open.

Dennis M. Lanfear: Great. Thanks so much for taking the questions, guys. And congratulations on the progress, Denny, and team. Thank you. Thank you, Salim. Sure. Sure, guys. Just a couple for me, one, one high-level one, and then one quick one.

Great. Thanks, so much for taking the questions guidance and congrats on the progress Danny team. Thank you. Thank you slim.

Seriously I'm sorry, guys.

Just a couple for me one one high level, one and then one quick one.

Denny is.

Dennis M. Lanfear: So Denny, as you kind of gave your high-level view of what you're envisioning for the company of being, you know, multi-BioSimilar, a company with, you know, 30 billion revenue, let's see, the branded revenue market. Could you maybe just speak to how you're thinking about long-term margins? I think, you know, consensus has you sub 50 percent, and, you know, these are pretty well-defined products from an R&D standpoint. You know, I presume, I think you guys have said 150 to 200 million to develop a product, and then SG&A, you know, I presume you'd be able to get some synergies there. It's not long-term guidance I'm asking for, but how do you generally think about long-term margins for a pure play biosimilars business?

You kind of gave your high level of you.

You're envisioning for the company has been.

<unk> bye.

Biosimilar accompany with.

$30 billion.

Revenue.

Random revenue market.

Could you maybe to speak to how you were thinking about longterm margins I think.

[noise] consensus has you sub 50% and.

These are pretty well defined products from my R&D standpoint, presumably think you guys have set of 150 $200 million to develop a product and then SG&A.

I presume you'd you'd be able to get some synergies there so.

That's how long term guidance I'm asking for but how do you generally think about long term margins for pure play Biosimilars business.

Well, thank you for the questions.

Dennis M. Lanfear: Well, thank you for the question, Salim. I think margins are very attractive for the business. With respect to Udentica, I think currently our margins are 92 or 93%. With respect to Ophthalmology, you have products there that are given in very, very small doses, relatively infrequently, either once a month or twice a month. That means the COGS is very low.

The way I think margins are very attractive for the business.

With respect to your Deneke I think currently our margins are 90, 293% with respect to ophthalmology you have a product products. There that are given and very very small doses relatively infrequently either once a month or twice a month that means the cogs is very low.

Dennis M. Lanfear: As I indicated a few minutes ago, the boots on the ground for Ophthalmology are marginal and incremental, maybe 25 folks with significant leveraging internally. So I think that the Udentica business has proven to be very attractive. The Ophthalmology business is extremely attractive. With respect to inflammation and 1420, we expect to be able to deliver substantial volumes to that market and be extraordinarily competitive in terms of cost. I think that's also very attractive in terms of margins and COGS.

As I indicated a few minutes ago.

Puts on the ground for up the Myology is marginal incremental maybe 25 folks with significant leveraging internally so I think that.

Deneke business is proven to be very attractive ophthalmology business is extremely attractive with respect to inflammation and 14 20.

We expect to be able to deliver.

<unk> <unk>.

Volumes to that market to be.

Extraordinary really competitive in terms of course, I think that's very attractive also in terms of margins and Cogs.

Dennis M. Lanfear: You know I

I think that all of these markets and the U S with biosimilars are proving to be very attractive.

Dennis M. Lanfear: I think that all of these markets in the U.S. for biosimilars are proving to be very attractive with respect to margins. I think it's a good business.

With respect to margins I think it's a good business.

Salim Qader Syed: So would you go to the committee and say that the consensus is... You know, too low, or kind of around what you're thinking, or...

So would you would you go to extended to say that consensus is.

Two O or what kind of around what you're thinking or.

Salim Qader Syed: Salim, do you mean consensus with respect to future sales of products? To the EBIT margin. EBIT operating margins.

Do you mean consensus with respect to future so.

To EBIT margin EBIT operating margins.

Salim Qader Syed: You know, I think they have you under 50 and just trying to think about the long-term here, if that's an accurate way to represent how you guys are thinking about the business.

They have you sub 50.

I'm just trying to think about long term here. If that's an accurate does that represent a how do you guys are thinking about the business.

Dennis M. Lanfear: I think, generally speaking, that we're a bit more optimistic about the EBIT margins in the future. If you'd like to revisit modeling and have us interact a little bit more on that, that's fine. JV, do you have any comments on margins?

Oh, I think I think generally speaking that.

A bit more optimistic about to EBIT margins in the future if you'd like to revisit modeling and have us interact a little bit more on that's fine Jamie you have any comments on margins yeah, we can comment on consensus but.

Unknown Executive: Yeah, we can comment on consensus, but, you know, certainly we can, after this call, discuss, you know, the general cost involved in developing a biosimilar. I think it's still developing, so we'll have to see how biosimilars settle. I mean, this is really the early years of biosimilars being profitable.

Suddenly we couldn't after this call.

Discuss.

The general cost involved in developing.

Similar I think it's still developing so we'll have to see how biosimilars settle I mean, which is really yearly.

Years Biosimilar being profitable.

Overall, I think they market.

Dennis M. Lanfear: Overall, I think the market may be underestimating how successful we feel we will be with respect to both Lucentis and ILEA. We're fairly optimistic there, and certainly underestimate how effective we will be with 1420 or Humeyra Biosimilar.

The market, maybe underestimating how successful we feel we will be with respect to bulk dissenters and eylea, we're fairly optimistic there and certainly underestimates, how effective will be with 14 20 yards Jamire biosimilar.

I think that we have outperformed market expectations. During our launch we achieved 20% the first year and we outperformed mark that expectations with respect Q2 in the face of Cove. It. So I think that gives us credibility.

Dennis M. Lanfear: I think that we have outperformed market expectations during our launch. We achieved 20% growth in the first year, and we outperformed market expectations with respect to Q2 in the face of COVID. So I think that gives us credibility to say that we believe that these future markets will be very successful.

To say that we believe that in the future markets will be very successful.

Okay and just one quick one for me T V. I don't think it was mentioned in the call.

Salim Qader Syed: JV, I don't think it was mentioned on the call, could you maybe just give us the inventory movement for the quarter, in the channel, and the channel inventory for Udemyca?

Could you maybe.

Give us the inventory movements.

And the quarter for channel the channel inventory for Ya Deneke.

Unknown Executive: Yeah, sure, Salim. Actually, Macquarie is in the normal range, and it's relatively unchanged since last quarter.

Yeah, sure selling actually <unk> in the normal range and relatively unchanged since last quarter and it's not a factory.

Salim Qader Syed: Okay, great. Thanks so much, guys. Thanks, Lane. Thank you.

It's pretty much a non issue.

Okay, great. Thanks, so much guys.

Thank you.

Dennis M. Lanfear: This concludes the Q&A portion of the call. I will now turn the call back to Denny for final remarks.

This concludes sticky any portion of the call as amount of time to call back at any of our final Mike.

Dennis M. Lanfear: Thank you, and thank you all for joining us today. So for Q2 2020, we've reported to you not just excellent results with Eudenica but consistent progress against planned weather ophthalmology and immunology pipelines. Over the next five years, we anticipate our addressable market will grow to $4 billion to about $10 billion in 2022 and again, a further $30 billion by 2023. We expect to capture a significant portion of this opportunity, just as we are doing now with IDENICA. Our strong Udenica results reflect our commercial competence in the face of market challenges, and we are confident in our ability to replicate the success with our subsequent commercial launch. We look forward to seeing you all again on our next call in November. Thank you.

Okay.

Thank you and thank you all for join Us today.

So for Q2 2020, <unk> reported to not just excellent results with you deneke, but consistent progress against plan, whether ophthalmology and immunology pipeline.

Over the next five years, we anticipate are dreadful market will grow $4 billion to about 10 billion in 2022, and then again further 30 billion by 2023.

We expect to capture a significant portion of this opportunity just as we are doing with identical.

Are stronger deneke results reflect our commercial competency in the face of market challenges, we're confident in our ability replicate the success with a subsequent commercial lunches.

We look forward to seeing you all again on our next call in November Thank you.

This concludes today's call you may know all disconnect.

unknown: This concludes today's call. You may now disconnect.

unknown: BF-WATCH TV 2021

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