On May 7, 2020 Coherus BioSciences, Inc. ("Coherus" or the "Company", Nasdaq: CHRS), reported financial results for the quarter ended March 31, 2020 (Press release, Coherus Biosciences, MAY 7, 2020, View Source [SID1234557263]).

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First Quarter 2020 and Recent Corporate Highlights

Strong financial position and performance to support pipeline development and long-term growth:

Coherus had cash and cash equivalents of $193.3 million as of March 31, 2020.

Completed a convertible notes financing for an aggregate principal amount of $230 million at a 1.500% coupon in April 2020. The net proceeds from this financing will be used for opportunistic pipeline acquisitions or licenses, working capital, and for other general corporate purposes, which may include debt repayment in the future.

Cash flow from operating activities was $13.5 million for the first quarter of 2020.

Net product revenue for the first quarter of 2020 was $116.2 million, and net income was $35.6 million, or $0.48 per share on a diluted basis.

Non-GAAP income during the first quarter of 2020 was $49.8 million, or $0.67 on a diluted basis.

Coherus has remained cash flow positive since the second quarter of 2019.

Coherus completed a key licensing transaction in oncology to enhance its midterm product pipeline 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.

First Quarter 2020 Financial Results

Net product revenue for first quarter of 2020 was $116.2 million. Cost of goods sold for the same quarter was $6.9 million, resulting in a gross profit margin of 94%, a 213% increase compared to the net product revenue of $37.1 million for the same period in 2019. Net product revenue increased year-over-year markedly as a result of market penetration.

Research and development (R&D) expenses for the first quarter 2020 were $33.1 million, as compared to $18.8 million for the same period in 2019. The increase in R&D expenses was largely due to an upfront payment obligation of $5.0 million pursuant to the Innovent license agreement and increased expenses related to

preparations for the filing of the 351(k) BLA for CHS-1420 (Humira (adalimumab) biosimilar) and the development of other biosimilar product candidates.

Selling, general and administrative (SG&A) expenses for the first quarter of 2020 were $35.4 million, as compared to $32.7 million for the same period in 2019. The increases in SG&A expenses were mainly attributable to an increase in salesforce personnel, related commercial functions and marketing programs to support the continued growth in UDENYCA sales. The increases were partially offset by a decrease in legal costs attributable to the legal settlement that the Company entered into with Amgen in May 2019.

Cash, cash equivalents were $193.3 million as of March 31, 2020, as compared to $177.7 million as of December 31, 2019.

Net income (loss) for the first quarter of 2020 was $35.6 million, or $0.48 per share on a diluted basis, compared to a net loss of ($20.0) million, or ($0.29) per share on a basic and diluted basis for the same period in 2019.

Non-GAAP net income (loss) for the first quarter of 2020 was $49.8 million, or $0.67 per share on a diluted basis, compared to a non-GAAP net loss of ($10.5) million, or ($0.15) per share on a basic and diluted basis for the same period in 2019. See "Non-GAAP Financial Measures" below for a discussion on how we calculate non-GAAP net income (loss) and a reconciliation to the most directly comparable GAAP measure.

Guidance for the Next Nine Months from March 31, 2020

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.

Increase penetration against all Neulasta dosage forms, while maintaining average selling price ("ASP") discipline.

Advance the Company’s Avastin (bevacizumab) oncology biosimilar candidate in-licensed from Innovent by initiating a planned three-way pharmacokinetic ("PK") study using innovator Avastin drug articles from the United States and China compared to Innovent’s biosimilar to bevacizumab, and additional analytical similarity exercises. The Company expects to submit a 351(k) BLA with the FDA in 2021, depending on the outcome of these exercises and the timing of required interactions with the FDA.

Diligence the option to commercialize Innovent’s Rituxan (rituximab) oncology biosimilar in the United States.

Ophthalmology

Facilitate Bioeq’s resubmission of a 351(k) BLA with the U.S. FDA for the biosimilar candidate to Lucentis (ranibizumab) in the second half of 2020, with expected product launch in the United States to address a $6 billion anti-VEGF ophthalmology market, if approved, enabling the Company to potentially play a key role in market formation.

Advance the Company’s internally developed CHS-2020 Eylea (aflibercept) ophthalmology biosimilar currently in preclinical development to an expected Phase 3 clinical trial initiation in 2021, with launch projected in 2025, if approved.

Immunology

Advance certain manufacturing, regulatory and development activities for the Company’s internally developed CHS-1420 immunology biosimilar to Humira (adalimumab) with an anticipated filing of a 351(k) BLA in the second half of 2020. The Company expects this timing will enable a projected competitive market entry in the United States on or after July 1, 2023, if approved.

CHS-131

Advance previously announced strategic alternatives for the Company’s program in CHS-131, a small molecule for nonalcoholic steatohepatitis ("NASH") and multiple sclerosis.

Financial Guidance

Anticipate that R&D and SG&A expenses combined together will range between $285 million and $310 million for the full fiscal year 2020, excluding upfront and milestone payments from entering into potential new collaborations.

Conference Call Information

When: Thursday, May 7, 2020 starting at 4:30 p.m. ET

Dial-in: (844) 452-6826 (Toll Free) or (765) 507-2587 (International)

Conference ID: 6167564

Webcast: View Source

Please join the conference call at least 10 minutes early to register. The webcast will be archived on the Coherus website.

First quarter 2020 financial results, are posted on the Coherus website at View Source.