Coherus Oncology, Inc. (CHRS) Earnings Call Transcript & Summary

Good afternoon, everyone. So continuing the afternoon session for the day, we have with us the management from Coherus. And we have Dennis Lanfear, CEO; and Rosh Dias, CMO; and of course, Paul Reider Chief Commercial Officer. Dennis, Paul and Rosh, thanks so much for taking your time to join us today.

Thank you. Thank you very much, and thank you once again for your invitation. It's nice to be here in Miami.

Of course, absolutely. [indiscernible] meetings. So since you reported a couple of weeks ago, why don't we up with recapping some of the key highlights from the earnings call and [ risk focus before we go to Q&A ].

Sure. I'd be happy to do that. That's in 2022, we made substantial progress on our overarching strategy with respect to the development of our other, our IO portfolio with sales of our biosimilars. I think particularly, we've made very good progress with the delta franchise. As you know, we have a new auto-injector, which Paul can tell you about, which we think is going to be a very important additional presentation to sort of unmet needs in the oncology arena. We're off to a strong start with the similarly biosimilar for Lucentis. -- things are perking along also. We're very pleased that the toripalimab inspection now is being scheduled, and we anticipate in that completed eventual approval here midyear. So overall, I think things a on all cylinders. 2023, I think, is going to be a transition year for us. We have ahead of us the launch of the auto-injector something in Deals, of course, to Palmer plus HUMIRA. So we're going to be pulsing going to be quite busy. Lastly, I would just note, while focusing on continuing to add additional products to diversify the top line and strengthen revenues. We've also focused a lot on cost control and expense control. We got about 60 staff members about 2 weeks ago, just before the call. And we've recognized about $100 million in expense savings over our plan from a previous year for 2023, moving our guidance down to $325 million, plus or minus about $10 million. So I think good progress all around for the company. We're happy to take your questions with respect to the product launches pipeline portfolio...

Great. Absolutely. And as we sit through, I think one of the things which market has been trying very hard to figure out is clearly toripalimab and we figure out in that where you kind of position your source of that? And as you called out, Danny, now that [indiscernible] has been lowered, travels getting back to normalcy. So I mean wasn't any incremental update on things on the regulatory side of oral and you said you call or that you look for richer...

Yes. So I'll be first to the [indiscernible] situation has been frustrating with Covid all which really impaired FDA's ability to get over to China to the inspection. That facility has not been expected. It doesn't have any U.S. crude products. So absolutely as required. But the good news is, is that COVID has now worked its way through China. China has opened up after the first of the year. And the FDA has been very receptive to our efforts to the inspection schedule. I think that after notification takes about 6 to 8 weeks that they get the inspection scheduled that has happened. You have to actually set up the manufacturing and then be in the process of executing the manufacturing during the time that the FDA is there. We expect about 6 to 8 weeks after the manufacturing inspection to get action on the file, hopefully, to a profile some probably, I don't know, third quarts and then about 6 weeks after what we would expect to go ahead with the lung. So we're very, very hopeful. We think everything is lined up appropriately. FDA a number of times, as reiterated that the local data developed in especial cancer. It's appropriate to support the filing. And so Rosh and his team have worked through that through a number of questions back and forth with the agency. So I think we're confident that, that study will support licensure of the product for that indication, which is really important because those patients have no IO treatment. They're only on chemotherapy. They're progressing very rapidly and they see substantial benefit from using toripalimab. So accordingly, the FDA has been very receptive to getting this drug to them as soon as possible. But overall, back to the inspections, I think things are opening up in China just in time here. And we look forward to getting that out of the way.

Great. And on the question around FDA [ respectively ] at all. I think this been discussed multiple times in the last few quarters a year, but in general, to be generalizability concerns and the way FDA interprets or incremental benefit when it's reviewing the BLA application for any checkpoint individuals based on the data. Could you let us know the incremental benefit that toripalimab brings to the U.S. market? And what would your positioning be in the post approval for this asset?

Yes. So the TPA has been very, very clear with respect to where things regulatory flexibility is warranted. If there is an existing PD-1 approved for an indication in that standard of care, then if you wish to put an indication, you have to do studies against the reference standard. Now with respect to nasopharyngeal carcinoma, that's not the case. There is no IO treatment for that. So we would expect to get a label in all the lines of therapy in that indication. I'll let Rosh [indiscernible] maybe just explain that a little better with respect to Rosh's question with the standard of care and so forth with nasal fairing...

Yes, absolutely largely. So there is no standard of care here in the U.S. and no approved IO therapies that essentially physicians use Genesis plus or minus immunotherapy in -- which is currently unapproved, right? [indiscernible] can be used in conjunction with chemotherapy, but it is off label, and it's based on NCCN guidance that's supported by the toripalimab dataset interestingly. So in terms of the FDA stance, this would be the first approved immunotherapy. And so we've consistently, as [indiscernible] mentioned, we -- they have talked about rebates that the unmet need. We have breakthrough therapy designation as well. And so I think we're in a very strong position to be able to help these patients who essentially have no approved therapy...

With respect to toripalimab, further your point about the U.S. market and the PD-1s that are available. What's unique about Tory is its mechanism of action. It was specifically developed to bind a certain epitope the flu on new PD-1 receptor, which is on the actual T cell mining to PD-1 results in subsequent internalization into the T cell and impacts signaling within a T cell, which directly drives, for example, interferon gamma a number of things, which makes the T cell response very, very robust. This is the reason why there has been activity in low PD-L1 patients in various settings with toripalimab, which I think is a clear differentiator, for example, okay, the -- and some other molecules. So I think there is the potential for differential patient benefit in low PD-L1 states. And you'll hear more about this with various publications as the years roll out, but it will be the very next thing we address directly after MPC approval.

Got it. And maybe just a quick follow-up on the other combo studies that you have planned and you've discussed in the past. Any updates around both the digital to come trial [indiscernible]...

Those are moving on well. Yes, absolutely. We're very excited about our U.S. Tori-TIGIT study. So that is active currently in the U.S. It's a Phase I [indiscernible] is so looking at the combination, first of all, across the multiple tumor rates and then moving on into expansion. That trial is active, and we anticipate data sets being released starting next year from our U.S.-based Tori-TIGIT the study. I will also just add that we have our partner, Junshi, are running a companion study, a little bit ahead of us, also with the Tori-TIGIT combination as well. They're moving on into indication expansion. So we do anticipate data sets from their study continually really throughout this year 2023. So I think with these 2 programs together, I think we really have a very solid -- we will have a very solid base to move on in Phase I...

Great. Shifting to the commercial side, maybe similarly, weeks update numbers came through and you guided to $100 million revenue for 2023 with this. So how will this uptake or look right now? You also at some point, it will track or it tracks to ink in terms of the uptake curve. -- help us in time that.

Yes. Well, I don't think we've actually made a statement that's tracking the UDENYCA curve with respect to uptake. I think what's different about the launch, I'll let Paul in separately. But what's different about the launch here similarly was approved in October and launched, and it's operating under a miscellaneous code, which means it's not the permanent code, which means that all of the reimbursement forms have to be manually filled out active practice, sense of the insurance company where they're adjudicated checked for errors. And then it could take 1 month or 2 months for the practice actually to receive payment. So this is a bit of a labor process, which is offset by the [ Raciopricing ], which is, of course, beneficial. However, when we launched UDENYCA -- in 2019, we had the permanent bid from the start. That product was actually approved in November of 2018, the Q code we turned in December. So we launched it in January, we had the Q code in hand. So I would sort of think about the timing a little more lining up January of 2019 to April of 2023 coding of impediment for the practices. Notwithstanding that, there's been considerable enthusiasm for similarly with the revenue community. There is not, for example, reticence to use biosimilar to LUCENTIS. I think Rosh's team has done a very good job educating them on this. We do have interchangeability, both dosage strengths. -- all the indications. We have the very same molecule, very same buffers, excipients in. So I think this is really a strong cell and the interchangeability allows you to take the position that you can take a patient who is stable on chronic therapy and go ahead and convert that patient to similarly. So I think that's advantageous. Perhaps, Paul, maybe if you want to give a little color on the rest of the similarly launch and how you see things moving forward.

Yes. Thanks, Dennis. Yes, we're very pleased with the launch uptake at this point. As a reminder, we guided to $100 million similarly in 2023, which was part of the $275 million as were for numbers for the year. So I just wanted to make sure we anchored on our recent guidance. But the focus of our effort is on 450 accounts that really comprise 80% of the Lucentis volume. So we've taken the approach to be very focused and very surgical as it relates to our promotional efforts. I'm pleased to say that since launch, we've had over 150 practices, purchased similarly inject patients a reorder in our market share in those accounts is 15%. So I think that's a very strong indication of accounts when they're ready to buy, that they'll buy and they'll start converting patients. So we see that base business as a good launch pad moving to April when the Q Code goes into effect and then the remaining practices that we're waiting for the electronic billing process to occur and lower all those operational concerns. So we'll see continued breadth and depth. That's also driven by our expanded payer coverage. It's coming along nicely. We've got 100% on the Part B side for the Medicare patients. Over 60% of the commercialized nearly half of the Medicare amenities. The coverage is expanding nicely as well, all setting us up for acceleration really beginning in Q2. And then remember, these patients come in every 4, 6, 8 weeks for their injections. So as we -- as you see the uptake curve, it's driven really by those patients that you get started, they come back every month or 2 for their next code. So we're really excited. And I think we'll see -- I think you'll see a lot of luckies here until we get to the second half of the year. So we could be just guiding you to not focus too much on the weekly or even the monthly IQVIA as look at the quarterly until things smooth out a part...

Got it. That's very helpful, Paul. So reasonable to expect that you would fairly soon reach to 450 accounts that you're targeting? And is it also reasonable to expect a similar market share with these accounts?

Well, I think the early adopters have shown that when they're ready to convert to biosimilars that they can do so, that is our objective. There's 1 million Lucentis units that were in the market in 2022. Our focus is to convert that with sites market. And then we believe that all things being equal, doctors have a choice, we can start to convert some of that [indiscernible] business from other anti-VEGFs. So we see that as a 2-strategy.

And one of the questions I get from investors is really how relevant interchange bidding is in a buy-and-bill setting. So can you help us understand that?

Really relevant here the interchangeability is typically as applied is in the pharmacy setting where pharmacists can interchange products at the point of dispensing in this case because it's buying bill and uniquely because these patients where doctors are injecting into the eye, it's the safety that matters. And the interchangeability stamp of approval by the FDA, which on the front of our label says that a doctor can interchange similarly from Lucentis and expect the same outcomes, safety, efficacy without all the patients treated. We haven't received any inquiries, any safety concerns. Actually, patients are -- we're hearing more reports that is living up to a drying eyes doing a great job very similar...

I think the interchangeability is indicative of the very, very strong data in the filing. Our competitor, the first filer had the opportunity to get tangibility. But we have both doses strength. We have very, very compelling lytic data and clinical data, preclinical data. And I think we were successful and asking the FDA for biliary because of the strength of that data, which basically says this is a one problem.

Understood. Maybe very quickly on Eylea and [indiscernible]. No, there's the same entity that you licensed similarly from a couple of years ago of Verde's different company by IQ. So help us understand the these 2 assets now within the anti-age of space? And how you do you need to have a second asset here and the time line on this?

Yes. So this is a -- so we had an into an agreement with a -- what I would characterize as a related party due to the -- to similarly product, Lucentis biosimilar for a transaction in the spread. I think that it's very important to have an unitarian product that the physicians feel comfortable with and feel we patients' needs. So there's a few different products in optimal as flavors, addressing patients. Still the EYLEA market is much larger of the LUCENTIS market. But we stay very close to our customers and some of the key opinion leaders that we spoke to after we launched similarly personal comment to me that, look, we really look forward EYLEA biosimilar. So this is very much a customer-driven sort of transaction for us. We want to be the folks that address our customers' needs very holistically. And by the way, this is the very same approach that we're taking in the UDENYCA market. As we recently have brought out the auto injector, -- of course, we have a prebuilt range. And of course, the continued prosecution of the post-approval supplement for the combination device for our embody device, we felt that we would be in the strongest position if we covered all of the patient and providers' needs, and that's another instance of this.

Got it. Maybe it's a good segue to just quickly jump into [indiscernible] also spectacular and then it had -- it caused by a fair bit of hard born with investors. So. as you sold over the last couple of years, [indiscernible] changeably feel for you. So now we are on from surprise areas. So how should we think about the [indiscernible] franchise now the area coming on or an…

I would say the rumors are demise are greatly exaggerated -- we're still staying here 5 years into the UDENYCA franchise. We did 356. I think that's the first year of 47. You're right. [indiscernible] a little shop, I couldn't get to the doctors that patients didn't get to the clinics. That was a bump in the road. But I think that we have responded, we've got both these devices developed 2 [indiscernible] studies during COVID [indiscernible] -- although it did slow things down because those patients could not get into the clinics and that are our a long time. But we do have both these products, and then Paula can show you each of them. One is which is the on-body injector and the other one is the -- go ahead, Paul. -- injector.

Yes. So when we think about the pegfilgrastim market, you've got the office segment, which is the prefilled syringe patients come back to the office the next stage for their injection. It's about 56% of the market. It's where UDENYCA is completed right now for all the additional biosimilar competitors have launched. Then you have the at-home segment, which is where the Neulasta Onpro device has really remained resilient because of COVID although that. This is our demand -- is Onpro. But in that regard, what happens is the patients that are coming back the next day. The on-body device is applied to the patients, either belly or the back of the arm, you have to wear at home the next day. And then it's programmed to correct dose 27 hours later, it takes 45 minutes for the Neulasta Onpro dose to be injected. And so they can shower, I got to be careful not to knock it off and be very active. And so there's -- involves great technology, and we're going to have a knee better one. There's limitations and that's being met by our organic auto injector. What this will do now is really to give patients a level of freedom of control over their pegfilgrastim injection experience, where now they can choose the damn place in a matter of seconds inject the dose. So this was designed. It's a state-of-the-art design. There's no buts. There's no needles. We'll use this for our Usemry auto-injector presentation as well. So instead of waiting on entire day and 45-minute injection process, simply wish this down. You'll hear a click. And it takes about 6 seconds for the dose to be delivered. So when the patient hears that second click, we'll know that it's completed and they can dispose of it and then its time. But you imagine younger women with breast cancer, busy lives, active, working, kids, older adults, -- everybody wants to be vital and not be tethered to the cancer. Or this is going to be a real opportunity.

I would just add that since we announced this product a couple of months ago, the reception has been very enthusiastic. I think every single one of our accounts with our solicitation has reached that sales force has for a presentation on the product. So I think this is a genuine unmet need. Our strategy here, as you know, is to preserve price for our additional product additional presentations. So we're going to go ahead and do that now. And our efforts here will be to move up share now on the back product rest of this year...

When we have all 3. We'll be the only brand with 3 presentations, offering really a total solution for prescribers and...

So Paul, with all 3, I think [indiscernible] will definitely get back onto the growth product, but how should we think about the maximum potential for the franchise than for these 3 entities?

I'll take that one. I think that's hard to say. I think that you can gain here, but there's no question that the franchise is 5 years and that there's a lot of price pressure. So I don't have a crystal ball, but I think what you can do, you can fulfill all of the needs and then have those customers focused on Coherus and [indiscernible] for these needs in this market. So I think we'll be in a very strong position in this market to grow share, but just how that's going to translate to revenues down a side with one long term. It's a little tougher call.

Understood. Fair enough. Maybe a couple of minutes on Umery and you just know that also the auto-injector [indiscernible]. So multiple moving parts there. I think different companies are coming with different formations of combinations for what the market would look like your take on the market development based on the discount from your peers? And how should we think about the opportunity, especially in 2024[indiscernible].

Yes. I will call in, but there is no question, and we've said it, I think that Humira similar market it's going to be highly competitive. A number of competitors an originator who is going to I think, offer additional rebates or incentives to maintain formulary position and share ultimately that will have repercussions on the line for them. But that's going to be a very tough market. I would say that we're well positioned for it. We knew the market was going to be tough. We went to very large steel tanks. We drove the price down to less than $100 per loaded auto-injector. But it's a large volume, robust supply, low-cost market. That's where you want to be for that. You want to be in the strongest contracting position possible with the payers and the PBMs. And I think that's where we're going to be. Just how that's going to turn out. It's hard to say, but highly competitive -- any further color on the pricing or the contracting, Paul?

No. I think when AbbVie made the decision to drop price substantially to maintain a formulary position, you're all tracking [indiscernible] launch uptake. It's going to be a competitive market. We'll be able to share more folks launch in July when things started really shaking out, but we'll be looking more really, I think is really where biosimilar market at really takes old in this category. And then, of course, you have a reduction coming in 2025, which is going to present another unique dynamic as the risk that the government is normally holding and the cost shifts over to the payers. So the next few years in this space is going to be really dynamic.

Understood. I know we are out of time, but I just want to have 2 follow-ups on that, Denny. I think in the past question that we discussed with some you might as billion, dropping down to 5 billion 1 players -- so no, we yes, what...

It's going to be true I think the $20 billion credit I think it's a tough market. Avi themselves, I think, are calling for significant price year...

How is any questions any for you?

There's only one direction all these trend lines are heading -- for the era, just what the trajectory is and the slope is difficult to say. But I do think like this market will be really, really competitive. I'm not sure how well everyone will be doing lean the center. But I'm very happy that we made substantial investments, $25 million, $35 million to drive the price down, the volume not be able to give the guarantee. So we're going to be in the best position we get -- and just how everything hands out all the rest of the folks that are in subs and that it's kind of hard to say. But certainly, we have a robust supply of hundreds of thousands of loadings where you go, why the fourth launch...

Right. Wishing you all the best. Continue to have a productive conference here.

It's been great so far.

Ending on -- Rosh, thank you for your time in joining us.

Thanks, [indiscernible]. Good to be back in Miami. Thank you.