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

This is McDavid Stilwell, Chief Financial Officer of Coherus BioSciences. We issued a press release earlier announcing the U.S. FDA approval of LOQTORZI for the treatment of nasopharyngeal carcinoma. This release can be found on the Coherus Biosciences' website. Today's call includes forward-looking statements regarding Coherus' current expectations about future events. These statements include, but are not limited to, our ability to enter into future partnerships and approval for new products and to launch our products in a timely manner, projections of future financial performance, including expenses and revenue, projections of future market share for any product and our expectations for market opportunity for any indication. All of these forward-looking statements involve substantial risks and uncertainties that are beyond our control and could cause actual results, performance or achievements to differ from those implied by the forward-looking statements. These statements are not guarantees of future performance and are subject to substantial risks and uncertainties, including risks and uncertainties that are discussed in our press release that we issued today as well as the documents that we filed with the SEC. Forward-looking statements provided on the call today are made as of this date, and we do not undertake -- we undertake no duty to update or revise any forward-looking statements. With me on today's call are Denny Lanfear, CEO of Coherus, Dr. Theresa Lavallee, Chief Development Officer; Dr. Rosh Dias, Chief Medical Officer; and Paul Reider, Chief Commercial Officer. I will now turn the call to Denny.

Thank you, McDavid. Thank you all for joining us this afternoon. Sorry for the technical delay. The LOQTORZI approval is a seminal event establishing Coherus as an innovative immuno-oncology company. And LOQTORZI is the cornerstone of our strategy to use next-generation therapeutics to extend cancer patients' survival. We plan to develop LOQTORZI in combination with other novel I-O agents that target the tumor micro environment, including the pipeline programs Coherus acquired through its recently completed merger with Surface Oncology. Coherus is now one of a small handful of companies in the United States with an approved PD-1 inhibitor. We've received numerous inbound inquiries regarding partnering opportunities for LOQTORZI in combination development. And we are now well positioned to become an immuno-oncology partner of choice. I want to congratulate our team on the approval, and I want to thank my partner, Junshi, who provided us with a molecule with robust efficacy and strong safety across indications. Theresa Lavallee, our Chief Development Officer, will now speak to the regulatory approval and the unique attributes of LOQTORZI. Theresa?

Thanks, Denny. We are thrilled to have LOQTORZI approved by the U.S. FDA for the treatment of all lines of therapy in all subgroups of patients with nasopharyngeal carcinoma or NPC. This is the first drug approved in the U.S. for NPC patients and is based on a clinically meaningful and statistically significant survival benefit reported in the JUPITER-02 and POLARIS-02 study. We are grateful to the FDA and thank them for prioritizing the BLA-required inspections and taking a final action within less than a month of completing the clinical infection, making this treatment option available to these underserved patients with a high unmet medical need. LOQTORZI is the next-generation programmed-death receptor 1, PD-1 monoclonal antibody that blocks PD-1 ligands, PD-L1 and PD-L2 with high potency at a huge site on the PD-1 receptor. With this approval in hand, LOQTORZI in this key indication, allows us to focus on our next stage of our I-O strategy, developing LOQTORZI with casdozo, our IL-27 antibody, and CHS-114, our [ cytolytic ] CCR8 antibody, which have demonstrated promising clinical data, and we will have updates over the next 18 months. As Denny indicated, we plan to pursue partnerships for co-development with novel agents such as T cells engagers, bispecifics and ADC. Now Dr. Rosh Dias, our Chief Medical Officer, will share with you more about LOQTORZI's clinical profiles. Rosh?

Thanks, Theresa. We are delighted to bring LOQTORZI to patients in the U.S. living with nasopharyngeal carcinoma as the first and only FDA-approved treatment for NPC patients across all lines of therapy. We, first of all, like to thank both the investigators and patients who participated in the JUPITER-02 and POLARIS-02 clinical studies, upon which this approval was based. NPC is a type of head and neck cancer that due to its anatomical location behind the nasal cavity and just below the base of the brain is rarely amenable to surgery and has limited therapeutic options. And currently, the majority of patients are treated with decades-old chemotherapies, primarily gemcitabine and cisplatin. LOQTORZI approval in both first-line patients with metastatic or recurrent locally advanced disease in combination with cisplatin and gemcitabine, and also as a single agent for patients with resectable -- with recurrent unresectable or metastatic disease progression after platinum-containing chemotherapy, marks a step change in the standard of care for NPC treatment. The approval is based on strong efficacy data from 2 well-conducted studies and a safety profile consistent with class, data published in Nature Medicine and presented at both AACR and ASCO. Firstly, in JUPITER-02, LOQTORZI in combination with chemotherapy in first-line patients with either primary metastatic or recurrent disease showed a hazard ratio of 0.52 for progression-free survival, and of 0.63 for overall survival, the benefit seen across all PD-L1 expression levels. The results were both statistically significant as well as clinically meaningful. Secondly, in POLARIS-02 in second line and beyond, single-agent LOQTORZI met its primary endpoint of overall response rate with an ORR of 20.5% and also demonstrated the median overall survival of 17.4 months. The adverse event profile in both trial demonstrated an acceptable safety profile, which is consistent with drug class. This represents a landmark approval for NPC that now offers patients an approved therapy for the treatment of their disease, and we really look forward to bringing LOQTORZI to patients in the U.S. Paul Reider, our Chief Commercial Officer, will now discuss our commercial plans for the upcoming launch. Paul?

Thank you, Rosh. Good afternoon, everyone. The Coherus commercial team is very excited to finally bring to patients and providers the first and only FDA-approved treatment for patients diagnosed with relapsed or metastatic and NPC. We estimate that approximately 2,000 NPC patients are diagnosed each year, and we'll be able to access all of them as our broad indication allows for LOQTORZI to be used in combination with chemotherapy in all lines of therapy, including first line. And we believe that LOQTORZI opportunity in NPC is large with estimated value at peak of up to [ 200 million ]. Through npcfacts.com, we've now enrolled a community of over 2,100 NPC patients or caregivers and we'll appropriately communicate LOQTORZI-branded information with them. So they are informed and educated in speaking with their doctors about their individual treatment plans. And finally, LOQTORZI is being efficiently integrated into our existing oncology commercial infrastructure. The team is fully trained and launch activities will immediately commence. We expect the commercial launch in early Q1 2024. I look forward to updating you on the progress of launch as it commences. I'll now hand the call back over to Denny.

Thank you, Paul. Thank you all for joining this afternoon. We're happy to take questions. Tony?

[Operator Instructions] Our first question comes from Robyn Karnauskas with Truist Securities.

Congrats, Denny and Theresa, I know hard work with at hand and for your team. So congratulations. I guess, I have a couple, you talked about partnerships. And so my first question is about partnerships. How do you think about the time lines for doing those across the year because, could those -- could be catalysts for the company? And what are your goals and what you want to get out of the partnership? Do you want them to spend more money and help you run the trial, but what are the goals? My second question is really about commercialization. I don't know if you can comment on price yet and your response in 2024. And how are you thinking about the needs on the SG&A front to -- I know you have some leverage there, but talk to me a little bit about how we think about modeling the expense side for launching this product.

Thank you for your question, Robyn. First of all, I would say that we've had significant incoming interest from potential partners as we approach the approval. I think that there is a unmet need in the market for a highly efficacious and safe PD-1 for a variety of combination approaches. As Theresa pointed out, T cell engagers bispecifics and so on, we would expect to begin to engage with those parties directly and have additional conversations for example, the healthcare investment conferences now in the fall and then, of course, in the course of the year. Our objective would be to complete on number of those by mid next year. On that side of things, we believe putting toripalimab in the hands of our partners is a very, very good way to enhance patient benefit and advance our key objective, which is to extend patient survival in a number of these cancers with unmet needs like you've seen in NPC. With respect to commercialization and potential pricing, I'll let Paul address that question for you. Paul?

Thanks, Denny. Robyn, thanks for your question. Yes. So in terms of commercialization, LOQTORZI is going to be integrated into our existing oncology commercial team and infrastructure. So no new additional headcount required. Team's fully trained and ready to go. But we're going to be sharing more about price as the launch progresses. But what's going to happen between now and when we expect full launch in early Q1, we'll be establishing the payer coverage, educating the customers, getting our -- [ head hop out ] stood up to your LOQTORZI solutions. And our goal is to ensure that we can get patients this treatment as fast as we can.

Thanks, Paul. Robyn, with respect to your question about modeling, we would anticipate probably a 2- to 3-year period to reach maximal market penetration. And Paul's team has done an excellent job of identifying these patients with npcfacts.com. So we're going to be, I think, very active in terms of educating the patients and so on. A number of these patients are on existing therapies. But as more patients are diagnosed, our objective is to bring them all on LOQTORZI from day 1. So probably that period of time is a appropriate way to model the ramp.

That's helpful. And just one follow-up there. So when we're thinking about like how you're going to talk about LOQTORZI over the next 6 months or so before you launch, when do you plan to give an update on more solid guidance on the spend. I mean, a 3-year ramp is pretty fast. So market research, updated market research, do you plan to give that at JPMorgan, could it be a little bit like a call in early first quarter. Like what are your thoughts there? And that's my last question.

Sure. Thank you for that. We probably won't say too much about that on our upcoming quarterly call. But you can certainly expect that by the time of the Q4 call which will happen in the February, March time frame. That being said, I would point out that we have been very active digitally and identifying these patients. And so we probably will have spend, which do not approach that of traditional launches. Secondarily, commercialization is highly synergistic with our existing UDENYCA franchise. And so the call points, I think, have a slightly 95% overlap. And so we do not anticipate having extensive additional costs associated with the launch although, of course, there will be certain marketing and educational costs. Happy to provide an update for you.

Our next question comes from Yigal Nochomovitz with Citi.

This is [ Ashik Mubrarak ] on for Yigal. Very big congrats on the approval and really great to see how you navigated this whole entire regulatory saga. Just a few questions for me. I guess, first, what has to happen before you can launch the drugs in the first quarter? It sounds like it will be a really early first quarter launch. So what do you anticipate you need to do between now and then before you can start to generate some revenue.

Thanks for your question. Paul can comment a little further. But post approval, you have to finish printing the package insert, you have to import, you cannot import until you are approved, then you have to label box up, ship through 3PL. Typically, this sort of exercise takes between 8 and 12 weeks, if we look at our previous [ conferences ] we are going to anticipate this happening in about that same period of time. But there's just a few things that you cannot do until you are approved, such as import, finished labeling and so on. And for sure, you don't know if its final label [ says them you're proved either ]. However we are pleased that the FDA acted so promptly on our application after the final inspection. I think there was just tremendous impediments for them to overcome, get the inspections done in China and can get back and forth. So we want to just thank them for helping us as we move forward to [ get to these ] patients.

Okay. Okay. Got it. Maybe I can ask a couple of follow-ups. I guess on the patient identification front, I know you mentioned the 2,100 number, but I'm wondering if you can split that between how many are patients versus caregivers. And it sounds like we should expect this launch to sort of reflect maybe a bolus effect. Do you think that's fair? And when do you think we can sort of start to see the payer coverage come online?

Paul, would you like to address those issues?

Yes, sure. The split's about 60-40 between patients and caregivers in the enrollment of our npcfacts.com. So that's the split. And we'll be able to now with the approval, engage with them with improved promotional LOQTORZI-branded information. So if they're fully educated when they go and speak with their physician about their treatment. The patient is getting chemotherapy today because we have approval on all lines of therapy. The doctor can simply add LOQTORZI to their current chemotherapy regimen, that's fully indicated. And so that's going to be the primary approach with the patient engagements. Secondly, as it relates to payer coverage, that should vary, but you would expect coverage to come online usually within 30 to 60 days. However, because this is a rare disease with no good treatment, doctors can submit patient prior authorizations. And given the data, we don't expect much in the way of favorable.

With respect to your question about the shape of the adoption curve, we'll have a little more to say about that on our earnings call. But Paul may wish to comment further, but I believe there's been a number of patients that positioned KOLs even today reaching out for the availability of product. Paul?

Yes, that's right, Denny. We've spent the last couple of years as we've been waiting approval, engaging and nurturing the KOL relationships in head and neck and NPC. So when they heard the news today, they've already reached out to us very excited, want to know exactly when their pharmacists can have it in their clinics. So that's very exciting event and goes to the high unmet need and demand for LOQTORZI for these patients.

I would just -- and Rosh may comment further, but I would just underline that there is no approved treatment for these patients.

Absolutely Denny. Yes. Currently, there are zero approved treatments, current standard of care is, as I mentioned, decades old chemotherapy, gemcitabine and cisplatin. So I think this will be a very welcome add to the therapeutic option. In particular, this will be the only approved regimen in this [ regime ] all in all, very, very strong needs for patients.

So we anticipate strong adoption.

Okay. Got it. That's very clear. Last question for me. I understand that the NCCN guidelines already have the PD-1s recommended for use in NPC. I think some of that is all based on your data. I'm just wondering if you have a sense of how much off-label use is already occurring or if there's any clear data on that.

Well, yes. I wouldn't say there's clear data. When you look at claims data, which gives you a snapshot of the marketplace, we estimate that there could be about 40% of existing PD-1 use in the marketplace. So it's certainly not considered standard of care. But with our data, as you mentioned, the only Phase III trial plus with both PFS and very significant overall survival data. We believe that we'll have the science to position tori -- LOQTORZI-plus chemo as the new standard of care.

Rosh here. Yes, thanks. Paul, just tagging on to what you were saying. I'll just -- for those of you who are at ASCO and heard the update on the final overall survival analysis at ASCO this year, the discussion specifically said at the -- from the podium, this is practice-changing data. So I think, again, given that will be the only approved regimen now in NPC, again, I support what Paul was saying.

Our next question comes from Michael Nedelcovych with TD Cowen.