Business Overview and History: Coherus was founded in 2010 and is headquartered in Redwood City, California. The company has established itself as a leading player in the biosimilar industry, with its first approved product, UDENYCA, a biosimilar to Neulasta (pegfilgrastim), receiving FDA approval in November 2018. This milestone marked Coherus' transition from a development-stage to a commercial-stage biopharmaceutical company. UDENYCA was launched in the United States in January 2019 and has since become a significant revenue driver for the company, with net sales of $93.58 million in the first half of 2024, a 60% increase compared to the same period in 2023.
In addition to UDENYCA, Coherus has successfully launched two other biosimilar products: YUSIMRY, a biosimilar to Humira (adalimumab), which received FDA approval in December 2021 and was launched in July 2023, and CIMERLI, a biosimilar to Lucentis (ranibizumab), which was approved by the FDA in August 2022 and launched in October 2022. However, the company divested its CIMERLI and YUSIMRY franchises in the first and second quarters of 2024, respectively, to focus on its core oncology pipeline and UDENYCA.
Coherus' oncology pipeline is anchored by its novel PD-1 inhibitor, LOQTORZI, which was approved by the FDA in October 2023 for the treatment of nasopharyngeal carcinoma (NPC). LOQTORZI's launch in January 2024 has been a significant event for the company, contributing $5.78 million in net revenue in the first half of 2024. The company is also advancing its earlier-stage oncology candidates, including casdozokitug (CHS-388.00) and CHS-114.00, which are in clinical development for various solid tumor indications.
Throughout its history, Coherus has faced and overcome various challenges. In 2017, the company was involved in a patent infringement lawsuit with Amgen regarding the 707 patent. Coherus prevailed in this lawsuit, with the U.S. Court of Appeals for the Federal Circuit affirming the lower court's decision to dismiss Amgen's complaint. This legal battle demonstrated the company's ability to defend its intellectual property rights.
Additionally, like many other companies, Coherus faced operational challenges during the COVID-19 pandemic, which disrupted its operations and supply chain. The company had to adapt its business practices to ensure the continuity of its product supply and clinical trials. Despite these challenges, Coherus was able to maintain its commercial operations and advance its product pipeline during this period.
The company has continued to innovate and expand its product offerings. On March 3, 2023, the FDA approved the prior approval supplement (PAS) for an autoinjector (AI) presentation of UDENYCA, which became available for commercial sale on May 22, 2023. Furthermore, on December 26, 2023, the FDA approved the PAS for their third pegfilgrastim presentation, the UDENYCA on-body injector (ONBODY), which became commercially available in the first quarter of 2024. These new presentations have helped to strengthen UDENYCA's market position and contribute to its revenue growth.
Financial Performance: Coherus' financial performance in recent years has been challenging, with the company reporting net losses in 2021, 2022, and 2023. In 2023, the company reported a net loss of $237.9 million, compared to net losses of $291.8 million and $287.1 million in 2022 and 2021, respectively. This ongoing profitability challenge has been primarily driven by the company's significant investments in its oncology pipeline and the competitive pressures in the biosimilar market.
However, the company's performance in the first half of 2024 has shown some promising signs. While the company reported a net loss of $12.99 million in the second quarter of 2024, this represented a significant improvement compared to the net loss of $42.99 million in the same period of 2023. The company's total revenue for the first half of 2024 was $142.04 million, a 56% increase compared to the same period in 2023, driven by the strong performance of UDENYCA and the launch of LOQTORZI.
In the most recent quarter (Q2 2024), Coherus reported total revenue of $64.98 million, with UDENYCA contributing $50.9 million. The increase in revenue compared to Q2 2023 was primarily due to a $19.2 million increase in UDENYCA net revenue, driven by additional presentations launched and overall higher demand, partially offset by a decline in UDENYCA's average net selling price per unit. The launches of YUSIMRY and LOQTORZI each contributed $3.8 million to net revenue during the quarter. Additionally, the sale of rights to commercialize toripalimab within Canada on June 27, 2024, contributed $6.3 million to revenue.
The company's operating cash flow (OCF) and free cash flow (FCF) for Q2 2024 were both $59.73 million, indicating strong cash generation during the quarter.
Liquidity: Coherus' cash and cash equivalents stood at $159.2 million as of June 30, 2024, compared to $117.7 million at the end of 2023. The company's financial position has been bolstered by the divestiture of its CIMERLI and YUSIMRY franchises, which generated $187.8 million and $40.0 million in cash proceeds, respectively. These transactions have provided Coherus with the necessary resources to focus on the development and commercialization of its oncology pipeline.
The company's total debt to total capitalization ratio was 1.40 as of June 30, 2024, indicating a significant level of leverage. To enhance its liquidity position, Coherus entered into a senior secured term loan facility of up to $38.7 million on May 8, 2024 (the "2029 Term Loan").
Coherus' current ratio of 1.21 and quick ratio of 1.07 as of June 30, 2024, suggest that the company has adequate liquidity to meet its short-term obligations. However, the company will need to carefully manage its cash position and debt levels as it continues to invest in its oncology pipeline and commercial operations.
Risks and Challenges: Coherus faces several risks and challenges that could impact its future performance. The biosimilar market remains highly competitive, with the company facing ongoing pricing pressure and potential patent challenges from originators. The successful development and commercialization of its oncology pipeline is also critical for the company's long-term success, as the competitive landscape in the immuno-oncology space continues to evolve rapidly.
Additionally, Coherus is heavily reliant on the success of UDENYCA and LOQTORZI, which together accounted for over 90% of the company's total revenue in the first half of 2024. Any setbacks or delays in the commercialization of these products could have a significant impact on the company's financial performance.
Outlook and Guidance: In its most recent guidance, Coherus expects total revenue for the full-year 2024 to be higher than 2023, driven by the continued growth of UDENYCA and the contribution from LOQTORZI. The company is also focused on advancing its oncology pipeline, with plans to initiate a first-in-human clinical study for its CHS-1000 antibody candidate in the coming months.
However, the company has not provided specific financial guidance for 2024 due to the ongoing challenges and uncertainties in the market. Coherus has also faced several short reports and negative market sentiment, which have contributed to the volatility in its stock price.
Conclusion: Coherus BioSciences is navigating a dynamic market, with both opportunities and challenges in its biosimilar and oncology businesses. The successful launch of LOQTORZI and the continued growth of UDENYCA have provided a foundation for the company's future, but the company must continue to execute on its pipeline and manage the competitive pressures in the biosimilar space. While the company's financial performance has been challenging in recent years, the divestiture of its CIMERLI and YUSIMRY franchises and the strengthening of its balance sheet have positioned Coherus for a more focused and potentially successful future. Investors will closely watch the company's ability to deliver on its oncology pipeline and maintain its momentum in the biosimilar market.
The company's experienced oncology market access, sales, key account management, and medical affairs team in the United States has been instrumental in supporting the successful commercialization of UDENYCA and the launch of LOQTORZI. As Coherus continues to focus on its core oncology portfolio, this expertise will be crucial in driving the adoption of its products and maximizing their commercial potential.
Looking ahead, Coherus' success will depend on its ability to navigate the competitive landscape, effectively manage its financial resources, and capitalize on the growth opportunities presented by its oncology pipeline. The company's strategic shift towards oncology, coupled with its strong commercial capabilities, positions it well to address the evolving needs of cancer patients and potentially deliver long-term value to shareholders.