On February 27, 2020 Coherus BioSciences, Inc. ("Coherus" or the "Company", Nasdaq: CHRS), reported corporate events and reported financial results for the quarter and full year ended December 31, 2019 (Press release, Coherus Biosciences, FEB 27, 2020, View Source [SID1234554901]).
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Fourth Quarter 2019 and Recent Corporate Highlights
Coherus’ commercial capabilities advanced its core mission to expand choice, improve patient access and lower healthcare costs in the United States:
UDENYCA (pegfilgrastim-cbqv) launch continues to deliver strong results using its validated branded-biosimilar approach across all market segments:
• UDENYCA continues to be the U.S. market-leading pegfilgrastim biosimilar and achieved approximately 20.5% unit market share, as measured by IQVIA, at year-end 2019.
• UDENYCA was the top pharmaceutical launch in 2019 based on IQVIA sales figures.
Strong financial position to support pipeline and potential long-term growth:
• Cash flow was positive after just two quarters post-launch in 2019.
• Cash flow from operating activities was $28.4 million for the full year and $17.7 million for the fourth quarter of 2019.
• Coherus had cash and cash equivalents of $177.7 million at December 31, 2019.
• Net product revenue for the fourth quarter of 2019 was $123.9 million, and net income was $39.2 million, or $0.53 per share on a fully diluted basis.
• Net product revenue for the full-year 2019 was $356.1 million. Net income attributable to Coherus for the same period was $89.8 million, or $1.23 per share on a fully diluted basis.
Coherus completed key licensing transactions to enhance its midterm product pipeline in the United States:
• Acquired exclusive rights from Bioeq AG ("Bioeq"), a Swiss biopharmaceutical joint venture, to commercialize Bioeq’s Lucentis (ranibizumab) biosimilar candidate in the United States.
• Entered into a license agreement with Innovent Biologics, (Suzhou) Co., Ltd., ("Innovent"), a leading biopharmaceutical company headquartered in China, to commercialize Innovent’s biosimilar candidate to Avastin (bevacizumab) in the United States and Canada.
• Under the terms of the agreement with Innovent, Coherus also acquired an option to commercialize Innovent’s biosimilar to Rituxan (rituximab) in the United States and Canada.
The Company advanced its internal pipeline in ophthalmology and immunology:
• Further advanced internally developed ophthalmology product candidate, CHS-2020, a biosimilar candidate to Eylea (aflibercept), which is in the preclinical stage.
• Completed certain development and regulatory objectives for its internally developed immunology product, CHS-1420, a biosimilar candidate to Humira (adalimumab), to support a potential BLA filing with the U.S. FDA in 2020.
Fourth Quarter and Full Year 2019 Financial Results
Net product revenue for fourth quarter of 2019 was $123.9 million. Cost of goods sold for the same quarter was $7.8 million, resulting in a gross profit margin of 94%.
Research and development (R&D) expenses for the fourth quarter of 2019 were $34.9 million, as compared to $26.7 million for the same period in 2018. The increase in R&D expenses for the quarter year-over-year was mainly due to the $11.1 million in upfront and milestone payments to Bioeq for the development of Bioeq’s Lucentis biosimilar in the fourth quarter of 2019. R&D expenses for the fiscal year 2019 were $94.2 million, as compared to $110.2 million for the same period in 2018. The decrease in R&D expenses for the full year-over-year was due primarily to the capitalization of UDENYCA manufacturing costs that had a $33.9 million impact since the approval of UDENYCA on November 2, 2018. This decrease was offset by an increase of $15.6 million, which was primarily related to the upfront and milestone payments to Bioeq for $11.1 million and the development of other biosimilar product candidates.
Selling, general and administrative (SG&A) expenses for the fourth quarter of 2019 were $36.1 million, as compared to $33.8 million for the same period in 2018. SG&A expenses for the full year 2019 were $137.0 million, as compared to $94.2 million for the same period in 2018. The increases in SG&A expenses for the quarter year-over-year and the full year-over-year were mainly attributable to an increase in sales force personnel and related commercial functions in connection with the commercialization of UDENYCA.
Cash and cash equivalents: As of December 31, 2019, Coherus had $177.7 million of cash and cash equivalents compared to $72.4 million as of December 31, 2018. During 2019, Coherus generated $28.4 million in operating cash flow, used $12.7 million in investing activities, including $11.1 million in upfront and milestone payments to Bioeq, and received net cash proceeds of $73.0 million, included in cash flow from financing activities, related to the issuance of debt to HealthCare Royalty Partners in January 2019.
Assets and working capital: As of December 31, 2019, Coherus had $408.9 million in total assets compared to $99.5 million as of December 31, 2018. Working capital increased from $51.2 million at the beginning of 2019 to $228.0 million at the end of 2019. The quadrupling in working capital was mainly due to increases in UDENYCA trade receivables of $142.0 million.
Net income attributable to the Company for the fourth quarter of 2019 was $39.2 million, or $0.53 per share on a fully diluted basis, compared to a net loss of ($62.6) million, or ($0.92) per share on a basic and fully diluted basis for the same period in 2018. Net income attributable to Coherus for the fiscal year 2019 was $89.8 million, or $1.23 per share on a fully diluted basis, compared to a net loss of ($209.3) million, or ($3.22) per share on a basic and fully diluted basis for 2018.
Guidance for the Next Twelve Months from December 31, 2019
Coherus will continue delivering on the promise of biosimilars and laying the foundation for long-term growth across its three therapeutic areas:
Oncology
UDENYCA (pegfilgrastim-cbqv)
• Maintain market position as the leading pegfilgrastim biosimilar of choice, leveraging the validated branded-biosimilar strategy of offering a robust value proposition across all key customer segments including ample product supply.
• Increase penetration against all Neulasta dosage forms, while maintaining average selling price (ASP) discipline.
Advance its Avastin (bevacizumab) oncology biosimilar candidate in-licensed from Innovent toward the filing of a BLA with the U.S. FDA in late 2020 or early 2021 depending on FDA interaction timing and development requirements, with an expected launch directly upon approval.
Diligence the option to commercialize Innovent’s Rituxan (rituximab) oncology biosimilar in the U.S.
Ophthalmology
Facilitate Bioeq filing a BLA with the FDA for the biosimilar candidate to Lucentis (ranibizumab) in 2020, with expected product launch in the United States to address a $6 billion anti-VEGF ophthalmology market, if approved.
Advance internally developed CHS-2020 Eylea (aflibercept) ophthalmology biosimilar currently in preclinical stage to an expected Phase 3 clinical trial initiation in 2021, with launch projected in 2025, if approved.
Immunology
Complete certain development and regulatory objectives with CHS-1420, Humira (adalimumab) immunology biosimilar candidate to support the filing of a BLA with the U.S. FDA in 2020 with an expected competitive launch in 2023 in the largest biologics market, if approved.
CHS-131
The Company has decided to pursue strategic alternatives for its program in CHS-131, a small molecule for nonalcoholic steatohepatitis (NASH) and multiple sclerosis.
Conference Call Information
When: Thursday, February 27, 2020 starting at 4:30 p.m. ET
Dial-in: (844) 452-6826 (toll free) or (765) 507-2587 (International)
Conference ID: 9658203
Webcast: View Source
Please join the conference call at least 10 minutes early to register. The webcast will be archived on the Coherus website.
Fourth quarter and full year 2019 financial results, are posted on the Coherus website at View Source.