Q1 2025 Coherus BioSciences Inc Earnings Call
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Good day and thank you for saying goodbye. Bye.
Welcome to the Coherus BioSciences, 1st quarter, 2025 earnings conference called the Coherus BioSciences,
Executive Vice President commercial before we get started I would like to remind you that today's call includes forward looking statements regarding coheres its current expectations about future events.
These statements include but are not limited to the following expectations about repurchase incoherences remaining convertible notes.
Junction of cost savings from head count reduction timing for coherent to release data from its clinical trials and projections of future expenses.
All of these forward looking statements involve substantial risks and uncertainties that are beyond our control and could cause actual results performance or achievements to differ from those implied by the forward looking statements.
These statements are not guarantees of future performance and are subject to substantial risks and uncertainties that are discussed in our press release that we issued today as well as our quarterly report on Form 10-Q forward looking statements provided on the call. Today are made as of this date and we undertake no duty to update or revise.
Any forward looking statements.
And now I'll hand, the call over to Denny. Thank you Julian and thank you everyone for joining us today on our Q1 2025 earnings call.
First let me say that with a biosimilar divestitures behind us and our promising innovative oncology business in front of US we are fully focused on innovative oncology.
We are now commercial stage innovative oncology company with an FDA approved next generation PD, one inhibitor like towards it as well as two highly promising proprietary pipeline products moving quickly through early to mid stage clinical trials.
And demonstrating positive data for large markets.
Our strategy is anchored around three core pillars.
Both our near term revenue growth as well as our long term innovation as we strive to establish the level of cancer patients.
The first pillar is toward Palomar, our next generation PD, one inhibitor Brent earmark towards me, which is the only FDA approved and available treatment for metastatic recurrent locally advanced nasopharyngeal carcinoma in all lines of therapy and the standard of care in M. P C.
Demonstrated to be efficacious in a number of cancers.
And accurate and low PD L. One tumor types.
Palomar derives its differentiation from its unique binding epitope on PD one the <unk>.
<unk> loop of the receptor.
We have demonstrated that as a result of differential and superior signaling within the T cell.
Okay.
These three phase III studies <unk> in combination with chemotherapy has shown efficacy and respective PDL one status.
These properties make top hub ideal combination agent for other cancer therapeutics, which I will discuss directly.
The electronic growth is now focused on increasing the breadth and depth of market penetration driven by strong MCC on guidelines as well as the duration of treatment in patients maximize patient benefit.
Unencumbered by the strategic diversion for the last two quarters.
Divestiture and the supply interruption issues as well as the field team re mapping efforts. It's now clear that our commercial team will be able to deliver consistent growth going forward.
Speaker Change: Sameer Garg Walker, our executive Vice President commercial.
Speaker Change: We will be describing this for you in greater detail in just a moment.
We project like towards the adjust the NPC indication alone will grow to about $150 million to $200 million annually over the next three years, providing non dilutive funding for the development pipeline as well as being an important source of revenue going forward as we seek to expand its indications and non MPC sales.
Speaker Change: Once we exceed about $15 million per quarter, we will cover our commercial costs and begin to contribute to corporate expenses progressively moving to cover R&D costs with revenues.
Speaker Change: A key development focus is on expanding the indications product towards the combination with other agents.
Speaker Change: Adding our own to extend patient survival across tumor types, which creates a market opportunity for our current pipeline candidates.
Speaker Change: Over $15 billion annually.
Speaker Change: Okay.
Speaker Change: A key part of this is an elegant efficient and aggressive indication expansion strategy based on partnerships.
Speaker Change: Whereby we supply drug to various partners, who then fund all other clinical trial costs themselves.
Speaker Change: Once approved these partner combination agent labels will specify tour Palomar.
We have put several of these agreements in place which include pivotal trials, such as with an OBO and HPV positive head and neck cancer as well as a number of earlier stage assets.
Speaker Change: Our objective is to be the preferred partner of choice for companies, maybe it's safe and highly efficacious.
Speaker Change: Next generation PD one inhibitor.
Speaker Change: More such arrangements are in the process.
Speaker Change: Additionally, our partner <unk>.
Speaker Change: Pivotal study underway with Toro power in combination with <unk> in small cell lung cancer subtype, which would also provide an additional approved indications.
Speaker Change: We are also developing additional indications for <unk> in combination with our proprietary pipeline, which includes <unk> a first in class anti IL 27 antibody and CHS one for our <unk> antibody in several cancers.
Speaker Change: Particularly we believe that the broad therapeutic problems of selective T. Reg depletion in a tumor microenvironment facilitating the infiltration of CDA positive T cells to attack the tumor may finally be realized with a sufficiently selected <unk> satellite <unk> antibody such as CHF one four.
Speaker Change: Ourselves and others believe the antiques CRE class could see broad applicability across a number of solid tumors, turning cold tumors hot and constituting an emerging cancer therapeutic superclass synergistic with other modalities such as T cell engages adcs bi specifics and others.
Speaker Change: Accordingly, our development efforts with CHS 1004 constitutes the second pillar of our value creation strategy.
Speaker Change: We believe that CHF, one four is potentially best in class as it is highly selective in our product and extensive product candidate selection process that resulted in the only agent with no off target binding.
Speaker Change: What is most striking about this program and what gives us such confidence is the translational read through from binding to T. Reg depletion to CDA positive T cell tumor infiltration to clinical efficacy.
Speaker Change: We recently presented the first U S clinical data.
Speaker Change: With a PCR rate at ACR last week.
Speaker Change: Showing visually compelling biomarker data illustrating the elimination of T regs.
Speaker Change: Filtration and inflammation of the TMA by CDA positive T cells.
Speaker Change: Remarkably in the study there was also a partial response showing tumor shrinkage and a very advanced fourth line head and neck cancer patients, which what Dr. Diab will discuss directly.
Dr. Diab: We believe that our very thorough and deliberate scientific translational approach and developing datasets physician coherent as the thought leader expert in this rapidly evolving field of Sunshine promise.
Dr. Diab: The third pillar of our development value creation strategy focuses on pioneering novel treatment paradigms in a first line <unk> carcinoma.
Dr. Diab: <unk> unmet need with large market potential.
Dr. Diab: These efforts are centered on cargoes are key to our first in class anti IL 27.
Dr. Diab: Earlier this year, we announced very compelling data in first line liver cancer, where five out of 28 patients. Some 20, some 17% had a complete response in a phase II efficacy study of casto key to combine.
Dr. Diab: Okay.
Dr. Diab: <unk> and.
Dr. Diab: This compares very favorably to the standard of care alone or even other studies in this indication.
Dr. Diab: Building on this very positive data, we are now conducting phase II trial evaluating <unk> towards <unk> and Bevacizumab.
Dr. Diab: We expect data in the first half of next year.
Dr. Diab: Also liver cancer, our partner to achieve is conducting a phase III pivotal study would like towards the combined with Manhattan, which should read out the next three to six months.
Dr. Diab: If successful we will seek to engage the FDA regarding potential approval approaches.
In summary, the development value creation strategy now, let me make two key points for you.
Dr. Diab: First as you know we felt it essential innovative oncology company to have an approved and proprietary PD one inhibitor.
Dr. Diab: It is now apparent why.
Dr. Diab: Such an approach first allows great latitude cost savings, while developing your own synergistic combination agents.
Dr. Diab: This offers the opportunity for others to embrace your PD one co develop it with their own assets at minimal cost to call here is as we realized expanded label indications and result in higher revenues.
Dr. Diab: Additionally, when your PD, one is combined and approved with your own proprietary agents you set up the opportunity to realize sales multiples by realizing revenues on both agents because as Youre novel agents get approved you can mark your PD one right alongside.
Dr. Diab: My second key point is that clinical data readouts that are occurring in 2025 support these product candidates with safety initial efficacy and proof of mechanism data that builds momentum as we look forward to initial key data readouts for these studies projected in the first half 2026.
Dr. Diab: Today, you will hear next from factory to refill O'malley, our chief scientific and development Officer, who will be followed by Dr. Raj <unk>, our chief Medical Officer.
Dr. Raj: Dr. <unk> will provide you with an update on clinical trial rationale study designs and progress to date.
Speaker Change: Then you will hear from Samir, Greg <unk>, our executive Vice President commercial Sameer joined US late last year to lead laboratory franchise, and we'll give you a detailed rundown on the key market drivers impacting revenues uptake and alike.
Speaker Change: Following that I will turn the call over to Brian Michael Our Chief Financial Officer.
Brian Michael: Brian will review the close out of Q1, the divestiture of the <unk> business and financial impact of these discontinued operations.
Brian Michael: He will also review the Q1 overall numbers and provide SG&A guidance looking forward through the end of 2025.
Speaker Change: Now with that I'll turn the call over to Dr. <unk> to review the scientific rationale of our pipeline product candidates and the expansion strategy for <unk>.
Speaker Change: So we will particularly focus on the biology of emergent <unk> class, including CHF 104, which is a preeminent candidate given its high productivity treatment. Thank.
Speaker Change: Thank you Denny and good afternoon.
Speaker Change: We are pleased to update you on our continued progress in 2020 with key regulatory and clinical translational advancements.
Speaker Change: Promising pipeline in combination with our next generation and differentiated PD, one inhibitor to our talent.
Speaker Change: There are three key components.
Speaker Change: Value creation scientific and development strategy.
Speaker Change: I'll focus my remarks today.
Speaker Change: What we view is a high potential impact our ctr a targeted antibody CHF 194.
Speaker Change: First let me review for you with Danny alluded to earlier, our elegant and efficient Torah Allomap label expansion strategy.
Speaker Change: Our strategy.
Speaker Change: <unk> for Apollo map indications beyond MPC in the United States is first put in place trend supply collaboration where we evaluate Torah allomap with other novel trends across a variety of mechanisms.
Speaker Change: We have prioritized collaborations with strong MLA rationale and clinical safety and efficacy data evaluating tumor types, such as head and neck and lung cancer and clinical trials.
Speaker Change: These are tumors that overlap with our existing commercial call point.
Speaker Change: The second area or Alan that indication expansion is combination therapy with our own pipeline.
Speaker Change: And selective antibody.
Speaker Change: Additionally, <unk>, so strong biologic rationale to establish proof of concept.
Speaker Change: For each clinical indication that advances catch as the key Ted or CHF <unk> four into a pivotal study.
Speaker Change: That study also advances Torah allomap into a potential new indications as a combination regimen.
Speaker Change: These efforts include Kpis or key CAD, and liver and lung cancers.
Speaker Change: Just 114 across a wide variety of solid tumor types.
Speaker Change: Given our recent head and neck cancer presentation at ACR today I'll focus on CHF, one four as we believe <unk> could be an emerging target that may address unmet medical need for a variety of tumor types in combination agents and our compound <unk>.
Speaker Change: That's what I'm looking for.
Speaker Change: <unk> has the requisite pharmacology and clinical proof of mechanism needed for success.
Speaker Change: For background T regulatory cells or T Rex.
Speaker Change: <unk> further ability to suppress effector T cell function and the tumor microenvironment and our associated with PD one resistant.
Speaker Change: Genetic defects with complete knockout on all T Reg inhuman.
Speaker Change: The inflammation and autoimmunity.
Speaker Change: Effective drugs targeting T regs in cancer patients requires antibody based strategy that targets selective expression of a protein on T. Reg in tumors.
Speaker Change: Not in normal tissue.
Speaker Change: Secondly, selected target T Reg.
Speaker Change: Normal TD, eight and CD four T cells immune.
Speaker Change: Immune cells needed for anti tumor immunity.
Speaker Change: CBRE was identify from single cell sequencing experiments of T regs in tumors.
Speaker Change: And as a G protein coupled receptor that is up regulated preferentially on tumor resident T. Reg.
Speaker Change: And has limited expression in other tissues or on other cell, including CE and CD four T cells.
Speaker Change: While there are over 450 drugs targeting GPC ours and approximately one third of all FDA approved drug target that class of receptors.
Speaker Change: Only about five antibody drugs targeting TTC ours have been approved so far.
Speaker Change: Highlighting the challenges in generating and develop therapeutic antibodies for these receptors.
<unk> are seven transmembrane spanning receptors with a limited amount of protein on the outside of the cell, which makes them difficult targets to generate antibodies with selectivity.
Speaker Change: Said another way.
Speaker Change: And antibody drug candidate that Pat no off target binding or non CRE protein binding is a challenge.
Speaker Change: To date <unk>.
Speaker Change: <unk> four is the only known selective <unk> eight antibody.
Speaker Change: As we profile some of the competitor antibodies, we identified off target binding, including one that binds J chain.
Speaker Change: Off target binding has the potential to lead toxicity.
Speaker Change: Let me now discuss the dosing and clinical biomarker data for CHS, one landlord that has shown targeting CPRE results and selected depletion at CCR, a positive T Reg, but not deviate or CD four T cells.
Speaker Change: Furthermore, the safety profile has not shown auto immunity and has a manageable safety profile to date.
Speaker Change: Q critical aims for advancing the development of CHF, one four is addressing Fda's project optimists sufficient.
Speaker Change: To define a recommended phase two dose.
Speaker Change: And establishing that the drug candidate does what is it that can do that.
Speaker Change: T regs in the tumor.
Speaker Change: At the ACR meeting last month, we presented the results from our ongoing clinical trial, and our head and neck cancer expansion phase evaluating treatment with CHS moment for alone or in combination with tour of Allomap and.
Speaker Change: Two pharmacologically active doses.
Speaker Change: I will highlight the CHS, one for monotherapy dosing and biomarker aspect of the study and Dr. Diab will further elaborate on the clinical safety and efficacy data.
Speaker Change: Importantly, and paired tumor biopsies, we show that following treatment with DHS. One line for there is greater than 50% depletion of <unk> positive T. Reg.
Speaker Change: These data strongly support the CHF, one four doses as being pharmacologically relevant and targeted therapy leads to selected depletion of T regs in tumors.
Speaker Change: We are pleased to say that we recently had a type C meeting with FDA to review these data and gained alignment on the acceptability of the of credits and doses for addressing project Optimists and defining a recommended phase II dose.
Speaker Change: We are on track for defining the dose early in 2026.
Speaker Change: The second aspect of the biomarker studies that I want to call out as being a surprise and exciting.
Speaker Change: Is that the CHF one one for immediate T. Reg depletion was accompanied by a marked increase in tumor infiltrating CDA T cells.
Speaker Change: Did not expect T. Reg depletion to promote this level of CDA T cell recruitment in the tumor.
Speaker Change: Well I. This is important is that.
Speaker Change: It is evidence that key ranked depletion with CHS one loan for is a potentially promising combination for immunotherapies broadly.
Speaker Change: Internally, we are focus on combination like tour our Palomar.
Speaker Change: And addressing mechanism of PD, one resistance with the aim of bringing treatment to many of the 70% of cancer patients that are underserved by PD one inhibitors.
Speaker Change: Moreover, this impressive increase in tumor immune infiltrate supports combination with T cell engages.
Speaker Change: By specific antibodies Adcs radio ligand and cars to name a few.
Speaker Change: We own global rights for CHS, one month or in these exciting and compelling clinical data can support discussions with potential partners to evaluate and CHS one four with agents other than tour of Allomap, while we work to rapidly advance our sponsored clinical studies.
Speaker Change: Dr. <unk> will update you further on clinical data for Cat does the key tag and CHS one for Ross.
Speaker Change: Thank you Theresa.
Speaker Change: Let me focus on the significant progress we've seen with our internal pipeline of CHF, one one forecast as a key tool, which we're developing in combination and toured Palo map.
Speaker Change: We're very excited about the positive data with CHS, one one for our highly selective CCR right Pfizer lytic antibody.
Speaker Change: It's part of an emerging class of <unk> with significant potential to impact solid tumor therapies across a number of modalities.
Speaker Change: As <unk> explained it to turn cold tumors hot enabling immune response overcoming PD one resistant.
Speaker Change: We are exploring CHF, one four in head and neck squamous cell carcinoma, as well as gastric cancer, both tumor types with TCR right density and prevalence of high <unk>.
Speaker Change: Therefore, a strong supporting biological rationale exists for therapeutic impact.
Speaker Change: <unk> is now emerging that validates that rationale.
Speaker Change: Two weeks ago, we presented CHF, one four data from our head and neck squamous cell program, which was to our knowledge. The first U S focused trial data presented to date within the Ctr rate plus we.
Speaker Change: We reported data from 21 patients with advanced head and neck squamous cell carcinoma in late lines of therapy.
Speaker Change: 121 received CHS, one one for monotherapy and seven of the feed combination therapy of CHS 114, with Tori Panamax.
Speaker Change: We're very excited and encouraged to report that.
Speaker Change: Seven patients receiving combination therapy that was one confirmed partial response.
Speaker Change: Advanced very late and therapy fourth line patient with older for NGL squamous cell carcinoma had lung metastases and low Immunogenicity featured and had received prior therapy with multiple agents, including a prior PD one of Teekay and a taxane.
Speaker Change: Recently, this patient achieved a 40% reduction target lesions as well as response and non target lesion.
Speaker Change: The fact that we saw these responses impressive for several reasons first this was a very late line patients who hadn't you had substantial and multiple prior therapies was additionally, refractory to prior PD one treatment.
Speaker Change: This is important to note because the head and neck squamous cell patient population anytime after failure of a first line agent tends to have very limited additional treatment options in the second line setting and even more limited and even late Tonight.
Speaker Change: Additionally, the fact that we achieved a partial response in fourth line gist.
Speaker Change: The CHF one four Tory part of that combination may have reversed PD, one resistant in effect, turning a cold tumor hot.
Speaker Change: Deep and sustained partial response in this resistant population sets us up very well as we move into the earlier line setting and I'll focus moving forward and then the second line setting specifically in less refractory patients.
Speaker Change: Secondly.
Speaker Change: Clinical observation and scientifically consistent with the biomarker data that Teresa has outlined which showed impressive T. Reg depletion and median activation, suggesting that the clinical data followed the biology of the tumor. This is consistent with a robust and deliberate biologically driven approach we followed throughout our program.
Thank you both acceptable and manageable with overall treatment emergent aes being generally well balanced for monotherapy and combination which is a very important consideration in this late line population that tends to have a with performance status.
Speaker Change: And the CHF one four study in addition to the partial responses observed. We also reported stable disease in two subjects in the combination arm and four subjects in the monotherapy arm considering that fits within a heavily pretreated population that was refractory to prior therapies and in the target where one may not typically expect monitor.
Speaker Change: RFP activity. These positive results are highly encouraging.
Speaker Change: Ask in 2024 last year, we presented data from the dose escalation portion of this trial reporting a 47% stable disease rate in a heavily pretreated population.
Speaker Change: These most recent findings are consistent with those data reinforcing our biological and scientific rationale.
Now act to be accruing, an additional 40 head and neck squamous cell patients to an expansion cohort in this study in an earlier line of therapy that is second line patients using CHF 114 in combination with toward Palomar and we anticipate reporting results of data in the first half of next year.
Speaker Change: We've also opened a CHF one four study and a second tumor type second line gastric cancer, where again, a strong biological rationale and we're clear clinical proof of concept exists.
Speaker Change: This 40 patient study will explore the same two biologic reactive CHF one four dose levels in combination between Ocado Matt.
Speaker Change: With multinational study includes both U S and ex U S sites with an anticipation of results in 2026.
Speaker Change: As you've heard from Teresa T Reg depletion mechanism synergistic and complementary to the other modalities as well as across other tumor types accordingly, when appropriate and evaluating additional tumor types of modalities to explore with CHS one one for both on our own and with potential partners.
Speaker Change: Regarding kept those key tax affecting cost 527 antagonist, our focus remains on both non small cell lung cancer and about cellular carcinoma.
Speaker Change: Non small cell are focused in squamous cell carcinoma, specifically, where we have seen our signals to date and we anticipate reporting further news on this program over the coming months.
Speaker Change: For HCC, our multinational study in first line exploring the triplet combination of <unk> in combination with Tory Parliament and Bevacizumab get active.
Speaker Change: Currently accruing patients.
Speaker Change: As a reminder.
Speaker Change: This study builds upon the very exciting data presented at ESMO Gi in January which reported an overall response rate of 38% with a 17% CR rate with kind of <unk> in combination with the Tivo Importantly, this compares very favorably with current standard benchmark in the setting but no other agents have reported CR rates.
Speaker Change: Double digits in the phase III setting.
Speaker Change: The safety profile was consistent with the teeth of envelope.
Speaker Change: We are currently actively accruing patients inventory panamax triplet study exploring to biologically active dose.
Speaker Change: In combination Victorian Best Competitory Deb alone and a total of 72 subjects. The objective is to address project optimists and provide contribution of components as we advanced the development pathway to phase III.
Speaker Change: With that I'll hand over to Suzanne Smith, Thank you Ross.
Speaker Change: Over the course of Q1, the commercial team have been focused on two priorities.
Speaker Change: First concurrent with the <unk> divestiture, we remap territory updated customer assignments.
Speaker Change: First our talent pool for the highly clinical cell demanded by law enforcing.
Speaker Change: We are happy to report that our Salesforce restructure work is complete and all field staff were in place and a new assignment immediately following the divestiture.
Speaker Change: While the restructuring of a short term headwind our proven <unk> sales team is now laser focused on driving rapid growth and appropriate mtc patients.
Speaker Change: Second we drew HCP education on the new NCC and guidelines, which accurately reflects the strength of our data and placed locked towards the preferred position for recurrent and metastatic patients.
Speaker Change: There are still a significant number of patients receiving non preferred chemo only and off label I O treatment.
Speaker Change: Thus, we continue our efforts to educate physicians on the survival benefit of <unk> in combination with chemotherapy.
Speaker Change: While Q1 was a transitional quarter in the middle of a significant corporate transformation. We are excited to share that patient demand grew 15%.
Speaker Change: Revenue was flat at $7 3 million due to a seasonal inventory drawdown despite strong demand growth.
Speaker Change: Demand growth came from an increase in new patient starts and an increase in duration of treatment.
Speaker Change: New patient starts came from two sources first new accounts and oncologists, starting using block towards the for the first time in their mtc patients.
We're happy to see an increasing breadth of offers are used in both the academic and community setting.
Speaker Change: Over 400 accounts now have experience with the brand.
Speaker Change: The second source of new patient starts both depth Ah repeat use in accounts with prior loss experience.
Speaker Change: Feedback from physicians, who have tried look towards we have been very positive and in Q1, we saw a growing number of accounts using lock towards the on a subsequent patient.
Speaker Change: Duration of treatment also continued to increase.
Speaker Change: Earlier stage patients would be expected to stay on therapy longer and we see about two thirds of our business coming from relapsed locally advanced and first line metastatic setting.
Speaker Change: While it's too early to comment on the average duration of therapy growth in duration is progressing according to our expectations.
Speaker Change: As a singularly focused oncology commercial organization, we will further establish the off towards the standard of care for all eligible <unk> patients.
Speaker Change: Our commercial execution centers on three priorities.
Speaker Change: First enabling the sales force to leverage real time data to drive patient and HCP identification at the time of diagnosis.
Speaker Change: Second expanding the breadth and depth of adoption by educating oncologists on a strongly differentiated clinical profile and preferred MCC and guidelines.
Speaker Change: And finally engagement with key customers to encourage updating MPC pathways and order sets to reflect our label and preferred MCC and recommendations.
Speaker Change: In summary, we continue to expect that locked through the we will achieve a dominant share in the NPV market.
Speaker Change: We estimate to be valued at $150 million to $200 million.
Speaker Change: With that I'll now turn the call over to Brian Mcmichael, Our Chief Financial Officer, Brian.
Brian Mcmichael: Thank you Samir and good afternoon, everyone. Today I will discuss the successful closing of the identical divestiture, which occurred at the beginning of Q2 and the related discontinued operation operations presentation reflected in <unk> financial reporting I will then conclude with the first quarter 2025 results.
Brian Mcmichael: In accordance with the relevant accounting rules the results of the Biosimilar business, which comprises the deneke. Similarly in your summary have been collapsed into a single discounted operations line in the <unk> paid out.
Brian Mcmichael: Our balance sheet includes a similar treatment.
Brian Mcmichael: This presentation is retroactive so comparative periods, such as Q1 2024 have been recast.
The remainder of the P&L comprises continuing operations, including locked worthy the I O pipeline and transmission services transactions for divestitures.
Brian Mcmichael: The proceeds from the identical divestiture and the use of a portion of those proceeds will not be reflected in our financial reporting until we report our Q2 results.
Brian Mcmichael: As a reminder, we received $483 million upfront cash in April.
Brian Mcmichael: So in April we repurchased $170 million principal amount of our convertible notes and privately negotiated transactions we.
Brian Mcmichael: We expect to purchase the remaining $60 million of convertible notes by mid May provided that they are tendered by the holders of those notes.
Brian Mcmichael: Finally also in April we paid $48 million to buy to buy the remaining royalty on your deneke in conjunction with the close of the divestiture.
Brian Mcmichael: The net cash from these transactions is almost $200 million after deducting transaction fees and taxes and is in addition to the $82 million in cash go here has had on its balance sheet at March 31 2025.
Brian Mcmichael: The majority of the $60 million in accounts receivable and a $148 million and accrued rebates fees and reserves reflected on the March 31, 2025 balance sheet related to get Anika and were not transferred into the divestiture.
Brian Mcmichael: Most of these balances are expected to be settled in a frontloaded fashion over the remainder of the year.
Brian Mcmichael: Following the divestiture, we expect to achieve approximately $25 million in annualized savings from lower head count with more than half already being realized due to the transfer of approximately 40 employees that deal closed in April.
We anticipate realizing the full annualized savings benefit by year end.
Brian Mcmichael: We further expect additional savings in SG&A due to lower commercial and other costs.
Brian Mcmichael: Costs associated with the reimbursed.
Brian Mcmichael: Excluding cost associated with reimbursed the transaction services paid fully by acquirers are expected to be several million dollars through the end of this year net.
Brian Mcmichael: Net of non reimbursed transaction services service costs SG&A encourage solely for coherent programs and expenses for full year 2025 is projected to be between 90 and $100 million.
Brian Mcmichael: R&D expense will be a function of data.
Brian Mcmichael: Readouts.
Brian Mcmichael: Our portfolio prioritization process.
Brian Mcmichael: We will be able to provide more detail on this later in the year.
Brian Mcmichael: Turning to the results for the quarter.
Speaker Change: Compared to Q1 last year, starting with Cogs, because sameer already covered revenue.
Speaker Change: Cogs from continuing operations was $2 $7 million, an increase from $1 $4 million in Q1 last year due to increased <unk> sales.
Speaker Change: As a reminder, there is a royalty of the low 20% range on net sales of <unk>.
Speaker Change: We do not expect tariffs to have a significant impact on core aerospace margins.
Speaker Change: R&D from continuing operations was $24 4 million.
Speaker Change: A decrease of just over $4 million or 14% from Q1 last year.
Speaker Change: The change reflects savings from reduced co development with June sheet, partially offset by increased investments in <unk> internal programs CHS one floor in casto the keto.
SG&A from continuing operations was $26 million.
Speaker Change: A decrease of $14 2 million or <unk>, 35% from Q1 last year.
Speaker Change: $6 $8 million of the decrease was due to non reoccurring charges for the net write down of acquired out license in Q1 last year. The remainder of the decrease was primarily due to savings from lower head count.
Speaker Change: The net loss from discontinued operations for the quarter was $9 2 million as compared to net income of $179 million in Q1 last year.
Speaker Change: The primary driver for the difference was the $153 $6 million gain on sale of the severe similarly.
Speaker Change: <unk> franchise in March 2024, and.
Speaker Change: In addition, net revenues from discontinued operations were $32 1 million.
Speaker Change: In Q1, 2025, and 70 $474 8 million in Q1 2024, driven by divestitures in 2024 and wholesaler locations allowed following the Q4 2024 supply interruption there were not lifted until the end of February.
Denny: With that ill hand, the call back over to Denny.
Speaker Change: Okay.
Brian: Thank you Brian.
Speaker Change: Our strategic transformation now complete we are well positioned to execute on our mission to bring innovative therapies that extended survival in cancer patients while building a sustainable oncology franchise that delivers long term value for our shareholders.
We're happy to open the line for questions operator.
Speaker Change: Thank you as a reminder to ask a question. Please press star one one of your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Cooper never Condra with <unk> Securities. Your line is now open.
Speaker Change: Hey, guys. Thank you so much for taking my question and congratulations on all the progress, especially with CFS.
Speaker Change: For a presentation at ACR.
Speaker Change: Have a question a lot currently given the.
Speaker Change: Drugs preferred position with the androgen guidelines, what do you think needs to happen I know you've provided a lot of color. During your prepared remarks, but what do you think really need to happen to see a significant inflection point.
Speaker Change: No.
Speaker Change: As you are running more Tony you're trying to send ahead of substantial data next year do you think the awareness around Tory.
Speaker Change: Increasing amongst providers and then maybe a big picture question in the context of all the macro elements headwinds that the industry is facing.
Speaker Change: Changes at FDA.
Speaker Change: I would just love to hear your comments on the recent changes and if you're concerned about any of them. Thanks.
Speaker Change: Thank you Chris.
Speaker Change: Let me, let me start with the last 0.1st I would factor in law violated address the issue of the FDA changes.
Speaker Change: Sure Thanks for the.
Speaker Change: The question, obviously, we spend a lot of time.
Speaker Change: And Jeremy what changes are occurring and also trying to keep our fingers on the pulse.
Speaker Change: Aspect that I think.
Speaker Change: <unk> advantage is at.
Speaker Change: As the FDA has staff that's turning over.
Speaker Change: In some of the experience there.
Speaker Change: And so having a well thought through high quality packages with the strength of development really is an advantage and people with strong development expertise.
Speaker Change: And so I think that we own.
Speaker Change: Owing to that Michael.
Speaker Change: Half the packages we submit.
Speaker Change: Erin readable.
Speaker Change: How this is in line with the guidance.
Speaker Change: And exactly what we're doing and why our experience to date has not seen anything we had it at whatever surprise to get a type b meeting.
Speaker Change: If it gets written response or submarine and prior dosing discussion.
Speaker Change: And the other thing I'll say is.
Speaker Change: Colleen for your calendar, that's something that I think we've done repeatedly so getting Tory upgraded through COVID-19 travel restrictions to China.
Speaker Change: <unk>.
Speaker Change: Not your usual overlap, but we will find a way to get it done.
Speaker Change: Just to dovetail Chris's remarks deferred Sameer addresses your secondary question with that but we were there.
Speaker Change: We were the first ones out of the gate with Pegfilgrastim Biosimilar. They were handing out of complete response letters at the time, we were there with them.
Speaker Change: The FDA changed direction with respect to the flexibility of Chinese debt and I think this is a business really where you just have to adapt and do good science is treated.
Speaker Change: Feel very straightforwardly, FDA and we have a very strong track record of doing so now regarding your questions about torry.
Speaker Change: The inflection point for themselves and secondarily any issues and how the clinical trial program.
Speaker Change: Increased awareness.
Speaker Change: I'll, let <unk> address that summer. Thank you for the question.
Speaker Change: So let me make a couple a couple of points here so.
Speaker Change: What we're really excited about Q1, we saw 15% growth in end user demand of either real physician level of patient demand that we saw increasing in Q1.
Speaker Change: We also saw an increase in the breadth, we define that as a number of new accounts starting block towards the and we had about 75 new accounts starting in Q1 guided memory, we've operated in the past.
Speaker Change: We also had 25% of the <unk>.
Our users have.
Speaker Change: You have operating again for a subsequent views and what we're seeing when we ask physicians who have used walk towards even the path. We are very satisfied with the product and the next time, we have a new patient you'd restart them on the product. So those are all the.
Speaker Change: Great things that we saw in Q1 that being said I do want to kind of reemphasize. What we described on the last earnings call and also I alluded to today.
Speaker Change: The supply interruption, what real field force for Q4 lost a bit of momentum because the focus after changed on <unk>.
Speaker Change: <unk> Q4, and in Q1, we did have the restructure of the Salesforce the territories, where we mapped.
Speaker Change: And the reps that new customer relationships to build prevented impact the momentum a little bit, but despite that we did see a 15% growth in the demand right.
Speaker Change: We're gonna be transitional.
Temporary events in Q2 and onwards, Salesforce will be firing on all cylinders and we expect to see an acceleration in the growth.
Speaker Change: And one last point I'll make is as we've said in the past MPC. The rare cancer. So it will be a steady ramp up we expect to get our market leadership in terms of share.
Speaker Change: In the near future investment next year.
Speaker Change: But until our position as an NPV patient, which happens once or twice a year. They are not actually speaking about of course.
Speaker Change: So it is going to take a steady ramp up year for us to get there.
Chris: Thank you Chris.
Speaker Change: Thank you so much.
Speaker Change: Our next question comes from the line of Brian Cheng with Jpmorgan. Your line is now open.
Speaker Change: Got it thanks, Laura can you call us this.
Speaker Change: This afternoon.
Speaker Change: Can you clarify what you meant by patient demand.
Speaker Change: I just wanted to confirm if that 15% that you quoted.
Speaker Change: Referring to at a number of patients on commercial supply and I have a quick follow up thank you.
Speaker Change: Yeah, So we look at.
Speaker Change: Revenue in two.
Speaker Change: Two different things right, so wholesaler purchasing our product.
Speaker Change: We have that going into inventory and then the end users which is the actual clinic.
Speaker Change: Buying the product from the wholesaler investor demand and the demand is usually a direct indicator of.
Speaker Change: Actual patient growth.
Speaker Change: These days.
Speaker Change: Physicians are not stocking inventory on their shelves. So two things to remember right. The revenue reflected by our actual demand and inventory and the end user demand.
Speaker Change: Patient demand.
Brian: Thanks, Brian your follow up.
Speaker Change: And then one quick one just on the sales force.
Brian: Structure here.
Brian: Can you talk a little bit more about whether there will be still be impact in the second quarter as we model out the rest of the year, how should we think about just the projection if I look towards the.
Brian: For the remainder of the year and also into 2020. Thank you.
Brian: Yes. Thanks for that question. So we believe there's a favorable restructure impact was felt primarily in Q1, we did a lot of work during the restructuring phase of re training with Salesforce reestablishing relationships.
Brian: So we believe that Q2 is going to be a byproduct of growing the business the time for us to grow demand.
Brian: So we <unk>.
Brian: The Q2, and Q3 will be time for growth for the brand.
Brian: Just add Brian that on the <unk>.
Brian: August call. We report Q2 will probably got some interesting.
Speaker Change: Projections for you and how will land for the year and how the sort of announced sales timberland.
Speaker Change: Thank you. Thank you.
Speaker Change: Our next question comes from the line of Mike Metal Kovich with TD Cowen. Your line is now open.
Speaker Change: Thank you for the questions I have two one is a follow up on luck towards <unk> you noted that it could take some time to take share in MPC in part because a lot towards the stocks at all institutions should we take that to mean that PD ones like Keytruda and Opdivo are still being used off label to a high degree and MPC.
Speaker Change: And then my second question is about the CRE landscape curious you've noted that you guys have thoroughly surveyed the competitive landscape here and found that most competitor molecules are less selective but I'm curious if on the efficacy side are there any molecules that you think have served as stalking horses that helped us.
Speaker Change: <unk> out the mechanism and provide proof of concept for CRA targeting or have not really gotten far enough or are there too.
Speaker Change: It's too difficult to interpret the data because of the issue.
Speaker Change: Thank you.
Michael: Thanks for that Michael let's take the last one first.
Speaker Change: Yes.
Speaker Change: And so two things on the selectivity.
Speaker Change: In our screen.
Speaker Change: There was only one antibody identified that explicitly bouncy theory.
Speaker Change: That is very unusual to only have one.
Speaker Change: So lead identification screening.
Speaker Change: We screen some competitors and some have reported out their screening and no one else has demonstrated selectivity.
Speaker Change: To date.
Speaker Change: So that is where we act for people to please provide that evidence impact that rate that poster at ACR, where blended the competitor so Q off target binding.
Speaker Change: In terms so they all do behind PRA set the mechanism, it's still relevant it sits whether or not they're picking issues with pharmacokinetics or toxicity.
Speaker Change: And Lenovo medicine last year.
Speaker Change: We presented data with their <unk> antibody.
Speaker Change: One eight in combination with <unk>.
Speaker Change: In gastric cancer.
Speaker Change: To me this data.
Speaker Change: Very exciting product class, because and the overall second line and greater.
Speaker Change: Gastric cancer population progressed on PD, one they set at 36% response rate.
Speaker Change: In second line only looks at 11 patients.
Speaker Change: A small number.
Speaker Change: <unk> shared at 63% response rate and why scientifically I find that incredibly exciting.
Speaker Change: That there are a very high density and prevalence of <unk> positive T regs in gastric cancer.
Speaker Change: So there are many mechanisms that PD one resistant getting at 63% response rate suggests that T. Regs are prominent mechanism for PD, one resistance in gastric cancer.
Speaker Change: So we think that that really bodes well for these tumor types, which is a large number of solid tumors that have a high density and prevalence of <unk> positive T regs.
Speaker Change: So super excited to see and the safety category.
Speaker Change: Wang PR in the head and neck.
Speaker Change: Steady and now are waiting for that 40 patients that price described thank you Mike.
Speaker Change: Michael regarding your question, how we view the sort of old habit of countries are.
Speaker Change: PD, one use and we're going to address that regarding using the new <unk> guidelines.
Sameer: Sameer offer you a little more color.
Speaker Change: Sir.
Speaker Change: So again, the Keytruda chemo only use Israel, it real, especially in the community setting outlet for the academic setting and this is despite the NCC guidelines recommending.
Speaker Change: A chemo combination, including locked review of the preferred regimen and the reason this happened.
Speaker Change: Frankly, it's a matter of Abbott right. That's the reason that's happening.
Speaker Change: When we talk to physicians, it's very clear story. The story is simply the only brand only io with us or survival benefit that we've demonstrated in our phase III trial, and we're the only mtc and accrued preferred regimen for these patients. So at this point is really simple and when we talk to physicians and we are able to get the physicians onboard.
Speaker Change: Sure.
Speaker Change: What happens after we talk to physicians there is a time lag between that conversation with the physician and by the time a patient is available for that for that office. So just to reiterate this is going to be a steady ramp up because of a delay from the time that we have the conversation at the time that a patient becomes available.
Samir Greg: Thank you Samir.
Samir Greg: Thank you Mike.
Speaker Change: Our next question comes from the line of Culling Cousy with Baird. Your line is now open.
Culling Cousy: Great. Good afternoon, Thanks for taking my questions and congrats on all the progress can you talk a little more about the type B meeting you had with the FDA for Steve just one on four it sounds like youre lined on private documents with any other interesting feedback coming out of that meeting.
Culling Cousy: Thank you Colleen <unk>, yes, I mean, the focus of that.
Culling Cousy: Our branches to collaborate with the FDA and not just show up with data that really have a conversation about our approaches in how we do things so.
Culling Cousy: Got it.
Culling Cousy: D meetings in particular are very focused on opex.
Culling Cousy: And that was I mean project Optimus is something a lot of people have struggled with.
Culling Cousy: And so really walking them through the data we have and the data we plan to bring to them early next year and ensuring that this mi what theyre looking for words important room, and I think very exciting that they found it X outperformed.
Culling Cousy: A positive development.
Culling Cousy: I mean, it always depends on the data.
Culling Cousy: Just like that low Esa.
Culling Cousy: But they didn't say W. Five other things or change that.
Speaker Change: That's helpful. Thank you and then following the restructuring of the sales force can you speak to the level of interest in potentially adding another commercial stage asset to further leverage the existing infrastructure.
Culling Cousy: Thank you.
Culling Cousy: Talk about it.
Culling Cousy: Certainly.
We think that it's probably another 12 months or so before its samir and the team really get the doctors sort of trained and focused and I think routinely writing all the scripts with log towards it but we are keen to put something else in the bag at some point in the future too.
Culling Cousy: <unk> sales, that's one bogey that we focus on I think a lot as we as we go through various strategic options and so on but I think the sales force is about a year I would say maybe a little more.
Culling Cousy: Just getting the MPC market moving up the escalators.
Speaker Change: Got it thanks for taking my questions.
Speaker Change: Thank you Kelly.
Speaker Change: Our next question comes from the line of Douglas Tsao with H C. Wainwright. Your line is now open.
Speaker Change: Hi, good afternoon. Thanks for taking my questions just one as a follow up in terms of educating physicians I'm just curious is it.
Speaker Change: It's.
Speaker Change: Does it take convincing a physician in terms of the value of the PD, one or is it sort of demonstrating the value of block towards the meeting do they have some skepticism because of.
Speaker Change: Other PD ones not demonstrating efficacy.
Speaker Change: And so you need to convince them, there and and the differentiation of the asset. Thank you.
Speaker Change: Thank you well, let me get that one first.
Speaker Change: Dr. <unk> addressed that on one side the clinical data is irrefutable and the positioning on the FCC and guidelines reflects that Raj can you talk about.
Speaker Change: Physicians view.
Raj: View the data that we're presenting if you are a physician prescribing for your patient.
Speaker Change: Once you reduce yeah. Thanks for the question, Doug So a couple of points I'll make the festival up until now you know that's been no approved therapies.
Raj: No data actually in this tumor type.
Raj: This is a real area of unmet medical need so we've come along with the first real data positive data and.
Raj: As you know what look towards we have shown is the chemotherapy alone.
Raj: Sure.
Raj: <unk> profound survival benefit that is the gold standard right. So.
Raj: Whenever a doctor hears this data out there.
Raj: Very impressive the data it is impressive data and again its a 37% risk reduction now thats now accompanied by.
Raj: Premier listing on the <unk>. So there are no real.
Objections to the data whatsoever.
Raj: Just remember this is a rare disease rates when it takes some time for patients to really show up too for this but again when they hear the data there is no real objections.
Based on the strength of the data itself, but also the NCC and positioning as well.
Raj: And impressively also experienced so far when they've had a patient when they've used it we are generally hearing very positive experience.
Raj: And.
Raj: Taking that forward.
Raj: Yes, I just wanted to comment just one thing I would like us to remember just three months ago. The <unk> guidelines basically we're saying you can use either luxury both chemo use chemo or you could use the off label.
Speaker Change: To your other question Gregg that was three months ago, but now it's completely changed with only three months since the CCM unequivocally say that you should be using luxury plus chemo.
Speaker Change: Our real education, my personal guidelines have really taken off for the last three months and we do expect that it's going to pay off in the coming months and quarters.
Speaker Change: And just thank you follow up.
Speaker Change: Can I get a follow up.
Speaker Change: Sure.
Speaker Change: I think you referenced sort of positive experience of physician as being curious I'm just curious when they talk to you.
Speaker Change: Are they speaking I'm sort of curious what are they sticking to what they say that they are having good experiences are only are they seeing patients with extended survival partial responses I'm just curious.
Speaker Change: So to characterize.
Speaker Change: What doctors are saying, thank you very much.
Speaker Change: Yes, generally they are saying that one of the data.
Speaker Change: It's going to be variable from patient to patient depending on where the mathematic patients are recurrent locally advanced patients are generally what they are saying the data that we show them the clinical trial.
Speaker Change: We'll just see those experiences.
Speaker Change: Actual patients.
Speaker Change: Thanks, Doug.
Speaker Change: Thank you I would now like to turn the call back over to Denny Lanfear for closing remarks.
Speaker Change: Thank you operator, and thank you all for joining us today regarding our upcoming presentation schedule next week, we'll be attending the HC Wainwright biotech conference at NASDAQ in New York than May 27.
Speaker Change: Presenting at the Cowen <unk> annual virtual oncology innovation summit and.
Speaker Change: Later on in June we'll be at the Jefferies Global Healthcare Conference in New York, We'll see you all there. Thank you.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect bye.
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