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

Yes. My name is Bhavin Patel, one of the biopharma analysts here at BofA. I'm here with Denny, CEO of Coherus.

So to jump right into the Q&A. You reported 1Q, and the stock is down to about $5 a share trading at 52-week lows. And I wanted to get your thoughts on what do you think is the reason? And is it an overreaction to the maybe miss on UDENYCA?

Well, sure. I think it's a little overdone. Frankly, I've had better weeks than this week. But I think you have to put it in perspective in the long-term view of the company. Q1 was the last quarter in which we had only one undifferentiated presentation for UDENYCA. So this is a market in which we've said many times there was additional competitors and entrants. And that put significant pressure on competitive pricing dynamics and so forth. So our strategy in that market is to launch differentiated presentations: first, the auto-injector; and then secondarily, the on-body system. So the auto-injector will launch in the last half of this month. There's tens of thousands of units that are ready to go, and the market response to that has been very, very positive. The on-body system is very successfully working its way through the FDA. And so we're optimistic to get that finished and into the market. It will put us in a position then where we will be the only team in the pegfilgrastim space with all 3 presentations. Further, we think there is a significant unserved segment in the auto-injector position for patients who want at-home administration but really find the on-body system too cumbersome. So it is true that it was a weak quarter for UDENYCA, weaker than we'd like. However, we look forward over the second half of the year, starting in June, we'll get some additional share, I think, with the auto-injector, and then on we go. Now with respect to CIMERLI, the story there really is that the Q-code was finally approved, I think, February 16, on time. We focused ourselves in Q1 with, first of all, getting the Q-code from CMS. And then secondarily, getting the Q-code deployed into the payment systems of all the providers, and that's been very successful. That was deployed April 1. The first payment was done, I think, around April 14 or 16. These are all running very well now, being routinely reimbursed. So I think that's off and running. Lastly, I would say that I spent a little time on the road talking to retinal practices and physicians to understand the impediment that the Q-code presented to them. And I was a bit surprised to learn that they finance their practices with their credit cards significantly. So payment becomes a very big issue for them, timing of payments and cash flow. So I think this is really what hampers them. When they don't have rapid turnaround in cash, which they would get from a Q-code and electronic system, it causes little problems. And up to this point, we've been moving forward with a miscellaneous J-code, which requires filling out a form, submission to the payers. Then it gets adjudicated and paid back. It takes 2-plus months versus 2 weeks. So I think that was one of the key dynamics. Now unfortunately the -- or fortunately, the Q-code and the last quarter of UDENYCA, having just one presentation, landed in the same quarter. So that's a bit of a problem. And I think Q1 was weak. And then last point I would make about Q1 is it's prone to stock-ins from the end of the year. And so there's always this inventory that buyers push in, and then you have to burn through that inventory. So it's always a little bit weak anyway. But that's sort of how we see it. So I think it's a bit overdone. Overall, I think that we're on the trajectory for the things that we've set out to do with the approvals and the launches and so on. We had, for example, the auto-injector for our YUSIMRY biosimilar approved last quarter. We had the post-approval supplement for the large-scale, low-cost manufacturing approved. We, of course, got the auto-injector approved. I think we're in a pretty good position now with the inspections in China, and that's also moving along. So I think a number of these things are now coming together. But I'm glad to have Q1 behind me.

Yes, I agree. So for CIMERLI, just as a follow-up, at the end of March, your Symphony data showed about 6% of volume share was captured. So it seems like you're on track to hit $100 million by the end of the year if you're able to capture about 10% of volume share. Do you see any upside to this in 2024, given the sales trajectory seems pretty solid?

I think so, and I think it's a very, very interesting market for a number of reasons. First of all, with respect to increases in utilization, what happens is there are sort of 3 dimensions to the utilization increase. The first is that you convert practices, and retinal practices can have 4 or 5, 22 doctors. I spoke to one in New York, there was 22 physicians there. Then within the practice, you have early adopters and later adopters. And then within those doctors and patients, you have patients that are either fresh starts or whatever. So the net result of that is that as you add practices, you add doctors, and that builds. And then once the patients go on, they stay on the drug. We've seen utilization of CIMERLI from 3 places: first of all, of course, Lucentis market itself, just conversions of patients that were stable on Lucentis; secondarily, fresh starts; and third, conversion from reformulated Avastin, which is a very significant part of the market. There's about 7.2 million units all in, in this market, including Eylea and VABYSMO and so on. And of those units, about 40% of those are reformulated Avastin. So I think that's a significant market share to mine against going forward. But the last thing I would say about this market, it's a somewhat dynamic market. We saw one introduction of the first biosimilar, and we have 8-mg Eylea coming and some other things. But overall, I think that the strategy to enter the very large center part of this market with Lucentis biosimilar has been validated. I think it's a good one.

So on your immuno-oncology plans, in terms of the PD-L1-TIGIT combo in non-small cell lung cancer, just as a reminder, last year around the same time at the conference, the stock was under some pressure after Roche's SKYSCRAPER-01 trial failed to show the PFS benefit. OS was still immature. And then 3Q, Roche is expected to read out final OS data. So what do you think investors need to see there to gain better confidence in your program, which is taking a similar approach?

Well, let me first say is that large -- very large companies like Roche can afford to go off and start large Phase IIIs with hundreds of patients. And they can afford to fail, right, because they have so many bets. We can't really do that. So we don't intend to spend significantly on TIGIT plus tori combinations until we're very, very certain that we've identified the appropriate clinical setting, tumor type where we can see efficacy. So we have pretty much a minimal spend on tori plus TIGIT here for the next 6 to 18 months as we see that data develop. And we're doing the combination studies now and the dose expansion. But we're intentionally going to limit our spend on TIGIT until we see a little more sign of life. That being said, TIGIT, I think, remains a very, very interesting target if you get the appropriate clinical setting correct and the appropriate tumor type correct with the right biomarkers for it and so on. So I think you have to step through it very carefully, but that's the nature of immuno-oncology. But I would emphasize that I would rather be a few steps behind the leaders than up in the front. You can tell the pioneers by the arrows in the back, right? So we're just going to watch how the things develop and then fast follow.

Yes. And hitting on HUMIRA, so you're going to launch in the second half of '23. Can you give us an update on the high concentration format? When do you expect that to be approved and ready to be launched?

We haven't said too much about the high concentration format. But what we have said, as I just pointed out in my opening remarks, is that we are locked and loaded, I think, with the existing formulation and ready to go to market, which I think is the key thing to keep your eye on. The high formulation was developed by AbbVie in response to their low concentration, which had a citrate buffer and caused stinging and a number of things. And so to alleviate the sting, they reduced the concentration. But actually, there's not a real significant benefit in terms of injection time or anything with an auto-injector. So what we opted to do is go forward with a citrate-free formulation, 29-gauge needle, a very, very nice daily auto-injector, very high patient comfort. And so we're going forward with that. And that's, I think, the lowest cost way to move forward. And this is a market with if anything, I think, ultimately will be very, very cost sensitive. I think what's more interesting though is the approach to that market strategically, both this year and next year. And I think that after we get the launch out of the way in July, we'll have a little more to say about our go-to-market strategy there. But we remain convinced that our approach is the correct one, be a very high-volume, low-cost producer, be able to do supply guarantees and be able to address the needs of the PBMs and the payers, who are the primary folks that are going to have the selection decisions.

So you mentioned that in August, we can expect a pricing update and in November on formulary coverage. Maybe if you could preview what that update would look like, what level of detail you might be willing to share?

I think that post launch, you'll see -- post July 1, I should say, or July this year, I think you will see a number of teams who have that launch window. And I think there's a couple of them go forward and talk about their go-to-market strategy and their pricing strategy and so on. Earlier in the year, you saw Amgen's strategy, which is sort of a dual WACC approach that was somewhat creative. But I think folks will all have their own thoughts on how to move forward in the market. But I think you'll probably see some contracting announcements in that time frame between July and September-ish, that sort of thing. And obviously, you'll see what the pricing strategy is.

Yes. And could you just refresh us on toripalimab in nasopharyngeal cancer? What your view on the market opportunity is? I guess in our view, we've thought of it as more of a niche indication. And I just wanted to get your thoughts on -- ahead of the launch coming up in 3Q.