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spk01: Good day and thank you for standing by. Welcome to the GoHarris Biosciences Incorporated first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 in 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, Chief Financial Officer. Please go ahead.
spk03: Thank you, operator. Good afternoon, everyone, and thank you for joining us. We issued a press release earlier announcing our financial results for the first quarter of 2022, and the results can be found, or the release can be found on the Coherence Biosciences website. Today's call includes forward-looking statements regarding Coherence's 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 candidates 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, our revenue targets for 2026 and our ability to meet the same, our projections about margin, as well as our ability to draw down amounts under our recent credit facility, and the timing of the resubmission and review of the Toro Palamab BLA. All these future events 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 implied by the forward-looking statements. And these statements are not guarantees of future performance and are subject to substantial risks and uncertainties that are discussed in our press release that we issued today, as well as the documents that we file with the Securities and Exchange Commission, including those in our quarterly report on Form 10Q with today's date. 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, Teresa Lavallee, Chief Development Officer, and Dr. Raj Dias, Chief Medical Officer. And I'll now turn the call to Denny. Thank you, McDavid. Good afternoon, everyone, and thank you for joining us today on our conference call. to review recent business highlights and financial results for the first quarter of 2022. Today, we'll provide updates on our current business, as well as our progress transforming Coheris into an innovative immunology company, supported by revenues from a diversified portfolio of FDA-approved products. Now, first, with respect to the complete response letter we received from the FDA pursuant to the 12th of May for advanced nasal and parent-child cancer, we are currently assembling the FDA meeting package. which will support an agency interaction to occur prior to the BLA submission. We expect mid-summer filing in the six-month review timeline. As we previously communicated, we believe the requested quality process change is straightforward and readily addressable. Further to the development side of the business, Dr. Teresa Lavalle, our Chief Development Officer, will provide additional detail regarding Toro Palva BLA as well as our work with our partner, Junichi Biosciences, on the development of Torpalimab for other indications, and in combination with CHS-006, our TIGIT-targeted antibody. On the commercial side of the business, Paul Reeder, our Chief Commercial Officer, will review recent Udenica performance in our preparation for the anticipated near-term commercial launches of, first, Torpalimab. we plan to launch for MPC once approved. Similarly, our Lucentis Biosimilar candidate, where the review of the BLA is proceeding well and progressing towards an August 2, 2022 action date. Yosemite, our Humira Biosimilar, where we are investing heavily in inventory built and robust supply availability is a key part of our market strategy. As well as the Udenica on-body injector presentation, significant market share growth opportunity for our Eugenica franchise. Today, we're also announcing the termination of our license relationship with InnoVent for the development of the biosimilar basket candidate, IBI 305. COVID commenced shortly after execution of this agreement and has caused significant delays to the development timeline. We have recently assessed the market dynamics and given ongoing and projected COVID-related delays we determined that this program no longer warrants our continued investment. Lastly, McDavid Stilwell, the company's chief financial officer, will review our first quarter financial results and provide an update on our operating expense guidance for the remainder of 2022. We'll then, of course, be happy to take your questions. Today, I want to introduce you to our new chief medical officer, Dr. Raj Dias, who is with us and will be happy to take your questions during the Q&A. Raj has over 18 years' experience in oncology across medical affairs, development, and commercialization, and we welcome Raj to our team. Now, at our Analyst Day event March 29th, we introduced 2026 Revenue Guidance Targets of $1.2 to $2.2 billion and further described how we will leverage our existing operational infrastructure to achieve our commercial and development objectives. With continued strong execution of regulatory approvals and commercial launches and the advancement of our novel immuno-oncology pipeline. We expect to transform Coheris into a rapidly growing, profitable, and innovative immuno-oncology company. Now I'll turn the call over to Dr. Lavalle for an update on the TORI BLA review and our other development programs. Teresa.
spk07: Thank you, Denny. As Denny referenced, the FDA issued a complete response letter for the biologics license application for Torapalamab for NPCs. The CRL requests a quality process change that we believe is straightforward and readily addressable. We plan to meet with the FDA to ensure our resubmission is complete and will submit the meeting request package in the next few days. We plan to resubmit the BLA by mid-summer 2022. The agency also communicated in the CRL that the review timeline for the BLA resubmission would be six months. As required, onsite inspections have been hindered by travel restrictions related to the COVID-19 pandemic in China. The FDA has indicated that the existing toropalimab clinical data are supportive of the BLA submission. Toropalimab has demonstrated clinical efficacy in multiple tumor types including in tumors with low PD-L1 expression. This differentiated clinical activity may result from toropalimab's high binding affinity to a unique epitope that potentiates PD-1 internalization. The next clinical milestone for toropalimab would be the readout of the PFS and OS co-primary endpoints from the small cell lung cancer study, Jupiter-8, which is expected this year. We recently obtained orphan drug designation for this indication in the United States. Jupiter-8 is a randomized, double-blind, placebo-controlled, multi-center phase three clinical trial evaluating platinum chemotherapy plus etoposide alone, or in combination with toropalimab, as the first-line treatment of extensive stage small cell 1 cancer. This is an aggressive tumor characterized by rapid disease progression, low expression of PD-L1, and low levels of tumor infiltrating immune cells, as well as a high degree of immunosuppression. Efficacy of cancer immunotherapy has been limited in small cell lung cancer, and no PD-1 inhibitors are currently approved in the United States for this indication. Regarding additional potential indications in the United States, we announced at a recent Analyst Day event that we are working with Junshi to review possibilities to amend protocols of several studies to enroll patients in the United States to satisfy the FDA's needs for multi-regional clinical trials. We look forward to providing additional information on this topic in the future. At this time, we are not planning additional studies for toropalimab in combination with chemotherapy for first-line non-small cell lung cancer. However, we are planning to develop the dual IO treatment of toropalimab in combination with Artigid CHF006 for non-small cell lung cancer, leveraging the robust efficacy results reported in the CHOICE-1 study. An ongoing Phase I clinical trial evaluating CHF006 and toropalamab is being conducted in China and is expected to read out next year. An IND is open in the U.S. and we expect to begin enrolling cohorts of U.S. patients later this year or early next year. Blockage of the TIGIT pathway may be a crucial underlying mechanism for overcoming PD-1 resistance. We believe the dual immunotherapy approach of TIGIT with PD-1 could enhance PD-1 efficacy with the potential to extend survival and create a new standard of care for multiple tumor types. We expect to see important clinical data from several competing TGIP programs in coming months, and these data may inform the future direction of our CHS006 development program. At our recent Analyst Day, we introduced several fully-owned programs targeting ILT4 and CCR8 that are being developed by Coherent Sciences at our Research Center in Camarillo. We expect to submit an IND for a first of these CHS1000 targeting ILT4 next year and to file at least one new IND per year going forward. On the biosimilar development and regulatory front, we recently held the late cycle review meeting with the FDA for the similarly BLA, and that review is advancing towards the August action date. Upcoming in June, results of the PK-PD study evaluating our eugenica on-body injector device will be published in connection with the ASCO annual meeting. Recall that we previously announced that the study met all PK bioequivalence primary endpoints, as well as the key secondary pharmacodynamic endpoint of AMC. I'll now turn the call to Paul Reeder.
spk02: Thank you, Teresa. Udenica net sales were $60 million the first quarter, a decline from $73.4 million the prior quarter. This was driven by a 12% decline in demand units, as well as continued price erosion due to intense competitive pressures in the Pegfield-Graston pre-filled syringe market. On a units basis, the overall Pegfield-Graston market increased 1% in the first quarter, and we expect low single-digit market growth in the remainder of 2022, consistent with historical trends. New Alaska retains 59% total market share within the class, with OnPro holding 47% market share, based on an entrenched preference by customers reinforced by the COVID pandemic. Udenica market share erosion from 17.5% 16% in the first quarter occurred largely in the hospital segment, where competitive biosimilars have resorted to a strategy of offering irreversible significant price reductions in order to capture short-term market share. This is reflected in the quarterly ASP declines by these competitive products. With our on-body device in the pipeline, Our strategy is to maintain a disciplined approach in managing price with the PFS format in 2022. This will enable us to maximize long-term revenues for the Udenica franchise through significant share gains that we expect in 2023 and beyond within the on-body segment, which currently represents approximately $1 billion in untapped opportunities. We expect Udenica market share to grow next year once we introduce our Udenica on-body injector, if approved. Now I'd like to talk about commercializing our pipeline. We are preparing for the launch of three new brands in the next 15 months. Torpalimab, our PD-1 inhibitor for nasopharyngeal carcinoma, Simerly, our Lucentis biosimilar, and Usimri, our Humira biosimilar. Nasopharyngeal carcinoma, or NPC, is a rare cancer where there are currently no PD-1 inhibitors approved for use by the FDA. Fort Palomar not only has the potential to be the first and only PD-1 inhibitor indicated for this tumor type, but also to establish a new first-line standard of care. Our oncology commercial capabilities have been built to scale, and there is significant overlap between our current Udenica customers and Torapalamab-targeted prescribers. Therefore, the launch of Torapalamab will be efficiently integrated into our existing oncology commercial infrastructure. In addition, the NCCN Guidelines Committee for NPC has added as a reference to the guidelines the citation for the Jupiter-02 trial, which was published in Nature Medicine last year. further validating the importance and quality of the clinical trial. Commercial launch preparations are on track, and the field-facing teams have been fully trained. We will be ready to launch TorapalMap if approved by FDA. With respect to Simerly, our FDA action date is August 2nd, 2022, which, if approved, will allow us to launch in the early biosimilar market formation period of the $7 billion anti-VEGF market. This is a clinic-based buy-and-bill model, which is very similar to oncology and a core competency of ours. And we look forward to competing in this large, attractive market. Recently conducted market research confirms the opportunity exists to penetrate the entire VEGF market. Since our last call, We've continued to engage with retina thought leaders, built out additional marketing expertise, and hired the head of our ophthalmology sales team, an experienced sales executive with over 15 years building and leading sales teams in the ophthalmology therapeutic area. Retinal specialist opinion leaders expressed positive receptivity to Coheris entering this market, and our track record of success in oncology gives them confidence that Coheris understands the dynamics of a buy-and-build market and that we will deliver a safe and effective alternative to Lucentis with a compelling value proposition. Now regarding Yosemite, our Humira biosimilar. Yosemite was approved by FDA last December, and we are preparing for a launch in July 2023. Humira's U.S. net sales were $17 billion in 2021, and we look forward to competing in this large market. We believe payers and PBMs will drive biosimilar adaluminab adoption and have completed extensive market research with national and regional payers as well as PBMs. The insights gleaned from this market research confirm that Coheris can deliver on the attributes most important to payers, which include a highly competitive price, robust and reliable supply, and an auto-injector presentation that has non-stinging, citrate-free formulation. USIMRI will have both a pre-filled syringe and an auto-injector presentation, and the USIMRI device will include our proprietary non-stinging, citrate-free formulation and a 29-gauge needle, all comparable to the originators. We also plan to introduce a high-concentration presentation post-launch. Beneath our expectations to win at least 10% unit market share, we have invested more than $45 million in large-scale manufacturing and expect to be a high-volume, low-cost manufacturer, well-positioned to compete on supply guarantees and price. Our first-year manufacturing capacity exceeds 1 million units, for about 10% of the overall adalumab market. And we have the potential to triple that capacity in the current facility. Unlike other players in the adalumab market, we have no portfolio of branded alternatives to Humira that we need to protect from adalumab cannibalization. Our positioning for Yosemite is perfectly aligned with that of the payers and PBMs. We want to make the adalumin map market as large as possible, as quickly as possible. We see this as a source of competitive advantage. In short, we are confident that we will deliver a compelling value proposition and that we can achieve our objective to win at least 10% unit market share at peak. I'll now turn the call to McDavid for a review of the quarter's financial results. Thanks, Paul.
spk03: I'll focus on just a few financial highlights since the details are in the press release and in the 10Q that we filed earlier this afternoon. For the first quarter of 2022, we reported a $96.1 million net loss on a GAAP basis. On a non-GAAP basis, we reported a net loss of $77 million. GAAP to non-GAAP reconciliation included two items, $12.9 million in non-cash stock-based compensation expenses and a $6.2 million loss on the extinguishment of debt. Cash used in operating activities was $54 million for the first quarter of 2022. As detailed earlier in the call, net product revenues were $60.1 million, a decline from the prior quarter and the year-ago quarter. The decline was primarily attributable to a decline in demand units, as well as lower net realized price. Research and development expenses for the first quarter of 2022 were $82.9 million compared to $203.5 million for the same period in 2021. This year's first quarter included a $35 million payment to Junshi Biosciences for the license of CHS-006, our TIGIT targeted antibody. Last year's first quarter R&D expense included the $145 million upfront payment to Junshi for the Toropanumab collaboration. General and administrative expenses were $48.8 million in the first quarter of 2022, as compared to $39.4 million in the year-ago quarter. The increase was primarily driven by activities in preparation for the launches of multiple new commercial products anticipated in 2022 and 2023. We ended the quarter with cash and cash equivalents of $326 million, compared to a balance of $417 million at year-end 2021. Recall that in January, 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. At the end of March, we drew a second $100 million tranche and simultaneously paid off the 2022 convertible notes. Two additional tranches of $50 million each will become available to us upon the approval by the FPA of Torapalimab and of Simerly. As for our expectations for full-year operating expenses, with the discontinuation of the CHS 305 of ASTIN by a similar program and the delay in the Torapalimab launch, we are lowering our projected range for full-year R&D and SG&A expenses by $20 million to $395 million to $430 million. This guidance excludes both the $35 million upfront fee to Junichi Biosciences that we paid for rights to CHS-006 and the $25 million milestone payment that will become due on approval of Toropanumab for nasopharyngeal carcinoma. This range also 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. a significant portion 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. Recall that one lesson from our 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 approval subsequently is expected to deliver P&L benefit in the form of lower costs of goods sold. 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 costs. I'll close by saying that on the investor relations front, we'll be participating in the Bank of America Healthcare Conference in Las Vegas next week on May 12th, and in the UBS Conference in New York on May 24th, and the HCW Conference in Miami on May 25th. And I'll now turn the call to Kenny for closing remarks. Thank you, McDavid, and thank you all once again for joining us today. This is an exciting time, and our company has been prepared for as many as four product launches in 2022 and 2023. and continue to make strong progress transforming Coheris into an innovative immunology company supported by our diversified commercial portfolio revenues. With our sharp focus on execution of this strategic transformation, the leveraging of our commercial capabilities with new products, and the advancement of our novel immunology pipeline while keeping a critical eye on our cost structure, I believe we are in an excellent position to create significant shareholder value in the coming years. Operator, we're ready to take any questions. Thank you.
spk01: As a reminder, to ask a question, you will need to press star 1 in your telephone. To withdraw the question, press the pound key. Please stand by while we compile the candidate roster. Your first question will come from the line of Selim Sayev with Mizzou Hope. Please proceed with your question.
spk06: Hi. Hi, guys. This is Benetton for CELINE. Thanks for taking our questions. Regarding the three-parameter submission beyond an MPC, are you still planning to submit for NCC and non-small cell lung cancer this year, or should we expect this to happen after potential approval in nasopharyngeal? And also, if you could provide a little bit more... I'm sorry.
spk03: I'm sorry. I'm sorry, let's just do one question at a time.
spk06: Sure.
spk03: And then we'll provide you with the opportunity for a follow-on question. So, I'll let Dr. Teresa Lavalley address the question about the submissions. Did you hear the question clearly?
spk07: Hi, thanks for the question. Just to make sure I heard, you were asking about submission for non-small cell lung cancer. Is that correct?
spk06: Yes, and for ESCC as well, if, you know, you're planning to do it this year as well, or, you know, are you going to expect first to get approval in NPC?
spk07: So, as mentioned during the discussion, we don't anticipate following up with 4-Palamab in non-small cell lung cancer for a filing based on the Choice 1 data. We'll leverage that data to look at dual immunotherapy combinations with R-tigit molecule CHS-006. In terms of other filings, I think at this time, we're focused with engaging with the FDA on MPC, and we'll continue to have discussions about where else the clinical data really warrant regulatory flexibility.
spk03: Well, we're happy to provide you with the opportunity for a follow-on question then. Did you have a second one?
spk06: Yeah, thank you. Well, if you could provide a little bit more color on the reasons behind today's announcement, discontinuation of CHS 305. Thanks.
spk03: Could you provide more color on the discontinuation of CHS 305? Yes, we're happy to, of course. First of all, let me say that we have a very positive relationship with an event. I have a very good relationship with therapy. and event CEO, Michael Yu. We signed this agreement, and directly thereafter, right after Chinese New Year, as you can recall, COVID struck. And COVID basically impaired the progress of this product development, I think, significantly. It was very difficult, and it was impossible, actually, for us to travel to China. The clinical trials were difficult, a number of things. So we lost a substantial amount of time with the product, really as a function of that. And when we took a look during a product review period, currently it was simply a matter that the commercial case for the product and the market had moved on from our prior assumptions. And given the costs that were at hand in front of us, we felt that it was in the best interest strategically for us to discontinue it. And there's really nothing more else to it. we have, you know, nothing but good things to say about our friends at InnoVent. And, you know, it's unfortunate that this particular product did not move forward, but it was simply a business decision.
spk06: Thank you very much. Thank you.
spk01: Your next question will come from the line of Barlaji Prasad with Barclays. Please proceed with your questions.
spk08: Hi. Good evening. I'll just take a couple of questions from my side. Firstly, on... FTA inspections, are there any pending for either similarly or similarly? I'll stick to one question. Thanks.
spk03: Yeah. Teresa, do you want to answer that one with respect to similarly inspections?
spk07: Yeah, we feel that we're complete at this time.
spk08: I'm sorry, complete for both?
spk03: Yeah. The similarly inspections have been completed, and there's no issues comparing the approvals.
spk07: And Yosemite is approved.
spk03: Yosemite is already approved. Of course, my bad. Thanks.
spk01: Your next question will come from the line of Jason Gerberry with Bank of America. Please proceed with your question.
spk05: Hey, guys. Thanks for taking my questions. I guess my first would just be just looking at the run rate that you have for Edenica right now, do you see any reason why that would get better for the remainder of the year before you have the OBI launch, which will be a 2023 event. So just curious if you see that run rate improving. I know there was some commentary about, I think, sort of market unit volume trends growing, but I'm just curious specifically your own run rate, how that pans out through the rest of the year. Well, I thank Jason for that.
spk02: Paul, do you want to take that one? Sure. Thanks for your question, Jason. So, yeah, as we indicated during our Q4 call, you know, where we stated that our Udenicus sales in 2022 will be less than the sales in 2021. We're not offering any updates to that guidance at this time. You know, the market grew 1%, remaining relatively stable. So we're expecting that to pick up, but that's where we're at right now. No further updates on guidance.
spk05: Okay. And then I guess if I can get a follow-up question, just based on the commentary about sort of the maybe irrational competitor pricing behaviors in the Udenica market, thinking ahead to Humira, just given the sheer volume of players, do you see this as a profitable market beyond 2024? Like, I think most people could probably say 2023 and 2024 could be interesting, but the but there's sort of an expectation amongst investors that perhaps pricing could get so compressed in that category that it might be not particularly profitable beyond 2024. So curious if you guys have a view there based on your learnings from the Identica, I guess, market launch.
spk03: I would let Paul add some additional remarks, but I would point to two things. First of all, we've already made previous investments that we outlined in order to be the high-volume, low-cost producer. We've made significant progress in driving the cost down with a fully loaded and released auto-injector, which I think the price will be significantly larger then. The second issue, though, I think Paul might want to go ahead and address.
spk02: Yeah, no, I think Denny articulated very well, Jason. This is There's a two-pronged approach to success with the adalumin mat biosimilar entry. It's price and it's supply. And so we're going to be coming to market, offering supply guarantees, and we'll react to whatever price is going to be in the market at that particular time. And we're very prepared to compete on that price to gain rapid growth you know, rapid adoption on the formularies, you know, in the second half of 2023 with real acceleration occurring in 2024 and beyond. So we see the opportunity for significant revenue growth in this market.
spk03: But we expect with our cost structure to remain profitable for a number of years on this product, given our high volume and low cost capabilities, Jason. And the fact that we don't expect this, but we also don't expect to fill the sales force.
spk05: Yep. Okay, guys. Thanks. Thanks.
spk01: Your next question will come from the line of Georgie Yordanov with Cowan & Company. Please proceed with your question.
spk04: Hey, guys. Thank you so much for taking our questions. So I guess for the first one, regarding the review process for biosimilar docentes, Are there any additional updates or color you could provide around interactions with the agency? And specifically, have you been part of these discussions? And has your partner received clearance around the manufacturing issue that was identified in the previous TRL? And then if I could have a follow-up.
spk03: Yeah, to be clear, And I'll let Dr. LaValle address this in more detail. To be clear, yes, we are confident that the previous issues with respect to the manufacturing CRL have been fully addressed. There has been an inspection. The facility and the manufacturing inspection, we do not believe are any impediment to approval whatsoever. Teresa, do you have any additional comment with respect to assembly approval?
spk07: Yeah, we do. the late cycle meeting, and I am optimistic of continuing engagement with the FDA through the review process for the August SUFA date.
spk04: Great. And then just around the opportunity for biosimilar incentives, do you know if there are any other competitors except Biogen and Samsung that might be launching in the near term? And given that limited competition, could you potentially see a similar ramp up as we saw with Eudenica over the next two to three years?
spk03: Well, I would say that our understanding is Biogen will probably be in a position of coming to market before us. Just how much, we're uncertain, but perhaps a bit. But as you point out, we were second to market with Eudenica. did very, very well with that launch, with that product, and dominated that biosimilar market up until this point. So I think that we're fairly optimistic about how well Paul and his team will perform with the simile launch based on our demonstrated expertise. Paul, any additional points you want to make on simile launch?
spk02: I don't think so, Danny. I think, I mean, we're in the market formation period, and that's key for, you know, for short, long-term success with biosimilars. So we're going to be prepared to come in, get that market formation period with our track record of our expertise and, you know, clinic-based buy and build markets with our expertise, you know, with contracting, with discipline there, as well as ASP management and delivering a retinal specialist, say, very compelling value proposition.
spk03: Just one note. The first similarly filing did not receive a complete response letter. There was additional manufacturing data requested by the agency. That data was subsequently developed in conjunction with the agency they were conferred with. It was submitted, it was accepted, and now we look forward to approval. Thank you so much.
spk01: And at this time, there are no further questions in key. I would now like to turn it back over to the panel for closing remarks.
spk02: Thank you, Operator, and thank you, everybody, for joining us today.
spk01: This concludes today's conference call. Thank you for participating in Menial Disconnect.
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