Coherus BioSciences, Inc.

Q4 2022 Earnings Conference Call

3/6/2023

spk04: Thank you for standing by, and welcome to Caheris Biosciences' fourth quarter and fiscal year 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 1-1 on your telephone. I would now like to hand the call over to SVP, Investor Relations, Mark Chachefsky. Please go ahead.
spk03: Thank you, Lateef, and good afternoon, everyone, and thank you for joining us. We issued a press release earlier today announcing our financial results for the fourth quarter of 2022. This release can be found on the Coherence Biosciences website and is also attached to our Form 8K. 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 gain approval for multiple new products and launch them, the ability of the FDA to complete required inspections in China for our BLA for toripalimab, timing of the end of our decline in revenues and timing of our ability to gain market share for any of our approved products, expectations about revenue growth, projections of expenses and revenue, our future manufacturing capacity, and whether we can return to profitability and the timing of any return to profitability. All of these forward-looking statements involve substantial risks and uncertainties that are beyond our control and could cause actual results, performance, or achievements to differ from those implied by the forward-looking statements. 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 filed with the SEC. 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. Fourth quarter and full year 2022 results are not necessarily indicative of results for future periods. With me on today's call are Danny Lanphier, CEO of Claharis, Dr. Therese Hellevalley, Chief Development Officer, Dr. Rosh Diaz, Chief Medical Officer, Paul Reeder, Chief Commercial Officer, and McDavid Stilwell, Chief Financial Officer. I will now turn the call over to Danny.
spk11: Thank you, Merrick, and thank you all for joining us on our Q4 2022 call. For Q4 2022, we continued our efforts to first drive top-line revenues across our products. Secondly, to actively manage expenses without jeopardizing our product launches or sales potential. And then third, to drive towards profitability in 2024. COHER's strategy is to create long-term shareholder value with immuno-oncology products that extend patient survival and the fund development of these products with the sales of biosimilars or other innovative products across diversified therapeutic areas. We have continued to make good progress with both our development efforts and our biosimilar sales efforts this quarter. Following my opening remarks, Paul Reeder, our Chief Commercial Officer, will update you on the similarly launch and progress on obtaining our permanent reimbursement Q code, which we expect to drive sales starting in Q2 and on through 2023. Paul will then further update you on Udenica sales and trends for Q4-22, as well as our plans for our newly approved Udenica auto injector. As you know, the Pegtoe Grasta market has become increasingly more competitive. with market participants continuing to discount prices. As Paul will explain, our strategy is to provide multiple product presentations to fully address market needs, maximizing UDENICA utilization. Dr. Theresa Lavallee, our Chief Development Officer, will update you on two key items. First, and most importantly, Tor Palamab inspections and approval, and secondly, ILT4 IND progress, as well as certain other pipeline developments. With respect to clinical development, our Chief Medical Officer, Dr. Raj Dias, will then update on recently announced final NPC data, as well as progress in our tiget-torpalimab combination study. As I indicated, we have been tightly focused on actively managing expenses without jeopardizing our product sales potential. Accordingly, McDavid Stilwell, our Chief Financial Officer, will provide greater detail on our expense management efforts. However, the top line results of these exercises is that we are revising our previous 2023 SG&A expense forecast to $315 million to $335 million, a reduction for the 12 months of 2023 of nearly $100 million compared to previous guidance. This is being achieved by both reducing headcount by approximately 20% as well as realizing savings, including R&D. across the board. Last quarter, we told you that our goal was to launch four products or presentations by the end of 2023 and significantly reduce our cost structure. This quarter, we report that we continue to successfully track to those goals while adding yet another launch, our auto injector presentation in Udenica. With that, I'll now turn the call over to Paul Reeder, our Chief Commercial Officer. Paul?
spk06: Thank you, Danny. I'll start with Simerly, the first and only interchangeable biosimilar to Lucentis, approved by the FDA with all five indications, both dosage strengths, and with 12 months of first interchangeability exclusivity. This complete label has been well received by retinal specialists, giving them the confidence that they can safely transition currently treated Lucentis patients to Simerly and expect the same clinical outcomes. Our strategic approach to the market is twofold. First, maximize the conversion of existing Lucentis business, which currently represents greater than 1 million units annually. And second, grow share through new patient starts or conversion from other anti-VEGF products. For the fourth quarter, sales of Simerly were $7 million, and market share ended the quarter at 2.4%. With channel inventory levels at the end of the quarter above the normal range due to launch stocking and anticipated demand. Payer coverage is expanding, which is creating greater access opportunities for Simerly. We have confirmed coverage on 100% of Medicare fee-for-service lives, enabling the reimbursement pathway for claims submitted under Medicare Part B, which is the majority of patients with wet AMD and 40% of Lucentis Business. coverage achieved thus far for commercial and Medicare Advantage is 61 percent and 47 percent of lives, respectively. Importantly, CIMRLY received its permanent product-specific Q code from CMS, which will go into effect on April 1st, providing retinal specialists more efficient electronic billing processes and faster reimbursement for submitted claims. We see this as a catalyst for accelerated growth in 2023, beginning in Q2. Given this, we continue to expect that in 2023, similarly revenues will be at least $100 million. I'll now turn to our oncology franchise, beginning with Udenica. For the fourth quarter, Udenica net sales were $38.3 million, which included a $4.7 million charge for a contingent liability related to resolving a dispute arising from certain sales, which occurred from October 2020 through December 2021. This compared to $45 million in the prior quarter. The majority of the decline was driven by, first, an 8% decline in demand, primarily in the clinic and non-340B segments, respectively, and secondly, a 14% decline in net selling price, required to maintain a competitive position in the pre-filled syringe segment. Market share for the quarter was 12.4%, a 1% decline from the prior quarter. Channel inventory levels at the end of the quarter increased slightly above the normal range due to end-of-the-year holiday stocking at wholesalers. As Denny mentioned, we are excited to announce FDA approval of Udenica Auto Injector, which represents the first product presentation innovation in the PEGFIL Graston class in eight years. Commercial launch will occur in the coming weeks. Udenica will be the only PEGFIL Graston brand with both pre-filled syringe and auto-injector presentations, offering greater choice and flexibility for providers and patients, enabling them to tailor the PEGFIL Graston treatment approach to their unique needs. whether it's in the clinic or at home. We believe that the Udenica Auto Injector can effectively complete for Neulasta OnPro Share in some of the clinical and patient settings. This year, when we launch our OnBody device, if approved, the Udenica brand will become the only PEGful Graston product with three presentations, providing a total solution for customers and enabling Udenica to compete head-to-head with Neulasta OnPro, which currently maintains 44% of the market. Now regarding Torpalimab. We remain excited about the potential to bring to oncologists and patients what would be the first and only PD-1 inhibitor approved in the U.S. indicated for nasopharyngeal carcinoma, and to establish a new standard of care in all lines of therapy, including first line. Our oncology commercial capabilities have been built to scale, with significant overlap between Udenica customers and toropalimab-targeted prescribers. Therefore, the launch of toropalimab will be efficiently integrated into our existing oncology commercial infrastructure. We maintain a state of commercial launch readiness and will be ready to launch toropalimab directly upon FDA approval. Now I'll end with you, Simri. or Humira Biosimilar, which is on track to launch in July. We continue to believe that price, supply robustness, and product presentation will serve as the key criteria used in making formulary decisions, and USMRI is well positioned to compete on each of these criteria. USMRI will have a state-of-the-art auto-injector presentation, which was approved by FDA last month on schedule and includes our proprietary, non-stinging, citrate-free formulation and a 29-gauge needle for maximal patient comfort. We will have substantial supply volumes at launch, with 500,000 UCIMERI units ready for distribution in July. Despite the high competitive intensity of this market, we are confident that we will deliver a compelling UCIMERI value proposition, and we'll share more details as we get closer to launch. I'll now turn the call over to Teresa.
spk17: Thank you, Paul, and good afternoon, everyone. I would like to begin with an update on our toropalimab inspections. As you know, the FDA missed the PDUFA date for our toropalimab MPC application in December of 2022. As we have previously noted, travel restrictions related to the COVID-19 pandemic have hindered the FDA's ability to complete inspections in China for the toropalimab BLA. However, as of January 8, 2023, China's COVID policies were lifted with complete elimination of the quarantine requirement upon entering the country or in response to a positive COVID test. Coheris and our partner Junxi Biosciences are currently engaged with the agency regarding the scheduling of the inspection. The FDA has notified the company of planned dates in the second quarter of 2023 for the manufacturing inspections in China. The FDA granted toropalimab breakthrough therapy designation and has consistently recognized the unmet need for patients with MPC and the strength of the clinical data, which has been further supported by the positive final overall survival data. While we are very optimistic that the toropalimab will be approved for MPC, a rare cancer, an unmet need, with no approved immunotherapy options in 2023. In 2022, the FDA made clear its position that it will generally require multi-regional clinical trials to support other U.S. registrations that do not warrant regulatory flexibility. Consistent with the FDA's position, we have recently worked with our partner Junshi to streamline the toropalimab development plan and focus on the two studies that support the nasopharyngeal carcinoma BLA, as well as a small solid tumor study currently being conducted in the United States. The development plan scope reduction significantly reduces our toropalimab-related clinical trial expenses going forward, as McDavid will describe later in the call. Torapalimab, a PD-1 with a differentiated mechanism of action and impressive survival benefit in multiple tumor types, provides an essential foundation to our I-O pipeline. We continue to look at development opportunities to expand beyond MPC for Torapalimab by investigating novel combinations with our partner Junshi, with our TIGIT CHS-006 program, with new partners that have clinical data and cohere as new molecular entities. With respect to our early stage pipeline, CHS1000, our proprietary ILT4 antibody, a tumor microenvironment modulator, is progressing towards IND, and we are on track for filing in 2023. While the field has focused on T cell checkpoint inhibitors, myeloid checkpoint inhibitors such as ILT4 may serve as an important approach for overcoming PD-1 resistance. We believe the mechanism of this myeloid modulator will be complementary with toropalimab and plan to explore the combination in a broad range of solid tumors, including lung cancer. I'll now turn it over to Dr. Raj Daya to discuss the toropalimab combination studies in further detail.
spk18: Thanks very much, Teresa, and good afternoon, everyone. Toripalimab continues to form the backbone of our immuno-oncology franchise. We recently announced that we have positive final overall survival results of Jupiter-02 in nasopharyngeal carcinoma to build upon the positive PFS data published in Nature Medicine and presented at the 2021 ASCO plenary session, and which we will be communicating in detail at a forthcoming Congress. With regards to our TIGIT program, we remain excited about our toropalimab TIGIT study, which is currently active in the U.S., and we're continuing to open U.S. sites. We anticipate data from this U.S. study being available beginning in 2024 as previously communicated, and emerging datasets from the companion China toropalimab-tiget study being available throughout 2023. And finally, we continue to be active in exploring academic collaborations as well as partnership opportunities for toropalimab clinical trials with novel combinations across multiple tumor types, including non-small cell lung cancer. I'll now turn the call over to our Chief Financial Officer, McDavid Stilwell. McDavid.
spk09: Thank you, Raj. The details of our financial results are in the press release, the 8K and the 10K we filed this afternoon, so I'll focus on just a few highlights. For the fourth quarter and full year 2022, we reported net losses of $58.9 million and $291.8 million, respectively, on a GAAP basis. Net revenue for the fourth quarter was $45.4 million. Udenica net product revenue for the quarter was $38.3 million. and was reduced by a $4.7 million charge for a contingent liability related to resolving a dispute regarding certain sales that occurred in 2020 and 2021. Net product revenue of Simerly, which launched October 3rd, was $6.9 million. Cost of sales was $14.2 million for the quarter and $70.1 million for the year. resulting in gross margins of 69% and 67%, respectively. COGS for the full year 2022 included a $26 million write-down taken in the third quarter for inventory at risk of expiration. Recall that Udenica COGS includes a mid-single-digit royalty paid on net sales through mid-year 2024. And similarly, COGS includes low to mid-50% royalties on gross profits. Research and development expenses were $29 million for the fourth quarter and $199.4 million for the year. Excluding upfront license fees in both years, R&D costs declined in 2022 relative to 2021 due to lower development expenses for Udenica and USMRI. Selling, general, and administrative expenses were $53.6 million for the quarter and $198 million for the year. An increase compared to the prior year, it was driven by higher commercialization expenses in preparation for launches of Simerly in late 2022 and multiple new product launches in 2023, including Torre Panlamab, USIMRI, and the auto-injector and on-body injector presentations of Udenica. We ended the year with $192 million in cash, cash equivalents, and marketable securities. Looking ahead for 2023, we continue to project net product revenue to exceed $275 million, including at least $100 million in net sales of Simerly. In the last three months, we have implemented important measures to significantly reduce our operating expenses and cash outlays. As Teresa described, we have worked with our partner Junshi to streamline the U.S. Toropanamab Development Plan, which forms the basis for our Toropanamab-related clinical trial reimbursements. We expect this change in scope will reduce our expenses for this asset by approximately $100 million over the next five years, including by $23 million this year in 2023. On our last call, we reported to you that we had reduced expenditures but would continue to work on generating more savings I can report today that we are reducing headcount by about 20%, initiating a reduction in force impacting about 60 staff members, effective March 10th. We have also reduced other internal and external SG&A expenses throughout the company. Additionally, we have worked with our manufacturing partners to reduce expenses and shift production schedules to minimize near-term cash outlays. As a result of these measures, Our projected operating expenses are significantly reduced compared to the five-year operating cost structure that we illustrated at our April 2022 Analyst Day event. For 2023, the difference is nearly $100 million. We project total combined SG&A and R&D gap operating expenses of $315 to $335 million for this year, excluding upfront or milestone payments to collaborators. and including approximately $50 million in non-cash stock compensation expense. As 2023 progresses, we expect our operating losses to moderate rapidly, and we continue to manage Coherus to become profitable again in 2024. I'll now turn the call to Denny for closing remarks.
spk11: Thank you, McDavid, and thank you all for joining us on our Q4 2022 earnings call. We are pleased with our progress over the last quarter with the launch of our second product similarly, or the sentence by similar. We're also pleased that we have obtained approval for a new and innovative product presentation, the Udantica Auto Injector, which will launch next quarter, addressing unmet patient and physician needs. Through thoughtful and disciplined cost and expense control, we have significantly reduced our 2023 expenses by about $100 million, about 325 million dollars and will continue to look for more efficiencies and savings in 2023 we look forward to the approval and launch of other products and we continue our efforts to drive revenue increases while controlling expenditures to achieve profitability in 2024. operator we're ready for the questions thank you as a reminder to ask a question you will need to press star 1 1 on your telephone again that's
spk04: Star 1-1 on your telephone to ask a question. We ask that you limit yourself to one question and one follow-up, then return to the queue. Please stand by while we compile the Q&A roster. Our first question comes from the line of Salim Syed of Mizuho. Your question, please, Salim.
spk07: Hey, great. Thanks so much for the question, guys. I guess I'll use my one question on the auto-injector and my follow-up for Tori, if I can. On the auto-injector, guys, can you just remind us, is the predominant – first, can you tell us when you filed this? I don't recall you guys actually ever telling us when you filed for the auto-injector. I'm just trying to understand how quickly the FDA may have gotten through this particular approval. process. I'll just leave it there. And then I guess for my follow-up, just curious if you can give us an update on how you're pursuing NCCN coverage as a Category 2b drug for lung for toropalimib now that you have the inspection on the docket.
spk11: Thank you. Thanks, Salim. Actually, Salim, I would remind you that you detected the autoinjector clinical trial some time ago, if I recall correctly, and you also detected the own-body clinical trial at a similar timeframe. We have not disclosed the filing timing, but I'll let Dr. LaValley make any further comments with respect to things. Teresa?
spk17: Yeah, thanks, Salim, for the questions. For competitive reasons, we didn't talk about the auto-injector a lot. approval of BASUFA III in terms of review timelines. It's dynamic, and it changed in October. So I think the important thing is that we got the approval over the weekend. So we're excited to see this launched and continue to develop the Udenica franchise.
spk11: I think before we have Raj address the issue of NCCN, I would just invite Paul Reeder to make some comments about where the auto-injector fits in to the product presentations that we're working on and the needs in the market. Paul? Sure. Hi, Saleem.
spk06: So the market for PEG-filgrastim since COVID has really bifurcated into two segments. You've got your pre-filled syringe segment, which is around 55% of the business. That's where patients come back to the clinic or the office 24 hours after chemotherapy to get their injection. And then you've got the at-home segment where patients will get the OnPro device supplied, and that is injected approximately 24 hours later. What became clear is that while the on-body device, you know, was very useful, it has certain restrictions and limitations. And we believe that the auto-injector presentation will meet the needs of patients who desire an alternative to OnPro. And these are patients that you know, might be very active in their lifestyle, don't want to wear a device, or they have had problems previously with the OnPro device, or, you know, they just want more control over their treatment where they can administer their PEG filgrastim injection when and where they want and not be, you know, beholden to the timing of when the device is programmed to go off. So we feel like this is going to serve an unmet need for a number of patients, and we look forward to working with patients and doctor's office to bring this to market.
spk11: Thanks, Paul. Raj, can you address Saleem's question regarding NCCN?
spk18: Sure. Saleem, hi, and thanks for the question. So, Saleem, we will obviously, first of all, wait for our NPC approval. And once that's happened, we can submit other published data sets to the NCCN. And I'll remind you that we have published data sets in several high-tier journals. So that's the timing in terms of NCCN. Did you have a follow-up, Selim?
spk07: Oh, I thought I used it. Out of respect for my peers, I'll get back in the queue. But thanks so much for the call, guys. Super helpful. Thank you.
spk12: Okay.
spk04: Thank you. Our next question comes from the line of Douglas Stahl of HC Wainwright. Your question, please, Douglas.
spk14: Hi. Good afternoon. Can you hear me? Yes. Maybe as a starting point with similarly, Paul, your Q code will come into effect on April 1st. Just curious from your perspective, how meaningful will that be? And will it sort of really unlock a lot of that value? Or will it continue to build throughout the year? Or should we see a really big step up in, you know, with the start of QQ and with the Q code being available?
spk06: Yeah, thanks, Doug. Yeah, the Q code is really important because under this miscellaneous code period, retinal specialists have to manually submit claims. And the processing of the claims is manual, which delays reimbursement and it increases financial risk to the practice. And so, you know, retinal specialists, you know, trying to manage cash flow understand this. And so, what the product-specific Q-code will do is it will enable efficient electronic billing processing. It will automate the reimbursement for the claims, minimizing the risk of error and the claims denial. And so we're working with many practices now to begin to operationalize that with their billing systems, electronics health record systems. And so we think it's going to be the catalyst for growth in 2023, starting in Q2. Obviously, it will build as the year goes on.
spk14: Okay. And obviously, with you know, one of the big events for the year, Denny, is the launch of USIMRI in July. Just curious, at what point will you start to have visibility, be able to share with us where that product is positioned from a formulary standpoint with payers? Because I know you have always said that that's going to be a big part of the strategy. Thank you.
spk11: Yeah. Thanks, Doug. Fair question. So I think that it's fair to say that the Humira biosimilar, you know, formulary environment is in a dynamic period at this point with Amgen launching and so on. And I think that we will have clarity on this sometime after the July launch. So I would say that the Q3, the post-Q3 call, when we get to that, which should be around November, would be a great time to talk about how things are panning out and what's going on. But I think that is fairly dynamic, as you know, for this year in 23. Perhaps things will settle out a little more in 24. But I don't think we'll know very much until we see what happens in Q3 and how things are shaking out. Fair question, though.
spk13: Okay, great. Thank you.
spk04: Thank you. Our next question comes from the line of Chris Schott of J.P. Morgan. Please go ahead, Chris.
spk08: Great, very much. Just two questions for me. Just continuing on the biosimilar Humira front, just to help set our expectations, do you see there being a meaningful revenue opportunity for this product in 2023, or is the opportunity more skewed to 2024 and beyond, given some of the contracting that AbbVie's put in place? I'm just trying to get a sense of, is this year more about kind of like formulary building and access versus actual revenue, and next year is more the revenue opportunity? And then my follow-up question was just on the cost savings front. I think you mentioned Tori and some streamlining of the programs there, but can you just elaborate a little bit more about where the other expense reduction is coming from? Just trying to get my hands around how much of this is savings on the SG&A side versus further deferred R&D and just getting a little bit more color of how you're kind of streamlining the business. Thanks so much.
spk11: Hi, Chris. Thanks for the question. With respect to Marabou Somewhere's projected revenues for 23 and 24, as I indicated a little earlier with Doug, I don't think we'll really have a good grip on that until we get past the July launch. We see what happens, how the jockeying with the positioning of the formularies goes and so on. So I don't want to give you imprecise information or gaze into the crystal ball here without basis. So I think we'll just have to wait post-launch and see how things pan out. But I think that's a totally fair question to ask us on the November call with respect to Q3 and so on. With respect to the savings and where the savings came from, I'll let McDavid Stilwell handle that. But I think that we have done a very complete job looking top to the bottom on the organization. in a number of areas for savings. McDavid, where are the key areas the savings came from for Chris's benefit?
spk09: Sure. Thanks, Chris. The expense reductions come across three main areas. Headquarters headcount, development expenses, and manufacturing expenses. So we're rethinking business processes across the company and asking how can we operate more efficiently. And then the Tor Palamab Joint Development Committee reducing the scope of the U.S. Development Plan from a broad development plan to to the three studies that Teresa described, that's also very significant in the overall expense reduction. And then finally, with respect to manufacturing, we are shifting the timing of certain manufacturing-related expenses in inventory building in order to reduce expenses near term. What we are not doing is we are not significantly downsizing the customer-facing teams for Udenica or Simerly. And so we don't expect that the workforce reduction will impact our ability to execute on our commercial plans and meet our revenue targets.
spk11: One thing with respect to how we have approached this on the commercial side, and maybe Paul Reeder can comment a little further, is we're multiplexing these groups across both products. For example, the market access group that addresses the payers, right? We have those folks working on Simile plus Udenica, plus potentially Toro Paba and so forth. And the other area is also the internal operations group, the data analytics group. They also get multiplex across these various products. We have additional bandwidth for even more products, actually. But I think that we found good efficiencies there. And I think Paul's team is really working much, you know, Very much an integrated, holistic sort of fashion. Paul, any particular comments on this?
spk06: No, I would just reinforce that when we built the commercial team, we built it to scale, and it was designed so that the multiple groups handle the portfolio. Then he mentioned the payer team, our field reimbursement managers, and importantly, our key accounts and strategic account teams that handle the big accounts for both oncology and retina. They're dealing with the same GPO groups and others, and And so this provides us tremendous synergies and not having to add additional layers of groups. So we are taking every advantage of those synergies in the launch of our products, managing headcount and capacity very carefully. But we feel we're very right-sized to be able to continue our multiple launches here in 2023. Thanks, Paul. Thank you.
spk04: Thank you. Our next question. comes from the line of Balaji Prasad of Barclays. Your line is open, Balaji.
spk16: Hi, good afternoon. This is Shao Ong for Balaji. Thanks for taking our question. Just one quick one on the generalizability issue and toripalimab. Seems like for the indication for MPC, seems like you don't have any concerns for generalizability. So is it because the patient profile of MPC patients would help addressing the generalizability issue, or is it because there is currently no approved target therapy for MPC in the United States? Thank you.
spk11: Oh, thanks for the question. Theresa, could you address the generalizability of the data question, please?
spk17: Yes, thanks, Balaji. And both points are important, both the epidemiology of the disease, but also critically that there are no approved immunotherapies in the disease. So it's both the, and it's a rare disease. So looking, the FDA has always looked at rare disease populations and the ability to do multi-regional versus targeted trials as an approach to really look at a drug's effect. The overall survival impact that has been observed is quite compelling. So it's a risk-benefit that is undeniable.
spk16: Thank you. This is very helpful.
spk04: Thank you. Our next question comes from the line of Jason Gerberry of Bank of America. Please go ahead, Jason.
spk15: Hey, guys. Thank you for taking my questions. my uh my question is just around the uh the opex cuts if they're in any way uh related to any it would be anticipated shortfall on revenue from the new launches in 2023 or 2024 and then my follow-up on celine's question is about nccn and lung um do you think the tort polymath could garner much juice in lung cancer um just on an nccn recommendation i'm not sure if there's any precedent you'd point to that um mindful that you're obviously not promoting but I think with an NCCN recommendation, doctors can get reimbursement technically, so just kind of curious about that dynamic.
spk11: All right, thanks. I'll take the first one with respect to the revenues, and then I'll let Raj Dias, our CMO, address the NCCN. No, not so much a shortfall in revenues driving the cuts, but we felt that we needed to have the organization highly focused and right-sized And we felt that it was prudent for us and responsible to look for savings across the organization. We talked about this last year and developed savings in Q3 and Q4, which we disclosed. We told you we were going to go on for some more, and we've gone ahead and we've done that. We run a very, I think, efficient company, a very tight ship. All the expenditures are very closely scrutinized, and we know what each single person in the company is doing and how they work together. So we think it's prudent. And lastly, I would say that, as I've said to you many times, we are very focused on driving towards profitability in 2024. And that means two things. That means, first of all, bringing up the revenue line with the additional products, similarly, Udenica, the additional presentations, Tori, eSimmery, all across the board. Raise the revenues and really control the costs without jeopardizing those revenues. And when those two lines intersect, we get the profitability. So that's really our focus. With respect to NCCN, I'll let Raj address that question. Raj?
spk18: Hi, Jason. Thanks. Yeah, as I mentioned before to Saleem, again, we will wait for NPC approval. And after that happens, we are able to submit additional data sets. You asked specifically about Lung. Lung was published, I think, back in the August time frame in JCO. So, once we have NPC approval, we will go ahead and submit and see.
spk21: Got it. Thanks.
spk04: Thank you. Our next question comes from the line of Ash Verma of UBS. Please go ahead, Ash.
spk20: Hi. Thanks for taking my questions. I have two. So on the Udenica auto-injector, I'm just curious, like, trying to understand how simple is this to use? Would this require kind of like any training for a patient physician? How do you foresee most of the initial use to happen? Would it be in the physician office setting, or do you think patients can actually use this? And the second one, so we've seen, like, one biosimilar Humira competitor launch and they have two product offerings. Does that in any way change your view in terms of either how pricing could evolve in this market or whether companies like yourself would want to have two product strategy to come into the market? Thanks.
spk11: Hi, Ash. Thanks for the question. So if I understand you correctly, the first question is, What about the auto-injector, the AI, ease of use, and so on? And second is, with respect to our Humira biosimilar and so on. I would first, I'll let Paul answer both these, but I would first presage remarks by saying that we're very proud of the auto-injector. Very streamlined, it's an excellent auto-injector. We had a lot of experience with auto-injectors because of the Humira product, which also has an excellent auto-injector. I believe it's a two-step auto-injector. And then, Paul, a little more backstory on that for us. Sure.
spk06: Yeah, Ash, this is a state-of-the-art auto-injector. There's no buttons to it. It's a push-to-skin activation. So, really, it just, the patient can depress it onto their body. It's a very reliable device, delivering the dose consistently. And it's fast. You know, the whole process, start to finish, can take under 10 seconds, which gives, again, the patient a lot of control over when and where they can do it. We'll have training devices, but really it's so simple to use. Really anybody can learn how to do it. And if they don't, when we launch our on-body device later this year, we'll be the only brand that offers doctors and patients three different presentations to meet their unique needs. We would imagine that the auto-injector will be used both in the office, you know, for nurses who prefer this over a pre-filled syringe. There's no needle exposed, so that's a real advantage, or at home. So we're expecting usage in both settings of care. With respect to the biosimilar launch of Amgen's product, you know, we're not going to comment at this time. you know, on our pricing strategy. So I think you'll learn more about that once we, you know, are closer or right after launch, Ash.
spk11: Yeah, I would just add with respect to Yosemite that, you know, we engaged with the market significantly the last few years on what was important to folks, what's important to them. And that is, you know, robust supply chain. Citrate-free, pain-free formulation, small needle, high patient comfort, strong price, supply guarantees. So we really focus there, and that's the value proposition that we're going to bring to the market, and we think we're going to compete well with that.
spk01: Thank you.
spk04: Thank you. I would now like to turn the conference back to Denny Lanphier for closing remarks, sir.
spk11: Oh, thank you, operator. Thank you all for joining us on our Q4 2022 call. As you can see, Coherus continues to progress against its goals of developing our Iowa franchise, plus launching additional products to support their development. We have also been quite busy with respect to constraining our expenses and making sure the company operates very efficiently. We look forward to Q2 when we get a little more lift with the similarly sales on the Q code. And we'll be happy to chat with you all again in August when you see how things come out for Q2. Thank you.
spk04: This concludes today's conference call. Thank you for participating. You may now disconnect.
spk11: Thank you, operator.
spk20: To raise and lower your hand during Q&A, you can dial star 1 1. Thank you. Thank you. Thank you.
spk00: Thank you.
spk04: Thank you for standing by, and welcome to Caheris Biosciences' fourth quarter and fiscal year 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 1-1 on your telephone. I would now like to hand the call over to SVP, Investor Relations, Mark Chachefsky. Please go ahead.
spk03: Thank you, Latif, and good afternoon, everyone, and thank you for joining us. We issued a press release earlier today announcing our financial results for the fourth quarter of 2022. This release can be found on the Coherence Biosciences website and is also attached to our Form 8K. 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 gain approval for multiple new products and launch them, the ability of the FDA to complete required inspections in China for our BLA for toripalimab, timing of the end of our decline in revenues and timing of our ability to gain market share for any of our approved products, expectations about revenue growth, projections of expenses and revenue, our future manufacturing capacity, and whether we can return to profitability and the timing of any return to profitability. All of these forward-looking statements involve substantial risks and uncertainties that are beyond our control and could cause actual results, performance, or achievements to differ from those implied by the forward-looking statements. 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 filed with the SEC. 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. Fourth quarter and full year 2022 results are not necessarily indicative of results for future periods. With me on today's call are Danny Lanphier, CEO of Claharis, Dr. Therese Hellevalley, Chief Development Officer, Dr. Rosh Diaz, Chief Medical Officer, Paul Reeder, Chief Commercial Officer, and McDavid Stilwell, Chief Financial Officer. I will now turn the call over to Danny.
spk11: Thank you, Merrick, and thank you all for joining us on our Q4 2022 call. For Q4 2022, we continued our efforts to first drive top line revenues across our products. Secondly, to actively manage expenses without jeopardizing our product launches or sales potential. And then third, to drive towards profitability in 2024. COHER's strategy is to create long-term shareholder value with immuno-oncology products that extend patient survival and the fund development of these products with the sales of biosimilars or other innovative products across diversified therapeutic areas. We have continued to make good progress with both our development efforts and our biosimilar sales efforts this quarter. Following my opening remarks, Paul Reeder, our chief commercial officer, will update you on the similarly launch and progress on obtaining our permanent reimbursement Q code, which we expect to drive sales starting in Q2 and on through 2023. Paul will then further update you on Udenica sales and trends for Q4 22, as well as our plans for our newly approved Udenica auto injector. As you know, the Pegto Grasta market has become increasingly more competitive. with market participants continuing to discount prices. As Paul will explain, our strategy is to provide multiple product presentations to fully address market needs, maximizing UDENICA utilization. Dr. Theresa Lavallee, our Chief Development Officer, will update you on two key items. First, and most importantly, Tor Palamab inspections and approval, and secondly, ILT4 IND progress, as well as certain other pipeline developments. With respect to clinical development, our Chief Medical Officer, Dr. Raj Dias, will then update on recently announced final NPC data, as well as progress in our tiget-torpalimab combination study. As I indicated, we have been tightly focused on actively managing expenses without jeopardizing our product sales potential. Accordingly, McDavid Stilwell, our Chief Financial Officer, will provide greater detail on our expense management efforts. However, the top line results of these exercises is that we are revising our previous 2023 SG&A expense forecast to $315 million to $335 million, a reduction for the 12 months of 2023 of nearly $100 million compared to previous guidance. This is being achieved by both reducing headcount by approximately 20% as well as realizing savings, including R&D. across the board. Last quarter, we told you that our goal was to launch four products or presentations by the end of 2023 and significantly reduce our cost structure. This quarter, we report that we continue to successfully track to those goals while adding yet another launch, our auto injector presentation in Udenica. With that, I'll now turn the call over to Paul Reeder, our Chief Commercial Officer. Paul?
spk06: Thank you, Danny. I'll start with Simerly, the first and only interchangeable biosimilar to Lucentis, approved by the FDA with all five indications, both dosage strengths, and with 12 months of first interchangeability exclusivity. This complete label has been well received by retinal specialists, giving them the confidence that they can safely transition currently treated Lucentis patients to Simerly and expect the same clinical outcomes. Our strategic approach to the market is twofold. First, maximize the conversion of existing Lucentis business, which currently represents greater than 1 million units annually. And second, grow share through new patient starts or conversion from other anti-VEGF products. For the fourth quarter, sales of Simerly were $7 million, and market share ended the quarter at 2.4%. With channel inventory levels at the end of the quarter above the normal range due to launch stocking and anticipated demand. Payer coverage is expanding, which is creating greater access opportunities for Simerly. We have confirmed coverage on 100% of Medicare fee-for-service lives, enabling the reimbursement pathway for claims submitted under Medicare Part B, which is the majority of patients with wet AMD and 40% of Lucentis Business. coverage achieved thus far for commercial and Medicare Advantage is 61 percent and 47 percent of lives, respectively. Importantly, CIMRLY received its permanent product-specific Q code from CMS, which will go into effect on April 1st, providing retinal specialists more efficient electronic billing processes and faster reimbursement for submitted claims. We see this as a catalyst for accelerated growth in 2023, beginning in Q2. Given this, we continue to expect that in 2023, similarly revenues will be at least $100 million. I'll now turn to our oncology franchise, beginning with Udenica. For the fourth quarter, Udenica net sales were $38.3 million, which included a $4.7 million charge for a contingent liability related to resolving a dispute arising from certain sales, which occurred from October 2020 through December 2021. This compared to $45 million in the prior quarter. The majority of the decline was driven by, first, an 8% decline in demand, primarily in the clinic and non-340B segments respectively, and secondly, a 14% decline in net selling price, required to maintain a competitive position in the pre-filled syringe segment. Market share for the quarter was 12.4%, a 1% decline from the prior quarter. Channel inventory levels at the end of the quarter increased slightly above the normal range due to end-of-the-year holiday stocking at wholesalers. As Denny mentioned, we are excited to announce FDA approval of Udenica Auto Injector, which represents the first product presentation innovation in the PEGFIL Graston class in eight years. Commercial launch will occur in the coming weeks. Udenica will be the only PEGFIL Graston brand with both pre-filled syringe and auto-injector presentations, offering greater choice and flexibility for providers and patients, enabling them to tailor the PEGFIL Graston treatment approach to their unique needs. whether it's in the clinic or at home. We believe that the Udenica Auto Injector can effectively complete for Neulasta OnPro Share in some of the clinical and patient settings. This year, when we launch our OnBody device, if approved, the Udenica brand will become the only PEGful Graston product with three presentations, providing a total solution for customers and enabling Udenica to compete head-to-head with Neulasta OnPro, which currently maintains 44% of the market. Now regarding Torpalimab. We remain excited about the potential to bring to oncologists and patients what would be the first and only PD-1 inhibitor approved in the U.S. indicated for nasopharyngeal carcinoma, and to establish a new standard of care in all lines of therapy, including first line. Our oncology commercial capabilities have been built to scale, with significant overlap between Udenica customers and toropalimab-targeted prescribers. Therefore, the launch of toropalimab will be efficiently integrated into our existing oncology commercial infrastructure. We maintain a state of commercial launch readiness and will be ready to launch toropalimab directly upon FDA approval. Now I'll end with you, Simri. are Humira Biosimilar, which is on track to launch in July. We continue to believe that price, supply robustness, and product presentation will serve as the key criteria used in making formulary decisions, and USMRI is well-positioned to compete on each of these criteria. USMRI will have a state-of-the-art autoinjector presentation, which was approved by FDA last month on schedule and includes our proprietary, non-stinging, citrate-free formulation and a 29-gauge needle for maximal patient comfort. We will have substantial supply volumes at launch, with 500,000 UCIMERI units ready for distribution in July. Despite the high competitive intensity of this market, we are confident that we will deliver a compelling UCIMERI value proposition, and we'll share more details as we get closer to launch. I'll now turn the call over to Teresa.
spk17: Thank you, Paul, and good afternoon, everyone. I would like to begin with an update on our toropalimab inspections. As you know, the FDA missed the PDUFA date for our toropalimab MPC application in December of 2022. As we have previously noted, travel restrictions related to the COVID-19 pandemic have hindered the FDA's ability to complete inspections in China for the toropalimab BLA. However, as of January 8, 2023, China's COVID policies were lifted with complete elimination of the quarantine requirement upon entering the country or in response to a positive COVID test. Coheris and our partner Junxi Biosciences are currently engaged with the agency regarding the scheduling of the inspection. The FDA has notified the company of planned dates in the second quarter of 2023 for the manufacturing inspections in China. The FDA granted toropalimab breakthrough therapy designation and has consistently recognized the unmet need for patients with MPC and the strength of the clinical data, which has been further supported by the positive final overall survival data. While we are very optimistic that the toropalimab will be approved for MPC, a rare cancer, an unmet need, with no approved immunotherapy options in 2023. In 2022, the FDA made clear its position that it will generally require multi-regional clinical trials to support other U.S. registrations that do not warrant regulatory flexibility. Consistent with the FDA's position, We have recently worked with our partner Junshi to streamline the toropalimab development plan and focus on the two studies that support the nasopharyngeal carcinoma BLA, as well as a small solid tumor study currently being conducted in the United States. The development plan scope reduction significantly reduces our toropalimab-related clinical trial expenses going forward, as McDavid will describe later in the call. Torapalimab, a PD-1 with a differentiated mechanism of action and impressive survival benefit in multiple tumor types, provides an essential foundation to our I-O pipeline. We continue to look at development opportunities to expand beyond MPC for Torapalimab by investigating novel combinations with our partner Junshi, with our TIGIT CHS-006 program, with new partners that have clinical data and cohere as new molecular entities. With respect to our early stage pipeline, CHS1000, our proprietary ILT4 antibody, a tumor microenvironment modulator, is progressing towards IND, and we are on track for filing in 2023. While the field has focused on T cell checkpoint inhibitors, myeloid checkpoint inhibitors such as ILT4 may serve as an important approach for overcoming PD-1 resistance. We believe the mechanism of this myeloid modulator will be complementary with toropalimab and plan to explore the combination in a broad range of solid tumors, including lung cancer. I'll now turn it over to Dr. Raj Daya to discuss the toropalimab combination studies in further detail.
spk18: Thanks very much, Teresa, and good afternoon, everyone. Toripalimab continues to form the backbone of our immuno-oncology franchise. We recently announced that we have positive final overall survival results of Jupiter-02 in nasopharyngeal carcinoma to build upon the positive PFS data published in Nature Medicine and presented at the 2021 ASCO plenary session, and which we will be communicating in detail at a forthcoming Congress. With regards to our TIGIT program, we remain excited about our toropalimab TIGIT study, which is currently active in the U.S., and we're continuing to open U.S. sites. We anticipate data from this U.S. study being available beginning in 2024 as previously communicated, and emerging datasets from the companion China toropalimab-tiget study being available throughout 2023. And finally, we continue to be active in exploring academic collaborations as well as partnership opportunities for toropalimab clinical trials with novel combinations across multiple tumor types, including non-small cell lung cancer. I'll now turn the call over to our Chief Financial Officer, McDavid Stilwell. McDavid.
spk09: Thank you, Raj. The details of our financial results are in the press release, the 8K and the 10K we filed this afternoon, so I'll focus on just a few highlights. For the fourth quarter and full year 2022, we reported net losses of $58.9 million and $291.8 million, respectively, on a GAAP basis. Net revenue for the fourth quarter was $45.4 million. Udenica net product revenue for the quarter was $38.3 million. and was reduced by a $4.7 million charge for a contingent liability related to resolving a dispute regarding certain sales that occurred in 2020 and 2021. Net product revenue of Simerly, which launched October 3rd, was $6.9 million. Cost of sales was $14.2 million for the quarter and $70.1 million for the year. resulting in gross margins of 69% and 67%, respectively. COGS for the full year 2022 included a $26 million write-down taken in the third quarter for inventory at risk of expiration. Recall that Udenica COGS includes a mid-single-digit royalty paid on net sales through mid-year 2024. And similarly, COGS includes low to mid-50% royalties on gross profits. Research and development expenses were $29 million for the fourth quarter and $199.4 million for the year. Excluding upfront license fees in both years, R&D costs declined in 2022 relative to 2021 due to lower development expenses for Udenica and USMRI. Selling, general, and administrative expenses were $53.6 million for the quarter and $198 million for the year. An increase compared to the prior year, it was driven by higher commercialization expenses in preparation for launches of Simerly in late 2022 and multiple new product launches in 2023, including Torre Palamab, USIMRI, and the auto-injector and on-body injector presentations of Udenica. We ended the year with $192 million in cash, cash equivalents, and marketable securities. Looking ahead for 2023, we continue to project net product revenue to exceed $275 million, including at least $100 million in net sales of Simerly. In the last three months, we have implemented important measures to significantly reduce our operating expenses and cash outlays. As Teresa described, we have worked with our partner Junshi to streamline the U.S. Toropanamab Development Plan, which forms the basis for our Toropanamab-related clinical trial reimbursements. We expect this change in scope will reduce our expenses for this asset by approximately $100 million over the next five years, including by $23 million this year in 2023. On our last call, we reported to you that we had reduced expenditures but would continue to work on generating more savings I can report today that we are reducing headcount by about 20%, initiating a reduction in force impacting about 60 staff members, effective March 10th. We have also reduced other internal and external SG&A expenses throughout the company. Additionally, we have worked with our manufacturing partners to reduce expenses and shift production schedules to minimize near-term cash outlays. As a result of these measures, Our projected operating expenses are significantly reduced compared to the five-year operating cost structure that we illustrated at our April 2022 Analyst Day event. For 2023, the difference is nearly $100 million. We project total combined SG&A and R&D GAAP operating expenses of $315 to $335 million for this year, excluding upfront or milestone payments to collaborators. and including approximately $50 million in non-cash stock compensation expense. As 2023 progresses, we expect our operating losses to moderate rapidly, and we continue to manage Coherus to become profitable again in 2024. I'll now turn the call to Denny for closing remarks.
spk11: Thank you, McDavid, and thank you all for joining us on our Q4 2022 earnings call. We are pleased with our progress over the last quarter with the launch of our second product similarly, or as the sentence follows, similar. We're also pleased that we have obtained approval for a new and innovative product presentation, the Udantica Auto Injector, which will launch next quarter addressing unmet patient and physician needs. Through thoughtful and disciplined cost and expense control, we have significantly reduced our 2023 expenses by about $100 million. about 325 million dollars and will continue to look for more efficiencies and savings in 2023 we look forward to the approval and launch of other products and we continue our efforts to drive revenue increases while controlling expenditures to achieve profitability in 2024. operator we're ready for the questions thank you as a reminder to ask a question you will need to press star 1 1 on your telephone again that's
spk04: Star 1-1 on your telephone to ask a question. We ask that you limit yourself to one question and one follow-up, then return to the queue. Please stand by while we compile the Q&A roster. Our first question comes from the line of Salim Syed of Mizuho. Your question, please, Salim.
spk07: Hey, great. Thanks so much for the question, guys. I guess I'll use my one question on the auto-injector and my follow-up for Tori, if I can. On the auto-injector, guys, can you just remind us, is the predominant – first, can you tell us when you filed this? I don't recall you guys actually ever telling us when you filed for the auto-injector. I'm just trying to understand how quickly the FDA may have gotten through this particular approval. process. I'll just leave it there. And then I guess for my follow-up, just curious if you can give us an update on how you're pursuing NCCN coverage as a Category 2b drug for lung for toropalimib now that you have the inspection on the docket.
spk11: Thank you. Thanks, Salim. Actually, Salim, I would remind you that you detected the autoinjector clinical trial some time ago, if I recall correctly, and you also detected the on-body clinical trial at a similar timeframe. We have not disclosed the filing timing, but I'll let Dr. LaValley make any further comments with respect to things. Theresa?
spk17: Yeah, thanks, Salim, for the questions. For competitive reasons, we didn't talk about the auto-injector a lot. approval of BASUFA III in terms of review timelines. It's dynamic, and it changed in October. So I think the important thing is that we got the approval over the weekend. So we're excited to see this launched and continue to develop the Udenica franchise.
spk11: I think before we have Raj address the issue of NCCN, I would just invite Paul Reeder to make some comments about where the auto-injector fits in to the product presentations that we're working on and the needs in the market. Paul? Sure. Hi, Saleem.
spk06: So the market for PEG-filgrastim since COVID has really bifurcated into two segments. You've got your pre-filled syringe segment, which is around 55% of the business. That's where patients come back to the clinic or the office 24 hours after chemotherapy to get their injection. And then you've got the at-home segment where patients will get the OnPro device supplied, and that is injected approximately 24 hours later. What became clear is that while the on-body device, you know, was very useful, it has certain restrictions and limitations. And we believe that the auto-injector presentation will meet the needs of patients who desire an alternative to OnPro. And these are patients that you know, might be very active in their lifestyle, don't want to wear a device, or they have had problems previously with the OnPro device, or, you know, they just want more control over their treatment where they can administer their PEG filgrastim injection when and where they want and not be, you know, beholden to the timing of when the device is programmed to go off. So we feel like this is going to, you know, serve an unmet need for a number of patients, and we look forward to working with patients and doctor's office to bring this to market.
spk11: Thanks, Paul. Raj, can you address Saleem's question regarding NCCN?
spk18: Sure. Saleem, hi, and thanks for the question. So, Saleem, we will obviously, first of all, wait for our NPC approval. And once that's happened, we can submit other published data sets to the NCCN. And I'll remind you that we have published data sets in several high-tier journals. So that's the timing in terms of NCCN. Did you have a follow-up, Selim?
spk07: Oh, I thought I used it. Out of respect for my peers, I'll get back in the queue. But thanks so much for the call, guys. Super helpful. Thank you.
spk12: Okay.
spk04: Thank you. Our next question comes from the line of Douglas Stahl of HC Wainwright. Your question, please, Douglas.
spk14: Hi. Good afternoon. Can you hear me? Yes. Maybe as a starting point with similarly, Paul, your Q code will come into effect on April 1st. Just curious from your perspective, how meaningful will that be? And will it sort of really unlock a lot of that value? Or will it continue to build throughout the year? Or should we see a really big step up in, you know, with the start of QQ and with the Q code being available?
spk06: Yeah, thanks, Doug. Yeah, the Q code is really important because under this miscellaneous code period, retinal specialists have to manually submit claims. And the processing of the claims is manual, which delays reimbursement and it increases financial risk to the practice. And so, you know, retinal specialists, you know, trying to manage cash flow understand this. And so what the product-specific Q code will do is it will enable efficient electronic billing processing. It will automate the reimbursement for the claims, minimizing the risk of error and the claims denial. And so we're working with many practices now to begin to operationalize that with their billing systems, electronics health record systems. And so we think it's going to be the catalyst for growth in 2023, starting in Q2. Obviously, it will build as the year goes on.
spk14: Okay. And obviously, with you know, one of the big events for the year, Denny, is the launch of USIMRI in July. Just curious, at what point will you start to have visibility, be able to share with us where that product is positioned from a formulary standpoint with payers? Because I know you have always said that that's going to be a big part of the strategy. Thank you.
spk11: Yeah. Thanks, Doug. Fair question. So I think that it's fair to say that the Humira biosimilar, you know, formulary environment is in a dynamic period at this point with Amgen launching and so on. And I think that we will have clarity on this sometime after the July launch. So I would say that the Q3, the post-Q3 call, when we get to that, which should be around November, would be a great time to talk about how things are panning out and what's going on. But I think that is fairly dynamic, as you know, for this year in 23. Perhaps things will settle out a little more in 24. But I don't think we'll know very much until we see what happens in Q3 and how things are shaking out. Fair question, though.
spk13: Okay, great. Thank you.
spk04: Thank you. Our next question comes from the line of Chris Schott of J.P. Morgan. Please go ahead, Chris.
spk08: Great, very much. Just two questions for me. Just continuing on the biosimilar Humira front, just to help set our expectations, do you see there being a meaningful revenue opportunity for this product in 2023, or is the opportunity more skewed to 2024 and beyond, given some of the contracting that AbbVie's put in place? I'm just trying to get a sense of, is this year more about kind of like formulary building and access versus actual revenue, and next year is more the revenue opportunity? And then my follow-up question was just on the cost savings front. I think you mentioned TORI and some streamlining of the programs there, but can you just elaborate a little bit more about where the other expense reduction is coming from? Just trying to get my hands around how much of this is savings on the SG&A side versus further deferred R&D and just getting a little bit more color of how you're kind of streamlining the business. Thanks so much.
spk11: Hi, Chris. Thanks for the question. With respect to Marabou Somewhere's projected revenues for 23 and 24, as I indicated a little earlier with Doug, I don't think we'll really have a good grip on that until we get past the July launch. We see what happens, how the jockeying with the positioning of the formularies goes and so on. So I don't want to give you imprecise information or gaze into the crystal ball here without basis. So I think we'll just have to wait post-launch and see how things pan out. But I think that's a totally fair question to ask us on the November call with respect to Q3 and so on. With respect to the savings and where the savings came from, I'll let McDavid still handle that. But I think that we have done a very complete job looking top to the bottom on the organization. in a number of areas for savings. McDavid, where are the key areas the savings came from for Chris's benefit?
spk09: Sure. Thanks, Chris. The expense reductions come across three main areas. Headquarters headcount, development expenses, and manufacturing expenses. So we're rethinking business processes across the company and asking how can we operate more efficiently. And then the Tor Palamab Joint Development Committee reducing the scope of the U.S. Development Plan from a broad development plan to to the three studies that Teresa described, that's also very significant in the overall expense reduction. And then finally, with respect to manufacturing, we are shifting the timing of certain manufacturing-related expenses in inventory building in order to reduce expenses near term. What we are not doing is we are not significantly downsizing the customer-facing teams for Udenica or Simerly. And so we don't expect that the workforce reduction will impact our ability to execute on our commercial plans and meet our revenue targets.
spk11: One thing with respect to how we have approached this on the commercial side, and maybe Paul Reeder can comment a little further, is we're multiplexing these groups across both products. For example, the market access group that addresses the payers, right? We have those folks working on Simile plus Udenica, plus potentially Toro Paba and so forth. The other area is also the internal operations group, the data analytics group. They also get multiplex across these various products. We have additional bandwidth for even more products, actually. But I think that we found good efficiencies there, and I think Paul's team is really working much, you know, Very much an integrated, holistic sort of fashion. Paul, any particular comments on this?
spk06: No, I would just reinforce that when we built the commercial team, we built it to scale, and it was designed so that the multiple groups handle the portfolio. Then he mentioned the payer team, our field reimbursement managers, and importantly, our key accounts and strategic account teams that handle the big accounts for both oncology and retina. They're dealing with the same GPO groups and others, and And so this provides us tremendous synergies and not having to add additional layers of groups. So we are taking every advantage of those synergies in the launch of our products, managing headcount and capacity very carefully. But we feel we're very right-sized to be able to continue our multiple launches here in 2023. Thanks, Paul. Thank you.
spk04: Thank you. Our next question. comes from the line of Balaji Prasad of Barclays. Your line is open, Balaji.
spk16: Hi, good afternoon. This is Shao Ong for Balaji. Thanks for taking our questions. Just one quick one on the generalizability issue and toripalimab. Seems like for the indication for MPC, seems like you don't have any concerns for generalizability. So is it because the patient profile of MPC patients would help addressing the generalizability issue, or is it because there is currently no approved target therapy for MPC in the United States? Thank you.
spk11: Oh, thanks for the question. Theresa, could you address the generalizability of the data question, please?
spk17: Yes, thanks, Balaji. And both points are important, both the epidemiology of the disease, but also critically that there are no approved immunotherapies in the disease. So it's both the, and it's a rare disease. So looking, the FDA has always looked at rare disease populations and the ability to do multi-regional versus targeted trials as an approach to really look at a drug's effect. The overall survival impact that has been observed is quite compelling. So it's a risk-benefit that is undeniable.
spk16: Thank you. This is very helpful.
spk04: Thank you. Our next question comes from the line of Jason Gerberry of Bank of America. Please go ahead, Jason.
spk15: Hey, guys. Thank you for taking my questions. my uh my question is just around the uh the opex cuts if they're in any way uh related to any it would be anticipated shortfall on revenue from the new launches in 2023 or 2024 and then my follow-up on celine's question is about nccn and lung um do you think the tort polyamide could garner much juice in lung cancer um just on an nccn recommendation i'm not sure if there's any precedent you'd point to that um mindful that you're obviously not promoting but I think with an NCCN recommendation, doctors can get reimbursement technically, so just kind of curious about that dynamic.
spk11: All right, thanks. I'll take the first one with respect to the revenues, and then I'll let Raj Dias, our CMO, address the NCCN. No, not so much a shortfall in revenues driving the cuts, but we felt that we needed to have the organization highly focused and right-sized And we felt that it was prudent for us and responsible to look for savings across the organization. We talked about this last year and developed savings in Q3 and Q4, which we disclosed. We told you that we were going to go on for some more, and we've gone ahead and we've done that. We run a very, I think, efficient company, a very tight ship. All the expenditures are very closely scrutinized, and we know what each single person in the company is doing and how they work together. So we think it's prudent. And lastly, I would say that, as I've said to you many times, we are very focused on driving towards profitability in 2024. And that means two things. That means, first of all, bringing up the revenue line with the additional products, similarly, Udenica, the additional presentations, Tori, eSimmery, all across the board. Raise the revenues and really control the costs without jeopardizing those revenues. And when those two lines intersect, we get the profitability. So that's really our focus. With respect to NCCN, I'll let Raj address that question.
spk18: Raj? Hi, Jason. Thanks. Yeah, as I mentioned before to Saleem, again, we will wait for NPC approval. And after that happens, we are able to submit additional data sets. You asked specifically about Lung. Lung was published, I think, back in the August time frame in JCO. So, once we have NPC approval, we will go ahead and submit and see.
spk21: Got it. Thanks.
spk04: Thank you. Our next question comes from the line of Ash Verma of UBS. Please go ahead, Ash.
spk20: Hi. Thanks for taking my questions. I have two. So on the Udenica auto-injector, I'm just curious, like, trying to understand how simple is this to use? Would this require kind of like any training for a patient physician? How do you foresee most of the initial use to happen? Would it be in the physician office setting, or do you think patients can actually use this? And the second one, so we've seen, like, one biosimilar Humira competitor launch and they have two product offerings. Does that in any way change your view in terms of either how pricing could evolve in this market or whether companies like yourself would want to have two product strategy to come into the market? Thanks.
spk11: Hi, Ash. Thanks for the question. So if I understand you correctly, the first question is, What about the auto-injector, the AI, ease of use, and so on? And second is, with respect to our Humira biosimilar and so on. I would first, I'll let Paul answer both these, but I would first presage remarks by saying that we're very proud of the auto-injector. Very streamlined, it's an excellent auto-injector. We had a lot of experience with auto-injectors because of the Humira product, which also has an excellent auto-injector. I believe it's a two-step auto-injector. And then, Paul, a little more backstory on that for us. Sure.
spk06: Yeah, Ash, this is a state-of-the-art auto-injector. There's no buttons to it. It's a push-to-skin activation. So, really, it just, the patient can depress it onto their body. It's a very reliable device, delivering the dose consistently. And it's fast. you know, the whole process start to finish and take under 10 seconds, which gives, again, the patient a lot of control over when and where they can do it. We'll have training devices, but really it's so simple to use. Really anybody can learn how to do it. And if they don't, when we launch our on-body device later this year, we'll be the only brand that offers doctors and patients three different presentations to meet their unique needs. We would imagine that the auto-injector will be used both in the office, you know, for nurses who prefer this over a pre-filled syringe. There's no needle exposed, so that's a real advantage, or at home. So we're expecting usage in both settings of care. With respect to the biosimilar launch of Amgen's product, you know, we're not going to comment at this time. you know, on our pricing strategy. So I think you'll learn more about that once we, you know, are closer or right after launch, Ash.
spk11: Yeah, I would just add with respect to Yosemite that, you know, we engaged with the market significantly the last few years on what was important to folks, what's important to them. And that is, you know, robust supply chain. Citrate-free, pain-free formulation, small needle, high patient comfort, strong price, supply guarantees. So we really focus there, and that's the value proposition that we're going to bring to the market, and we think we're going to compete well with that.
spk01: Thank you.
spk04: Thank you. I would now like to turn the conference back to Denny Lanphier for closing remarks, sir.
spk11: Oh, thank you, operator. Thank you all for joining us on our Q4 2022 call. As you can see, Coherus continues to progress against its goals of developing our Iowa franchise, plus launching additional products to support their development. We have also been quite busy with respect to constraining our expenses and making sure the company operates very efficiently. We look forward to Q2 when we get a little more lift with the similarly sales on the Q code. And we'll be happy to chat with you all again in August when you see how things come out for Q2. Thank you.
spk04: This concludes today's conference call. Thank you for participating. You may now disconnect.
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