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

Welcome to the UBS Virtual Event. David Dai, you may begin.

Great. Thank you, operator. Hi, everyone. I'm David Dai, I'm a biotech analyst here at UBS. Thanks for joining our inaugural Virtual Oncology day today. We continue our session with Coherus. It's our great pleasure to welcome Dennis Lanfear, Chief Executive Officer; Theresa Lavallee, Chief Development and Scientific Officer; and Rosh Dias, Chief Medical Officer. Thank you for joining us.

Thanks for having us.

Thank you for having us, David.

Excellent. So team, maybe to start things off, can you introduce yourself and provide a high-level overview of Coherus, including your pipeline as well as your strategy?

Great. Well, thank you, David. First of all, let me thank you and UBS for having Coherus on today to talk about our company. Coherus Oncology is a company that is focused on enhancing the lives of cancer patients and delivering a step change in survival. We believe we have the right strategy to drive growth and to accomplish that. Our strategy really is in 3 distinct pieces that I'll outline for you. The first is the drugs that we have on the market and the drugs that we are bringing to the market. That includes LOQTORZI, our next-generation PD-1 as well as CHS-114 which is our CCR8 antibody, a Treg depleter, and casdozo and anti-IL-27. The second thing we focused on with respect to Coherus is the data that we'll be delivering with our development programs that Dr. Lavallee and Dr. Dias will review for you, that will be coming out around mid-2026. This includes data with CHS-114 in the head and neck cancer, a place where we have been quite active. Also with CHS-113 and gastric tumors, esophageal and colorectal program that we've simply recently initiated. We're also are very active in liver cancer with casdozokitug anti-IL-27 where we've shown some excellent results that Dr. Dias will review for you. Lastly, investors should watch out for deals over the next 6, 12 and 18 months. We have full rights to our product pipeline for both the anti-IL-27 moiety and our CCR8 moiety and we are seeking ex-U.S. partners to provide for us a validation of the pipeline, but also monetary support for the development programs and cost sharing. We are very active in the U.S. with LOQTORZI in combination with other products, and we'll outline that strategy for you in just a moment. Dr. Lavallee is that architect. And then, of course, non-PD-1 combinations also. But just at a 50,000 foot level, I think that Coherus has been very strong with its execution across a number of key parts development commercial and with deals. And we've established a strong financial track record regarding our sales, our ability to manage our balance sheet and now our deal revenue. So with that, I'm happy to talk a little bit more on a granular level about some of the programs and some of the things that are happening over the 12 months -- next 12 months, which should be interesting for investors.

Thanks for that overview, Denny. So let's start talking about the -- you said the lead program which is LOQTORZI, which is now approved in frontline and second-line Nasopharyngeal carcinoma. So maybe you can just level set some of the investors around this PD-1 asset. Can you talk about some differentiation of this assay versus other anti-PD-1 in terms of binding affinity, combinability, et cetera, et cetera.

Yes. Dr. Lavallee will take that one. Theresa, can you talk a little bit about toripalimab LOQTORZI.

Sure. So toripalimab is a next-generation PD-1 based on its higher binding affinity. It's more than tenfold higher binding affinity than other marketed PD-1s. Additionally, it has a unique epitope finding the FG loop. So both potency and where it binds can add increased activity in vitro assays when we look preclinically head-to-head with pembro, we see in a number of assays, statistically significantly higher T cell activation. Clinically, we've seen differentiation in 3 Phase III studies when toripalimab is used in combination with chemotherapy, we see activity very similar in PD-L1 high and PD-L1 low. And that's very different from the other molecules intact in esophageal squamous cell carcinoma, the other PD-1s pembro, nivo, tizi do not have approval in PD-L1 low or 0, whereas in Europe, toripalimab was approved based on the JUPITER-06 study irrespective of PD-L1 status. So we think that it really sets our combination strategy well with our pipeline as well as with others as you'll go against standard of care with PD-1, so our PD-1 will start at least here, if not here, so the combination to get a hazard ratio should increase probability of success.

Got it. That's really helpful. And so then since it's approved in 2023, we've seen a few quarters of growth. Most recently, in the last quarter, you generated about $10 million in revenue. Maybe can you just help us understand some of the adoption trends you've seen across different segments, including academic settings, also community settings.

Sure. LOQTORZI is the only launch product in the Nasopharyngeal space. We have preferred positioning on NCCN guidelines in first line. We're happy with last quarter's results. We had a very significant increase over the previous quarter. I would point out that the dynamics of the market though are that they -- while the academics are early adopters and very cognizant of NCCN. The community setting comprises about 50% of the overall sales. Now if you're a community oncologist, you see one of these patients maybe once a year, perhaps you see 2 patients a year. So trying to get mind share is a little challenging with respect to the community oncologists. And so it's an area where we're sharply focused. However, for guidance, I would say that between now and, say, mid-2028, we expect this market to grow substantially and to reach RP. Overall, the Nasopharyngeal market is about a $250 million market. We expect to land somewhere between $150 million and $200 million peak sales by mid-2028. And so we expect something along the order of 10%, 15% growth per quarter, which is a sort of a linear ramp to get us there. We don't expect any strong inflection points along the way given the dynamics that the patients only show up infrequently and they're not -- there's about 2,000 patients in the U.S. So as the patients show up, though, I think we're doing an excellent job converting those physicians. And we find that they are highly receptive to understanding the compelling data with LOQTORZI.

Understood. And what about the -- or label expansion strategies you're planning to do for LOQTORZI over the next few years? How much do you think this is going to add to the top line revenue?

Look, we are involved in a number of collaborative agreements with others with respect to LOQTORZI. Our stated strategy is that we provide LOQTORZI to others who are moving forward with their clinical trials with innovative moieties. We have partners who are in pivotals, we have partners who are in early phase. We do not do cost sharing on clinical trials. However, when those clinical trials are successful and those partners earn BLA labels for their drug, they will also, at the same time, they would get a label of LOQTORZI. So this is a very low cost and effective strategy to go forward. And I think it's one of the differentiating strategic opportunities that you see with Coherus. We are very much a collaborative combination focused company, and we believe that is the opportunity really to provide step change in patient survival. With regards to quantitation of that, I think those numbers are all quite large. There's a number of indications that we are pursuing. For example, with our own products in combination with LOQTORZI, which is the other leg of our combination strategy. Our products, our 114 product, anti CCR8 Treg depleter as well as Casdozo, our anti-IL-27 are both being developed in conjunction with LOQTORZI. And this underlies really the overarching LOQTORZI strategy. It is differentiated. It is NextGen, but we see it as both a revenue multiplier in combination with these other products and a revenue generator with respect to the NPC market.

Got it. I would love hear a little bit more about the combination strategies. We've seen a lot of anti-PD-1 programs combining with ADCs, given that this might give rise to a deeper response or durable response well. So what are your thoughts around the combinability of LOQTORZI with, let's say, either your own moieties like 114 or other moieties? Is it safe enough to actually be able to combine with other therapies in development?

Dr. Lavallee do you want to offer a few comments.

Yes, a really important question. And over a couple of dozen studies, the combinability has been published for tori with chemotherapy, other IO agents, TKIs. And we're very excited to see that at the ESMO Presidential Symposium later this month. that tori was the RC48, the HER2 ADC, partnered with Pfizer and RemeGen. It will be in that oral presentation. So Phase III data in bladder cancer. So we've seen really good combinability as a PD-1 inhibitor, we would expect it and look forward to continuing to develop that.

Got it. Great. Let's switch gears and turn to the pipeline programs. Let's first talk about the CHS-114, which is a very interesting program, a very interesting mechanism for CCR8, targeting Tregs or CRA positive Tregs, maybe just give us an understanding of this target? Why is this a compelling target talk a little bit more about the mechanism of action for cancer treatment here?

Yes. So Treg regulatory cells are the immune suppressive cells. So the immune system is about homeostasis. We often see that the tether, is it activated? Is it off? And the T regulatory cells are one of the primary mechanisms to keep balance within the immune system. And in fact, they're so important approaches to deplete them in oncology has really been fraught with toxicity autoimmunity. And so while it's well understood and well characterized that the presence of T regulatory cells in tumors leads to poor prognosis, resistance broadly to therapies, chemotherapy, radiation, PD-1 inhibitors, they haven't been able to be targeted because of broad depletion. So the missing puzzle piece has been a target on the T regulatory cells that would be preferentially expressed in tumors. And that was identified as CCR8 through single cell sequencing technology and characterizing the T regulatory cells in tumors, finding that CCR8 was highly upregulated and highly prevalent across a broad range of solid tumors. So the mechanism of action of CHS-114 is very simple. It's a targeted therapy. It binds and kills. So it's an ADCC enhanced, so a souped up antibody. So when it binds the target, it will kill the cell. So it depletes the T regulatory cells and getting rid of that suppressive immune population within the tumor to allow the tumor now to be -- to stop evading the immune system.

This is -- I would just add to Dr. Lavallee's remarks. We see this as potentially an emerging class of products. It has long sought and a bit of a holy grail in immuno-oncology to be able to turn hold tumors hot and make them subject to the immune system. And by impacting this balance that Dr. Lavallee talked about, there is this potential. There is data being generated by a number of teams in various parts on this and the validation of this target is well underway. And we feel that strategically, we're very well positioned as CHS-114 is highly selective, and we believe potentially a best-in-class asset in this emerging super class.

Got it. Maybe you can share some of the clinical data we've seen so far in head and neck cancer, gastric and esophageal cancers. Can you help us understand some of the things you've seen so far.

Sure. Dr. Dias.

Yes. Thanks, David. So given its mechanism of action, I think CHS-114 has potential utility across a multitude of tumor types. In dose escalation in data that we presented at ASCO 2024, so last year, we did show safety with no DLTs all the way up to dose level 7. And we showed a pretty good disease control rate in very late-line patients. Specific to head and neck, which is our most advanced tumor type, we presented data at AACR just a few months ago, which showed basically in the combination of toripalimab and CHS-114 in 7 subjects, out of 7 subjects in total, we showed 1 partial response. Now the interesting thing about this partial response was it was actually in a very late-line patient, a fourth-line patient who had previously failed a prior PD-1, failed a prior taxane, failed a prior TKI as well. So it's very encouraging as we move forward. So our current study in head and neck is looking at a 40-patient second-line specific combination strategy, looking at 2 biologically active doses of CHS-114 in combination with toripalimab. That is an ongoing study right now, and we anticipate results probably around the middle of next year. The other programs you mentioned just very briefly as well. So we're also looking at second-line gastric. This is in many ways, somewhat derisked program because there is proof of concept, proof of principle in terms of the CCR8 class in combination with toripalimab specifically. So we have an ongoing study in second line, specifically looking at, again, 2 biologically active doses of CHS-114 in combination with toripalimab, also ongoing. And then we're also looking at esophageal squamous cell carcinoma, both first-line as well as second-line. This builds upon some of the data that you heard earlier from Theresa in terms of the activity of toripalimab irrespective of PD-L1 status specifically and particularly actually in esophageal squamous cell as well. So that's also ongoing. And then we've also -- as Denny mentioned earlier, we've opened a colorectal study as well, initially starting in fourth line and the intention will be initially focused on non-liver mets, moving forward quickly into liver mets and then also quickly into first line as well. So I think there's potential broad utility across multiple different modalities and tumor types here.

You guys have a favorite among the 4 indications that you're pursuing?

I think we love each of our children the same. I think there's potential across all of them. I think as we kind of talked about all 3 or 4 of them, there's good rationale for each of those specific tumor types. I think we're certainly excited about all 4 programs.

Yes. I would note, though, that CRC is particularly devastating. First-line CRC is chemotherapy, if you can believe that. And as evidenced by the recent JAMA article, this is an indication which is expanding. It's reaching younger and younger patients globally, not just in the U.S. So I think for me, it's the opportunity really to have real significant impact on patients' lives.

Understood. And then just looking at the sort of the competitive landscape for CCR8, there's a few competitors, especially from big pharmas. So I'm curious in terms of what do you think are some key differentiation of CHS-114 to be able to differentiate from other assets in development.

Yes. So CCR8 is a deep protein-coupled receptor, which while it's one of the most successful protein targets for drugs, 1/3 of all approved drugs target GPCRs, there's only a handful of antibodies. And that's because the structure of the GPCR makes it notoriously difficult to get a selective antibody. CHS-114 is the only known selective antibody. We screened it against over 5,000 extracellular protein, so the human proteome and found the only protein it found is CCR8. Characterizing some of the competitors, we found off-target binding, things like J chain, which is highly expressed in the gut. So when I see that, I would worry about gut toxicity. which having off-target binding, bringing toxicity to your program can really affect the combination strategy, the development, having predictability. So there's -- the selectivity is a key differentiation. It also has high potency. As I told you, the mechanism is binding kill. You'll hear some talking about ligand binding, inhibiting signaling. What I say is dead cells don't signal. So blocking the signaling is, if anything, you could set up competition with the ligand for binding. And then the last piece is not all of the antibodies are ADCC enhanced. So that potency and the killing fraction. So really setting it up, I think, as a pharmacologically well-designed molecule that we've seen clinically just beautiful Treg depletion, a great safety profile and early clinical responses in the tumor types we expect them. So super excited to look for next year's data sets.

Yes. Great. This is really helpful. And then let's focus on that top line data readout in the first half next year with respect to the 40-patient data for -- in combination with tori. So maybe just Dr. Dias, I wondering if you can just help us understand some of the expectations heading to those readout? And what are some of the benchmarks we should be look -- watch for, for this data readout here?

Yes. Thanks, David. So I think as with most things in oncology and immuno-oncology specifically, we are looking at the totality of evidence. So that is not only one specific measure. It will include safety. It will include overall response rate. It will include duration of response, stable disease, disease control, et cetera. I think if you look at that -- obviously, this is an emerging field with bispecifics, et cetera. But I think in the second-line setting specifically, the current standard of care remains cetuximab, and that may not change, right, given some of the data that's emerging in the first-line setting. So the current cetuximab overall response rate is probably in the 13% range around there, so pretty -- very limited. So we'll be looking for ORR at least probably 20%, but also very importantly, as I stated earlier, the other measures also are very important to really kind of round out the totality of evidence.

Got it. That's helpful. Okay. Great. Let's switch gears, talk about your second program, Casdozo IL-17 antagonist here. Quite interesting because it's autoimmune target. So very briefly also introduces the mechanism in oncology and what makes it a compelling target in your hands?

So this is a -- so this -- you're right, this is a very, very compelling target. The cytokines help balance the immune system. And what I really find compelling about casdozokitug IL-27 is the translational biology and how that has read out in the clinic. This is a target that plays a key role in barrier proteins in lung and liver and other, which is exactly where we've seen effect. This is a first-in-class molecule. So there's no one else around doing it. And we're very happy to be the pioneers. It was brought forward by Chris Hunter at University of Pennsylvania. And we have a very nice program where we're seeing great results in liver cancer, and now we're pursuing lung. But maybe Theresa wants to offer a few insights just with respect to MOA.

Sure. So I mean, I think the thing that we have to remember with cytokines is context matters. So they're immune regulatory, not suppressive or activating. So it really depends upon where they are and who's around them. And so as Denny mentioned, the context that we've seen from the translation where we've seen in the mouse models, whether it be infectious disease or cancer models that IL-27 is important in turning off the immune system, the T cells, the NK cells, those killer cells in the lung and the liver. So going into the clinic, it's well understood that antibodies rebalance the immune system and inflammatory diseases. There's a multitude of approved antibodies in the IL-27 family. But this is the first demonstration in oncology where we've seen inhibiting a single cytokine leads to immune activation. And with that, we saw monotherapy responses in lung cancer and then seeing this activity in liver cancer that translation from mouse to human has a very strong focused program to establish the proof of concept to move forward.

Got it. Maybe just help us understand some of the clinical data we've seen so far. I believe you initially saw about 5 CRs, 30% OR and pretty durable response in combination with atezo and bevi. So maybe just help us understand some of the results here so far and how does that compare to other standard of care in HCC.

Yes. Thanks, David. So I think the data in first-line HCC, which you've just been referencing, I think it's actually very, very exciting. We showed data at ASCO GI earlier this year, so in January this year, which showed exactly that data set that you outlined. So the triplet combination atezo, bev and casdozokitug, we did show a 38% overall response rate and a 17% complete response rate. The relevant benchmarks there for the current standard of care atezo bev are 30% and 80%, respectively. So importantly, that complete response rate was approximately double the current standard of care. So that was actually very interesting and exciting. Now where have we taken that forward? Now so we have an ongoing study right now, swapping out the atezo for toripalimab. So we're looking at tori, bev, casdozo triplet combination. It's a 72-subject study looking at 2 biologically active doses again of casdozo in combination with tori, bev versus tori, bev alone. And the aim of this study is, I'd say, probably threefold. Number one, to obviously further characterize efficacy and safety; number two, to address Project Optimus; and then number three, also to define and look at the contribution of components. So I think that's the study that's ongoing, and we anticipate releasing some results probably around the middle of next year. One thing I will say, though, is this will be initial results. What we noted with the atezo, bev, casdozo combination is over time that there was a deepening of the responses and an increase in response rate. So if we anticipate that to also happen with our triplet combination with tori, each of that anticipated early results and followed by further evolving results after that.

Great. And actually, one thing that you mentioned is the contribution of different components, right, because this is a combo therapy. How should we think about the various components that's contributing to the 38% OR and 17% CR? How confident are you that this is a casdozo-related benefit?

Yes, in the 30-patient study, I mean, the one thing that stands out to me, as Rosh mentioned, is that depth of response, right? So a 17% CR rate. I mean, I don't think most people appreciate that even PD-1 inhibitors in lung cancer, the CR rate is like 4%. So getting above 10%, I mean, I've been in IO since before it was cool, seeing anything above 10% is impressive, and it's doubled any Phase III study in HCC. So that depth of response is distinguishing. The other thing is we've done a lot of characterization from the 30-patient study to look at the biomarker responses and do see association with response and IL-27 inhibition, immune activation, really looking at that and the levels of IL-27. So there is good correlation between the biology and the response. And the current study that Rosh's team is running now with the randomized study with casdozo, tori, bev versus tori, bev will really address that to set us up for a pivotal study.

Excellent. Great. I think we're at the top of the hour right now. So we can just wrap up here. But thank you so much for taking this time to speak with us. Really appreciate the insight and looking forward to all these updates next year. It's going to be an exciting time for Coherus.

Thank you, David, and thank you for having Coherus with us today. But I would just close by saying that our company is very unique in the space. We have a commercial product. We have best-in-class products. We have first-in-class products. And we have a very, very strong team that's executing a cogent strategy. We have a great track record of execution, and we look forward to delivering those results for our investors next year.

Great. Thank you so much for joining.

Bye-bye.

Thank you.

Thank you.