Coherus BioSciences, Inc.

Q3 2021 Earnings Conference Call

11/8/2021

spk02: Good day and thank you for standing by. Welcome to the third quarter 2021 Coherus Biosciences conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, McDavid Stilwell. Please go ahead.
spk08: Thank you.
spk07: Good afternoon, everyone, and thank you for joining us. We issued a press release earlier announcing our 2021 third quarter results. This release can be found on the CoHARIS Biosciences website. Today's call includes forward-looking statements regarding CoHARIS's 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 Eudinica 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 10-Q for the quarter ended September 30th, 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 model. With me on today's call are Denny Lanphier, CEO of Coherus, Paul Reeder, Executive Vice President of Commercial Operations and Market Access, and Chris Thompson, Executive Vice President of Sales. I will now turn the call over to Denny. Thank you, McDavid, and thank you all for joining us this afternoon. I'm pleased today to report on our recent achievement of key milestones driving near-term growth of our commercial product portfolio. We now have three PLAs under FDA review and expect to pursue multiple additional FDA applications. In 2022, based on recently reported positive clinical data, we expect within a year to have four products approved and within two years to have five products launched and driving significant revenue growth. to fund our expansion in oncology. Since our last conference call in August, we've reported a series of significant achievements towards this goal. First, the positive data from the Udentica On-Body Injector Clinical Trial, which is expected to enable a 2022 submission of a prior approval supplement to the Udentica BLA. Following the 10-month review period for the OBI submission, we plan to launch directly upon approval. The FDA has accepted the BLA for our biosimilar leucensis, CHS201, and has signed a target action date of August 2022. We plan to launch directly upon approval. The FDA review of the BLA for our biosimilar hemyra, CHS1420, is proceeding well and advancing toward the December 2021 action date. We plan to launch in July 2023. The FDA also accepted the toropalimab BLA for advanced nasopharyngeal carcinoma, including in combination with chemotherapy for first-line and as monotherapy for second-line and greater, and granted priority review with a target action date of April 2022. We plan to launch toropalimab directly upon approval next year. Recently presented positive data from the esophageal squamous cell carcinoma Phase III clinical trial are expected to enable the submission of a toropalimab BLA supplement in 2022. Positive progression-free survival data from the Phase III clinical trials evaluating toropalimab and non-small cell lung cancer were presented in September. Final PFS and interim overall survival data are expected by early first quarter 2022, after which Coheris and partner Junichi Biosciences
spk08: submission of a BLA supplement with the FDA.
spk07: With respect to CHS305, our biosimilar Avastin candidate, we are conducting a three-way PK study to facilitate a BLA submission in 2022. The news flow will continue through 2022 as TorpalMap clinical data continue to accumulate in non-small cell lung cancer, small cell lung cancer, triple negative breast cancer, and hepatocellular carcinoma. Also next year, we expect data from the toropalimab combination trial Junichi Bioscience is conducting with their antitiget antibody, to which we have option rights. Interest in toropalimab combinations has grown as data has been presented and published this year. We continue to receive inquiries from other parties interested in evaluating their novel agents with toropalimab. Such combination therapies provide additional opportunities for Toropelma growth and differentiation. Udenica continues to provide a strong source of funding for pipeline investments to support upcoming product launches. Net sales declined to $83 million in the third quarter, within the context of the increasingly competitive ecto-rest in market. We look forward to launching the Udenica On-Body Injector, which will directly compete with Nuasta On-Pro. which retains 50% share of the overall exo-grasted market. We were pleased with the official notice last week that CMS has extended enhanced Medicare reimbursement for Udenica in the 340B hospital setting through year-end 2022. Pass-through status was scheduled to expire on March 31, 2022, so this extension was announced and led by our government affairs team in collaboration with CMS. I'll now turn the call over to Paul Reeder for a review of Udenica's third quarter performance. Paul will also provide an update on launch prep for both Toropalimab and Arlucensis. Paul? Thank you, Denny. Udenica net sales were $83 million in the third quarter, down 6% from the second quarter. This was driven by an 8% decline in units, partially offset by a favorable shift in segment mix. The market share declined from 19% in the second quarter to 18% in the third quarter, with share loss being largely limited to 340B hospitals. Our lowest margin business, our new entrants, have been gaining share. Our share in clinics grew, and we held share in non-340B hospitals. As we saw in each of the last two years, the Penn Philgraston market declined modestly in the third quarter, and we expect a return to low single-digit market growth in the fourth quarter. Until COVID recedes more broadly, there will continue to be a short-term advantage favoring the originator's on-body device, which retains 50% of the overall market. We continue to believe that in the long term, taking share from OnPro will be a source of growth for biosimilars and especially for Eudetica. The other element beyond our control is the level of price erosion precipitated by our competitors. We seek to be good stewards of our ASP as we believe relative price stability benefits our customers. Our strategy is to maximize long-term eudetica revenues. Now I'd like to talk about commercializing our pipeline. We are now preparing for the launch of two new products in 2022, Torpalimab for nasal pharyngeal carcinoma and CHS, 201 are biosimilar lucentis. We expect to launch both products directly upon approval. Nasopharyngeal carcinoma is a rare cancer where currently there are no PD-1 inhibitors that are FDA approved for use. Borpalimab not only has the potential to be the first and only PD-1 inhibitor indicated for this tumor type, but to also establish a new first-line standard of care. capabilities have been built to scale and the TOR-PALOMAB effort will be efficiently integrated into our existing infrastructure. Launch preparations are underway and progressing well. With respect to our Lucentis biosimilar, our FDA action date of August 2022 will allow us to launch and compete early in the biosimilar market formation. The branded Lucentis market is expected to be $1.3 billion in 2021. Our launch planning is underway and progressing well, and we look forward to competing in this large market. We intend to launch with a dedicated ophthalmology sales team while leveraging our existing key account, market access, and patient support capabilities from oncology. I'll now turn the call over to McDavid for a review of the quarter's financial results. Thanks, Paul. The details of our financial results are in the press release and in the 10Q we filed this afternoon, so I'll now focus on a few highlights. For the third quarter of 2021, we reported a $38.5 million net loss on a GAAP basis. Cash flow from operating activities was $13.7 million for the third quarter of 2021. As detailed earlier in the call, net product revenue was $83 million, a decrease from $88 million in UDEMICA net sales recorded the prior quarter. Wholesaler inventory remained within the normal range. In the first quarter of 2021, we depleted the inventory manufactured and expensed prior to Udineka approval. And since then, per unit acquisition costs are fully reflected within CODS. Therefore, cost of goods as a percent of net revenue has increased from the year ago quarter. The third quarter 2021 COGS was also impacted by a write-off of $5.2 million related to inventory that did not meet acceptance criteria. We expect COGS as a percentage of net sales to decline in the fourth quarter to the mid-teens, including amid single-digit royalty we owe through mid-2024. In the long run, starting in 2024, We expect Udenica gross margins to return to 90% or higher as we realize the benefits of a significant manufacturing process improvement and royalty expiration. Research and development expenses for the third quarter of 2021 were $54.1 million compared to $38.9 million for the same period in 2020. The increase reflects costs to advance our late-stage pipeline. Recall that we expect to bring four additional products to market over the next two years, and also the on-body injector presentation of Udenica. And we are investing this year in activities such as regulatory affairs and manufacturing scale-up for CHS 1420, clinical development and BLA filings for toropalimab, and a clinical trial for CHS 305 and one for Udenica on-body injector. Selling, general, and administrative expenses were $39.9 million in the third quarter of 21 as compared to $32 million in the year-ago quarter. The increase was driven primarily by higher Eugenica commercialization activities as well as stock-based and other compensation expense. We ended the quarter with cash, cash equivalents, and marketable securities of $468.7 million compared to a balance of $454.5 million at June 30th, 2021. We are maintaining our full year guidance for R&D and SG&A expense of $370 million to $400 million, excluding the first quarter upfront payment to Junichi Biosciences. And this range includes approximately $50 million to $55 million in stock-based compensation expense. I'll now turn the call back to Jimmy for closing remarks. Thanks, McDavid. The next 12 months will be exciting time at Coheris for the potential for additional clinical data for toropalimab and new termotypes, a growing immuno-oncology pipeline, FDA action on multiple new product candidates, and anticipated commercial launches for both toropalimab and CHS-201 or Lucentis biosimilar. In January, we are planning to host the first annual Coheris Pipeline and Business Review Meeting in New York City. With progress in our pipeline and our strategic expansion into oncology, Our business is rapidly evolving. We plan to provide a deep dive into the various elements of our business and give investors and analysts an opportunity to hear from additional members of the team. We will provide additional information a little closer to the date, and we look forward to seeing you there. I'll now ask the operator to open the line for questions.
spk08: Operator?
spk02: Absolutely. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Salim Syed of Mizzou. Your line is open.
spk04: Good afternoon, guys, and thanks for the questions. Just a couple for me, one on the Udemycon body injector and then one on TIGIT if I can. So on the on-body injector, guys, congrats on the progress. Just curious how you guys are thinking about the revenue profile here for Udenica. If we should be expecting a bimodal peak, obviously consensus isn't modeling a bimodal peak right now. Just curious how you're thinking about that, and if late 22 is even in the cards for when we can expect a commercial on-body injector. And then on TIGIT, just given the ARCUS release tonight where they mentioned that the triplet with their PD-1 TIGIT and the adenosine looks like it's numerically outperforming doublet, just curious how you're thinking about what you would need here to opt in on the Gingy TIGIT if you'd be looking at doublet versus doublet or doublet versus triplet. a triplet in the market. Just curious how you're thinking about what you need here for the opt-in. Thank you.
spk07: Thanks very much for the question, Celine. Let me take the OBI question first. With respect to potential launch timing, we have not yet disclosed that. We had a few conversations last year. I remember you had some very salient questions at the timing of our BK study, which I think you turned out to be pretty close on, actually. It was very, very timely. But we won't have very much else to say about OBI until we have another disclosure to make. And so we'll just graciously decline to give some additional color with potential timing on that. With respect to the bimodal model for OBI and how we expect OBI to do in the market, I'll just punt that one over to Paul for comment. Paul? Thanks, Danny. Thanks for your question, Salim. Yeah, I mean, New Last Dog Pro has proven to be resilient over the last two years with COVID. So holding on to 50% market share represents a very sizable opportunity for our on-body device, if approved. And so we do see that as a growth catalyst there and aligns with our overall strategy of maximizing the long-term revenues for Udenica. Now, with respect to the doublet versus triplet with the TIGIT and so on, I think we've talked about this a little before, Celine. We view toropalimab really as the foundation stone and the backbone for our immuno-oncology franchise. And so we contemplate combining toropalimab with a number of agents, including TIGIT. So we expect, of course, to evaluate doublet strategies with Toropalimab. We also contemplate evaluating triplet strategies with Toropalimab. We see combinations as the wave of the future. And I think we've talked previously about our efforts at co-formulation, which is now well underway. That is Toropalimab with various agents, including, of course, the TIGIT. We'll have a little more color for you on that and perhaps some data at the Analyst Day meeting in January. But, yes, that, we believe, is the future of immunology, sort of double and triple combinations, and we're gearing up to evaluate those. Super helpful.
spk04: Thanks so much, and congrats again on the progress.
spk07: Thanks. Good to hear from you, Slade.
spk02: Your next question comes from the line of Ken Kishatore of Cowen and Company. Your line is open.
spk03: Hey, guys. How are you? Just a couple questions. Denny, the strategy you're taking in the PD-1 market seemingly being validated by others who want to take a similar approach. So can you talk about the likely evolution of the marketplace in terms of pricing and who can play in what area and why? And then on Lucentis, just wondering, This seems to be more of a managed care-driven approach. At least I would gather that would be the case, different than Udenica that had heavy commercial spending. So can you talk about the Lucentis opportunity in terms of the spend necessary to achieve what you want to accomplish, and then whether a biosimilar Lucentis may be a step through to ILEA and others, and so maybe the evolution there. And then lastly, just wondering if you all would take a shot about timing of profitability again. seems like we have a lot of good things happening, but wondering if you think 2023 we can break out and kind of forever put profitability kind of to what we experience as we go forward. Thanks a lot.
spk07: All right. I'll try to unpack that. Again, there's three questions there. First, with respect to Ascentis, I think that the The expenditures are relatively modest in the grand scheme of things. We've talked before about how we intend to leverage our existing infrastructure, you know, both in terms of the marketing side and so forth. And we've also talked about the size of potential sales force and boots on the ground being 20, 25 folks, something around that order. I'll let Paul answer the follow-on question with respect to incentives with respect to how we see the market shaping up, our participation during market formation, and the potential step through. Paul? Sure. Thanks for your question, Ken. So, you know, unlike oncology, this retina market is highly concentrated. And so, you know, you've got, you know, a fairly small market that drives, you know, the largest percent of utilization. The other dynamic that's different is that it's much more Medicare driven because of the age of the population of these patients in general. And so, you know, the impact of commercial access isn't as great as it is in oncology in certain tumor types. So we believe we can be very efficient, you know, through proper targeting at the retina specialist level, the high lucentis users, and ensuring that really you know, the pricing and contracting, you know, meets the customer's needs because those are big drivers. And so, you know, the good thing is not having that large commercial requirement on the payer side, you know, really reduces the need to stack the rebates on the payer and the provider side. So we think we're going to be able to leverage the majority of our commercial infrastructure. We'll have a very focused retina team and we'll be able to approach this market in a very efficient and synergistic way. And we believe, you know, Ken, you know, with a high degree of confidence, we're going to compete very successfully given our track record here. And, Ken, can you remind me a little bit about what you would like to know about, you know, pricing in the PD-1 market, any detail? Are you just looking for a general clarivate? what we think the pricing is going to do and so on?
spk03: Yeah, Denny, there's a lot of folks actually, it's good to see, I guess in one sense, bad to see when there's competitors, but folks are looking to take a similar strategy. So just, you know, there seems to be an evolution here, folks pursuing a similar game plan as yourself, just how you see this market playing out and yes, pricing and kind of who takes kind of what area and why and just give us a sense of kind of as it gets a little bit more crowded, how everyone can participate.
spk07: Well, first I would say that I think it's a bit premature for us to comment on pricing of particular segments. I would rather have either approvals or at least confirmatory data and indications or filing particular indications before we start talking about how we're going to go into particular segments, whether that's non-small cell or soft at yield or with others. I think, though, that two broad sort of things emerge, though, from the market. In the very long run, I think that PD-1s definitely will moderate in terms of pricing in the market. And then secondarily will be replaced by doublets that are co-formulated or combination strategies, which will relieve a little of the pressure on the therapeutic stack and the pricing of the therapeutic stack, which is probably not sustainable in the longer term. But if you let us get a couple of rules and a few other submissions under our belt, we'll be happy to talk a little bit more about our strategies and how we intend to get into each of these markets. Now, let me take your last question. I'll let McDavid chime in on this one. I think it was about the profitability in 2023 and how we see that evolving and so on. So, McDavid, do you want to take that one? Yeah. Yeah. Thanks for the question, Ken. So, we recognize for a long time that 2022 would be a transition year between Eugenica sales exclusively and a, you know, a fully diversified portfolio. which will be up and running, we believe, in 2023. So we're managing Coheris efficiently toward the near-term launch of four new brands, as well as the on-body injector for Eugenica. And I'll remind you that, you know, our commercial organization is already operating at scale, and so new launches don't require de novo construction of commercial operations. And we believe that additional revenue will drop quickly to the bottom line. So in 2023, the fully diversified portfolio should be online. And, you know, we'll have four biosimilars, including Udenica with multiple different presentations, the OBI giving it the second wind, as well as Toropanumab approved with, we believe, multiple different indications that year. So, you know, it's 2023 setting up to be a very exciting year, and 2022 is a year where the story will be coming together rapidly. I would further characterize 2023, Ken, as having perhaps modest increases in expenses. As David indicated, there's a lot of leverage that we're going to exploit going into oncology between Udenica, Boston, Biosimilar, and the PD-1, but potentially substantial increases in revenues as these all launch. So I think 2023 is a year that will shape up quite well.
spk03: Thanks so much, guys.
spk08: All right. Thank you.
spk02: Your next question comes from the line of Chris Schott of JP Morgan. Your line is open.
spk06: Great. Thanks so much for the questions. Just two on Udenica. Maybe first just elaborate a bit on sequential trends as we think out to 4Q. It sounds like you're expecting modest volume growth for the market next quarter, but can you talk a little bit more about the competitive landscape and sequential price expectations and Is there more kind of mixed shifts away from 340B, et cetera? I'm just trying to get my hands around, you know, can we think about Udenica kind of at a floor this quarter, or is that a business that could continue to sequentially erode from here? And then my second question was just on the on-body product, as we think about that launch over time. Is there an ability to differentiate pricing for that product versus the existing format, given the different competitive landscapes between the two products, or is Is this really more of a volume play going after that 50% of the market that still is sitting with OnPro? Thanks so much.
spk07: Thanks a lot, Chris. With respect to the sequential insights quarter to quarter, I'll put that one over to Paul Reeder and see if he has any comment on that. Paul? Yeah, thank you. Yeah, so, you know, obviously our strategy is to maximize long-term budenic revenues And we're going to continue to balance the trade-off between price and share by customer and competitor as the competitive intensity heats up and likely new competitors coming in in 2022. So we're going to take a very careful review of that over time. Again, we're going to be focusing on Elasta, which is the largest source of revenue and opportunity for us moving forward. And we're going to be looking at really those higher margin, higher value segments, which is the clinic and the non-340B segments, which as we demonstrated in the third quarter, we grew that clinic business and held firm under intense pricing competition in non-340B. So that's going to continue to be our focus. I think it's reasonable to assume with competitive pricing pressures, some continued price declines into 2022 with some moderation of that in the mid and long term. Let me take the question with respect to OBI that you had, Chris, see if I can give you some help there. The first thing I would say is that after our announcement of the successful PK study, which, by the way, I think is the really pivotal part of the development program that is the most difficult to pull up. Actually conceiving a device, manufacturing it, testing it, and having it demonstrate about similarity with respect to pharmacokinetics, I think, is the tough thing. You know, after that, you're in the business of filing and prosecuting the file to get approval. But since we've made that announcement, it's become very clear to us that there's really significant pent-up demand in the market for a non-body system in the hands of a biosimilar company such as Eugenica. So I think we're pretty optimistic about that and how it's going to move. Just how we're going to price that and what our strategy is for penetrating the market, how we're going to develop a holistic value proposition, you know, such as we did when we first came out with the pre-filled syringe. I'm going to leave that for a little later down the road when we actually have that device approved in the hands of We'll be happy to talk about it then, as opposed to talk about it now. But I would note the very significant pent-up demand for an embodied device. I hope that's helpful.
spk03: Great. Thank you.
spk02: Your next question comes from the line of Douglas Chow of HC Wayne Wright. Your line is open.
spk09: Question is just one, Denny, in terms of the Eugenica business. I'm just curious, once you eventually get your on-body device to the market, do you anticipate, will that largely be going to the current Udenica book of business or from an account basis, will this represent an opportunity to really sort of penetrate accounts where you haven't had as much penetration to date?
spk07: Hey, Doug, great question. I'll put that one to Paul. Paul, what about the segments in the accounts for the on-body? Yeah, thanks for your question, Doug. No, we see that, you know, the approval and launch of our on-body device, you know, enables us to go after that 50% of new last OBI. So that's really the strategy we're going to take on approval. And that's where the opportunity is. So we see it really being a play to capture more share of the on-body market.
spk09: I guess, Paul, what I'm trying to understand though, you know, where the on-body market exists. I mean, are there sort of clinics or hospitals, et cetera, where you just simply haven't been able to get much traction just simply because they're predominantly using the OBI? Does that represent sort of an incremental opportunity for you to begin to compete just because they expressed a preference for that delivery system? And then I have a follow-up.
spk07: Yeah, absolutely. Yeah, Doug, I mean, the use of on-body delivery is high in all segments, hospitals and clinics. And so, as we are enhancing our segmentation capabilities, our intention is to be able to go very quickly into those particular segments, both in the hospital and the clinics, and be able to demonstrate a different value proposition with the Udenica OBI versus the originator. We believe that opportunity exists in all segments. I would further add, Doug, that to the question of accounts, definitely there's accounts that will be unlocked by our own on-body that have no alternative currently. Just put the innovator there with their device. And this is the reason I mentioned that I thought there was a significant pent-up demand.
spk09: Great. That's very helpful, Denny. And just in terms of the Lucentis Biosimilar, is your focus going to be going after some accounts that might be predominantly users of ILEA, or are you going to be focusing across the entire market, or will you be focusing primarily on sort of high volume with Centus users? Thank you.
spk07: Paul, you want to take a shot at that one? Sure, Doug. I mean, we see the whole VEGF market as an opportunity. Obviously, you know, the short term is, you know, being able to, you know, rapidly capture share from the innovator Lucentis. That's the low-hanging fruit. But we believe, you know, based on what we are understanding about this marketplace where, you know, pricing and contracting and value is extremely important, that we'll be able to deliver a value proposition, you know, that will be able to enable us to compete within the entire VEGF market.
spk09: Okay, great. Thank you.
spk02: Your next question comes from the line of Jason Gerberry of Bank of America. Your line is open.
spk05: Hey, guys. Thanks for taking the question. Just wanted to get your perspectives on this Eli Lilly pivot adcom in your ultimate views. It sounds like there's a growing consensus view that maybe the FDA's tone is changing here with respect to accepting China only faced three studies. And so just sort of curious how you think about that nuance with the different potential filings with Thorapaliumab. And ultimately, do you think there's anything materially different about your program versus some of the other PD1s that have been studied and developed primarily in Chinese subjects? And then just a quick one on the new last on-body program, just if you can talk a little bit about Any thoughts on how this plays out in terms of rollout and whether or not we anticipate any sort of IP or patent-related challenge? Thanks.
spk07: So let me take the first one first on this one, Jayden. So with respect to other teams' programs, Lully's programs or others, you know, we haven't taken a deep dive into their clinicals or reviewed their data or, of course, not reviewed their FDA correspondence. So we're not in a very good position to comment, except I can say that our understanding is that Lilly with Sintolimab most likely will have an adcom to review data. I can also tell you, though, that with our own communications with FDA and Toropalimab with nasopharyngeal, we will not have an adcom. We've had communications with FDA say an adcom will not be required for our indication. Now, you know, I think that the overarching color here is that a number of products have shown up and the FDA probably is going to take the opportunity to make thorough reviews of the data. But, you know, overall, I think we're pretty familiar with the the types of conditions that the FDA looks at and what they impose. They must have, for example, similar standards of care with respect to the co-therapies. You have to catch the patients at the same progression of disease. There can't be any significantly genetically driven histological differences, so therefore the results are highly generalizable. And then lastly, which I think is very important, the studies have to be conducted in a very rigorous fashion with CGMPs consistent with FDA, you know, standards. And we think that the June sheet code here as typical studies conform to all those conditions. And our strategy here, of course, is just with MPC is, you know, once we get the data, we'll go forward to the FDA, we'll review it with them, and we'll discuss the registration strategy.
spk08: And so once we have those conversations, we'll come back and check. And then I guess just the on-body one is the other follow-up.
spk07: Yeah. Were you wondering about exactly what part of on-body?
spk05: Just do you anticipate, you know, timely market access? Are you anticipating any sort of legal patent barrier at all to market access? Oh, sure.
spk07: Yeah. So, you know, I would say that the – We have certainly thoroughly considered all the relevant IP that's out there with respect to on-body and so forth and how to do this. We totally respect intellectual property, whether it's ours or whether it's other folks. And given all that, we expect to launch our on-body program accordingly. So I think that we've been very, very thoughtful about the intellectual property. I won't dive into the specifics of it. But there is IP out there, and I think it has to be observed. Okay. Thanks, guys.
spk05: No problem. Thanks.
spk02: Again, to ask a question, please press star 1 on your telephone keypad. Again, that is star 1 on your telephone keypad. Your next question comes from the line of Balaji Prasad of Barclays. Your line is open.
spk01: Good evening, and thanks for the question. Just one from me. Danny, you have in the past spoken of a $400 to $500 million opportunity for Biosimilar Humira, assuming a 10% share in a $4 to $5 billion market. Now, with your competitors working on interchangeability, or a couple of them already have, Do you think that there is a reason for us to revisit those assumptions in light of these developments? And, B, would you want to work on interchangeability yourselves, or are you? Lastly, I think maybe just extrapolating this to the profitability in 2023, how much would Humira contribute in your internal plans? Thank you.
spk07: Well, thanks a lot for the question. With respect to the impact of interchangeability on the Humira Balsamore market, I'll let Paul take a shot at that. Paul? Yeah, thanks for your question. So, you know, interchangeability is subject to state pharmacy laws, and so far it's not been a requirement to support any biosimilar adoption, which has been, you know, quite significant over the past several years. We believe that payers will be the primary determiners of product selection, and that they have the formulary utilization controls to enforce their formulary choices, their regular practice, and multiple product categories today. And given the payer's stance on the utilization of these formulary practices to drive the switch, we don't view interchangeability as an essential feature for commercial success. Given that, Denny, you want to... Yeah, so I agree. We think there's sufficient... payer power in the market to impose their formularies. And so we don't see that as a substantial impediment and so forth. With respect to actual contributions in 23, 24, 25, I think we'll leave that one for another day as opposed to shooting from the head.
spk01: Thank you.
spk07: Thanks, Blondie.
spk02: There are no further audio questions at this time. I will now turn the call over to Denny Lanphier.
spk07: Thank you. I just want to take the opportunity just for a brief recap. I think we've made some excellent progress with our programs in the past quarter. We're bearing great fruit with all the things we've done with the Lucentis Biosimilar, the Humira Biosimilar, the Toropalmab application, and so on. I think you can look forward to additional progress from the company. We're, of course, very excited about our progress with our on-body system, which, as you know, we all worked on for quite a bit. We look forward to catching up with you guys all at the analyst meeting, which we think is going to be sometime in mid to late January at this point.
spk08: So thanks for joining us today.
spk02: This concludes today's conference call. Thank you for participating in Now Disconnect.
Disclaimer

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