Q2 2021 Coherus BioSciences Inc Earnings Call

August 5, 2021

[music].

Good day, and thank you for standing by welcome to the quarter, 2.2021 to Harrah's Conference call.

Operator: And thank you for standing by. Welcome to the Quarter 2 2021 Coherus Conference Call. At this time, all participants are in a listen-only mode. If you require any further assistance, please press star zero. To ask a question, you will need to press star 1 on your telephone.

At this time all participants are in a listen only mode. If you require any further assistance. Please press star zero.

A question you will need to press star 1 on your telephone I would now like to hand, the conference over to your speaker today.

Operator: I would now like to hand the conference over to your speaker today, McDavid Stilwell, Chief Financial Officer. Please go ahead. Thank you.

Mcdavid Stilwell Chief Financial Officer. Please go ahead Sir.

[laughter].

McDavid Stilwell: Good afternoon, everyone, and thank you for joining us. We issued a press release earlier announcing our 2021 second quarter results. This release can be found on the Coherus Biosciences website. Today's call includes forward-looking statements regarding Coherus' current expectations.

Thank you.

Good afternoon, everyone and thank you for joining us.

We issued a press release earlier announcing our 2021 second quarter results. This release can be found on the co Arris Biosciences website.

Today's call includes forward looking statements regarding <unk> current expectations.

McDavid Stilwell: These statements include, but are not limited to, our ability to advance our biosimilar and immuno-oncology product candidates through development and registration, and our commercialization of eugenica and other potential products in the future. Our ability to meet our R&D and SG&A expense guidance for 2021, as well as our 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.

These statements include but are not limited to our ability to advance our biosimilar and immuno oncology product candidates through development and registration.

Our commercialization of Utica and other products potential products in the future.

Our ability to meet our R&D and SG&A expense guidance for 2021 as well if our uses 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.

McDavid Stilwell: These statements are not guarantees of future performance and are subject to certain risks and uncertainties that are discussed in documents that we file with the Securities and Exchange Commission, specifically in our quarterly report on Form 10-Q for the quarter ended June 30, 2021, that we filed earlier this afternoon. The forward-looking statements stated today are made as of this date, and we undertake no duty to update such information, except as required under applicable law.

McDavid Stilwell: With me on today's call are Denny Lanfear, CEO of Coherus, Paul Reider, EVP of Commercial Operations and Market Access, and Chris Thompson, Executive Vice President of Sales. And I will now turn the call over to Denny.

Dennis M. Lanfear: Thanks, McDavid, and thank you all for joining us this afternoon. Today, I'll provide updates on eugenics and performance, our biosimilar pipeline, and progress with Torapalmab, our PD-1 antibody. We're pleased with our progress as we transform Coherus from a single product biosimilar company to a diversified multiproduct biopharmaceutical company with multiple oncology assets. Over the next two years, we anticipate bringing four new products to market in the United States, complementing Udentica. Our diversified product portfolio will generate growing and durable cash flows to invest in the large and rapidly developing Minamikauchi market with Toro Petalmat as our foundational asset. Now, let me first turn to you, Dennis.

Dennis: In the second quarter of 2021, we recorded $88 million in net sales for Eugenica as compared to $83 million in the first quarter. Eugenica market share, as reported by Acubia, declined 0.25% from 20% to a 19% share. Wholesaler inventory was stable in the second quarter compared to the prior quarter end and was not a factor in second quarter revenue.

83 million in the first quarter.

Jessica market share as reported by Akea declined quarter to quarter from 20% to 19% share.

Wholesaler inventory was stable in the second quarter compared to the prior quarter and and was not a factor in second quarter revenue.

Recall, the first quarter revenue was negatively impacted by the burnt off for about 9 days, a wholesaler inventory that accumulated with the seasonal volume at year end 2020.

Later on call all reader will provide additional details with respect to our expectations for the second half eugenic a performance.

Dennis M. Lanfear: Recall that first quarter revenue was negatively impacted by the burn-off of about nine days of wholesaler inventory that accumulated with the seasonal buy-ins at year-end 2020. Later in the call, Paul Reider will provide additional details with respect to our expectations for the second half Udenica performance. Now, let me update you on the excellent progress we're making with our biosimilar pipeline. Together with Udenica, our biosimilars for Lucentis, Humira, and Avastin address an aggregate $28 billion in market opportunity.

Now let me update you on the excellent progress, we're making with their biosimilar pipeline.

Together with your day like our Biosimilars of incentives <unk> and Avastin address an aggregate $28 billion market opportunity.

We've already demonstrated our ability to use our branded marketing and commercial capabilities to penetrate competitive area from about similar we.

We believe we will experience similar success, taking significant share in these do biosimilar markets.

Our objective is to take at least 10 percentage these new markets and in some cases as much you detica, even greater market share.

Our next expected Biosimilar launches Thf's 2 O 1 are Lucentis Biosimilar Kennedy.

Dennis M. Lanfear: We've already demonstrated our ability to use our branded marketing and commercial capabilities to penetrate competitive areas with biosimilars. We believe we will experience similar success taking a significant share in these new biosimilar markets. Our objective is to take at least 10% of each of these new markets, and in some cases, as with Udenica, even greater market share.

Dennis M. Lanfear: Our next expected biosimilar launch is CHS 201, our new census biosimilar candidate. I'm pleased to report that our partner, BioAcc, recently submitted the BLA to the FDA. Assuming the filing is accepted for review, we anticipate a standard 12-month review and approval cycle. We are excited about the potential approval of this product in 2022 and believe it will be among the first biosimilar food census candidates to market, actively participating in the market formation.

Dennis M. Lanfear: Launch planning is underway. Now, with respect to our Humira biosimilar, GHS1420, the FDA review is progressing well, and we believe that the application is on track for the December 2021 target date. You may recall that we expect to launch CHS 1420 in the United States on or after July 1st, 2023.

Central approval from the first line indication.

Tubular 2 clinical trial evaluating 2 our Palomar from first line MPC generated strong progression free survival and overall survival data that were presented this June in a plenary session on in Africa.

Dennis M. Lanfear: Regarding CHS-305, our Avastin biosimilar, we are currently conducting a three-way PK study to support a BLA, which we expect to file in the first part of 2022. Once approved, the Avastin Commercial Opportunity will further leverage our commercial oncology capabilities with a nearly identical customer base as Udenica and Toropelmeb, adding incremental margin to our bottom line. Now, let me make a few remarks with respect to TORP-Helmet and provide you with a positive update regarding our BLA filing for nasal pharyngeal carcinoma, or NPC. As you recall, the registration strategy called for filing the second and third-line MPC BLA and then, post-approval, filing a supplemental BLA for first-line treatment events.

The rolling BLA submission for all indications is expected to be completed this quarter and we continue to project approval from the first half of 2022.

Now I'm also pleased to report that tour palmette clinical data will be presented in September of 2 medical conferences.

Data from the Phase III first line non small cell lung cancer study, which we earlier reported had met the primary endpoint of progression free survival will.

It will be presented at the World conference on lung cancer.

The Jupiter 6 phase III study in esophageal squamous cell carcinoma, which also met as co primary endpoints of progression free and overall survival.

Featured at the annual meeting of the European Society for medical oncology.

<unk> continues to make good progress with additional per Paramount clinical trial in lung cancer.

Which represents approximately 45% of the PD 1 market opportunity.

Phase III studies, evaluating <unk> and neo adjuvant that small cell lung cancer and Egfr positive patients will fail on Ti treatment are enrolling rapidly with data expected next year.

Dennis M. Lanfear: FDA has now agreed to accept the first line submission for concurrent evaluation with the second and third line data, thereby accelerating time to potential approval for the first line indication. JUPITER-2, the clinical trial evaluating TOR-PAL-MF, the first-line NPC, generated strong progression-free survival and overall survival data that were presented this June in a plenary session at ASCA. The rolling VLA submission for all MPC indications is expected to be completed this quarter, and we continue to project approval in the first half of 2022.

Phase III study on small cell lung cancer with co primary endpoints of progression free and overall survival is now fully enrolled and is also expected to read out in 2022.

You'll find details of these studies on slide 20 of the August Investor presentation, which we posted to our website earlier today.

Beyond lung cancer in 2022, we also project data from our Phase III study in first line treatment of Triple negative breast cancer, and 2 phase III trials and had a cellular carcinoma.

1 for the first line treatment and 1 in the Neo adjuvant setting as detailed on slide 21 of the industrial presentation.

Dennis M. Lanfear: Now, I'm also pleased to report that TORP-PALMAP clinical data will be presented in September at two medical conferences. Data from the Phase 3 first-line non-small-cell lung cancer study, which we earlier reported had met the primary endpoint of progression 3 survival, will be presented at the World Conference on Lung Cancer. The JUPITER-6 Phase III study in esophageal squamous cell carcinoma, which also met its co-primary endpoints of progression tree and overall survival, will be featured at the annual meeting of the European Society for Medical Oncology.

On <unk> as the foundation of our immuno oncology franchise and develop it in combination with other agents that can improve response rates is a key part of our strategy.

J F 006 digit antibody for which we have option right now being evaluated by June sheet and phase 1 clinical trial and is progressing well.

I'll now turn the call over to Paul <unk>, Our executive Vice President commercial operations on market access for some additional color on the market dynamics, we see going forward for you Seneca Paul.

Thank you Jenny.

The pegfilgrastim market grew approximately 2% quarter to quarter.

<unk> ended the quarter with 19% share of the overall pegfilgrastim market.

Dennis M. Lanfear: Jun-Shi continues to make good progress with additional chloropalamab clinical trials in lung cancer, which represents approximately 45% of the PD-1 market opportunity. Phase III studies evaluating torpelmeb and neoadjuvant in small cell lung cancer and EGFR-positive patients who have failed TKI treatment are enrolling rapidly with data expected next year. A phase 3 study in small cell lungs, with co-primary endpoints of progression-free and overall survival, is now fully enrolled and is also expected to read out in 2022.

This 1% decline in <unk> market share in the quarter came primarily from the least profitable segment of the market, which were $3.40 beautiful hospitals.

Since the end of 2020 overall Neulasta share has declined 5 percentage points validating customers' willingness to move away from on Prem and we expect this trend to continue.

Going forward. Despite the Covid pandemic, we believe that taking share from on Prem will be a source of growth from biosimilars and especially for you Denny.

We are projecting market share within the second half of 2021.

Driven by the stability in our third quarter asps compared to competitor Esp's redeploy.

On the redeployment of our field teams to in person sales calls.

With respect to revenues, we expect modest second half growth compared to the first half 2021 <unk>.

Dennis M. Lanfear: You'll find details of these studies on slide 20 of the August Investor Presentation, which we posted to our website earlier today. Beyond lung cancer, in 2022, we also project data from a Phase III study and first-line treatment of triple negative breast cancer in two Phase III trials in hepatocellular carcinoma, one for the first-line treatment and one in the neoadjuvant setting, as detailed on slide 21 of the investor presentation. Tour PalMab is the foundation of our immuno-oncology franchise, and developing it in combination with other agents that can improve response rates is a key part of our strategy.

However, there are 2 major uncertainties that are largely beyond our control and therefore difficult to handicap.

The first is COVID-19 resurgence with dependent impact on market growth share movement.

Sales force access.

And the second is the level of price erosion precipitated by our competitors.

We remain confident in our ability to respond quickly manage either challenge to maximize our available opportunities.

I'll now turn it back over to Mcdavid will review the quarter's financial results.

Thanks, Paul.

Details of our financial results are in the press release and in the 10-Q, we filed this afternoon. So I'll focus now on just a few highlights.

For the second quarter of 2021, we reported a $29.9 billion net loss on a GAAP basis.

Dennis M. Lanfear: JS006, the digit antibody for which we have option rights, is now being evaluated by Jun Shi in a Phase 1 clinical trial and is progressing well. I'll now turn the call over to Paul Reider, our Executive Vice President of Commercial Operations and Market Access, for some additional color on the market dynamics we see going forward for Utenica. Thank you, Jami.

Cash flow from operating activities was essentially breakeven at negative $200000 for the second quarter of 2021.

As detailed earlier in the call net product revenue was $88 million.

An increase from the $83 million you Deneke net sales reported the prior quarter holds.

Wholesaler inventory was stable compared to the prior quarter again.

Cost of goods as a percentage of net revenues increased from the prior quarter.

In the first quarter, we depleted the inventory manufactured in fully expensed prior to <unk> approval.

So the second quarter was the first period with per unit acquisition costs from the reflected within Cogs.

Paul Reider: While the market grew approximately 2% quarter to quarter, Udenica entered the quarter with a 19% share of the overall petrographs market. This 1% decline in Udenica market share in the quarter came primarily from the least profitable segment of the market, which were 340B hospitals. Since the end of 2020, overall new last shares declined by five percentage points, validating customers' willingness to move away from OnPro, and we expect this trend to continue. Going forward, despite the COVID pandemic, we believe that taking share from OnPro will be a source of growth for biosimilars and especially for eugenics.

We expect a similar gross margin in the third quarter and then an improvement in the fourth quarter.

For the full year 2021, we expect gross margins of around 85%, including a mid single digit royalty, we owe through mid 2024.

In the long run starting in 2024, we expect <unk> gross margins to return to 90% or higher as we realize the benefits of our significant manufacturing process improvement and royalty exploration.

Research and development expenses for the second quarter of 2021 were $54.8 million compared.

Compared to $26.2 million for the same period in 2020.

Paul Reider: We are projecting market share within the second half of 2021, driven by the stability in our third quarter ASP compared to competitor ASPs, and the redeployment of our field teams to in-person sales. With respect to revenues, we expect modest second half growth compared to the first half of 2021. However, there are two major uncertainties that are largely beyond our control and therefore difficult to handicap.

The increase reflects cost to advance our late stage pipeline.

Recall that we expect to bring 4 additional products to market in the next 2 years and we are investing in activities such as regulatory affairs and manufacturing scale up for CHS $14.20.

Development, and BLA filings before Allomap and a clinical trial for CHS 305.

McDavid Stilwell: The first is COVID's resurgence, with an intended impact on market growth, share movement, and salesforce access. And the second is the level of price erosion precipitated by our competitors. We remain confident in our ability to respond quickly and manage either challenge to maximize our available opportunities. I'm going to turn it back over to McDavid for a review of the quarter's financial... Thanks, Paul.

McDavid Stilwell: The details of our financial results are in the press release and in the 10-Q we filed this afternoon, so I'll focus now on just a few highlights. For the second quarter of 2021, we reported a $29.9 billion net loss on a cap base. Cash flow from operating activities was essentially break-even at negative $200,000 for the second quarter of 2021. As detailed earlier in the call, net product revenue was $88 million, an increase from the $83 million in EugenicaNet sales recorded the prior quarter. Wholesaler inventory was stable compared to the prior quarter end.

Well here is on the strong progress we are making on the transformation diversified Biopharma company with multiple products in oncology, they're hard work is very much appreciated.

McDavid Stilwell: Cost of goods as a percentage of net revenues increased from the prior quarter. In the first quarter, we depleted the inventory manufactured and fully expensed prior to Eugenica approval. And so the second quarter was the first period with per unit acquisition costs fully reflected within COGS. We expect a similar gross margin in the third quarter and then an improvement in the fourth quarter. For the full year 2021, we expect gross margins of around 85 percent, including a mid-single-digit royalty we owe through mid-2024.

The result of our team's efforts are 2 products currently in the registration process plus a third BLA is soon to be followed for propel net.

We are advancing rapidly on our objected the transition from 1 approved product you deneke.

Our approved products in United States over the next year.

2023, we expect to have byproduct constant generating revenue.

Over the next several months, we anticipate clinical data announcements medical presentations and regulatory milestones for both our biosimilars enter our Palmetto we.

We look forward to providing updates through the fourth quarter, we will have our analyst day event in New York City.

Operator, we can now turn line open questions. Thank you.

McDavid Stilwell: In the long run, starting in 2024, we expect Udineka gross margins to return to 90% or higher as we realize the benefits of a significant manufacturing process improvement and royalty expiration. Research and development expenses for the second quarter of 2021 were $54.8 million, compared to $26.2 million for the same period in 2020. The increase reflects costs to advance our late-stage pipeline. Recall that we expect to bring four additional products to market in the next two years, and we are investing in activities such as regulatory affairs and manufacturing ramp up for CHS 1420, Development of BLA Filings for Toropalamap, and a clinical trial for CHS305.

As a reminder to ask a question you will need to press star 1 on your telephone.

On your question press the pound key.

Our first question from the line of Douglas Tsao of H C. Wainwright.

Sir your line is open.

Hi, good afternoon, thanks for taking the questions.

Just.

And he is a starting point just curious to hear your perspective in terms of what we're seeing I mean, you danica market.

It seems like from the Biosimilar makers pricing.

It's sort of stabilized, but the innovator continues to sort of take some pricing discount how do you see that playing out through the balance of the year.

Hi, Doug Thanks for the question.

I'll hand that question over to Paul Reader, our executive VP of marketing Paul would you like to address that question, Yes sure Doug.

Yes.

We definitely are watching the race to the bottom from Amgen and pushing the.

The price down.

McDavid Stilwell: R&D expense for the quarter was partially offset by a $9 million credit due to the accounting treatment of the Coherus equity purchased by Jun-Chi Biosciences in the second quarter. Selling general and administrative expenses were $40.3 million in the second quarter of 2021 as compared to $34.1 million in the year-ago quarter. The increase was primarily driven by higher stock-based compensation expense, as well as eugenica commercialization activities, which increased compared to the year-ago quarter, which was heavily impacted by the COVID lockdowns of the spring of 2020.

They have the lowest ASP per market and really for Biosimilar competitors.

You really need to recognize that the meaningful growth will only come from taking share from the originator in swapping growth among biosimilars is not a sustainable strategy from.

A pricing standpoint.

Our Q3 published ASP is.

This increased 1% over Q2, so by comparison to the originator.

You can you can see the declines there.

But we remain.

Focused on value over the long term and to maintain the highest ASP price while maximizing share.

And then.

And that's a question I know, we're maybe a little early but just looking ahead to <unk> 'twenty just curious at what point just given you said the likelihood of approval at the end of this year and then launching 18 months later.

McDavid Stilwell: We ended the second quarter with cash, cash equivalents, and marketable securities of $454.4 million, compared to a balance of $399.5 million at March 31, 2021. And recall that during the second quarter, Coherus received $50 million from Junji Biosciences' purchase of Comet's dock associated with the Toro Palomar licensing transaction. We are maintaining our full-year guidance for R&D and SG&A expenses of $370 million to $400 million, excluding the first quarter up-front payments to Jun-Chi BioSciences. Additionally, this range includes approximately $50 to $55 million in stock-based compensation expenses.

We expect to see some commercial build out for that product.

That's a great question, Doug we are currently performing some market research around the potential structure for the sales force, but we are on record earlier is indicating that we believe that will be primarily a payer driven market access.

Given the operation So we do not see substantial increases.

On the commercialization side to support that product.

So they will probably will be some marginal increases substantially.

Okay.

Given the fact that youre not going to be spending that much it'd be anticipate those would be sort of stream on just a few months before the actual launch.

Okay.

I will decline to actually at this point describe.

<unk>.

On the breadth of our efforts in various places in the organization to support that.

Dennis M. Lanfear: And I'll now turn the call back to Denny for closing remarks. Thank you, McDavid. In closing, I'd like to congratulate and thank my colleagues and teammates at Coherus for the strong progress we are making on the transformation to a diversified biopharmaceutical company with multiple products in oncology. Their hard work is very much appreciated.

But we do not expect for example to put a substantial number of boots on the ground to move that product.

Okay, great. Thank you.

Thank you next question from the line of Celine <unk> of Mizuho.

Sir your line is open.

Great. Thanks from me for my question guys.

And good afternoon. So a couple from me if I can on 1 on.

Actually both on you Danica.

So you know when you look at the data it looks like from a sense.

I was starting to pick up a little bit more share pegfilgrastim share.

Dennis M. Lanfear: The result of our team's efforts is two products currently in the registration process, plus a third BLA is soon to be filed for TOR repellent. We're advancing rapidly on our objective to transition from one approved product for Udentica to four approved products in the United States over the next year. In 2023, we expect to have five products launched and generating revenue. Over the next several months, we anticipate clinical data announcements, medical presentations, and regulatory milestones for both our biosimilars and our PALMEP. We look forward to providing updates through the fourth quarter when we'll have our Analyst Day event in New York City. Operator, we can now turn the line over to questions.

More quickly now than previously even though they have a slightly higher ASP from us I'm. Just wondering if you could just give us a little bit more color on what the dynamic there.

And then the second on your on body device.

The trial mentions on clinical heroes et cetera on some of the data points. It seemed to me that suggests that we could get data potentially.

Potentially the summer early fall from those trials is that a correct assumption or when do you expect when you shouldn't be able to get some data from there on what does it mean for you potentially be the only biosimilar.

With an approved on body device.

Okay. Thank you.

Well thanks for the question on Slammer.

I'll take the first 1 second question, rather first and I'll, let Paul address the tempo and and so on with respect to the on body device I think that we will.

Reiterate our previous comments that were pleased with the progress that we're making with respect to that product.

As you know we have had some expenditures disclosed over the past year.

Operator: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound. Our first question comes from the line of Douglas Tsao of HC Wainwright. Sir, your line is open.

Sure.

Other.

Delivery modalities for <unk>, but I'll try.

It would decline to give you timelines for data, but I think that the project is moving along on you want to say a little bit about interest in <unk> and putting on the market yeah sure soy meal and reiterate our focus here.

Unknown Executive: Unknown Executive, Ashwani Verma, McDavid Stilwell, Paul Reider, Rosh Dias, Bhavin Patel, Jason Gerberry, Bryan McMichael, Colleen Karnauskas, Michael Nedelcovych

Here at <unk>, which is the gain share from on pro cut.

Got over 50% of the market.

It's likely that any of the new biosimilar entrants for going on.

Pick up a couple of share points from now what we're seeing is their share is coming from primarily that 340 <unk> segment. It's in.

Unknown Executive: Hi Doug. Thanks for the question.

Paul Reider: Yeah, I'll hand that question over to Paul Reider, our executive VP of Marketing. Paul, would you like to address Doug's question? Yeah, sure, Doug.

It's the least profitable segment for us So that's where that's where we're seeing some market share gains.

But our focus is really to take share from on.

On the short form.

Understood. Thanks, so much.

Paul Reider: Yeah, I mean, we definitely are watching the race to the bottom for Amgen and pushing the price down. They have the lowest ASP in the market. And, you know, really, for biosimilar competitors, you really need to recognize that meaningful growth will only come from taking share from the originator. However, swapping growth among biosimilars is not a sustainable strategy. You know, from a pricing standpoint, our Q3 published ASP increased 1% over Q2.

Thanks Helane.

Next question from the line of Chris.

Sure.

Morgan.

Your line is open great. Thanks, so much for the questions.

Just wondering you Denny I kind of on a bigger picture 1.

Paul Reider: So, you know, by comparison to the originator, you can see the declines there. But we remain focused on value over the long term and to maintain the highest ASP price while maximizing share. And then another question, I know we're maybe a little early, but just looking ahead to 1420, just curious, at what point, just given, you said the likelihood of approval at the end of this.

Unknown Executive: Unknown Executive, Ashwani Verma, McDavid Stilwell, Paul Reider, Rosh Dias, Bhavin Patel, Jason Gerberry, Bryan McMichael, Coherus BioSciences Inc.

Operator: That's a great question, Doug. We are currently performing some market research around the potential structure for the sales force, but we are on record earlier as indicating that we believe that will be primarily a payer-driven market access operation. So we do not see substantial increases on the commercialization side to support that product, although there probably will be some marginal increases, but not substantial. And so just given the fact that you're not going to be spending that much, we anticipate that these would be sort of streamed on just a few months before the actual launch.

Changes in decreases.

As required with respect to oncology products. Thank you bring up a very interesting point.

We of course currently have a few immuno oncology products that came over with a <unk> collaboration the digit the engineer now too.

Operator: I'll decline to actually, at this point, describe the breadth of our efforts in various places of the organization to support that. But we do not expect, for example, to put a substantial number of hoots on the ground to move that product.

Et cetera are focused on the cancer muted cycle, but I think it's fair to say that in conjunction with total Hell number 81, we are now getting a fair amount of income in order insurers order no interest for various assets to.

Salim Qader Syed: Thank you. Next question from the line of Salim Syed of Mizuho. Sir, the line is open.

To use with towards tell him out so I think it's fair to say that we remain open minded about the assets that we look at but I would also say that the June sheets digits.

Unknown Executive: Great. Thanks so much for the question, guys. And good afternoon.

Unknown Executive: So a couple for me, if I can, one on Udenica and actually, both on Udenica. So, you know, when we look at the data, it looks like Ascensio is starting to pick up a little bit more share, Pegasol-Gaston share, more quickly now than previously, even though they have a slightly higher ASP from use. I'm just wondering if you could just give us a little bit more color on the dynamic there. And then, on your on-body device, given the trial mentions of clinical heroes, et cetera, and some of the data points, it seemed to me to suggest that we could get data potentially this summer or early fall from those trials.

Sort of front and center for US is that data reads out so.

End of the year and into 2022.

Right, but we aren't body insignificant or.

Our entry into the market with a P D..1 day.

Is causing significant interest.

Makes sense.

Okay and again to ask a question you will need to press down on 1 on your telephone. So we're doing a question push the pound key next.

Next question from the line of Jason got a bevy of Bank of America. Sarah Your line is open.

Hi, This is Ashley I'm on <unk>, so I have to 1 of them who might also it looks like I've eaten out team that they expect that to entertain them on by similar.

Unknown Executive: Is that a correct assumption? Or when do you expect we should be able to get some data from there? And what does it mean for you to potentially be the only biosimilar with an approved on-body device if that were to occur? Thank you.

I know these seen the first rule interchangeable bituminize getting approval decently, so to what extent does that conflicting predicted share predicated on any of them channel down at the change of advice from the either for you for competitors.

Unknown Executive: Well, thanks for the questions, Salim. I'll take the first one, the second question rather first, and I'll let Paul address ZipTenso and so on. With respect to the on-body device, I think that we would reiterate our previous comment that we are pleased with the progress that we are making with respect to that product. As you know, we have had some expenditures disclosed over the past year for other delivery modes for Eugenica.

That's the price 1 and the second 1 just 1 gross margin. So you say that I think call 85 per se end in 2021, Oh, it should be expect that on the same level 422, and 23 before it comes to 90 per cent and 24.

Thanks. Thanks for your question element, David gross margin question of speak to the issue of interchanged ability with tomorrow.

Paul Reider: And I'll probably decline to give you timelines for data, but I think that product is moving along. Paul, do you want to say a little bit about Centenzo and what's going on in the market? Yeah, sure.

We we don't believe that the lack of interchanged value is significant impediment to market penetration.

Paul Reider: Salim, I'm going to reiterate our focus here at Coherus, which is the gain share for ModPro. It's got over 50% of the market, and it's likely that any of the new biosimilar entrants are going to pick up a couple share points or not. What we're seeing is that their share is coming from primarily that 340B segment. It's the least profitable segment for us, so that's where we're seeing some market share gains. But our focus is really to take share from ModPro both in the short and long run.

It's more free apps operating segmentation issue and as we've said previously we believe that the the payers will probably have the loudest voice in terms of selection of the Biosimilar of choice and for them. So we look forward to that as we consider.

There are so to be very adept biosimilar competitors, and we think that we will do it very very well on the market, which is the reason why.

We are.

Projecting 10 per cent of breeze of market share before the humor about similar for centuries now with respect to your questions on gross margins and so I know, but still.

Operator: Next question from the line of Chris... Shah or J.P. Morgan? His eye is open.

Total address David Thanks, cash so as we said in the prepared remarks, the second quarter was the first period.

Chris: Thanks so much for the questions. I just have one on Udenica and then a bigger picture one.

And which the bold per unit acquisition cost of you Deneke was.

Unknown Executive: On Udenica, I think, sorry if I misheard this, during the prepared remarks, I think you expected ASP stability going forward. I just didn't know, is that relative to peers or on an absolute basis? And I just, as I think about price going forward, is the more stable dynamic, is that just mixed driving that, or are you actually seeing some of the competitive dynamics in the space maybe starting to normalize a bit?

What's realize and so that was mostly responsible for the increase in and.

And.

The cost of goods as a percentage of net price on.

Net sales.

I would add though that there was a.

Separate elements to the second quarter and it will also be available and snobby.

An obvious from the third quarter that.

Unknown Executive: And then my bigger picture question, I think you've talked about building out the I.O. portfolio over time, but there also seem to be a lot of opportunities, I guess, in the broader oncology market. So would there be any interest in the company to add, I guess, non-I.O. oncology assets to the mix, in that there's obviously some very large spaces there? There seems to be a number of ex-U.S. MeToo assets being developed there as well. And I just didn't know, is there anything about the strategies? Could that be something you look at as well, or is the focus very much on I.O.-specific assets?

B actual lots of you deneke that we were utilizing in the second and the third quarters.

Were lots that were manufactured prior to a process improvement and so those months' actually we're relatively low yielding us and therefore more.

More expensive knots, and we expect to move through those by the end of the third quarter and then 4 gross margin to come back down from that point in the fourth quarter and and to be relatively stable through 2022 and 2023.

So.

The trajectory that we expect per costs of goods.

Unknown Executive: Thank you. Thank you for the question, Chris. Let me take the ASP question first. As you know, we consider ourselves to be good guardians of ASP. We try to keep our prices, our price decreases, as modest as possible. And I think our track record and our ASP record reflects that. That being said, we can't control the pricing behavior of other competitors in the market, regardless of their motivations and so on.

Got it okay. Thanks for taking my question.

Thank you.

I've got to ask a question you won't need to press down on on your telephone.

There are no from your question presenters place continue.

Thank you very much for joining us today at the end.

Thank you very much we look forward to provide new on the another update our next quarterly call and we look forward to seeing you at our Investor Day in New York 4 thank you.

Goodbye concludes today's conference call. Thank you everyone for participating given L. O S net.

Unknown Executive: We are currently somewhat stable with our ASP for this quarter. But, you know, looking forward several quarters in the future, there might be additional changes and decreases as required. With respect to oncology products, I think you bring up a very interesting point. We, of course, currently have a few immuno-oncology products that came over with the Junichi collaboration, the Digit, the Engineer IL-2, you know, et cetera. Our focus is on the cancer immunity cycle.

[music].

Unknown Executive: But I think it's fair to say that, in conjunction with Toropel, MabarPT1, we are now getting a fair number of incoming overtures, partnering overtures, for various assets to use with Toropel, MabarPT1. So I think it's fair to say that we remain open-minded about the assets that we look at. But I would also say that the Junichi Digit is sort of front and center for us, as that data reads out, you know, end of the year and into 2022. But we are seeing significant, our entry into the market with the PD-1, though, is causing significant interest.

Operator: Great. And again, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Next question from the line of Jason Gerberry of Bank of America. Sir, your line is open.

Ashwani Verma: Hi, this is Ash Verma on for Jason. So I have two. One is on Humayra. So it looks like Abbey is now saying that they expect two interchangeable bi-cimulars, and we've seen the first two interchangeable biosimilars getting approval recently. So to what extent is your 10% projected share predicated on any assumption around interchangeable biosimilars, either for you or for competitors? That's the first one. And the second one, just on gross margins, so you say that 85% in 2021 should be expected to be around the same level for 2022 and 2023 before it jumps to 90% in 2024.

Unknown Executive: Thanks for your question. I'll let McDavid take the cross-margin question. I'll speak to the issues of interchangeability with Hemira. We don't believe that the lack of interchangeability is a significant impediment to market penetration. We think it's more of a segmentation issue.

[music].

Unknown Executive: And as we've said previously, we believe that the payers will probably have the loudest voice in terms of selection of the biosimilar of choice for them. So we look forward to that. We consider ourselves to be very adept biosimilar competitors, projecting 10% Aggressive Market Share before the Umair Biosimilar post-entry. Now, with respect to your questions on gross margins and so on, I'll let McDavid Stilwell address that.

McDavid Stilwell: Yeah, thanks, Ash. So, as we said in the prepared remarks, the second quarter was the first period in which the full per-unit acquisition cost of Udenica was realized. And so that was mostly responsible for the increase in the cost of goods as a percent of net price. Ardnett Sales. I would add, though, that there was a, Unknown Executive, Ashwani Verma, McDavid Stilwell, Paul Reider, Rosh Dias, Bhavin Patel, Jason Gerberry, Bryan McMichael, Colleen Karnauskas, Michael Nedelcovych, Colleen Kusy, Jason Gerberry, Bryan McMichael, Coherus BioSciences Inc Unknown Executive, Ashwani Verma, McDavid Stilwell, Paul Reider, Rosh Dias, Bhavin Patel, Jason Gerberry, Bryan McMichael, Coherus BioSciences Inc, So that's the trajectory that we expect for cost of goods, product. Okay.

Unknown Executive: Thanks for taking our questions. Thank you.

Operator: Again, to ask a question, you will need to press star 1 on your telephone. There are no further questions. Presenters, please continue.

Unknown Executive: Thank you very much for joining us today. And thank you very much. We look forward to providing you with another update on our next quarterly call. And we look forward to seeing you at our Investor Day in New York in Q4.

Operator: That concludes today's conference call. Thank you everyone for participating. (inaudible)

Operator: Copyright 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. The Seven Deadly Sins of Marek Ciszewski The Seven Deadly Sins of Marek Ciszewski The Seven Deadly Sins of Marek Ciszewski The Seven Deadly Sins of Marek Ciszewski

Operator: Good day, and thank you for standing by. Welcome to the quarterly two 2021 Coherus conference call. At this time, all participants are in a listen-only mode. If you require any further assistance, please press star zero. To ask a question, you will need to press star 1 on your telephone. I would now like to hand the conference over to your speaker today, McDavid Stilwell, Chief Financial Officer. Please go ahead.

McDavid Stilwell: Good afternoon, everyone, and thank you for joining us. We issued a press release earlier announcing our 2021 second quarter results. This release can be found on the Coherus BioSciences website. Today's call includes forward-looking statements regarding Coherus' current expectations.

McDavid Stilwell: These statements are not guarantees of future performance and are subject to certain risks and uncertainties that are discussed in documents that we filed with the Securities and Exchange Commission, specifically in our quarterly report on Form 10-Q for the quarter ended June 30, 2021, that we filed earlier this afternoon. The forward-looking statements stated today are made as of this date, and we undertake no duty to update such information, except as required under applicable law.

Dennis M. Lanfear: Thanks, McDavid, and thank you all for joining us this afternoon. Today, we'll provide updates on eugenic performance, our biosimilar pipeline, and progress with Torapelmab, our PD-1 antibody. We're pleased with our progress as we transform Coherus from a single product biosimilar company to a diversified multiproduct biopharmaceutical company with multiple oncology assets. Over the next two years, we anticipate bringing four new products to market in the United States, complementing Udentica. Our diversified product portfolio will generate growing and durable cash flows to invest in the large and rapidly developing Minamikauchi market with Toro Petalmat as our foundational asset. Now, let me first turn to you, Dennis.

[music].

Dennis: In the second quarter of 2021, we recorded $88 million in net sales, Eugenica, as compared to $83 million in the first quarter. Genica market share, as reported by Acubia, declined a point, quarter to quarter, from 20% to a 19% share. Wholesaler inventory was stable in the second quarter compared to the prior quarter end and was not a factor in second quarter revenue.

Dennis M. Lanfear: Recall that first quarter revenue was negatively impacted by the burn-off of about nine days of wholesaler inventory that accumulated with the seasonal buy-ins at year-end 2020. Later in the call, Paul Reider will provide additional details with respect to our expectations for the second half Udenica performance. Now let me update you on the excellent progress we're making with our biosimilar pipeline. Together with Udenica, our file similar to Lucentis, Humira, and Avastin address an aggregate $28 billion in market opportunity.

Dennis M. Lanfear: Our next expected biosimilar launch is CHS 201, our new census biosimilar candidate. I'm pleased to report that our partner, BioAct, recently submitted the BLA to the FDA. Assuming the filing is accepted for review, we anticipate a standard 12-month review and approval cycle. We are excited about the potential approval of this product in 2022 and believe it will be among the first biosimilar lucentis candidates to market, actively participating in the market formation

Good day, and thank you for standing by welcome to the quarter, 2.2021 to Harris Conference call.

At this time all participants are in a listen only mode. If you require any further assistance. Please press star zero growth.

So that's a question you will need to press star 1 on your telephone I would now like to hand, the conference over to your speaker today, Matt.

David Stillwell Chief Financial Officer. Please go ahead Sir.

Dennis M. Lanfear: Launch planning is underway. Now, with respect to our Humira biosimilar, CHS1420, the FDA review is progressing well, and we believe that the application is on track for the December 2021 target date. You may recall that we expect to launch CHS 1420 in the United States on or after July 1st, 2023.

Thank you.

Good afternoon, everyone and thank you for joining us.

We issued a press release earlier announcing our 2021 second quarter results. This release can be found on the coherent biosciences website.

Today's call includes forward looking statements regarding <unk> current expectations.

These statements include but are not limited to our ability to advance our biosimilar and immuno oncology product candidates through development and registration.

Dennis M. Lanfear: Regarding CHS-305, our Avastin biosimilar, we are currently conducting a three-way PK study to support a BLA, which we expect to file in the first part of 2022. Once approved, the Avastin Commercial Opportunity will further leverage our commercial oncology capabilities with a nearly identical customer base as Udenica and Toropelmeb, adding incremental margin to our bottom line. Now, let me make a few remarks with respect to Taurop Helmet and provide you with a positive update regarding our BLA filing for nasal parenchymal carcinoma, or NPC.

Our commercialization of <unk> and other products potential products in the future.

Our ability to meet our R&D and SG&A expense guidance for 2021 as well as our uses 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.

These statements are not guarantees of future performance and are subject to certain risks and uncertainties discussed in documents that we file with the Securities and Exchange Commission specifically in our quarterly report on form 10-Q for the quarter ended June 32021 that we filed earlier this afternoon.

Forward looking statements stated today are made as of this date and we undertake no duty to update such information, except as required under applicable law.

Dennis M. Lanfear: As you may recall, the registration strategy called for filing the second and third line MPC BLA and then, post-approval, filing a supplemental BLA for first-line treatment. FDA has now agreed to accept the first line submission for concurrent evaluation with the second and third line data, thereby accelerating time to potential approval for the first line indication. JUPITER-2, the clinical trial evaluating TOR-PAL-MF, first-line NPC, generated strong progression-free survival and overall survival data that were presented this June in the plenary session at ASCA.

With me on today's call are Ginnie Lanphier CEO co Harris poll reader EVP of commercial operations at market access and Chris Thompson Executive Vice President of sales and I will now turn the call over to Denny.

Thanks, David and thank you all for joining us this afternoon.

Provide updates on <unk> performance, our biosimilar pipeline and progress towards <unk>.

Our PD 1 antibody from.

We're pleased with our progress as we transform coherence from a single product Biosimilar company to a diversified multi product Biopharma company with multiple oncology assets.

Dennis M. Lanfear: The rolling VLA submission for all MPC indications is expected to be completed this quarter, and we continue to project approval in the first half of 2022. Now, I'm also pleased to report that our PalMath clinical data will be presented in September at two medical conferences. Data from the Phase 3 first-line non-small-cell lung cancer study, which we earlier reported had met the primary endpoint of progression 3 survival, will be presented at the World Conference on Lung Cancer. The JUPITER-6 Phase 3 study in esophageal squamous cell carcinoma, which also met its co-primary endpoints of progression 3 and overall survival, will be featured at the annual meeting of the European Society for Medical On

The next 2 years, we anticipate bringing for new products to market United States Complementing deneke.

Our diversified product portfolio will generate growth and durable cash flows to invest in the large and rapidly developing immuno oncology market mature apparel net is our foundational assets.

Now, let me first turn to denigrate.

In the second quarter of 2021, we recorded $88 million on net sales as compared to 83 million in the first quarter.

<unk> market share as reported by acute yet declined a point quarter to quarter from 20% to a 19% share.

Wholesaler inventory was stable in the second quarter compared to the prior quarter and it was not a factor in second quarter revenue.

Recall that first quarter revenue was negatively impacted by the burn off from about 90 days of wholesaler inventory net of accumulated with the seasonal buying in at year end 2020.

Later on our call reader, who will provide additional detail with respect to our expectations for the second half.

Dennis M. Lanfear: Jun-Shi continues to make good progress with additional chloropalumab clinical trials in lung cancer, which represents approximately 45% of the PD-1 market opportunity. Phase 3 studies evaluating torpelmeb and neoadjuvant in small cell lung cancer and EGFR positive patients who have failed TKI treatment are enrolling rapidly with data expected next year. The Phase III Study in Small Cell Lung, with co-primary endpoints of progression tree and overall survival, is now fully enrolled and is also expected to read out in 2022.

Performance.

Now let me update you on the excellent progress, we're making with our Biosimilar pipeline.

What's your Delek, our biosimilars or incentives you Myra.

<unk> and Avastin address an aggregate $28 billion market opportunity.

We've already demonstrated our ability to use our branded marketing and commercial capabilities to penetrate competitive areas from a biosimilar.

We believe we will experience similar success, taking significant share in these new biosimilar markets.

Our objective is to take at least 10 percentage these new markets and in some cases as much you don't get even greater market share.

Our next expected Biosimilar launches CHF 201, our Lucentis Biosimilar candidate.

I'm pleased to report that our partner bio <unk>.

Recently submitted a BLA to the FDA.

Dennis M. Lanfear: You'll find details of these studies on slide 20 of the August Investor Presentation, which we posted to our website earlier today. Beyond lung cancer, in 2022, we also project data from a phase 3 study and first-line treatment of triple negative breast cancer in two phase 3 trials in hepatocellular carcinoma, one for the first-line treatment and one in the neoadjuvant setting, as detailed on slide 21 of the investor presentation. Tor-Pal-Mab is the foundation of our immuno-oncology franchise, and developing it in combination with other agents that can improve response rates is a key part of our strategy.

Assuming the filing is accepted for review, we anticipate a standard 12 month review and approval cycle.

We are excited about the potential approval on this product in 2022 and believe we will be among the first biosimilar lucentis candidates to market actively participating in market formation.

Once the plant is underway.

Now with respect to our Humira Biosimilar CHS 14 plate.

FDA review is progressing well and we believe that the application is on track for December 2021 target day.

You may recall that we expect to launch CHS 14, 20 in the United States on or after July 1.2023.

Regarding the CHF 305, our Avastin Biosimilar. We are currently conducting a 3 way PK study to support BLA, which we expect to file the first part of 2022.

Once approved the avast and commercial opportunity will further leverage on our commercial oncology capabilities with nearly identical customer base as he deneke and tour our Pearl net.

Dennis M. Lanfear: JS006, the digit antibody for which we have option rights, is now being evaluated by Jun Shi in a phase one clinical trial and is progressing well. I'll now turn the call over to Paul Reider, our Executive Vice President of Commercial Operations and Market Access, for some additional color on the market dynamics we see going forward for Utenica. Thank you, Jami.

On incremental margin to our bottom line.

Now, let me make a few remarks with respect to TARP helmet and provide you with positive updates regarding our BLA filing and nasal pharyngeal carcinoma or NPC.

As you May recall, the registration strategy called from filing in the second and third line.

And then post approval filing a supplemental BLA for first line treatment of it.

Paul Reider: While the market grew approximately 2% quarter to quarter, Udenica entered the quarter with a 19% share of the overall petrographic market. This 1% decline in Udenica market share in the quarter came primarily from the least profitable segment of the market, which was $3.40 billion. Since the end of 2020, overall new LASTA shares declined by a percentage, validating customers' willingness to move away from OnPro, and we expect this trend to continue. Going forward, despite the COVID pandemic, we believe that taking share from OnPro will be a source of growth for biosimilars and especially for eugenics.

FDA has now agreed to accept from first line submission or concurrent evaluation with the second and third line data.

Thereby accelerating time to potential approval from the first line indication.

Jupiter 2 clinical trial evaluating 2 are parallel from first line Mtc generated strong progression free survival and overall survival data that were presented this June in a plenary session on Alaska.

The rolling BLA submission for all indications is expected to be completed this quarter and we continue to project approval in the first half of 2022.

Now I'm also pleased to report that tour Palomas clinical data will be presented in September at 2 medical conferences.

Data from the Phase III first line non small cell lung cancer study, which we earlier reported had met the primary endpoint of progression free survival will.

It will be presented at the World conference on lung cancer.

The Jupiter 6 phase III study in Suffolk, Gilles squamous cell carcinoma, which also met as co primary endpoints of progression free and overall survival.

Paul Reider: We are projecting market share within the second half of 2021, driven by the stability in our third quarter ASP compared to competitive areas and the redeployment of our field teams to in-person sales. With respect to revenues, we expect modest second half growth compared to the first half of 2021. However, there are two major uncertainties that are largely beyond our control and therefore difficult to handicap.

We featured at the annual meeting of the European Society for medical oncology.

<unk> continues to make good progress with additional per Paramount clinical trial in lung cancer.

Which represents approximately 45% from the PD 1 market opportunity.

Phase III studies evaluate to upheld NAV and neo adjuvant as small cell lung cancer Egfr positive patients will fail.

Our enrolling rapidly with data expected next year.

McDavid Stilwell: The first is COVID's resurgence, with an intended impact on market growth, share movement, and salesforce access. And the second is the level of price erosion precipitated by our competitors. We remain confident in our ability to respond quickly, manage either challenge, to maximize our available opportunities. I'm going to turn it back over to McDavid for a review of the quarter's financial... Thanks, Paul.

Phase III study on small cell lung cancer with a co primary endpoint of progression free and overall survival is now fully enrolled and is also expected to read out in 2022.

Youll find details of these studies on slide 20 of the August Investor presentation, which we posted to our website earlier today.

Beyond lung cancer in 2022, we also project data from our Phase III study in first line treatment of Triple negative breast cancer, and 2 phase III trials in cellular carcinoma.

McDavid Stilwell: The details of our financial results are in the press release and in the 10-Q we filed this afternoon, so I'll focus now on just a few highlights. For the second quarter of 2021, we reported a $29.9 billion net loss on a cap-based basis. Cash flow from operating activities was essentially break-even at negative $200,000 for the second quarter of 2021. As detailed earlier in the call, net product revenue was $88 million, an increase from the $83 million in eugenica net sales recorded the prior quarter. Wholesaler inventory was stable compared to the prior quarter end.

1 for the first line treatment and 1 in the Neo adjuvant setting as detailed on slide 21 a day.

Investor presentation.

<unk> is the foundation of our immuno oncology franchise and develop it in combination with other agents that can improve response rates is a key part of our strategy.

J F 006 digit antibody for which we have option right now being evaluated by June shape. The phase 1 clinical trial and is progressing well.

Thank you Denny.

The pegfilgrastim market grew approximately 2% quarter to quarter.

<unk> ended the quarter with 19% share of the overall pegfilgrastim market.

McDavid Stilwell: Cost of goods as a percentage of net revenues increased from the prior quarter. In the first quarter, we depleted the inventory manufactured and fully expensed prior to Eugenica approval. And so the second quarter was the first period with per unit acquisition costs fully reflected within COGS. We expect a similar gross margin in the third quarter and then an improvement in the fourth quarter. For the full year 2021, we expect gross margins of around 85%, including a mid-single-digit royalty we owe through mid-2024.

This 1% decline in <unk> market share in the quarter came primarily from the least profitable segment of the market, which were $3.40 hospitals.

Since the end of 2020 overall Neulasta share has declined 5 percentage points validating customers' willingness to move away from on Prem and we expect this trend to continue.

Going forward. Despite the Covid pandemic, we believe that taking share from on pro will be a source of growth from biosimilars and especially for your delek.

We are projecting market share within the second half of 2021.

Driven by the stability in our third quarter Asps.

McDavid Stilwell: In the long run, starting in 2024, we expect eugenica gross margins to return to 90 percent or higher as we realize the benefits of a significant manufacturing process improvement and royalty expiration. Research and development expenses for the second quarter of 2021 were $54.8 million, compared to $26.2 million for the same period in 2020. The increase reflects costs to advance our late-stage pipeline. Recall that we expect to bring four additional products to market in the next two years, and we are investing in activities such as regulatory affairs and manufacturing ramp up for CHS 1420, Development of BLA Filings for Toropalamab, and a clinical trial for CHS305.

Third competitor Asps.

On the redeployment of our field teams to in person sales calls.

With respect to revenues, we expect modest second half growth compared to the first half 2021.

However, there are 2 major uncertainties that are largely beyond our control and therefore difficult to handicap.

The first is COVID-19 resurgence with intended impact on market growth share movement and sales force access.

On the second is the level of price erosion precipitated by our competitors.

We remain confident our ability to respond quickly manage either challenge to maximize our available opportunities.

I'll now turn it back over to Mick David will review the quarter's financial results.

Thanks, Paul.

Details of our financial results are in the press release and in the 10-Q, we filed this afternoon. So I'll focus now on just a few highlights.

For the second quarter of 2021, we reported a $29.9 billion net loss on a GAAP basis.

McDavid Stilwell: R&D expense for the quarter was partially offset by a $9 million credit due to the accounting treatment of the Coherus equity purchased by Jun-Chi Biosciences in the second quarter. Time, general, and administrative expenses were $40.3 million in the second quarter of 2021, as compared to $34.1 million in the year before. The increase was primarily driven by higher stock-based compensation expense, as well as Udenica commercialization activities, which increased compared to the year-ago quarter, which was heavily impacted by the COVID lockdowns of the spring of 2020.

Cash flow from operating activities was essentially breakeven at negative $200000 for the second quarter of 2021.

As detailed earlier in the call net product revenue was $88 million.

An increase from the $83 million Utica net sales reported the prior quarter.

Wholesaler inventory was stable compared to the prior quarter end.

Cost of goods as a percentage of net revenues increased from the prior quarter.

In the first quarter, we depleted the inventory manufactured in fully expensed prior to <unk> approval.

And so the second quarter was the first period with per unit acquisition costs from the reflected within Cogs.

We expect a similar gross margin in the third quarter and then an improvement in the fourth quarter.

McDavid Stilwell: We ended the second quarter with cash, cash equivalents, and marketable securities of $454.4 million, compared to a balance of $399.5 million at March 31, 2021. And recall that during the second quarter, Coherus received $50 million from Junji Biosciences' purchase of common stock associated with the Toro Palomar licensing transaction. We are maintaining our full year guidance for R&D and SG&A expenses of $370 million to $400 million, excluding the first quarter upfront payments to Chunchi Biosciences.

For the full year 2021, we expect gross margins of around 85%, including a mid single digit royalty, we owe through mid 2024.

In the long run starting in 2024, we expect <unk> gross margins to return to 90% or higher as we realize the benefits of our significant manufacturing process improvement and royalty exploration.

Research and development expenses for the second quarter of 2021 were $54.8 million compared to $26.2 million for the same period in 2020.

The increase reflects cost to advance our late stage pipeline.

Call that we expect to bring 4 additional products to market in the next 2 years and we are investing in activities such as regulatory affairs and manufacturing scale up for CHS 14, 20 <unk>.

McDavid Stilwell: And this range includes approximately $50 to $55 million in stock-based compensation expenses. And I'll now turn the call back to Denny for closing remarks. Thank you, McDavid. In closing, I'd like to congratulate and thank my colleagues and teammates at Coherus for the strong progress we are making on the transformation to a diversified biopharmaceutical company with multiple products in oncology. Their hard work is very much appreciated.

Development and BLA filings per tour of Allomap, and a clinical trial for CHS 305.

R&D expense for the quarter was partially offset by a $9 million credit due to the accounting treatment of the coherent equity purchased by June She biosciences in the second quarter.

Yeah.

Selling general and administrative expenses were $40.3 million from the second quarter of 2021 as compared to $34.1 million in the year ago quarter.

<unk> increase was primarily driven by higher stock based compensation expense as well on a few deneke commercialization activities, which increased compared to the year ago quarter, which was heavily impacted by the COVID-19 lockdowns of the spring of 2020.

Dennis M. Lanfear: The result of our team's efforts is two products currently in the registration process, plus a third BLA is soon to be filed for Toro Palmetto. We're advancing rapidly, and our objective is to transition from one approved product, Udentica, to four approved products in the United States over the next year. In 2023, we expect to have five products launched and generating revenue. Over the next several months, we anticipate clinical data announcements, medical presentations, and regulatory milestones for both our biosimilars and for our panel members. We look forward to providing updates through the fourth quarter when we'll have our Analyst Day event in New York City. Operator, we can now turn the line over to questions.

We ended the second quarter with cash cash equivalents in marketable securities of $454.4 million.

Compared to a balance of $399.5 million at March 31, 2021 and.

And recall that during the second quarter <unk> received $50 million from <unk> Biosciences purchase of common stock associated with the <unk> licensing transaction.

Yeah.

We are maintaining our full year guidance for R&D, and SG&A expenses of 370 million to $400 million.

Excluding the first quarter upfront payments to <unk> Biosciences, and this range includes approximately $50 million to $55 million.

And stock based compensation expense.

And I'll now turn the call back to Denny for closing remarks.

Thank you David.

In closing I'd like to congratulate and thank my colleagues and teammates that coheres on the strong progress we are making on the transformation for diversified Biopharma company with multiple products in oncology their hard works is very much appreciated.

The result of our team's efforts are 2 products currently in the registration process plus a third BLA is soon to be filed for total element.

Unknown Executive: just any as a starting point.

We are advancing rapidly on our objected the transition from 1 approved product you deneke to 4.

Unknown Executive: Unknown Executive, Ashwani Verma, McDavid Stilwell, Paul Reider, Rosh Dias, Bhavin Patel, Jason Gerberry, Bryan McMichael, Coherus BioSciences Inc.

Our approved products in United States over the next year.

In 2023, we expect to have byproduct months generating revenue.

Over the next several months, we anticipate clinical data announcements medical presentations and regulatory milestones for both our biosimilars enter our palmetto.

Unknown Executive: Hi Doug. Thanks for the question.

Look forward to providing updates through the fourth quarter, we will have our analyst day event in New York City.

Paul Reider: Yeah, I'll hand that question over to Paul Reider, our executive VP of Marketing. Paul, would you like to address Doug's question? Yeah, sure, Doug.

Operator, we can now turn line open questions. Thank you.

Thank you as a reminder to ask a question you will need to press star 1 on your telephone.

Paul Reider: Yeah, I mean, we definitely are watching the race to the bottom from Amgen and pushing the price down. They have the lowest ASP in the market. And, you know, really, for biosimilar competitors, you really need to recognize that meaningful growth will only come from taking share from the originator. However, swapping growth among biosimilars is not a sustainable strategy. You know, from a pricing standpoint, our Q3 published ASP increased 1% over Q2.

Your question press the pound key.

Our first question from the line of Douglas Tsao of H C. Wainwright.

Sir your line is open.

Hi, good afternoon, thanks for taking the questions.

Just any of the starting point just curious to hear your perspective.

Terms of what we're seeing in the <unk> market.

It seems like from the Biosimilar makers pricing.

It's sort of stabilized, but the innovator continues to sort of take some price and discount how do you see that playing out through the balance of the year.

Hi, Doug Thanks for the question.

I'll hand that question over to Paul Reader, our executive VP of marketing Paul would you like to address that question, Yes sure Doug.

Yes.

We definitely are watching day.

Based on the bottom from Amgen and pushing the.

The price down.

Unknown Executive: I know we're maybe a little early, but just looking ahead to 1420, just curious, at what point, just given the likelihood of approval at the end of this year and then launching 18 months later, would we expect to see some commercials?

They have the lowest ASP per market and really for Biosimilar competitors.

We really need to recognize that the meaningful growth will only come from taking share from the originator in swapping growth among biosimilars is not a sustainable strategy.

From a pricing standpoint.

Our Q3 published ASP.

As increased 1% over Q2, so by comparison to the originator.

Unknown Executive: We expect to see some commercial build-out for that product.

You can you can see the declines there.

Unknown Executive: That's a great question, Doug. We are currently performing some market research around the potential structure for the sales force, but we are on record earlier as indicating that we believe that will be primarily a payer-driven market access operation. So we do not see substantial increases on the commercialization side to support that product, although there probably will be some marginal increases but not substantial. Okay.

But we remain.

Focused on value over the long term and to maintain the highest ASP price while maximizing share.

And then.

And that's a question I know, it's maybe a little early but just looking ahead to <unk> 'twenty just curious at what point just given you said the likelihood of approval at the end of this year and then launching 18 months later, we expect to see some commercial build out for that product.

That's a great question, Doug we are currently performing some market research around the potential structure for the sales force, but we are at record earlier is indicating that we believe that will be primarily a payer driven market access.

Unknown Executive: Okay, and so just given the fact that you're not going to be spending that much, it would be anticipated that those would be sort of streamed in just a few months before the actual launch. All right. Bye.

Given the operation So we do not see substantial increases.

Unknown Executive: I'll decline to actually, at this point, describe the breadth of our efforts in various places of the organization to support that. But we do not expect, for example, to put a substantial number of boots on the ground to move that forward.

On the commercialization side to support that product.

They will probably will be some marginal increases but not substantial.

Okay.

Given the fact that youre knocking on the spending that might should we anticipate those would be sort of stream on just a few months before the actual launch.

Operator: Thank you. Next question from the line of Salim Syed of Mizuho. Sir, the line is open.

I will decline to actually at those points describe.

Salim Qader Syed: Great. Thanks so much for the question, guys. And good afternoon.

<unk>.

On the breadth of our efforts in various places in the organization to support that.

But we do not expect for example to put a substantial number of boots on the ground to move that product.

Unknown Executive: So a couple for me, if I can. One on, actually, both on Udenica. So, you know, when we look at the data, it looks like Stencio is starting to pick up a little bit more share, Pegasol-Gaston share, more quickly now than previously, even though they have a slightly higher ASP from use. I'm just wondering if you could just give us a little bit more color on the dynamic there. And then the second on your on-body device, given the trial mentions on Clinical Heroes, et cetera, and some of the data points, it seemed to me to suggest that we could get data potentially this summer or early fall from those trials.

Okay, great. Thank you.

Thank you next question from the line of Celine <unk> of Mizuho.

Sir your line is open.

Great. Thanks, so much on any question guys.

And good afternoon. So a couple from me if I can 1 on.

Actually both on you Danica.

So when you look at the data it looks like.

I was starting to pick up a little bit more share pegfilgrastim share.

More quickly now than previously even though they have a slightly higher ASP from us I'm. Just wondering if you could just give us a little bit more color on what's the dynamic there.

And then the second on your on body device give.

Given the trial mentions on clinical heroes et cetera on some of the data points that seem to me that suggests that we could get data.

Potentially in the summer early fall from those trials is that correct assumption or when do you expect when you shouldnt be able to get some data from there on what does it mean for you.

It should be the only biosimilar.

Unknown Executive: Well, thanks for the questions, Salim. I'll take the first one, the second question rather first, and I'll let Paul address Zyntento and so on.

With an approved on body device if that were to occur. Thank you.

Thanks for the questions.

I'll take the first 1 the second question, rather first and I'll, let Paul address.

And so on with respect to the on body device I think that we would reiterate our previous comments that were pleased with the progress that we're making with respect to that product.

Unknown Executive: With respect to the on-body device, I think that we would reiterate our previous comment that we are pleased with the progress that we are making with respect to that product. As you know, we have had some expenditures disclosed over the past year for other. Delivery Modalities for Udentica, and I'll probably decline to give you timelines for data, but I think that product is moving along. Paul, do you want to say a little bit about Centenzo and what's going on in the market? Yeah, sure.

As you know we have had some expenditures disclosed over the past year.

Sure.

Other.

Delivery modalities for <unk>, and I'll, probably would decline to give you timelines for data, but I think that product is moving along.

You wanted to say, a little bit about <unk>, and <unk> and putting on in the market yeah, sure soy meal and reiterate our focus here.

Paul Reider: Hey, Salim, I'm going to reiterate our focus here at Coherus, which is gain share for LogPro. It's got over 50% of the market, and it's likely that any of the new biosimilar entrants are going to pick up a couple share points from now. What we're seeing is that their share is coming from primarily that 340b segment. It's the least profitable segment for us, so that's where we're seeing some market share gains. But our focus is really to take share from LogPro, both in the short and long term.

Here at <unk>, which is the gain share from on pro cut.

Got over 50% of the market.

It's likely that any of the new biosimilar entrants are going to pick up a couple of share points from now what we're seeing is their share is coming from primarily that 340 <unk> segment. It's in.

It's the least profitable segment for us So that's where that's where we're seeing some market share gains.

But our focus is really to take share from on.

On the short term loans.

Unknown Executive: I understand. Thanks so much.

Understood. Thanks, so much.

Operator: Next question from the line of Chris... Shah of J.P. Morgan. Iran is open.

Thanks Helane.

Great next question from the line of Chris assets.

Shah of J P. Morgan.

Chris: Thanks so much for the questions. I just have one on Udenica and then a bigger picture one.

Your line is open great. Thanks, so much for the questions.

Just wondering you Denny I kind of on a bigger picture 1.

<unk> I think I am sorry, if I misheard. This during the prepared remarks, I think you expected asp's stability going forward I should know is that relative to peers or on an absolute basis and as I think about price going forward is the more stable dynamic is that just mix driving that or are you actually seeing some of the competitive dynamics in this space.

Starting to normalize a bit and.

Unknown Executive: And then my bigger picture question, I think you've talked about building out the I.O. portfolio over time, but there also seem to be a lot of opportunities, I guess, in the broader oncology market. So would there be any interest in the company to add, I guess, non-I.O. oncology assets to the mix, in that there's obviously some very large spaces there? There seems to be a number of ex-U.S. MeToo assets being developed there as well. And I just didn't know, as you look at the strategies, could that be something you look at as well, or is the focus very much on I.O. 's specific assets? Thank you.

And then my bigger picture question, I think you've talked about building out the Io.

So over time, but there also seems to be a lot of opportunities I guess on the broader oncology market. So would there be any interest in the company to add I guess non Io oncology assets to the mix and that there's obviously some very large spaces. There there seems to be a number of ex U S kind of meet 2 assets being developed there as well on is to know what the strategy is could that be something you look at as well.

Or is the focus very much on on Io specific assets. Thank you.

Unknown Executive: Thank you for the question, Chris. Let me take the ASP question first. As you know, we consider ourselves to be good guardians of ASP. We try to keep our prices, our price decreases, as modest as possible. And I think our track record and our ASP record reflects that. That being said, we can't control the pricing behavior of other competitors in the market, regardless of their motivations and so on.

Thank you for the question, Chris Let me, let me say to ask the question first and as you know we consider ourselves to be good guardians of ASD, we try to keep our prices our price decrease as modest as possible and I think our track record and our ASP day record reflects that that being said we can't do.

Troll the pricing behavior of other competitors in the market now regardless of their their motivations and so on.

We are currently somewhat stable with our ASP.

For this quarter.

Looking forward several quarters in the future.

There might be additional changes and decreases.

Is required with respect to oncology products I think you bring up a very interesting point.

We of course currently have.

A few immuno.

Immuno oncology products that came over with the <unk> collaboration the digit engineered IL 2.

Et cetera are focused on on the cancer immunity cycle, but I think it's fair to say that in conjunction with total <unk>. Our PD..1 we are now getting a fair amount of incoming order insurers partner on overtures by various assets.

Unknown Executive: But I think it's fair to say that, in conjunction with Toropel, Medbar PD-1, we are now getting a fair amount of incoming overtures, partnering overtures for various assets to use with Toropel, Medbar. So I think it's fair to say that we remain open-minded about the assets that we look at. But I would also say that the Junichi Digit is sort of front and center for us as that data reads out, you know, end of the year and into 2022. But we are seeing significant, our entry into the market with the PD-1, though, is causing significant interest.

To use with torque allomap.

I think it's fair to say that we remain open minded about the assets that we look at but I would also say that the June sheets.

It's sort of front and center for US is that data reads out.

End of the year and into.

2022.

But we aren't seeing significant.

Our entry into the market with the PD 1 day.

Is causing significant interest.

Okay.

Makes sense. Thanks.

Great and again to ask a question you will need to press star 1 on your telephone to withdraw your question press the balance sheet net.

Our next question from the line of Jason <unk> of Bank of America.

Your line is open.

Ashwani Verma: Hi, this is Ashwani Verma on behalf of Jason. So I have two. One is on Humira. So it looks like Abby is now saying that they expect two interchangeable bisomers, and we've seen the first two interchangeable biosimilars getting approval recently. So to what extent is your 10% projected share predicated on any assumption around interchangeable biosimilars, either for you or for competitors? That's the first one. And the second one, just on gross margin, so you say that 85% in 2021 should be expected to be around the same level for 2022 and 2023 before it comes to 90% in 2024.

Hi, This is ashwin law on per Jason So I have 2.

1 is on who might also it looks like Abbvie is now saying that they expect that to interchangeable biosimilars.

No. This is the first true interchangeable biosimilars approvals recently, so to what extent does your thankful. Thank predicted channel predicated on any of them churn at all on interchangeable buys from the EBIT for competitors.

That's the first 1 and the second 1 just on gross margin. So you see that I think call 85 per se in 2021.

Should we expect that on the same level for 'twenty 2 'twenty 3 before it comes to 90% in 'twenty 4.

Thanks for your question.

David <unk> gross margin question I'll speak to the issue of interchange ability with Humira.

Unknown Executive: Thanks for your question. I'll let McDavid take the cross-margin question. I'll speak to the issue of interchangeability with Humira. We don't believe that the lack of interchangeability is a significant impediment to market penetration. We think it's more of a segmentation issue.

We.

Don't believe that the lack of interchange value significant impediment to market penetration.

It's more.

Apps of age segmentation issue and as we've said previously we believe that the payers will probably have allowed his voice in terms of selection of the biosimilar of choice for them. So we look forward to that as we consider ourselves to be very.

McDavid Stilwell: And as we've said previously, we believe that payers will probably have the loudest voice in terms of selecting the biosimilar of choice for them. So we look forward to that. We consider ourselves to be very adept biosimilar competitors, projecting a 10% aggressive market share for the Umaira Biosimilar post-entry. Now, with respect to your questions on gross margins and so on, I'll let McDavid Stilwell address that. Okay, McDavid? Yeah. Thanks, Ash.

Biosimilar competitors, and we think that we will do very very well in the market, which is the reason why.

We are.

Projecting 10% agrees that market share before the Humira Biosimilar post January now with respect to your questions on gross margins and so on now, but I think David So I'll address that David Thanks cash so.

McDavid Stilwell: As we said in the prepared remarks, the second quarter was the first period in which the full per unit acquisition cost of Udenica was realized. And so that was mostly responsible for the increase in the cost of goods as a percent of net price. Ardnett Sales. I would add, though, that there was a, This is a separate element to the second quarter, and it will also be available and obvious in the third quarter that the actual lots of eugenica that we were utilizing in the second and the third quarters were lots that were manufactured prior to a process improvement, and so those lots actually were relatively low yielding lots and therefore more expensive lots, and we expect to move through those by the So that's the trajectory that we expect for the cost of goods and products. Okay.

As we said in the prepared remarks, the second quarter was the first period.

And which the per unit acquisition cost of <unk> was.

What's realized and so that was mostly responsible for the increase in.

And.

Cost of goods as a percent of net price.

Net sales.

I would add though that there was a.

Separate elements to the second quarter and it will also be available.

On obvious from the third quarter net.

Actual lots of <unk> that we were utilizing in the second and the third quarters.

Were lots that were manufactured prior to a process improvement and so does not actually were relatively low yielding ops and therefore more.

<unk> expenses, not and we expect to move through those by the end of the third quarter and then for gross margin to come back down from that point in the fourth quarter and.

<unk> to be relatively stable through 2022 and 2023.

So that's the trajectory that we expect per cost of goods.

Got it okay. Thanks for taking our question.

Unknown Executive: Thanks for taking our questions. Thank you.

Thank you.

Operator: Again, to ask a question, you will need to press star 1 on your telephone. There are no further questions, presenters, please continue.

Again to ask a question you will need to press star 1 on your telephone.

Okay.

There are no further questions presenters. Please continue.

Thank you very much for joining us today and thank you very much we look forward to providing you another update on our next quarterly call and we look forward to seeing you at our Investor Day in New York in Q4. Thank you.

Operator: That concludes today's conference call. Thank you everyone for participating. You may now disconnect.

Goodbye. This concludes today's conference call. Thank you everyone for participating you may now all disconnect.

Q2 2021 Coherus BioSciences Inc Earnings Call

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