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spk01: Welcome to the Q1 2021 CoHarris Biosciences, Inc. Earnings Conference Call. My name is Richard, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star, then 1 on your touch-tone phone. I will now return the caller to McDavid Stilwell, Chief Financial Officer. Mr. Stilwell, you may begin.
spk12: Thank you.
spk09: Good afternoon, everyone, and thank you for joining us. We issued a press release earlier announcing our 2021 first quarter results. This release can be found on the CoHarris Biosciences website. Today's call includes forward-looking statements regarding CoHarris' current expectations. These statements include, but are not limited to, our ability to advance our biosimilar and immuno-oncology product candidates through development and registration. our commercialization of Eugenica and other potential products in the future, our ability to meet our R&D and SG&A expense guidance for 2021, as well as our uses of capital, all of which involve certain assumptions, risks, and uncertainties that are beyond our control and could cause actual results to differ from these statements. These statements are not guarantees of future performance and are subject to certain risks and uncertainties that are discussed in documents that we file with the Securities and Exchange Commission. Specifically, in our quarterly report on Form 10Q for the quarter ended March 31st, 2021, that we filed earlier this afternoon. The forward-looking statements stated today are made as of this date, and we undertake no duty to update such information except as required under applicable law. With me today are Cohera CEO, Denny Lanphier, Paul Reeder, Executive Vice President of Commercial Operations and Market Access, Chris Thompson, Executive Vice President of Sales, and Dr. Shah Rahimian, Senior Vice President of Immuno-Oncology Clinical Development. I'll now turn the call over to Denny. Thank you, McDavid, and thank you all for joining us this afternoon. Today I'll provide updates on Udenica commercialization our biosimilar pipeline candidates, as well as Toropalimab, the PD-1 antibody we in-licensed from Junshi Biosciences earlier in the first quarter. We are making strong progress with Toropalimab and our biosimilar product candidates. Over the next two years, we anticipate bringing four new products to market in the United States, complementing Udenica in our commercial portfolio. The investments we are making in 2021 are expected to diversify and grow our revenues for years to come. With the clinical data and regulatory milestones over the next 12 months, we expect the key elements to come together in our unique strategy of leveraging the strong cash flows from our biosimilar products into the rapidly growing immuno-oncology market. Today I'll start with a review of the performance of our first product, Eugenica, which maintains its position as the most prescribed type of grass and biosimilar with 20% of the overall market as reported by IQVIA. In the first quarter of 2021, we recorded $83 million in net sales of Udenica, as compared to $110 million in the fourth quarter of 2020, and $116 million in the year-ago quarter. Market share for Udenica at 20% was relatively flat compared with the fourth quarter, and within the 20% to 22% range we have experienced since the start of the COVID pandemic. The overall Pegfell Braston market grew by 1%. in the first quarter. Quarter-over-quarter revenue decline for Udenica in Q1 was driven primarily by two factors, inventory changes and pricing. First, seasonal fluctuations in wholesale inventory had a significant impact on quarter-to-quarter ex-factory shipments. Wholesale inventory rose from 11 days on hand at the end of the third quarter 2020 to 21 days on hand in the fourth quarter and then came back down at the end of the first quarter to 12 days. Second, as we have signaled since the third quarter last year, pricing pressure has intensified across the Pikeville-Graston market. The ASPs reported by CMS show the trends across the category. Price declines have been most significant for the originator, Elasta, which now has the lowest ASP at any Pikeville-Graston. I'd now like to introduce Paul Reeder, our Executive Vice President of Commercial Operations and Market Access. Paul brings over 30 years of relevant commercial experience in oncology and other therapeutic areas to Coheris and will provide some additional color to the market dynamics we see going forward. Paul?
spk12: Thank you, Danny. I'd like to make a few comments regarding the pricing actions taken by the originator. It's highly unusual for the category leader with presumed differentiation and strong marketing capabilities to employ a value proposition of having the lowest price in the market. These actions by the originator, combined with the revenue impact and unsustainability of price declines in a buy and bill reimbursement model, created an attractive opportunity for Udenica. Our strategy is to grow Udenica at the expense of Neulasta while maintaining pricing discipline and overall long-term economic value for providers. As you know, new last to retain 67% of the thankful grass to market with on pro representing approximately 55% share during COVID physicians use this on body device to minimize patient visits into clinics and hospitals. Now that COVID is receiving the medical imperative to use on pro is greatly reduced. We believe you Danica is well positioned to gain share in this context for the following reasons. First, Udenica is the number one prescribed Pickle, Graston Biosimilar with approximately 20% share. Second, Udenica is well positioned among commercial pairs with over 90% of commercial medical lives covered. Thirdly, we've earned the trust of oncologists and have built a broad customer base with over 2,400 accounts currently purchasing Udenica. Fourth, The majority of our field team has now been vaccinated and has resumed in-person sales calls. And lastly, patient out-of-pocket costs for Udenica is on average $200 lower per syringe compared to Nulasta. This according to Symphony's data for the last half of 2020. Therefore, as COVID recedes, we expect Udenica will resume market share growth. Net product revenue, of course, will be a function of both volume and price. While our strategy is to maintain disciplined management of Udenica ASP, within the context of the competitive PEG filgrast to market, price is the variable over which we have the least control. As we pursue our strategy of growing Udenica penetration and make inroads into the on-pro market, we expect revenue growth in the second half of the year. Let me now hand it back over to Denny to discuss the progress in our biosimilar pipeline.
spk09: Thank you, Paul. Together with Eugenica, our biosimilars of Lucentis, Humira, and Avastin addressed an aggregate $28 billion in market opportunity. We've already demonstrated our ability to use our branded marketing and other commercial capabilities to penetrate the competitive areas with biosimilar. We believe we will experience similar success taking significant share in these new markets. Our strategy is to take at least 10% of each of these markets, and in some cases, as with Udenica, even significantly greater market share. By 2023, we expect all four of these biosimilars will be on the market, generating significant cash for Coheris. Biosimilar products play a critical role in our corporate strategy. Cash flows from this portfolio will create a diversified source of funding that we will redeploy as we enter the rapidly growing $25 billion immuno-oncology market. Having this core economic engine allows us to pursue high growth, high return opportunities while limiting delusion to our shareholders. Let me start with our next expected biosimilar launch, CHS201, our Lucentis biosimilar candidate. Our partner, BioWAC, continues to target mid-year 2021 for the submission of VLA filing. As we previously reported, BioWAC held a supportive pre-VLA meeting with the FDA during the first quarter of 2021. We're very excited about the potential approval of this product in 2022, and have begun commercial planning activities in preparation for launch next year. We believe we could be among the first biosimilar Lucentis candidates to market, and this could become another significant revenue opportunity for Coheris. Ophthalmology has a similar buy-in built business model to oncology, with analogous critical success factors that our commercial team understands very well. We plan to leverage much of our existing commercial share of the overall $6 billion anti-VEGF ophthalmology market. Now, with respect to our Jumeirah-Bau similar CHS1420, the FDA has accepted our BLA for review for the December 2021 action date and is making good progress. In March, the FDA conducted the on-site portion of the pre-approval drug substance CMC inspection with no 483s reported. The NDTNF market represents a substantial commercial opportunity for Coheris. After years of double-digit price increases with Humira, there is clearly significant pent-up demand for the type of biosimilar value that Coheris will deliver in this market, where lower-cost alternatives can bring down the overall cost of health care. Our product, our patient-focused offering, and our manufacturing scale will match what payers are looking for. We are making manufacturing and supply investments market share. With respect to CHS 305, our Avastin biosimilar, we're currently conducting a three-way PK study required to support the BLA filing. COVID has impacted the recruitment, and we now expect to receive data toward year end and to file the BLA the first part of 2022. Once approved, Avastin commercial opportunities will provide additional scale to our oncology commercial efforts, with nearly identical sales call points Toropalimab. By 2023, we anticipate this diversified portfolio of four biosimilar products plus Toropalimab, our first innovative product, will be approved, marketed, and generating significant cash flows to fund our growing immuno-oncology franchise. The next topic I'd like to cover with you today. Now, as you know, in February, we executed the transformational first step in our strategy to enter the large and growing immuno-oncology market. with our collaboration with Junshi Biosciences, an innovation-driven biotech company, for toropelmab, their PD-1 inhibitor antibody. We spent two years conducting a rigorous assessment of the global checkpoint inhibitor landscape. We defined the optimal preclinical clinical properties for our investment in a PD-1 blocking antibody. We searched for a molecule that would ideally deliver near-term revenue through monotherapy but would also provide us with a clinical profile that would be ideal as a foundational asset for future combination therapies, since that is where the immunology field is heading. We reviewed over a dozen PD-1 steps. Torpalimab demonstrated high potency and unique molecular properties, which appears to translate favorably across a broad, pivotal clinical development program. Toropalimab has been in development since 2015 as being evaluated in 15 registrational clinical trials across a broad range of rare and highly prevalent tumor types. As a reminder, our portion of the development cost is limited to $25 million per year, giving us rights to an extremely high-quality molecule at a reasonable and predictable cost. The Toropalimab collaboration is already exceeding our expectations. We are pleased with the progress being made now that the clinical data are beginning to read out and the first regulatory submission in the U.S. is underway. The accumulated external validation for toropelomab includes the selection of the nasopharyngeal carcinoma abstract for ASCO's plenary session and press program, breakthrough therapy designation from FDA, and the additional recent approvals in China for NPC and urinary cancer. supplementing the original approval there for second-line melanoma. We expect toropalimab's emerging clinical validation as a potent PD-1 inhibitor to drive partnership discussions with third parties seeking to combine their portfolio with a high-quality PD-1 backbone. We are already making progress towards registration in the United States with the initiation of the rolling submission, BLA, or metastatic or recurrent MPC. We're also working closely with our partner tumor types, which we will outline subsequently. And we expect to meet with FDA to discuss our registration strategy for some of these key programs. We expect several near-term toropalimab catalysts in areas of high unmet need, including NPC, lung cancer, esophageal cancer, triple negative breast, and urethral carcinoma. Now, let me introduce you to Dr. Shah Rahimian, our Senior Vice President in Immuno-Oncology, who is leading COHERES toropalimab development program, and will provide you with an overview. Sean? Thank you, Denny. I'm excited to speak today about a number of toroclomab studies for which we expect clinical detail over the next year. Let me start with nasopharyngeal carcinoma, or NPC. FDA has granted toroclomab breakthrough therapy dedication for recurrent or metastatic NPC. As a reminder, This is granted when preliminary clinical evidence reviewed by the agency indicates that the drug may demonstrate substantial improvement over available therapy on clinically significant inputs. With keeping that in mind, we expect the BLA submission for this indication to be completed in a year. The first NPC BLA submission is based on the Polaris O2 CT05 clinical trial. This study enrolled 190 patients to current or metastatic MPC refractory to standard chemotherapy. Results of this study were published in the Journal of Glinco-Oncology in January of this year. The toripolimab approval for this indication will come as soon as first half of 2022. We also expect to submit a BLA supplement for first-line MPC based on results from the randomized tributary O2 CT15 trial with 289 treatment-naive patients. DRIPADER-O2 is a Phase II study and first on MPC, and we're excited that the study results will be featured by ASCO as a late-breaking abstract in the plenary program on Sunday, June 6, and in ASCO's official press program. We look forward to the meeting and the opportunity to introduce Tori Palemap to the audience of U.S. physicians and investors. We expect toripolimab to become the first PD-1 inhibitor approved for these two NPC indications in the United States. Recurrent or metastatic NPC is an orphan indication in the United States. Because toripolimab has the potential to be the first PD-1 approved for the treatment of NPC and to address an unmet need, we see this indication as an excellent opportunity to educate opinion leaders, community oncologists, and payers on toripolimab. Now let me review our lung cancer program, which comprises four pivotal trials. As you know, lung cancer presents over 60% of immuno-oncology market opportunity, and we believe these trials will support a comprehensive label to thoroughly address this dominant segment. Now let me briefly comment on each of the studies in some detail. Choice 01, or CT19, is a randomized, first-line, non-sponsored lung cancer study with 465 patients. The primary endpoint of this study is progression-free survival, and the key secondary endpoints are overall survival and objective response rate. This study is progressing well. In December 2020, an interim analysis showed that the primary endpoint of progression-free survival had been met. and this will be presented later this year. We expect the final data readout of this study to be available by year end. The second study, CT25, is a randomized trial with 350 patients with TGFR mutations who have failed prior treatment with tyrosine kinase inhibitors. Enrollment is expected to be completed by the end of the year, with final data expected in 2022. The third non-small cell lung cancer study, CT18, is a randomized trial of 450 patients comparing toropalimab versus placebo in the new adjuvant phase. Enrollment is expected to be completed by the end of the year, with final date expected in 2022. The fourth study of the program is in small cell lung cancer, inhibitor 08, CT28, is a randomized first-line study with 420 patients with primary endpoints of progression-free survival and overall survival and is expected to be completed in 2022. We believe this comprehensive program will support illustration paths in lung cancer in the United States. The next indication I will discuss today is clavigil squamous cell carcinoma. Of the 18,000 patients in the United States diagnosed with esophageal cancer each year, approximately one-third have squamous cell histology. This is an unmet medical need, and approximately 95% of patients with metastatic disease die within five years of diagnosis. Last month, the interim analysis of Jupiter-06 CT21, a randomized phase 3 study with 500 patients, met both primary endpoints of progression-free survival and overall survival. We expect a presentation of TRIPITER-06 data later in 2021 and the potential supplemental VLA-5 support labeled indications in 2022. Triple negative breast cancer is another high unmet medical need. It accounts for approximately 10% to 15% of all breast cancers in the United States, and nearly 90% of these patients that the static disease died within five years of diagnosis. This report slide, or CT26 study, is enrolling 600 triple negative breast cancer patients. Data from this study are expected in 2022. The EuroDL carcinoma program consists of two studies. The first study is Polaris O2, or CT12, a phase two study which supported indication approval in China earlier Second study, CT38, a large phase III devaluatory polymer or placebo in combination with standard of care chemotherapy as first-line treatment, which is ongoing. I'll turn the call back to David. Thank you, Shaw, for that very exciting review. In the second half of 2021, together with Jun Shi, we plan to engage with FDA to discuss the filing strategy for these and the other indications. We look forward to providing to future updates on both the clinical data and the regulatory progress of these programs. I only see a few words about TorpalMAP combinations. As previously disclosed, the Junshi transaction also includes options to their anti-tigid antibody and engineered IL-2 cytokine, as well as certain negotiation rights with respect to additional assets. For the anti-tigid antibody, we expect phase one study to begin later this year. We'll have the opportunity to review the data and make our opt-in decision when the study Together with Jun Shi or other partners, we expect to explore and develop synergistic combinations with Toro Palmet, particularly given its emerging strong efficacy profile and the market's direction towards combinations. Launch planning is well underway, and our commercial team is excited to add Toro Palmet to our oncology product portfolio. There is significant overlap with our established footprint of over 2,400 accounts, and inbound customer comments suggest they are eager competition in the anti-PD1 market. We believe displacing entrenched competitors is one of our demonstrated commercial competencies. I look forward to the market entry in 2022. Now, I'll turn the call over to McDavid for a review of the quarter's financial results. McDavid? Thanks, Danny. The details of our financial results are in the press release and in the 10Q we filed this afternoon, so I'll focus now only on a few highlights. The first quarter of 2021, we reported a $173 million net loss on a GAAP basis. On a non-GAAP basis, we reported net income of $400,000, or about a penny a share, on a fully diluted basis. The translation from GAAP to non-GAAP included three items. The $145 million upfront payment to Junshi Biosciences, the $11.5 million charges related to the termination of the CHS 2020 program as part of a strategic realignment of R&D resources toward immuno-oncology, and $16.9 million in non-cash stock-based compensation. Cash flow from operating activities was $1.4 million for the first quarter of 2021. As detailed earlier in the call, net product revenue was $83 million, a decline from the prior quarter and the year-ago quarter. The decline was primarily attributable to seasonal fluctuations in wholesale inventory, as well as increased allowances and discounts to customers. Research and development expenses for the first quarter of 2021 were $203.5 million, compared to $33.1 billion for the same period in 2020. The increase was mainly due to the $145 million upfront payment to Junshi Biosciences, The $11.5 million charge related to the termination of the CHS 2020 program, as well as development costs in support of the advancement of Toropanamab and the biosimilar pipeline product candidates. Selling general and administrative expenses were $39.4 million in the first quarter of 2021, as compared to $35.4 million in the year-ago quarter. The increase was primarily driven by higher stock-based compensation expense. We ended the quarter with cash, cash equivalents, and marketable securities of $399.5 million, compared to a balance of $541.2 million at year end 2020. Subsequent to quarter end, Coherence received $50 million from Junichi Biosciences' acquisition of approximately 2.5 million shares at a price per share of $20.06. For financial guidance, Now that we have closed the Junshi Biosciences collaboration, we are increasing our expected operating expenses for the year to a range of $370 million to $400 million, excluding the $145 million upfront payment to Junshi Biosciences in the first quarter. The expense guidance includes approximately $50 million to $55 million in stock-based compensation expense. Our external R&D spending is focused on manufacturing-related activities in preparation for the potential launch of toropalimab and CHS1420, and development activities for CHS305 and for additional presentations of Udenica. Increases in SG&A spending in 2021 are primarily driven by marketing activities and headcount to support Udenica and the potential launches in 2022. of Toropanumab and CHS 201. In the first quarter, we exhausted the remaining inventory that was manufactured and fully expensed prior to Udenica approval. As a result, we estimate that the cost of goods sold as a percentage of net product revenue will be in the range of mid to high single digits, excluding a mid-single-digit loyalty on net product revenue that we owe through July 1st, 2024. As Paul noted earlier, we expect Eugenica revenue and market penetration to rise in the second half of 2021, assuming treatment patterns normalize as the COVID-19 pandemic recedes and subject to pricing trends in the overall Peckville-Grafton market. Finally, on the investor relations front, We'll be participating in the Bank of America Healthcare Conference next week with our presentation scheduled for May 12th at 1.15 p.m. Eastern Time. And I'll now turn the call back to Denny for closing remarks. Thank you, McDavid. As you can see, we're making strong progress with Udenica, our biosimilar pipeline, and our strategic realignment towards immuno-oncology. On a financial side, we are focused on optimizing the cash flow potential of our biosimilar product candidates to fuel our IO growth engine. clinical data announcements, medical and scientific presentations, and regulatory milestones for Toropalimab and our biosimilar product candidates, we expect frequent and important news flow for the remainder of the year. We look forward to engaging with you through these announcements and also to our analyst event day later in this year. I'll now ask the operator to open the line for your questions.
spk01: Thank you. We will now begin the question and answer session. If you have a question, please press star then 1 on your touchtone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then 1 on your touchtone phone. And we're standing by for questions. And our first question on line comes from Mohith Vensal from Citi. Please go ahead.
spk04: Thanks for taking my question. Another contributing factor in first quarter that was the severe weather in some part of the country. I think you are not mentioning that. So the question is, Is it a smaller part than previously anticipated? And then pricing and inventory are still the bigger parts first. And then as you think about the demand, so if I think about fourth quarter number and take out that inventory move, I calculate roughly $100 million worth of demand. Is this a fair number of demand demand? to think about for first quarter and beyond, because obviously price is an important point, but how should we think about demand here?
spk09: Hi, Mohit. Thank you. I think you cut out the first part of your question. Could you repeat the first part of your question, please?
spk04: Sorry. I just wanted to get some color on the weather, severe weather in some part of the country part, which you kind of mentioned earlier in the quarter. but you are not mentioning it today. So was it a smaller portion in terms of impacting the quarter number?
spk09: David, do you want to address that? Sure.
spk12: Mohit, it's hard to measure the effect of the weather.
spk09: So we're focusing today on the two aspects of inventory and pricing.
spk12: And so the way to think about it, as we said in the script, is that
spk09: At the end of the third quarter of 2020, we had about 11 days on hand in inventory, which jumped in the fourth quarter to the high end of the normal range at 21 days on hand due to seasonal buy-ins from customers.
spk12: And then in the first quarter, this extra inventory was depleted. And now we're back into the normal range of 12 days on hand. And then additionally, Eugenica ASP declined 6% in the first quarter versus the fourth quarter
spk09: which directionally indicates how pricing changed in the market. So this decrease, I think, accounts for the remainder of the decrease in net sales. Thanks, David. Mohit, did you have a follow-on question?
spk04: So if I can ask one more question. So in this press release, you are mentioning other formulations or other presentations of Siderica. So now that you seem to be working on that, Is there anything you can disclose in terms of timelines or how we are thinking about it?
spk09: We have made no formal disclosures, as you know, with respect to these additional formulations.
spk04: Okay, got it. Thank you for that.
spk09: However, you know, as soon as we have a material development, we will, of course, disclose such.
spk01: Thank you. Our next question online comes from Jason Gerpery from Bank of America. Please go ahead.
spk10: Hey, guys. Thanks for taking my question. First, just on Torpallimab, just the positive interim data in lung cancer, just wondering, do you think that's a sufficient basis for a BLA? Or I know a number of competitors are saying that they're going to need Phase I PK bridging data in U.S. subjects. So just sort of curious if that's a gating item or something in the final top-line update that you're looking to see. And then just on the Pegg-Filgraston ASP dynamics called out in the prepared remarks, do you have a sense of what proportion of oncology providers participate in capitated or value-based payment pilot programs? Just trying to get a rough sense of what proportion of the market Amgen might be trying to cater to with the lowest net cost offering. Thanks.
spk09: Thank you for your question, Jason. With respect to your first question, which strikes to the issue of the lung studies and the interim analysis. I don't believe that you want to conflate that with the issue of any additional studies that others might be doing to supplant their indications. That being said, I'll let Shaw make some remarks about the lung study, the interim analysis, and the patient population there. Shaw? Thanks, Danny. And thanks for the question. Really, the short answer is that we believe that the study is well designed, is well powered, and was conducted within the industry and international rules and regulations. And we believe that the study is sufficient for a BLA submission. Of course, once the study is presented to the agency, the agency has the last word. The other point that I would make here, Jason, is that other people's studies may not have included the appropriate subset of patient histologies. And one thing about this study, I believe, is that it includes both squamous and non-squamous histologies, which I think is very important. So I don't think it's really an apples-to-apples comparison when you look at other studies. But so far, no, we don't believe that we will have to do any supplemental studies to with the caveat that we will be talking to the agency later this year with Jun Shi to validate that. And lastly, what I would point out is that there's three non-small studies in lung and one small cell study. So we think there's going to be a plethora of data in the indication. Now, with respect to the ASP question, Paul Reeder, perhaps, or Chris Thompson may address that. Chris?
spk06: Thanks, Denny. Thanks for your question, Jason. You had asked us about do we have an idea how many customers participate in value-based incentives. And I would have to say I don't have an exact number, but many of the customers do. That's what they tell us. They participate both on the commercial side as well as on the Medicare side, with the Medicare side sometimes going in and out of programs. But let's say this. Although they are participating in value-based incentives, they evaluate not only the cost of the product, but also the revenue derived from the product. And they try to balance that in their decision making. We believe that we've made the right decisions as it relates to being good stewards of ASP. And we'll continue to do so. I hope that answers your question. Thank you.
spk09: We're ready for the next question, operator.
spk01: Thank you. Our next question on the line comes from Chris Schott from JP Morgan.
spk08: Great. Thanks for the questions. On Neulasta, just directionally, are you seeing signs of either normalized pig filgrastim usage or willingness to switch away from OnPro over to biosimilars as we've kind of moved from this environment we're in in January, February to where we're sitting today in April and May? I guess directionally you're starting to see that, or is that still TBD in terms of when that transition is going to start to happen? And then just a second one on pig filgrastim, just on pricing. You talked about a 6% erosion in 1Q. Has pricing stabilized at this point, or are you still seeing some erosion on the pricing front? And I just have one follow-up after that.
spk09: Oh, great. Thanks, Chris. So I'll let Paul Reeder address your first question with respect to New Lasta and so forth. Paul?
spk12: Yeah. Hi, Chris. Thanks for your question. Yeah, I mean, I think with respect to the share shift with OnPro and New Lasta, you know, you saw that in the first quarter. And so, you know, we do expect as COVID recedes, as we laid out the opportunity for the market in that on probe opportunity to open up to greater, greater opportunity. We believe we're well positioned there for that protecting the market. And as it relates to pricing, you know, I think, you know, we expect prices to continue to erode as new competitors enter the marketplace. I think if you look at what's happened in the last quarters, the steep decline is really fueled by the new lasted decline, but also the pandemic where these new entrants, biosimilar entrants were forced to compete for share in that smaller pre-filled syringe segment. So now, again, as COVID is receding, we feel we're well positioned that that entire market opportunity will open up for more competition as the need for on pro, you know, becomes more diminished and price decreases will moderate. We do believe price decreases will moderate over time, yes. Thank you, Chris. Did you have a follow-on question?
spk08: Yeah, I just had a quick one on TorpadMap. Is there any thought or need, in your view, to think about doing a head-to-head against Keytruda, just given they are obviously dominant in many of these indications you're pursuing over time? Would that help at all from a commercial standpoint, or do you think the data will be comparable enough that you won't need that type of data?
spk09: No, we don't think so. It is an issue that we took a look at earlier on. However, our research studies and our conversations with the customers and particularly with the providers indicated that really they would look at the data generated with the particular PD-1 And if that data compared favorably, that would be fine to generate utilization. This is why we're very pleased with the data that's being generated with toropalimab so far. It's showing very strong efficacy in each of the indications that it's been put in. So we're feeling that this will continue and we'll have excellent data to go forward, particularly in some of these other indications. So no, we don't think there's a need to go forward for the head-to-head in that. We have seen nothing in the market that indicates that.
spk08: Okay, perfect. Thanks so much.
spk01: Thank you. Our next question online comes from Salim Siad from Missoula. Please go ahead.
spk02: Hi, this is Bennett on behalf of Salim. Thank you for taking our questions. A couple if we may, although both are related. We found last month in the site clinicalhero.com two trials listed, one for Eudenica administered with an autoinjector and another one using an on-body injector. But we haven't seen similar trials in clinicaltrials.gov. If we could get some color regarding this, please. And also, if you could comment on the type of studies that are needed when developing an auto and an on-body injector. I mean, it is only a phase one PKPD study needed, or do you think a pivotal study is eventually needed as well?
spk01: Thank you.
spk09: Thank you. As I indicated previously, we haven't made any formal announcements or disclosures with respect to alternative dosage forms for Eudenica. With respect to the requirements, I would direct you to the studies that Amgen performed when they brought forward their on-body system, which were pharmacokinetic That is to say, efficacy studies are probably not required.
spk01: I see. Good. Thank you very much. Thank you. Our next question online comes from Georgie Jordan from Cohen & Company. Please go ahead.
spk03: Hey, guys. Thank you so much for taking our questions. I guess first, if you could talk about the opportunity for incentives in the anti-VEGF market. Do you believe that having only one of the two products as a biosimilar could allow you to have access to the whole anti-VEGF market. And then maybe if you could talk about your expectations for the competitive dynamics at the time of launch and thereafter. And then I have a quick follow-up.
spk09: Thank you. I'll let Paul Reeder offer some additional insights and a little sentence, but the short answer to your question is yes. We think that the entire market, that is the approximately $2 billion for Lucentis and $4 billion for ILEA is addressable to some degree with a Lucentis file somewhere. As you know, that market is stratified from reformulated Avastin at the low end all the way up to a very long duration Moides at the top end with ILEA and Lucentis in between. So we feel that Lucentis is an ideal entry point for this. And we further think that it'll be a couple of years before ILEA biosimilars actually get on the market. So we look forward to market formation with the Lucentis biosimilar starting sometime next year. And we are now working on our launch for next year, as we said. Paul, do you have any additional comments with respect to Lucentis?
spk12: I don't think I have much to add, Denny. I think that was very comprehensive. So nothing more to add. Thank you so much.
spk03: Thank you. And then just a quick follow-up on Udenica. What is your sales force seeing in terms of marketing activity from Pfizer's competitor product? And are there any other Udenica competitors that are not yet to market that you expect will be coming up in the next six to 12 months?
spk09: Great question. I'll let Chris Thompson, our Executive Vice President of Sales, handle that one. Chris, how's the competitor set look out there?
spk06: Thanks for your question. So you're seeing activity amongst all of the competitors that are out there. As Paul had mentioned earlier, though, with COVID being here, it's a smaller competitive set we all have to compete with, which probably attributed to some of the price declines. But now with COVID receding and everybody getting vaccinated and my sales force able to get into these accounts, I think what we're going to see here is You know, the pie gets bigger, right? The opportunity to compete for the on-pro business, that 55% of the business, really gives us an opportunity to expand as well as the competition to expand. But we're pretty confident that based on our past history, we're going to do a pretty good job there. Thanks.
spk01: Thank you so much. Thank you. Our next question on the line comes from Greg Gilbert from Truist Securities. Please go ahead.
spk11: Thank you. It's Greg Fraser on for Greg Gilbert. The expectation for identical sales to rise in the second half, is that relative to the first half or is that on a year-over-year basis?
spk09: Would you like to take that one, Paul? It's based on the first half, Greg.
spk11: Okay. And the operating expense guidance change, how much of that was related to the Junshi collaboration versus higher spending in other areas?
spk09: Sure, so for the Junichi collaboration, as you might recall, we have a $25 million per molecule per year R&D expense contribution. And so that's already kicking in. And then we're also preparing for commercialization there, which involves some tech transfer activities.
spk11: Got it. Okay. And then you mentioned that you could potentially do better with some of your future biosimilar launches than you've done with Udenica. Is Lucentis one that you'd put into that category where you could perhaps do better than 20%, 25% share? Thank you.
spk09: Yeah. So let me just correct that. What we indicated was that we felt that for any biosimilar launch, we would do at least 10%. And that would include, for example, the 1420 Humira Biosimilar launch, certainly the Lucentis launch. We're very proud of the Eudenica launch. We did 20% of the first year, which was actually 50% of the syringe segment. So we did quite well there. I'd be very, very happy to replicate that success with Humira or Lucentis. But we're optimistic that our proficiency in biosimilar commercialization will be demonstrated with the Lucentis launch, the Avastin launch, the Humira-Vao summer launch, and so on. We feel this is our playing field, and we're the folks who have demonstrated specific competencies in these areas without resorting to extraordinary price cutting.
spk11: Got it. Thank you.
spk09: Thank you.
spk01: And thank you. Our next question on the line comes from Douglas Sal from HC Wainwright. Please go ahead.
spk05: Hi, good afternoon. Thanks for taking the questions. Just, Danny, you know, so much of the strategy, certainly in the success that you've enjoyed, both the ANACA and hopefully with some of the other biosimilars that come to market have been driven by your sort of outreach to payers. I'm just curious, you know, have you, since you've moved ahead in the PD-1 market and immuno-oncology, have you engaged with payers extensively and talked to them about this sort of opportunity to sort of come to market as a value brand. And what are they looking for in their receptivity just given the significant increase in spend in the immuno-oncology category?
spk09: Thank you. Thanks for the question, Doug. You know, I think that the first thing that we're going to do is going to get toropalimab approved. It's an orphan indication. It's got breakthrough status. And so we don't see a need to position it as a value brand per se, given this indication going forward. How things roll out in the future, we'll handle in the future as they come. But I think the main thing to focus on here, though, is that toropelmab really is being extraordinarily validated in a number of ways. It got breakthrough status from the FDA, the selection at ASCO for the plenary session, the additional approvals in China, Junshi Bioscience's distribution agreement with AZ in China, and so on. And so we feel that we have a very, very strong molecule on our hands. We'll be able to address each of these indications as they come up.
spk05: Okay, great. Thank you.
spk01: Thank you. And our next question online comes from Jason McCarthy from Maxim Group.
spk07: Hey, this is Michael Akunowich on the line for Jason. Thank you for taking my question. So I'd like to see on Udenica, if you could provide a bit more color on how the pricing and reimbursement breaks down between Udenica and Neulasta now. I know you touched on that a bit before, but could you provide a bit more color?
spk09: Thank you for the question. Perhaps Paul or Chris have the actual ASP numbers for Udenica, Udenica versus Neulasta. Paul, do you have this? Yeah, how you doing, Michael?
spk12: Yeah, I think, you know, the second quarter published prices, you know, will be coming out soon, but, you know, looking at Q1, which were publicly available, you know, Neulasta had the, you know, the lowest ASP published price, you know, amongst all of the bio, the Pegfield-Graston set, just a little over $2,900, so Um, you know, so from a, as Chris mentioned, you know, many of these segments are, um, uh, cost recovery sensitive. So, you know, they look at both costs and, and the reimbursement on that. So, um, but the, you know, I'll refer you to Amgen's, uh, earnings report, you know, for specifics around their specific ASP declines year over year, quarter over quarter.
spk09: But we, I think it's fair to say that we have, uh, exercised, ASP pricing discipline, we've talked about that a lot, that's showing up in the numbers, and our ASP is well above that of entrance.
spk07: All right, thank you. And then on the competition in the biosimilar space, historically, you know, the idea has been that new entries come in and they're going to take share from Neulasta rather than from each other. However, with Amgen taking the ASP leadership position, does that change the calculus at all when looking at the competitive dynamics?
spk09: Yeah, Paul, do you want to take that one?
spk12: Yeah, sure, Michael. Yeah, I mean, you know, it's pretty expected with a lot of these biosimilars, you know, to compete for the overall share. But, you know, I think with COVID and the pandemic, favoring the on-body device, you know, it caused this competition for, you know, the segment which was really for pre-filled syringes. And we own that segment. We're the number one PEG, filgrast, and biosimilar. And now that COVID's receding, you know, we believe that's why we're in the strongest position to be able to go after that 54% on-pro share, which, you know, which is available to the market. So, You know, that's our standard. We're not, you know, focused on, you know, the newer entrants. Our focus is on taking share from the originator who has two-thirds of the business still.
spk07: All right. Thank you very much. Thanks.
spk01: Thank you. And our last question comes from Greg Gilbert from Truist Securities.
spk09: Yes, hi, this is the other Greg from Truist with a follow-up here. Two-part question. One is on revenue. Do you want investors to take away that you expect to sell more than four times the Q1 level of Edenica? I just want to make sure you have the opportunity to kind of set the stage here and reduce variability of estimates. But it sounds like second half higher than first half means most likely that your sales would be higher than Q1's sort of run rate. So that's part one. Part two is, Denny, about interchangeability. we may see for the first time ever, well, the biggest drug ever, seeing biosimilar competition, but you may also see a mix of interchangeable biosimilars and many that are not. Are you pursuing interchangeable status? I think you're not, but I'm curious on your views as to whether you would consider it and whether you think it matters. Thank you so much. That's a great question. Let me answer the second question before the first. First, I think it's important to keep in mind that interchangeability thus far has not been a requirement at all to support biosimilar adoption. Secondarily, what we'd say is that our payer research indicates that interchangeability will not be a major impediment to biosimilar adoption, specifically in the Humira market. We expect the payers to be very, very active in that market, but we don't expect the requirement to be interchangeability or not. And the third thing I would say is, you know, there's not interchangeability requirements in Europe, and that hasn't impeded biosimilar adoption there whatsoever. So, you know, we don't really think so, and no, we are not seeking a biosimilar interchangeability study or to invest in such. We don't believe it's required. With respect to first half versus second half revenues, I'll let McDavid comment on that. Yeah, I think another way of phrasing your question is whether or not you can take first quarter revenue and multiply it by four. And I would say no. We expect that the second half will have higher revenues as we penetrate into the on-prem market. Of course, that's dependent on the overall pricing environment, but we believe that revenues will rise in the second half.
spk01: Thank you.
spk09: Okay, great.
spk01: We have no further questions at this time. I'd like to turn the call over to Denny Lanphier for closing comments.
spk09: Thank you all very much for joining us today on our Q1 call. As you can see, I think we're making excellent progress with respect to our Malpa. And I think the June sheet transaction going forward will turn out to be a very positive one for the company, particularly since we are now apparent that we have a very high-quality asset. which I think will give us a lot of readouts with respect to the clinical programs over the next six to 12 months. And we look forward to seeing you all on our next call. We'll be at Bank of America. And also we'll have a few things to say on our R&D day, which will be towards the end of the year, most likely in Q4. We'll give you some additional color on a few things. Thank you.
spk01: And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.
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