CHRS - Earnings call transcript Q1 2020 | Coherus BioSciences, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Coherus BioSciences 2020 First Quarter Earnings Conference Call. My name is Lorie, and I will be your conference operator for the call today.

As a reminder, this conference call is being recorded.

I would now like to turn the call over to David Arrington, Coherus’ Investor Relations and Corporate Affairs. ahead. go Please

David Arrington

the and today, Lorie, first everyone. close found After financial Thank issued good a market on be can we This our BioSciences press of website. results. you, release afternoon, Coherus release quarter on

will for Fitzpatrick, Coherus’ Thomas CEO; Denny me Sales Officer; Legal and Viret, Joining Executive be Financial and Vice Access. Jean President, Chief Lanfear, call today’s Officer; Chief Dr. Chris Thompson, Market

making our formal of that remarks, I statements, to uncertainties like and you be Coherus’ COVID-XX business impact begin would we and operations. remind related will results we forward-looking on the risks including of Before to pandemic

financial and beyond uncertainties In SEC of in results addition, our release capital, could to A all and certain with cause of expectations ongoing risks use and assumptions, other from and and involve the commercialization can risks actual forward-looking control XXXX statements, description UDENYCA, product these be our documents. found product statements. projections press plans to these pipeline, our as that differ of regards our candidate earnings such plans, development disclosure are latest

you a in the also the and non-GAAP provided press that GAAP measures help included earnings note The reconciliations Coherus our release substitute be should GAAP used to should our Please business press not in reviewing performance risks. financial financial non-GAAP also are be in the understand of to release.

Denny. now to will call over I turn the

Dennis Lanfear

our everyone, And David. you, call. to welcome, earnings Thank QX

the rapidly and and for who so internal like adapted our they’re First, to to teams, to I’d doing during frontline like I’d new this pandemic, our all thank providers have environment. effectively acknowledge

and UDENYCA market reflects success a continued our executing maintained gross Our first margins. share, high plan. in and We performance demand on strong for increased we quarter

advance continue strategy. X year make progress and mission our good on to core our We

conclude SG&A R&D the of with financial will Company’s Today, I’ll then then pipeline, on the comments the performance. discuss CFO, a for to our quarter to XXXX, turn our the performance and first Viret, our guidance over will We’ll remaining call quarters include for I in year. and discuss few Jean which remainder

performance had a impact where Let’s modest review was note impact where immaterial. first quarter and COVID and

First, me market. overall of growth pegfilgrastim unit the comment let on

are digits, dynamics the COVID, previous growth quarters. consistent the unit is market in overall low While market notwithstanding fluid, single with

There system various pandemic. are are to temporarily due around signs the health that care treatments postponed being

you’d less much grow treatment vulnerable dangerous typically other As this expect, is a delay areas to and phenomena as fast therapeutic than to treatment is cancers cancer very patients.

quarter. the approximately a end XX% the to little we’ll Secondly, our about year up to related of XX% more this discuss uptick QX, of end at Onpro over a was market slight near from the COVID later. share in the There share detail in was

saw first we a with I Third, stocking sales of the price, to decrease and to would say, at unit significant end relative inventory QX respect QX.

more the relative a on segment the We basis to also sold units quarter. hospital XXXB during

demand that provided XXXX And from reset cancer anticipate assistance finally, modest continue patients return UDENYCA typical new discounts deductibles the well are realized Co-Pay and by grow the as a patients as and value end in benefit increase to to through the year. will calendar we in as as cancer providers of with increase as continue a for patients’ treatment. We

market to XXXX. end our these on in $XX market as the we our of continue opportunity. internally partner make turn progress billion by company’s good plan Now to X than have approved products. biosimilars long-term Overall, developed as assets and to represent Together, more let X the pipeline discuss on approximately me growth FDA our US the well

partner the BLA. in-license respect manufacturing continue the are as interacting Together, partner Bioeq on currently resubmission our Lucentis its on anticipate XXXX, with FDA quarter In a with from by We certain regulatory terms the will we and generate interactions. for required these supporting of biosimilar, of BLA as file of the the focused and with Bioeq, upon currently completion and resubmission. requested to fourth data in FDA Bioeq we to of and are opthamology work the our efforts to with manufacturing additional the FDA

expected Now company’s initiation program, to clinical with the respect ophthalmology progress our internally Eylea towards trial we pleased our are XXXX. in with developed biosimilar, CHS-XXXX, very III an Phase

supply objective, the ultimately To our R&D supply XXXX, The remainder exercises which of will the and cost trial commercial-scale and guidance necessary efforts initiated preliminary advanced biosimilarity support to provide Phase the efforts reflected we for that market. the manufacturing of we in III these are to later.

the Our Lucentis both the have will for anti-VEGF lays in Eylea subsequent Lucentis and Eylea market a market biosimilar biosimilar is formation having of market significant the billion biosimilar to role There a groundwork $X entry. ophthalmology and into enable portfolio the entry company value biosimilar. a

of patients expertise dynamics. and commercial well proven two complete therapeutic will believes serve Coherus better share constitute Our reimbursement to ophthalmology as in same assets providers. needs the product a translate into the ophthalmology its both offering oncology areas

relatively more the will units market are VEGF needed XX% ophthalmology to concentrated in than efficient be than the commercial accounts. little of We expect a XXX a address investment marketplace more as

market. and billion me an addressing immunology candidate developed Let $XX to biosimilar internally now CHS-XXXX, turn our product, HUMIRA,

the filing. We analytical to a support and gained with BLA on concurrence clinical have now FDA strategy

BLA, are we sections of We to of which reviewing second and the drafting key file half currently XXXX. project in

R&D will to the July guidance the rest we after market the large-scale United manufacturing SG&A strategy of associated on States Concurrently, for we to entry and the implement with or year. advancing are competitive product provide this XXXX. continue Costs in in X, enable our reflected

respect and to development. few to oncology business make Now go additional back me remarks a let with

a license with As candidate the agreement biosimilar Canada. in to Biologics Avastin we and completed know, its States QX, United you commercialize Innovent in to

currently Innovent file precursor BLA. are as engaged preparations to filing We the IND with to a an on

to Innovent’s and Avastin study compared the We biosimilar. initiate China the expect to using X-way from United Avastin PK innovator States

perform We analytical will biosimilarity also exercises. additional

outcome the timing and exercises of on interactions the of submit the with expect XXXX required We BLA these in FDA. depending the

Additionally, States. in to complete Rituxan the development we commercialize diligence oncology Innovent’s option the continue United the to and biosimilar

you updates that on at time. program for another have we However, this

company’s Now I’ll the Jean? Chief let financials. QX summarize Officer, Financial Viret, Jean the

Jean Viret

Thank you, Denny.

First, context, let With earnings now UDENYCA. it me will launched quarter year now review the we I of that been a and main full results commercialized cycle reporting has first XXXX. that preface for since the financial

of of $XX.X diluted income Net non-GAAP product XXXX $XXX.X per related quarter shares. net $X.XX diluted million first revenue for with million, non-GAAP of earnings was and

$XX.X debt loss share. diluted of first non-GAAP for revenue quarter a $X.XX net XXXX non-GAAP per with Net loss million, was and $XX.X million a of

quarter. year-over-year markedly of as disciplined revenue approximately increased XX% a each market Net product penetration and Our gross result profit margin remained our high at strategy. for pricing

million and preparations expenses for same product and $X the XXXX in payment quarter development related Innovent license of the agreement period the to million candidates. expenses the compared increased Research for to R&D as expenses and XXXX. pursuant was to million Increase the filing due other for $XX.X the first largely BLA of to upfront were in an biosimilar CHS-XXXX obligation of development $XX.X

XXXX same compared XXXX UDENYCA. over $XX.X Selling, the launched general expenses of and over as million first were with in we initially when $XX.X million administrative period the quarter

full range between We and upfront milestone excluding combined together any the or fiscal potential new million $XXX year million R&D for anticipate from that expenses XXXX, will collaborations. $XXX and SG&A

increase. the million cash with cash quarter fourth quarter is million row with operations. a $XXX.X and with positive from started ended We equivalents a and first flow in cash $XX.X $XXX.X million, our This in quarter our

current our cash of and net to payable, accounts used paid million represent $XX.X increase assets. of together sales We $X.X by generated down the million another $X in million from net UDENYCA our increase inventory which

I XXXX. remain operating would mention very us business. business Finally, to our our confident expect of that to our discipline strong and continue build grow continue of flow has in positioned the We cash and generate to in balance sheet to like and positive allocation the capital during durability to

back I like to to call Now turn Denny. the would

Dennis Lanfear

Jean. you, Thank

a let’s take to the growth look remainder share unit Now expect of Overall, XXXX. we XXXX. continued through ahead

appear of the not primary which to health result end system However, two reduction late the occurred. impacted pandemic, COVID of by the April March than lower in had pandemic as modestly and reacted to by crisis. in first, so far drivers the are: treatments the QX UDENYCA The utilization cancer quarter early be this may in care results

that to Northeast access ability Secondly, we be transient in use certain a Onpro patients’ reverse increase in to and will expect upon impacting of we we believe in saw hospitals Upper the what the Midwest. is COVID particularly parts normalization. market country, the

and strong resume we these as referrals momentum to However, expect normal. treated be to return UDENYCA’s patients return as will

As one impacted as the delays. such cardiology, the the in expect, be and appears would therapeutic health in oncology least treatment care areas to dermatology system, others, of all terms of

prudent deployment balance a company for overall with comments a respect me economic We let Now have a believe of is to of sheet strategic capital. make it to strong our time at uncertainty. few the

at $XXX completed in April, announced As million a of a X.X% notes we coupon. convertible financing

we capital terms and able above We believe so did well excellent we balance us price raise this additional sheet, with our negotiate, week flexibility The were the opportunistically. equity and is high, bolster provided investors. sense XX well protecting $XX.XX, dilution strike our that to to our to thereby makes to when is priced low

this States. the the we choice UDENYCA, our with given positioned oncology and as are of financing, track pipeline largely partner United acquisitions For successful well seen are record additional we for in

disciplined opportunistic, use However, as opportunistic and of well. was I and will and would point financing out capital that be our disciplined our

In further and XXXX. total $XX terms expand will of billion our about trajectory, billion in the will to $XX addressable market to about XXXX Coherus to growth future available in expand

will assets. grown deals considerably, as planning horizon, internally market our well X our to year expect Over thus ability that total developed particularly have as our addressable given we execute demonstrated

long-term are investors. areas in our growth new in replicate and deliver our UDENYCA to ability We therapeutic to our confident

And with that, questions. to take your we’re happy

Operator

have Cowen We Stacy from and question Instructions] [Operator Company. Ku from a

open. is line Your

Stacy Ku

Good afternoon. I for question. And my two. thanks have taking

with still of that of care in you with the idea QX gains office, kind are So are what XXXX? they that going to the maybe seeing in might relate is COVID-XX a it in making dynamics of into Kind amount and And competitors, given customer us an that are expectations first, what base the impact of how for product. of what’s are and importantly, critical coming patients your HX? the give on terms your

Dennis Lanfear

impacting will what would dynamics secondarily, And for particular what QX, are question understand Thank the that to the be, that thing? are what Thompson all, oversight of you I COVID that Chris? COVID-related? types impact competitive are question. have first Chris is things that. of I answer the of your

Chris Thompson

thanks, And Stacy, Denny. Thanks, for question. your

well, had we utilization and progressive treatment. have thresholds. the some of impact an same growth been Really, NCCN initiation and we’ll Recently, the time. at tailwinds increase have guidelines COVID ASCO on and the First, for expanded,

suspended. Additionally, has sequestration been

now So full reimbursement X% ASP Neulasta’s and of is the Medicare.

work as to way with health care an began we see Onpro in uptake UDENYCA, through as syringe in COVID its some there. the So did upside new Denny pre-fill decrease see patient expense But business as at well said. system, along has we the Neulasta of a as

That changes said, to be these in we are really believe nature. going that transient

area. treatment cancer As QX momentum has this pointed is the we We’ve Denny to dangerous, QX, the had out, and expect great delaying momentum continue. in as to from

Dennis Lanfear

that believe respect not do Yes. COVID-related just Thanks, say we other Chris. to with I the effect. there’s would any biosimilar competitors,

Stacy Ku

guess I just competitors negotiations in first to my doing there figure aiming And are you’re follow-through what potentially guess mid-year. what is I to since start of just sort If they to clarify seeing to question. in were HX, the are given there then QX? any one out. the

something that’s if understand now. are on to trying hospitals right that focused Just

Dennis Lanfear

as some the I in the I and dealing fair color. think particularly and Chris to in fair. very hot that with Northeast say Well, that COVID. concerned add hospital Upper answer additional the can particularly it’s - the Midwest, are such people segment think that, spots, is But about

and that’s So been front center.

I other disadvantage biosimilar a competitors. that’s actually competitive think for

in COVID, happens that we indicated or year would some as period expect QX QX, of side return growth whatever. in the We of to a on As back a whether resumption. during see time that

one? that the for this dynamic a -- any particular comment point Chris, see read-through at in really don’t particular that competitive I further time. on So

Chris Thompson

No, it’s fluid as else carefully fluid, it right watching Denny. environment QX, QX, obviously, very now, we’re On right? I agree, but it’s right And is, now. everyone a

Stacy Ku

That’s fair. question And then second on Lucentis.

contact issue of remind with it any have already in was Just finished you. already if the developed? if maybe the been you’ve Thank validation? And you then you running And and details us could bioeq. on wondering

Dennis Lanfear

Yes.

I partner. are call well very with Bioeq just We manufacturing a close morning this as matter fact. their in as of communication with a had as Bioeq

We on very have handle the the to that a FDA good requirements wants see.

campus additional and vessel another into enter it building some but They you to the see on firm want a same the same was to in running As data. relocating may that an recall, building. pursuant in same additional process

We developing data. that are the of in process

would take once it earlier months indicated develop to that four started. We data it that about

So that process has initiated.

to data and analyze drive timing will have would it include into We that the and it, then QX. BLA in that the file

one I appreciate - I would asking would Thank question, the callers please. just the you. other appreciate

Operator

Ulz Your Mike next question from from Baird. is

Your line is open.

Mike Ulz

Hey, potentially launch as like interested for of of terms additional maybe about in more of just thanks terms example, term? in indication, question. business can be something here. Thanks. preference taking just longer-term or it curious you’re on in share how is Is oncology profile that? And thoughts for you’re could that from Maybe And the and your the profile two look well? a or X I’m near current guys. for that the then products? thinking development activities maybe kind additional Or what does you timing, it

Dennis Lanfear

Mike. Sure,

before, focus oncology well assets, UDENYCA. very primary additional deals for which we are assets, would As our discussed dovetail with particularly

Avastin I Innovent We was with representative of think the that. would to other agreements. agreement such strike seek

of to us. products say, Our certainly that for show between less preferred those launch time is interested are post-XXXX That now products significantly XXXX. to and is up one

not rule a doing out we non-biosimilar asset. And

focused say at force that’s I given However, in on the is would this are where sharply time. that commercial that, very sharply point, this we oncology focused

making I directions. previously Lastly, we’re completing progress We’ve that a believe transactions. number additional of about talked good in

have can five XXXX, in the now. have see, launch We technically assets. asset as for right X additional We oncology prior one assets comprise to plan you to

Mike Ulz

Thank you. Great.

Operator

next Our Mohit is Bansal question Citigroup. from from

is open. line Your

Mohit Bansal

my Hey, guys. taking staying for is and Thank very hope everyone out there. you question also call, much I safe

about regarding one first drawdown wanted little talked Just deeper in to bit trends. a the XXXB you dwell inventory quarter well as on as trends the

this of it - is back impact move to as was inventory, inventory coming possible and a or drawdown do through quantify the which material on anticipate So we it you year?

be think the could dynamic it phenomena. rise, Thank well interesting. other is And in much companies as And forward? or expect you Do could which XXXB XXXX something on as rates as you. one-off it as the you XXXX a going unemployment side, well you pricing do pretty was impact

Dennis Lanfear

I give question, Actually, with see you I’ll do you understand Mohit. give you to -- let to transient So I’ll one inventory take you I’ll want impact then and give as answer. you the to And I’ll Jean, JV inquire the give respect I’ll one? We’ll that you two. the we - weather. question. XXXB whether that

Jean Viret

Yes.

started the ended So address of let year me first your end the question the to forward, quarter. over on high low at and then at observed. saw that we of QX and the we We what past else the fourth of year. inventory all what the of up range range inventory. going mid-range at the That’s end inventory build wholesalers expect end the happen. be And equal, The we’ve

I say -- would The in actually, maybe had the second context expansion. that And mix that XXXB expand talk about part question is GTN the of you shift. was and

of little expansion. GTN bit a So

approximately were with equal there major three However, magnitudes. components

we where And one shift towards in First, mix, sales we that transient. the I that the mix believe, segment XXXB sales saw a was is, segment, factor. -

think XXXB likes biosimilar the originator. by segment, I large, the and over

there Second, because we this rest of - year. was to contracts the QX drive increase Co-Pay, XXXX and in year. share discounting And for recur saw third, put expect remainder place increase to the phenomenon don’t of the is we we an not unit which as the growth for in in a an

Mohit Bansal

for helpful. answering Got it. question. you Thank Very my

Jean Viret

you give We’ll shot, Mohit. you. another Thank

Operator

question is Wainwright. Tsao from Douglas from Your next H.C.

open. is line Your

Douglas Tsao

afternoon. good Thanks taking for questions. Hi, the

so a of get share you’ve sort some pass-through How in you’re share April. you. status mix XQ. successful? been taken seen your will XXXB like beginning sounds in standpoint? you playing And pass-through defend what you that or you any where competitive obviously, have action either landscape up status one - And you seeing Denny, see your I the picked Thank it change out? competitors at there? from do curious, Have any of the Just to think of

Dennis Lanfear

that you question. a your take for at Thanks to shot one? want Chris,

Chris Thompson

Denny. Thanks, Sure.

mentioned not that barrier really received for present but did having And Pfizer not them, real a presents them, a that’s not they had status, we status Q-Code their yet. Q-Code. not only but but it for that you barrier follow pass-through receive have that in April, pass-through other true So a Sandoz having and all for to will believe competitors

Right with originator biosimilars can XX% that the pretty now, into opportunity entrants their is and go The that market. think see that you’ll I reservoir share a share market really after. at all insignificant, huge of represents future

on will another. market rather the the And where from from biosimilars innovator, the we come pressure the than entrants will that’s each against create increased of additional share believe and one

Dennis Lanfear

helpful, that Is Doug?

Douglas Tsao

just is. Yes, it when a the And Q-Code? to we Sandoz get expect - would

Dennis Lanfear

like July, X, maybe I around Chris? think that? July Something

Chris Thompson

But Yes. have with confirm to you’d them.

Douglas Tsao

much. Great. Thank so you

So that’s very helpful.

Chris Thompson

Thank you.

Operator

from Your Schott next Chris JPMorgan. question is from

line Your open. is

Chris Schott

Thanks very much.

Just in maybe parter two XQ. UDENYCA a on

I think a are you on XQ. UDENYCA how a terms there just through in you’re quantify of transient question earlier seeing uptick move a picture share you share thinking in maybe So of we use. what bigger you Can Onpro in much mentioned as gain And about? basically, just April?

at against continues? still in so think your some reasonable I growth year about patient when for we as kind gains Thanks sequential actually Is rebounding of see down we it and then to temporarily consider of this this share guess ongoing UDENYCA access. point, the balanced reduced quarter? sequentially could much. Or UDENYCA the

Dennis Lanfear

last one. take me the Let

is which I the of There Chris, impacted. take in tough maintained not be no, not which are be first some pretty part. not say. impact areas That’s So and have would and growth into will particular question right? areas business, face we of COVID in no Thompson There’s QX. will the Chris the Northeast then unit are that last COVID, are those areas. and take QX, a there there first, me the It modest. one Upper the Let let of particularly in would But Midwest impacted, I’ll

planning back COVID important However, that are side, very And the active programs, clinic cancer treatment in business. I I getting very out think crisis it’s they’re on particularly people active for hospitals exit of resuming think the have mind terms in to that keep also example, their of for in to care. and

there’s is significantly So through the wafting we QX very no forth through. But front. we work that And on of then COVID to to QX, quarter going on would say. that referrals fluid additional happens are think it, as be Chris, question you whatever with and go a so back have to side call it to tough do tend through comment? very, the I very going And

Chris Thompson

Yes. Thanks, Denny.

has really COVID some Onpro. limited said seen Northeast, fluid and the in to it’s where though, now, that’s I it ground It’s the spots really we But game, hard to really is Midwest. and As right to tell. migration in to been the Onpro. Upper give the -- did minimal some prevalent, earlier, COVID have States it’s United we cities early hot in to the But big

but really in in we and that did supply. the and than with up hospitals big made America to now United UDENYCA pre-filled ever, deal indicated the more that some so purchase ample first, be drug the gave made a reliable That’s Neulasta supplies desire And States. clinics are now. is this uninterrupted right share, transient, have we will syringe. And believe really

and time to hospitals EMRs clinics people, now, cetera, and don’t the pathways, their resources from their constrained. systems standpoint et they like have drugs. over And and of Secondly, new are a to switch and right

don’t to sort to we’ll is people inclined but a if it’s makes If of it enough to, we have it do really these catch So have to. switch, make switches it. There we ‘XX. not we’re --

that be offer will quickly. along full-service lose And thirdly, say this that transient, see it COVID, in with and really whatever superior I may I’d pretty UDENYCA ground we back value coming it

Chris Schott

Great. Thank you.

Dennis Lanfear

Thank you, Chris.

Operator

is question next Prasad Barclays. from Balaji from Your

is now Your line open.

Unidentified Analyst

questions. Balaji. is question on for for is My taking our This on biosimilar hi. Thanks Lucentis. Yeah, Stephen

Lucentis how the Just on the Lucentis to commercialize to your in And thoughts this biosimilar XXXX Thank US all the to if the and changes at view partnered own be biosimilars by with Stada then announced your still partnership of market? recently is for the on your Bausch year? final is your it launch you. interested in this BLA expectation if Bioeq, with the get biosimilar

Dennis Lanfear

Thanks for question. your

asset, I partner. we’ve say First they of would tracking we and a all, knew be that seeking Stada been would that US

well this would say I believe particular also we this do Part given very therapeutic positioned, expertise in we’re our - to therapeutic area. B in However, demonstrated well very

particular expect, time, this at respect ahead With BLA us market, our the progress the And we the that near year. and we the window will with timing. have go comment market to formation. be end launch some at biosimilar, to enable and will company’s And there ophthalmology Bioeq of get additional on filed we’ll the

the point an market. up for everything to But of or particular, So our see we’ve the entry and of go, where Stada that aspirations overall, FDA, boxed the in got ophthalmology update, calculus ready you we’ve the to don’t we’ll timing. for got we give launch the changing

Operator

[Operator questions Instructions] Presenters, there continue. no at you And are time. this further may

David Arrington

everyone, for you, good our earnings attending Thank day. call,

Dennis Lanfear

Thank hopefully, you and be the providing Bye-bye. we’ll backside time. QX. COVID on be we’ll And much, very of around additional on that you updates Yes.

Operator

for conference Ladies Thank and call. today’s gentlemen, this participating. you concludes

now may You disconnect.

Coherus BioSciences (CHRS) 9 May 202020 Q1 Earnings call transcript