Coherus BioSciences, Inc.

Good day, and thank you for standing by. Welcome to the fourth quarter and full year 2021 Kors Biosciences Earnings 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 this session, you will need to press star 1 on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your host today, McDavid Stilwell, Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and thank you for joining us. We issued our press release earlier announcing our 2021 fourth quarter and full year results. This release can be found on the Coheris Biosciences website. Today's call includes forward-looking statements regarding Coheris' current expectations about future events. These statements include, but are not limited to, our ability to advance our product candidates through development and registration, the status of our product candidate clinical profile, our timing and ability to commercialize our products and product candidates in the future, our R&D and SG&A expense guidance for 2022, and our ability to meet the same, our projections about margin, as well as our ability to draw down amounts under our new credit facility. all of which involve substantial risks and uncertainties that are beyond our control and could cause actual results, performance, or achievements to differ from the results, performance, or achievements complied by the forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks and uncertainties that are discussed in our press release that we issued today, as well as in the documents that we file with the Securities and Exchange Commission, including those in our annual report on Form 10-K and quarterly reports on Form 10-Q. The forward-looking statements provided on the call today are made as of this date, and we undertake no duty to update or revise any forward-looking statements. With me on today's call are Denny Lanphier, CEO of Coheris, Paul Reeder, Chief Commercial Officer, and Teresa Navalny, Chief Development Officer. And I will now turn the call to Denny. Thank you, McDavid, and thank you all for joining us this afternoon. Today, I'll describe how, over the past year, we've delivered on our objective to transform Coheris into an innovative immuno-oncology company supported by income from a diversified portfolio of FDA-proof products. I'll begin today with a brief review of our achievements toward our strategic initiative in immuno-oncology, detailing the progress of our foundational assets for OpalMed and of our preclinical and clinical stage innovative combination agents. Then I'll review recent progress to grow and diversify our commercial portfolio. Now, with respect to our immuno-oncology programs, you may recall that in November we announced the FDA-granted priority review for the VLA for Toropalmab for the treatment of nasopharyngeal carcinoma, an indication with no FDA-approved cancer immunotherapy options and for which Toropalmab has breakthrough therapy and orphan drug designations. The BLA review is progressing well towards the target action date of April 30th, which is about 10 weeks from now. Torpalimab's clinical profile continues to strengthen across indications. In December, we announced that Torpalimab plus chemotherapy demonstrated a statistically significant overall survival benefit in a pre-specified interim analysis of the Choice I clinical trial for the first-line treatment of advanced non-small cell lung cancer. This builds on other first-line indications in esophageal squamous cell carcinoma and nasopharyngeal carcinoma, where we have seen a robust benefit of both the progression-free survival and overall survival. We've also made progress with our clinical stage mid-stage IO acid strategy. In January, we initiated the process to exercise our option license, JS006, a targeted antibody developed by June Chief BioScience as our partner. which they are evaluating in a study combination with Toro Palmet. Dr. Teresa Lavalle, our new chief development officer, will provide additional details about JS006 and our development plans for you in just a moment. Our immunology preclinical research and development team is proving to be highly productive. In January, we announced that we're advancing an eternally generated pipeline of PD-1 combination candidates, and we expect to file the first IND in mid-2023. With Torapalmab nearing its first potential approval, a TIGIT-targeted immune checkpoint blocker entering mid-stage development, and our in-house early-stage immuno-oncology candidates successfully advancing towards human clinical trials, Coheris is evolving into an innovative immuno-oncology company with a broad pipeline of product candidates and the potential to drive long-term growth over this decade. I'd now like to introduce Dr. Teresa Lavalle, a recently appointed Chief Development Officer who brings more than 25 years of drug discovery and development experience and is recognized for her immuno-oncology expertise. Most recently, Dr. Lavalle was Vice President of Translational Medicine and Regulatory Affairs at the Parker Institute for Cancer Immunotherapy, where she provided scientific leadership for the clinical strategy for development of novel immunocology therapies. and help establish the Institute's translation and regulatory organization. Prior to that, from 2008 to 2013, Dr. Lavallee was a member of the immuno-oncology team, developing checkpoint inhibitors and related diagnostics at MedImmune in AstraZeneca. Teresa.

Thank you, Denny. It is exciting to join Coheris as the company gains momentum in its transition to an innovative immuno-oncology leader. I believe our broadening product portfolio with early, mid, and late-stage complementary IO products is well-positioned to clinically succeed in immuno-oncology. Commercially, our oncology-focused organization has proven that Coherence can be very successful in highly competitive fields. Coherence has both the in-house expertise and assets needed to support a successful transformation. Antibody development for BD1 combinations and co-formulations required world-class analytics, protein science, and bioinformatics capabilities. We have that at our Camarillo, California site, a 25,000 square foot facility we moved into two years ago. On the development side, our clinical and regulatory teams have repeatedly demonstrated the ability to develop drugs that gain FDA approval. Our Scientific Advisory Board of recognized IO experts from academia and industry is actively involved in our target and moiety selection, playing a key role, for example, in selecting toropalimab from a due diligence review of more than 10 PD-1 product candidates, as well as vetting the TIGIT asset from Junichi. For Coheris, these investments are paying off. Taurapalimab, our foundational immuno-oncology asset, is establishing an excellent safety and efficacy profile in the ongoing clinical trials. The Taurapalimab BLA for nasopharyngeal carcinoma and unmet medical need with no approved immunotherapies, is under priority review by the FDA with an action date of April 30th. Denny mentioned earlier that toropalimab's clinical profile continues to strengthen across indications. Case in point, the positive progression-free survival and overall survival data from the Jupiter-6 study in esophageal squamous cell carcinoma which showed a significant overall survival benefit even in low PD-L1 patients. We have and will continue to engage the FDA on the potential for submission later this year of a supplemental BLA for toropalimab in combination with chemotherapy for first-line treatment of ESCC. Another important immune-responsive tumor type is hepatocellular carcinoma. which also is highly prevalent in patients of Asian descent, and which the FDA has said could warrant regulatory flexibility for new PD-1. We are conducting two pivotal clinical trials evaluating toropalimab in HCC, including a frontline trial randomizing approximately 520 advanced HCC patients to linvatinib and placebo versus linvatinib plus toropalimab In adjuvant therapy, we have a trial with approximately 400 HCC patients randomized to toropalimab or placebo following resection. Initial clinical data from these studies are expected later this year. The February 10th ODAC meeting discussing the InnoVent Glili VLA for non-small cell lung cancer provided helpful insights into the FDA's expectations for sponsors seeking approval for PD-1s for indications with available immunotherapy options. We believe it is wise to fully engage with the FDA early and prior to submission decisions to fully understand their views. We are continuing to meet with the FDA frequently for toropalimab for multiple potential indications And we'll discuss with them this year the pathway for toropalimab in combination with chemotherapy for first-line treatment of non-small cell lung cancer. Although there are FDA-approved checkpoint inhibitors for non-small cell lung cancer, new and more effective treatment options are needed as the majority of patients still die rapidly from this deadly disease. We are focused on addressing unmet patient needs. So non-small cell lung cancer will be the first tumor type we pursue for the combination of toropalimab with JS006. We are excited about the development of this TIGID antibody. TIGID is emerging as an important checkpoint to enhance PD-1 antitumor immunity. After a decade of translational research with IO, the field understands better how PD-1 inhibitors work and why they have been foundational for IO treatments. Cancers trick attacking T cells into shutting off prematurely. A subset of T cells that exhibit stemness have the potential to be reactivated by the unique crosstalk between PD-1 and TIGIT pathways. All of this is consistent with the observed improved clinical activity with PD-1 and TIGIT inhibitors in the clinic, and specifically in non-small cell lung cancer. In preclinical studies, JS006 has demonstrated excellent binding affinity and strong inhibition of the TIGIT pathway, as well as enhanced antitumor activity in combination with toropalimab in preclinical mouse models. A clinical study evaluating JS006 as monotherapy and in combination with toropalimab in patients with advanced solid tumors is ongoing. The IND for JS006 is open in the United States, and we are planning to advance JS006 in combination with toropalimab in a clinical trial in the U.S. later this year. Clinical data news flow will continue this year as results come in from trials evaluating toropalimab for first-line treatment of small cell lung cancer and two additional non-small cell lung cancer studies one in the neoadjuvant setting, as well as a trial in patients with EGFR mutations who have failed prior TKI therapy, and also pivotal studies in triple negative breast cancer, hepatocellular carcinoma, and interhepatic cholangiocarcinoma. Depending on clinical outcomes and conversations with the FDA, these studies could lead to additional indications for toropalimab in the United States. I will now turn the call back to Denny.

Thank you, Teresa. It's great to have you on the team directing our mid- to late-stage IO development efforts. Now, let me briefly summarize our recent accomplishments with respect to our commercial stage portfolio and our goal to grow and diversify our commercial portfolio, FDA-approved products. As you may recall, in December, the FDA approved our second product, eSimmery, a Humira biosimilar. Paul will address our planning for this important launch in 2023 and some of the key issues we are considering to ensure that we reach our market share objectives. Thankful grass-to-market continues to be very important to us and has only about 50% biosimilar penetration in terms of presentation segment mix. We have had good success with additional presentation development to address all the segments. In October, a Udenica on-body injector demonstrated pharmacokinetic and pharmacodynamic similarity in a randomized clinical trial, enabling the submission this year of a prior approval supplement to the Eugenica BLA. If it is approved, we project that 2023 launch of the Eugenica on-body injector, which would compete directly with the last design probe, which would provide a second wave of growth for Eugenica. Eugenica in the pre-filled syringe format continues to provide a significant source of funding for our pipeline investments and support upcoming commercial launches. Net sales of Eugenica declined to $73 million in the fourth quarter, within the context of increasingly competitive typeful graphs in market. We anticipate Eugenica net revenue in 2022 will decrease relative to the $327 million of net revenue generated in 2021. Our strategy is to balance price and market share to optimize long-term revenues with the PFS format in 2022. on-body segment in 2023. In October 2021, the FDA accepted for review the BLA for Simerly, our Lucentis biosimilar. Mid-cycle review meeting occurred recently, and the BLA is progressing well towards the target action date in August this year. As Paul will elaborate, we plan to launch Simerly in the second half of this year, assuming approval. We are also planning for the launch of toropalimab in NPC meetings. further diversifying our product portfolio in 2022. These two launches in 2022 should be followed by the two 2023 launches of USMRI and the Udenica On-Body Injector, accelerating their revenue growth. We expect these four new products to mark an inflection point for revenues, fueling top-line growth starting later this year. We expect growth to continue with the potential expansion of the Toropel MAB label and project longer-term growth with the JS006 Toro-Palmab combination and our innovative I.O. pipeline we've discussed. I'll now turn the call over to Paul Reeder, our Chief Commercial Officer, and Paul will review Udenica's fourth quarter performance and update you on the launch preparation for Toro-Palmab similarly and similarly. Paul. Thank you, Denny. As Denny indicated previously, Udenica net sales were $73 million in the fourth quarter, down 12% from the prior quarter. This was driven by a 4% decline in demand units, as well as continued price erosion due to intense competitive pressures in the PEG Prograston 3-place surge market. Our share declined slightly from 18% to 17.5% in the fourth quarter. Market share gains in the clinic segment were offset by declines in both 340B and non-340B hospitals. On a unit basis, the overall PEG Fulgrastim market declined modestly in the fourth quarter, a period in which historically we've seen slight market growth. We expect to return to low single-digit market growth in 2022. Until COVID recedes more broadly, there will continue to be a short-term advantage favoring the originators on body device, which retains approximately 50% share of the overall market. As Denny indicated, We expect Udenica sales to grow again once we introduce our Udenica on-body injector next year, if approved. Our strategy is to balance price and market share, to optimize long-term revenues with the PFS format in 2022, and then gain significant share through accessing the untapped on-body segment in 2023. Now I'd like to talk about commercializing our pipe We are preparing for the launch of three new brands in the next 18 months. Toropalimab, our PD-1 inhibitor for nasal pharyngeal carcinoma, Simerly, our Lucentis biosimilar, and Usimri, our Humira biosimilar. Regarding Toropalimab, nasal pharyngeal carcinoma, or NPC, is a rare cancer where there are currently no PD-1 inhibitors approved for use by the FDA. Torapalamab not only has the potential to be the first and only PD-1 inhibitor indicated for this tumor type, but has the potential to also establish a new first-line standard of care. Our oncology commercial capabilities have been built to scale, and the Torapalamab launch effort will be efficiently integrated into our existing commercial infrastructure. Commercial launch preparations are proceeding on track. I'd also like to note that the NCCN guidelines for nasopharyngeal carcinoma recently added the Jupiter-02 study of Torpalamab for the first-line treatment of NPC as a reference, which serves to validate the significance of this important clinical trial. Now, with respect to Simerleaf, our FDA auction date in August 2022 will allow us to launch into the $1.4 billion Lucentis market in the early stages of biosimilar market formation, and we look forward to competing in the retina therapeutic area. Retinal specialist opinion leaders have expressed positive receptivity to Coheris entering this market, and our documented track record of success in oncology gives them confidence that Coheris understands the dynamics of the buy and build market, and that we will deliver a safe and effective alternative to Lucentis along with a compelling value proposition. Similar to our playbook with Udanica, we plan to launch a similar education campaign to the retina community in the second quarter. We've also completed our account segmentation work and intend to launch with a focused and dedicated ophthalmology sales team, while at the same time leveraging our commercial organization's existing key account, market access, and patient support capabilities. Now on to Yosemre. We're preparing for the launch in July 2023. Humira has been the top-selling drug in the United States with net sales of $17 billion in 2021, and we look forward to competing in this market. While we expect significant competition, our commercial goal is to achieve at peak at least 10% share of the overall adalumab market. We believe payers will drive by a similar adalumab adoption and have completed extensive market research with national and regional payers, as well as PBMs. The insights gleaned from this research confirm that Coheres can and expects to deliver on all of the payers' critical expectations. These include a competitive price that delivers value to key stakeholders, robust and reliable supply with high-quality manufacturing, a non-stinging citrate-free formulation, Pre-filled syringe and auto-injector presentations with high-gauge needles that are comparable to the reference product and that are comfortable, reliable, and easy for patients to use. Robust patient support services to facilitate access and to address patient out-of-pocket costs. Also, according to our research, interchangeability was regarded as a nice-to-have attribute, but not essential. since payers already have the mechanisms to drive product selection based on their formularies and utilization management tools that they use routinely today in multiple product categories. So to meet these expectations, Coherence has previously invested in large-scale manufacturing and expects to be well-positioned to compete on supply guarantees and price. we will have quality pre-filled syringe and auto-injector presentations. Our Yosemite device uses a 29-gauge needle comparable to the originators, and we also will use our proprietary non-stinging citrate-free formulation. In addition, through Coheres Complete, which is our patient and provider services that are considered best-in-class among the Peckville-Grassman class today, we have an established and high-touch service offering facilitate access and affordability. Some large competitors may position their adalumin mat biosimilar within a portfolio offering to payers. Coherus by contrast will have a singular focus on competing successfully in the adalumin mat market without the constraints trying to minimize the collateral impacts of price erosion on a portfolio of premium price branded products. Our interest is in seeing the overall adalumin map market become as large as possible. We believe this is also in the best interest of payers and patients. In short, we are confident we can deliver a compelling overall value proposition and expect results consistent with our market share forecast with UCMRI. I'll now turn the call to McDavid for a review of the quarter's financial results. Thank you, Paul. The details of our financial results are in the press release, so I'll focus now on a few highlights. For the fourth quarter and full year 2021, we reported net losses of $46 million and $287 million, respectively, on a GAAP basis. Cash used in operating activities was $52 million for the fourth quarter and $37 million for the full year 2021. As detailed earlier in the call, Net revenue was $73 million for the quarter and $327 million for the year. This is a decrease for both periods, reflecting lower unit volumes and lower net realized price. Wholesaler inventory remained within the normal range at year end. Cost of sales was $12 million for the quarter and $58 million for the year, resulting in gross margins of 84% and 82%. Recall that in the first quarter of 2021, we depleted the inventory manufactured and expensed prior to approval. And since then, per unit acquisition costs are fully reflected within CODS. Accordingly, cost of goods as a percentage of net revenues has increased since 2020. In the long run, starting in 2024, We expect Udenica pre-filled syringe gross margins to return to 90% or higher as we realize the benefits of a significant manufacturing process improvement and also royalty expiration. Research and development expenses were $51 million for the quarter and $363 million for the year. This is an increase over 2020 and includes the $136 million upfront payments to Junshi for the toropalimab license, as well as costs to advance our late-stage pipeline. Activities such as regulatory affairs and manufacturing scale-up for Yosemite, clinical development and BLA filings for toropalimab, a clinical trial for the Eugenica on-body injector, as well as the ongoing three-way case study evaluating CHF305, the Avastin biosimilar. Selling, general, and administrative expenses were $50 million for the quarter and $170 million for the year, an increase that was primarily driven by higher Udenica commercialization activities as well as stock-based compensation expenses. We ended the year with $417 million in cash and cash equivalents. Recall that subsequent to year end, we entered into a credit facility agreement with Pharmacon Advisors for a $300 million term loan payable across four tranches. We drew the first $100 million tranche at closing and simultaneously paid off a $75 million term loan. Prior to April 1st, we plan to draw a second $100 million tranche and simultaneously pay off the convertible notes that come due at the end of March. Two additional tranches of $50 million each will become available to us upon the FDA approval of toropalimab and of simile. We are introducing full-year 2022 guidance for R&D and SG&A expenses of $415 million to $450 million, not including the $35 million upfront fee to Junshi Biosciences we expected pay later in the first quarter for rights of JS006 or the $25 million milestone payment that will become due on approval of Toro Palo Mat for MPC. This guidance range includes approximately $55 million to $60 million in non-cash stock-based compensation expense. Let me provide some additional color on these anticipated operating expenses. much of which is investment that will convert back to cash quickly with a high IRR. This year, we will spend approximately $50 million manufacturing inventory for new product launches. Now, recall that one lesson from our successful Eugenica launch is that going to market with ample supply is a critical success factor. Also, recall that low-cost inventory manufactured and expensed prior to FDA approval subsequently delivers P&L benefit in the form of lower COGS. Another $40 to $50 million of operating expense this year will fund completion of development of additional presentations of products we expect to introduce over the next two years, as well as manufacturing scale-up projects that will deliver ongoing benefits in the form of significantly lower cost of goods. Finally, on the investor relations front, we will present and host investor meetings in March at two conferences, the Cowen Conference and also the Barclays Conference. And we are planning to host the CoHarris Analyst Day event in late March in New York City, hopefully in person. And I will now turn the call back to Denny for closing remarks. Thank you, McDavid. A year ago, we told you that our vision for Coherence was to become an innovative immuno-oncology company with commercial IO assets promising clinical stage programs and novel in-house preclinical pipeline. With the potential approval of toropalimab in April, the initiation of a clinical trial evaluating TIGIT in combination with toropalimab later this year and the advancement of the first of our in-house IO assets towards IND, we are delivering on this vision that we laid out to investors a year ago. The levers of success are now in our own hands. I am proud of the execution of my team and confident that we will fulfill the promise of our strategy. On the commercial side, we are uniquely positioned to launch multiple new products in the next 18 months. With these launches, the total addressable market opportunity of our from about $2.5 billion to more than $25 billion. Our commercial opportunity will continue to expand as additional toropel map indications are added and as our immuno-oncology pipeline candidates advance to commercialization. This growing product portfolio will fund our continued growth in immuno-oncology through the end of this decade. Operator, we're ready for the questions.

Thank you. If you have a question at this time, please press star, then 1 on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. And our first question comes from the line of Slim Seed with Mazuho. Your line is open. Please go ahead.

Hey, good afternoon, guys. Thanks so much for the color. A couple for me, if I can. One on toropalumab. So I would like to understand a little bit more about the strategy here in lung post and assumed NPC approval late April. Specifically, the prospects of getting toropalumab listed as a category to be medication on NCC guidelines and the prospects of a subsequent Medicare reimbursement off-label uptake in lung. Or do you really think you'll need an additional trial in lung that's head-to-head versus a PD-1 and how those costs would be allocated or shared? And then the second question is on the UDENICA guidance for 22. So, Denny, I appreciate that it's going to be lower than – revenues will be lower than 21. But how are you thinking about ASP declines in 2022? 2021, by my math, had roughly about a 20% to 30% ASP decline. So this is now the fourth year post-launch. Should we be thinking about that moderating in 2022? And then also with COVID cases largely declining here and OnPro still having 50% of the PEG filgrast in market, just maybe you could speak about qualitative here, your views on units. Please, thanks so much.

Thank you for that, Salim. I would ask that follow-on questions limit themselves to one question so we can work through, and then if your question is not answered, we're happy to go through. So let me direct the question of the non-small cell regulatory strategy that you posed to Dr. LaValley. Teresa, do you want to answer that one?

Yeah, thanks, Denny, and thanks for the question. I mean, for non-small cell lung cancer, we haven't had any meetings with the FDA since the ODAC and look forward to discussing the path forward with them. Continue to be impressed with the data. And I think for the overall tone of how the FDA is reviewing these data, they've kind of given some bookends between the MPC indication and non-small cell lung cancer. So our strategy is to have frequent and often conversations with them and align practices on the packages.

Thank you, Teresa. Any additional comment with respect to the endpoints of our study or other aspects to Celine's question?

The endpoints that we have are for overall survival with a pre-specified secondary endpoint. It was part of the statistical analysis plan, which was designed to meet FDA filings.

Thank you. Thank you for that. And I think your second question, Saleem, was with respect to second half of the year sales or 2022 sales. Paul, can you offer Saleem any additional color on what we see for Udenica through the rest of this year? Yeah, thanks for your question, Saleem. Yeah, so, you know, I think it's reasonable to expect continued price declines in this market, you know, throughout 2022 as it's becoming increasingly competitive. And, you know, I think if you look at our ASPs, you know, we've been averaging mid-single digits over the last three quarters. You know, our strategy has really been to balance price and market share. You know, as we look to optimize longer-term revenues for Udenica in 2022, it's going to be within the context of the refilled syringe segment. But we're, you know, we're going to be ready to go with the launch of an on-body device in 2023 if approved. you know, to go after that, you know, remaining 50% of the on-crow market that's, you know, I think just been able to entrench itself through the persistence of COVID. So, you know, that's what we're thinking. I hope that answers your question, Salim. We'll be happy to loop back with you if we have a little more follow-ons to that. Operator, can we have that next question?

And our next question comes from the line of Kingston. Ken Cacciatore with Cowan. Your line is open.

Please go ahead.

Hello, Ken.

Ken, your line might be on mute.

Okay, we'll move. I have a question.

We'll move to our next question, which is with Cowan and Company. Your line is open. Please go ahead.

Thank you so much for taking our questions. We're going to limit to one. So on the recently announced partnership for the acid, could you maybe talk about how do you see it being differentiated from the more advanced antibodies that are in later stages of development out there? And then you mentioned your intentions to run trials here in the U.S. in combination with psoriasis and mob therapies. Could you remind us of the expected R&D costs for that associated with that development and what percentage of that you're responsible for?

Let me take the last part first with respect to cost, and then I'll let Teresa describe our strategy around the TIGIT. With respect to cost, you may Recall that the agreement with Junshi limits our shared clinical cost to $25 million per year per product. That is the same for Toropalumab as it is for the opted-in products, which JAS006 is one. So we presume that this will be done under the auspices of the Joint Steering Committee of the partnership and subject to those caps. Now, if there's additional work that we want to do, Outside of that, that may be some additional things that is not paid for through the partnership. And then Junshi has the opportunity to opt back into that data later. Given that this asset, however, will be developed internationally, globally, across all markets, it's probably safe to assume that this will be primarily developed through the Joint Steering Committee of the partnership. With respect to digit development, potential differentiation, and our strategy of going into line, Teresa, would you like to make a few comments on that?

Yeah, and I think the data we've seen from our partner Junshi on the TIGIT antibody is it has significant potency in preclinical models. And we look to develop it in tumor types such as non-small cell lung cancer, obviously to establish proof of principle in combination with toropalimab with a translational strategy to really understand where we see activity and non-activity to advance it. with urgency.

The only other additional color I would provide with respect to the TIGIT is we have developed co-formulated approaches to the product, which would be single vial. Operator, we're ready for the next call.

And our next question comes from the line of Chris Schott with JPMorgan. Your line is open. Please go ahead.

Great. Thanks so much. I'm going to slip one and a half questions in. I just come back to the Tor Palumab discussion earlier. Would you run a US-based head-to-head study in non-small cell lung cancer if FDA required it? Or is that kind of a non-starter as you think about, I know you still need to meet with the FDA, but if that's what they're asking for, if that's something that makes sense for Coherus or not. And my core question was coming back to biosimilar Humira. I think there's been a lot of debate about how much volume AbbVie is going to be able to contract here and how many biosimilars each payer is going to cover. So can you just elaborate a little bit more on how you think that plays out as you look out to 2023 and beyond? Do you think it's going to be a situation where there's multiple biosimilars and it's kind of a jump ball and it's about commercial execution? Or do you expect the payers to kind of focus in on like one or two biosimilars? And do you expect that AbbVie is going to be able to retain a sizable portion of the market? Or do you expect that a lot of the volume in this space is going to be available to the biosimilar players? Thanks so much.

Thanks. Thank you for your one-and-a-half, I think you have one-and-three-quarters questions there, Chris, but that's okay. Let me let Paul first address the USMRI, you know, you might have a similar question for you, and then we'll loop back on to our panel. Paul? Yeah, thanks for your question. So, you know, at the time of our launch in July 2023, you know, we will expect to be one of a number of biosimilars entering the market at that same time. And what we'll be prepared to do at that time is to bring, you know, a value proposition, you know, that includes those factors that I mentioned in my prepared remarks. A very competitive price, substantial supply guarantees, and all of the pre-full syringe and autoinjector types of presentations. The non-sting citrate-free formulation will be another differentiator. And so I think what we expect to happen is we're going to, through our payer segmentation, is not look at them all as a one-size-fits-all, but to fit their particular objectives based on their plans, their covered lives, and their businesses, and to deliver the value proposition that depending upon the control level of the plant, might be a single biosimilar and a rapid conversion away from the innovator, or in the short term of launch, you know, Humira plus Yosemite, in which case it'll be a slower transition over time. Either way, we'll have, you know, a portfolio of the value proposition that will meet their needs, and we will expect to be you know, one of the most compelling high-volume, low-cost providers at the time of commercialization mid-year. So we expect to do very well. The other point I would make with respect to that, Chris, is we think with the number of competitors in the market, there's going to be tremendous cost pressure all around. And we would be surprised if, you know, two or three years out of the market, did not have a relatively small share of that market as opposed to a majority greater 50% share. So we think they'd probably get down to the 20%, 25% type of share gain. With respect to your question on TORAP-LMAP and the potential regulatory pathway therein line, we believe it's probably prudent for us not to preempt our conversations that we haven't had yet with the FDA. As Teresa said, we haven't really had a chance to interact with FDA post the ODAC, and we look forward to doing that. We're convinced that we have a very high-quality molecule that's demonstrating significant efficacy and safety across a number of indications, including lung. So we're very enthusiastic about talking to the FDA about that. But, you know, we really think it's probably not prudent to talk about what sort of studies they might require and when and that type of thing. That being said, though, we are planning on moving into lung with the TIGIT asset in conjunction with Torfell Med. And you'll be hearing more of that later in her prepared remarks. Teresa, of course, talked about that and how we're going to move in towards the end of this year. So stay tuned on that one. Thank you. Thanks, Chris.

And our next question comes from the line of Balaji Prasad with Barclays. Your line is open. Please go ahead.

Thank you. Hi, good evening, everyone. So firstly, getting back to biosimilar, can you quantify better the non-stinging citrate-free formulation and what kind of an advantage it provides to you? And also probably importantly, do you expect to be the only citrate-free formulation on the market next year? One. And two, if you can just also quantify with your clinical trials, with the multiple trials going on with $417 million in cash, If you need to prioritize your clinical trials, what will be the top one or two ones that you're going to advance next year? Thank you.

Thank you, Bhaji. Let me first address the issue of the formulation. It's very important from the viewpoint of patient comfort upon injection that the formulation does not stink, that it's not unduly uncomfortable. And there's anecdotal data that patients found the previous low concentration formulation of Abbey, very uncomfortable because it does have citrate. So several years ago, when we approached the Humira Balsamar, which was 1420 at that time, we developed a proprietary non-stringing citrate-free formulation. Now, I won't speak for others, but I think this is very, very important from the viewpoint of patient comfort and being able to penetrate the markets, as Paul said. Now, with respect to the clinical trials in 2022 and various costs, as McDavid pointed out to you, there are significant spends on matters such as manufacturing. One of the ways that we succeeded with Udenica, and you may recall, is we stockpiled 300,000 syringes prior to launch. That's significant manufacturing expense. It was $25 or $35 million when we did it. However, I think that served us very, very well post-launch. We were able to do supply guarantees and did very well in that market while others were not able to do so. And I think that was one of the reasons why we achieved in excess a 20% market share in that market. We think that very same formula applies here, for example, with Humira. We have gone to large scale. We've made those investments. We will be prepared. for example, for fierce competition in price that we have to. But we think that we want to be the team that has the inventory and the supply guarantees to be able to go on the market for that. And that's where I think some significant parts of our spend go. But on the other hand, we think that's very wide. And as McDavid indicated in his remarks, that pays back later. That goes into COGS. It's expense now. But that gives you an advantage, and there's a significant IRR Hope that answers your question.

Thank you. And our next question comes from the line of Jason Gerberry with Bank of America. Your line is open. Please go ahead.

Hey, guys. Thanks for taking my question. Mine is on the NPC U.S. market opportunity issue. Can you talk a little bit about your expectations here with this? Do you expect it to be used more frontline with the chemo combination or second-line monotherapy? How many of these patients are really addressable? Is it going to be hard to find these patients because it's a pretty small population? And it seems like there's a pretty big swing factor if you're frontline versus second-line. I think the interim PFS was 12 months for frontline, but I think in, like, second-line it was much, much shorter. So, Just trying to get a sense if you can kind of frame the key parameters of an oncology forecast.

Thanks for the question on that. Of course, we expect to get frontline with MPC. I'll let Paul fill in the rest of your question with respect to the market size and so on. Yeah, thanks for your question, Jason. So, yeah, as a rare cancer, you know, the data suggests that, you know, there's a couple thousand patients treated with NPC annually. And about a third of those patients, you know, are cycled through in the first-line setting. And so, you know, as we expect, if approved, to be the first and only PD-1 antibody approved for NPC, including first-line, you know, that's where we believe we have the potential to establish a new standard of care. And really, in combination with chemotherapy plus Torapalimab, you know, be the standard of care in frontline patients. The patients are treated with chemotherapy only in first line. It's likely they're going to progress. And then we've got the data in later lines of therapy that we'll, you know, we'll expect to pick them up later lines. But we want to get these patients treated frontline. Yeah, so there's not a lot of them, Jason, but, you know, we, you know, looking at our data with about 1,500 HCPs that we see are using PD-1s, for NPC, and they account for over half of the patient volume. And we've got significant overlap with our current, you know, Udenica base. And so, we'll have high overlap, very synergistic at time of launch to drive share of voice in the Tor Palomab NPC story there. And the fact that the data has already been, you know, widely presented by ASCO plenary in 2021, The study was published in Nature Medicine last year, and, of course, now NCCN Guidelines has added it, you know, provides a real tailwind for us going into a potential launch year. Jason, the other thing we would add here, of course, we'll also get second and third line. And so we're going to pursue MPC quite holistically. And as Paul indicated, you know, we think we have a very strong case therapeutically with the ASCOV. plenary session and nature of medicine and so forth. After we get the approval under our belts and we get into the market for a few months, I think your question is fair game with respect to forecasts and so on. We'll be happy to loop back through.

Can you just remind me in the frontline setting what the PFS was? And when you say one-third cycle through first line, so basically of a couple thousand, only a third of them may get to second line. Was that the point? Or only a third of a couple thousand ultimately get treated? in the frontline setting. Teresa, do you want to grab that one?

Yeah, the PFS in first line was 11.7 months with a one-year PFS of 49%.

Yeah, Jason, and then of the couple thousand patients treated annually, about a third get treated in the first line setting.

Okay. All right. Thanks so much.

Thank you. And our next question comes from the line of Doug LaSalle with H.C. Wainwright. Your line is open. Please go ahead.

Now added sort of your own internal R&D capabilities, discovery and I.O.

I'm just curious... Oh, forgive me, Doug. I think we missed the first part of your question. Could you restart?

Oh, yeah. Sorry. you've now started your sort of own internal discovery efforts in I.O., it sounds. And I'm just curious, as you sort of add to your own capabilities, you know, how do you see your vision for growing a business, you know, versus business development? Obviously, you're going to be launching a number of products. Your cash flow should be quite significant. Do you have a sort of bias towards now focusing on sort of internally developed assets versus ones that you might want to acquire? And as that cash flow comes in, do you potentially think about business development and M&A more aggressively? Thank you.

That's a great question, Doug. It's very important to us that we have a portfolio that's balanced across all three stages of development, preclinical, early-stage development, mid-stage development, represented by, for example, the TIGIT and TIGIT-toropelmeth combinations, and then late-stage, of course, with the potential approval of toropelmeth. I'll let Theresa talk a little bit about our early-stage development efforts, but to cut to the chase and answer your question directly, We certainly would be open for business development opportunities with I.O. There's a lot of opportunities out there, and we have a number of folks who approach us from time to time with various assets. We haven't locked in on anything so far, but we continue to look at them. Teresa, you want to say a few things about our early stage pipeline?

Yeah, and I think having recently joined, one of the things that really attracted me to CoCuris was the people and the talent involved. In addition to having great assets, what surprised me was how strong the science was and the preclinical aspects and looking at the early pipeline and how well it's been put together and really targeting important aspects of the tumor microenvironment that, you know, the field is really going after broadly. To think about, you know, we have starting on the T cell with you have to have a PD-1, so toropalamab is an excellent molecule. And then coming in with the TIGIT as an important way to really get the T-cells activated and have that anti-tumor immunity. But if you have a suppressed microenvironment, an active T-cell still is hindered. So I think the portfolio, really looking at that, is going to be exciting. And as we advance the stages, I mean, I'm really looking forward to getting an in-house IND next year and starting an in-house clinical trial.

The other comment I would offer you, Doug, is we will be covering our in-house assets in more detail at our investor meeting. I think David indicated it's going to be around the end of March in New York. And we'll bring out some of the key personnel as we're working on this and explain the mechanism of action, a few things that we're doing. So I think you'll find it interesting. Okay, great. Look forward to the event. Thank you, Doug.

Thank you. And I'm showing no further questions at this time. And I would like to turn the conference back over to Denny Lanphier for any further remarks.

Thank you. We want to thank you all for joining us today for end of the year in our fourth quarter conference call. We look forward to seeing you at the upcoming conferences and so on and so forth. And we also look forward to talking to you in more detail at our Investor Day event at the end of March. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.