Coherus BioSciences, Inc.

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to Coherus Biosciences Inc. first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, Press the star one. Thank you. I would now like to turn the conference over to Jamie Taylor, Head of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon and welcome to Coherus Bioscience's first quarter 2024 earnings conference call. Joining me today to discuss our results are Denny Lanthier, Chief Executive Officer of Coherus, Brian McMichael, our Interim Chief Financial Officer, Paul Reeder, our Chief Commercial Officer, Rosh Diaz, Chief Medical Officer, and Teresa Lavallee, our Chief Development Officer. Before we get started, I'd like to remind you that today's call includes forward-looking statements regarding Coherence's current expectations about future events. These statements include, but are not limited to, the following. Our ability to advance our pipeline, projections of future growth, revenue expenses, and counted debt levels. 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, including risks and uncertainties inherent in the clinical drug development process that are discussed in our press release that we issued today, as well as in 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 statement. And now, I'll turn the call over to Denny.

Thank you, Jamie. Good afternoon, everyone, and thank you for joining us on our call today. As we open the call, let me emphasize two things. First, the strength of our first quarter results, and secondly, the strategic initiatives we are successfully executing for long-term success. As you are aware, in the fourth quarter of 2023, we received two U.S. FDA approvals for products vital for our commercial portfolio. First, Lactorsi for nasopharyngeal carcinoma, a rare and devastating cancer for which it is the only FDA-approved therapy. And Eudenica On-Body Injector, an innovative drug delivery mechanism with novel features that opens up large portions of the Pegg-Philgraston market that we previously could not access. In the last three months, we launched both products, leveraging synergies derived from our company's focus on oncology. My Chief Commercial Officer, Paul Reeder, will describe these launches in more detail in just a moment and share with you the enthusiasm with which both products have been received in the market and the revenue growth each has experienced this quarter. Recently launched innovative products are fully aligned to our company's mission of extending the survival of cancer patients. On the development side, in just a moment, Dr. Teresa Lavalle and Dr. Raj Dias will describe how our R&D pipeline is advancing to plan, with impressive data consistently presented at major medical conferences and more to come. Across every key dimension, the company is executing well and to plan. Regarding strategic initiatives, we have focused on exercising our strategic optionality to strengthen the company's balance sheet and enhance long-term value for our shareholders consistent with our mission. This is particularly relevant to the commitment we have demonstrated to strengthening Coherence's capital structure, where strong progress has been made. I'll highlight just two of the recent steps and developments. Early in the first quarter, we announced the divestiture of Simile, a non-core, non-oncology asset for $170 million upfront cash payment plus an additional $17.8 million in cash for inventory. This divestiture has allowed us to pay down a large portion of our $250 million term loan debt while reducing interest costs, reducing headcount and overhead costs, and significantly improving our gross margins. Today, we announced a new non-dilutive debt and royalty financing, which fully repays the remaining $75 million, which was otherwise due in October of 2025. With this transaction completed, we have now reduced our structured term loan debt by 85% over the recent three-month period, while the remaining $37.5 million and moving the due date out five years to 2029 with no springing maturity. Timeline for debt maturity under this agreement extends beyond that, the development horizon of our products. And with that, let me turn the call over to Paul Reeder.

Paul? Thank you, Denny, and good afternoon, everyone. With the ophthalmology divestiture, we are now an oncology-centered commercial organization supports our overarching business objectives. The ongoing oncology launches, Lactorsi, Udenica OnBody, and Udenica AutoInjector enable singular focus on driving top-line revenue. We are executing to plan. We are pleased with our progress. Regarding the quarter's performance, total net product revenue was $76.7 million, a 137% increase over Q1 2023. For our core oncology brands, Q1 Udenica net revenue was $42.7 million, an 18% increase quarter over quarter, and a 63% increase over Q1 2023. Lactorsi net revenue was $2 million in the quarter, still early in launch and in line with our expectations and with new patient accrual momentum building. For our non-core products, Q1 net revenue for USMRI was $3.9 million, 77% growth quarter over quarter. And finally, similarly, given the deal closed on March 1st, net revenue for the quarter was $28.2 million, and only reflects sales for January and February. I'll now speak in more detail about our core oncology assets, starting with Lactorsi. The commercial launch of Lactorsi now establishes coherence in the immuno-oncology therapeutic area serves as the foundation upon which we will commercialize our exciting pipeline of IO products. Lactorsi has a broad label and is approved in combination with CISGEM for first-line treatment of adults with metastatic or with recurrent locally advanced NPC and as a single agent for adults with recurrent unresectable or metastatic NPC. the disease progression on or after a platinum-containing chemotherapy. Today, the standard of care is chemotherapy, so our ambition is to establish Lactorsi plus chemo as the new standard of care and offer NPC patients the hope for greater survival based on the final overall survival results from the Jupiter-2 trial in which Lactorsi plus chemo resulted in a 37% reduction in the risk of death. versus chemotherapy alone. Educating NPC treating oncologists on these clinical data remain a top priority, and it's being amplified by the advocacy of the nation's leading NPC opinion leaders, who have affirmed the strength of the Lactorsi clinical data and its position as the new standard of care. Since launch, we've achieved a series of milestones necessary to enable broad prescribing over the course of 2024 and beyond. I'll highlight four examples. First, Lactorsi was included in NCCN, ASCO, and ClinPath guidelines. In NCCN, Lactorsi is the only PD-1 with Category 1 designation for first-line use and the only preferred regimen in second-line plus. Second, payer coverage has been confirmed now on greater than 85% of medical benefit lives and health plans, including Medicare fee-for-service, Medicare Advantage, and national and regional commercial plans. Third, among the top academic research hospitals, Lactorsi was added to the formulary on 55% of the 33 NCCN institutions, with the remaining institutional reviews scheduled. The formulary position is highly expected to be achieved in all NCCN institutions by the end Q2 2024. Finally, product-specific permanent J-code has been granted by CMS and will take effect July 1, 2024. This will enable more efficient billing processes and speed the time to reimbursement for providers. Based on Lactorsi's labeled indication, we estimate approximately 2,000 patients will fall within the addressable market opportunity for Lactorsi. the hospital formulary conversion process underway, the enthusiasm with which the community is bracing the product, we're building momentum as the launch continues. In Q1, approximately 80 patients received Lactorsi treatment across all lines of therapy, combination with chemo or as monotherapy, which was in line with our expectations.

We're pleased that the launch is progressing to plan. Well, turning to you, Demica,

Udenica delivered another quarter of revenue growth driven by continued strong execution. The strength of our execution is fueled by three drivers. First, the commercial launch of Udenica OnBody, a novel and proprietary state-of-the-art delivery system for Pegfell Graston, enabling Udenica to now compete across the entire Pegfell Graston market. Second, Udenica is the only Pegfell Graston brand with three device options, to meet the unique needs of providers and patients. This strengthens our competitive position and allows us to compete on factors other than price. Third, we come into 2024 with payer coverage nearly two times that of 2023, opening up access to significantly more patient lives. As for key performance indicators for the quarter, Udenica franchise demand grew 36% quarter-over-quarter, driven primarily by the pre-filled syringe and auto-injector presentations. In addition, franchise market share was 25%, an increase of 10 market share points quarter-over-quarter. Regarding the launch of Udenica OnBody, customer receptivity has been very positive, specifically Providers are pointing to Udenica OnBody's five-minute injection time, which is approximately 90% faster medication delivery than Neulasta OnPro. This is noted as a key differentiator, and this differentiation is translating into strong customer adoption. In summary, Udenica franchise now offers providers and patients the total solution, and we expect continued unit and revenue growth with a focus on improving margins over the course of 2024. I'll now turn the call to Dr. Rosh Dias, our Chief Medical Officer. Roshan.

Thanks very much, Paul, and good afternoon, everyone. Octozy or toripalamab with a profound survival advantage demonstrated in nasopharyngeal carcinoma, together with additional positive efficacy datasets published across a variety of tumor types, continues to form the foundational element of our immune oncology portfolio. As an IO company with an approved and highly efficacious PD-1, this affords us the opportunity to prosecute three distinct strategies for further development of the wider variety of tumor types. Firstly, combinations with our own internal pipeline, which consists of three competitively well-positioned assets, tightly focused development plans, all of which are progressing according to plan. our IL-27 targeting antibody, DHS-114, our CCRA targeting antibody, and our anti-ILT-4. Secondly, development opportunities where toripalamab is studied in combination with novel compounds with nearer-term registration opportunities fully funded by partner companies in Phase III registration enabling studies, such as the Inovio vaccine combination study in head and neck squamous cell carcinoma-sponsored by Inovio, where we're providing toripalimab supply, and the ongoing Junshi BTLA toripalimab combination study in limited-stage small-cell lung cancer. And thirdly, development opportunities for toripalimab with partner companies that have earlier phase novel compounds for which they are looking for a PD-1 partner. With respect to our internal pipeline, let me first start with Casdozo. We remain excited about the potential of Casdozo in both non-small-cell lung cancer where we have demonstrated monotherapy activity in PD-L1 refractory subjects in the advanced setting, and also in hepatocellular carcinoma, where we have demonstrated encouraging overall response rates in the first-line advanced setting. We're taking forward the non-small cell lung cancer data with our Phase II study that is currently ongoing and is active in the U.S., and where we remain on track to report out data towards the end of this year or early next year. also remains on track to start in the second half of this year, building upon the promising data presented earlier this year at ASCO GI. Turning to CHS114, our CCR8 vitalizing antibody, we've continued to make good progress through dose escalation and are now moving on to the next stage of the study, which will further detail data from the dose escalation portion of the trial. Teresa will speak more about the status of our ILT4 program and will highlight data presented at the recent AACR meeting. Next, with respect to our pivotal partnered programs with nearer-term registration opportunities, our partnership with Inovio continues with the Phase III Registration Enabling Study in HPV-positive locally advanced head and neck squamous cell carcinoma currently actively in development. In addition, the toripalamab-BTLA phase three combination study in limited stage small cell lung cancer led by our partners Junshi continues to progress in the US and also other multi-regional sites. And this serves as a further example of the potential of toripalamab to act as a foundational element for novel combinations. Finally, with respect to earlier stage novel combinations, we were delighted to announce yesterday that toripalamab was selected by Cancer Research Institute as the PD-1 backbone for exploration with EMB Therapeutics Endothelin B inhibitor within a platform ovarian cancer study exploring novel combinations in this patient population that historically has been underserved by immunotherapy. Selection of toripalamab by CRI provides further validation of our strategic PD-1 backbone in these areas outside NCC. I'll now turn the call over to Dr. Lavallee, our Chief Development Officer. Teresa.

Thank you, Raj, and good afternoon, everyone. I'm pleased to update you on additional progress in our efforts to pursue development of our tumor microenvironment, or TME, focus pipeline. We have two approaches, combinations broadly with immune activators with partners, and And the internal development plans focus on combination with Lactorsi. The CAS-DOSA key tag clinical data in non-small cell lung cancer in HCC that were presented in December 2023 and January 2024 have demonstrated clinical efficacy in early clinical studies. Importantly, the studies show a favorable safety profile, blending CAS-DOSA to combination treatments. and of equal importance, immune activation in cancer patients. In the CAS-DOZO phase 1 study, the biomarker data show at CAS-DOZO doses of 10 mg per kg or higher, but not at 3 mg per kg or lower, that IL-27 signaling is inhibited. And further, NK and T cells are activated. While rebalancing the immune system with anti-cytokine antibodies is well established in inflammatory diseases, such as rheumatoid arthritis, inflammatory bowel disease, and psoriasis, this approach has not yet been successfully demonstrated for the treatment of cancer. Testozaquitag is an antagonist and first in class. It blocks IL-27. which is in the IL-23, IL-12, IL-6 family of cytokines, a family that has multiple approved antibody drugs and inflammatory diseases. Our scientific advisor, Dr. Christopher Hunter from University of Pennsylvania, was honored for his research on IL-27 with the distinguished lecture at the American Association of Immunologists Congress in Chicago on May 4th. In Dr. Hunter's lecture, he described the basic research of mouse models to understand the immune regulatory role of IL-27 and how the absence of IL-27 results in immune pathology due to an overactive immune system, specifically dysregulated and activated T cells and NK cells. Interestingly, these effects are most notable in liver, lung, and brain tissue. The translation of this work to cancer and treatment of patients with Casdoza-Ketog showing anti-tumor activity in lung and liver cancer is very exciting. The strong line of sight for tumor indications where IL-27 biology is critical for regulating immune response allows COHERIS to have a focused development plan. I'm also proud to say that at the recent ACR meeting, our team presented IND-enabling studies for ILT4 antibody CHS1000. CHS1000 is our first internally discovered and developed IO drug candidate. We remain on track for FDA feedback on the IND in second quarter 2024. I'll now turn the call to Brian McMichael.

Thank you, Teresa, and good afternoon, everyone. Since Denny covered the updates to our capital structure and Paul covered revenues, I will focus on the rest of the P&L and cash. Cost of goods sold during Q1 2024 was $34.6 million. Excluding the impact of the inventory write-down in Q4, COGS would have decreased 3 million or 8% from Q4 2023. R&D decreased $5.7 million and 17% from Q1 a year ago. primarily reflecting savings from reduced headcount and reduced development costs on biosimilars, partially offset by investments in our IO pipeline. SG&A increased to $7.4 million and 15%, driven by a net $6.8 million charge in Q1 2024, associated with the non-cash write-off of NZV930, which is now a license obtained in the Surface Oncology Acquisition that was terminated by Novartis. For the first quarter of 2024, we reported net income of $102.9 million, or $0.83 per diluted share, compared to a net loss of $75.7 million, or $0.96 per diluted share, for the same period in 2023. Non-GAAP net loss per share, which excludes the gain on divestiture and the net charge associated with the termination, from Novartis mentioned earlier was $35.8 million or 32 cents per diluted share in Q1 2024 compared to $59.5 million or 75 cents per diluted share for the same period in 2023. Cash and cash equivalents and investments in marketable securities were $259.8 million as of March 31st, 2023 compared to $117.7 million at year end. As noted earlier, we used the cash on hand to pay $175 million in principles after the quarter ended. Today, we are reiterating our expected range of combined 2024 R&D and SG&A expenses of $250 million to $265 million. This guidance includes approximately $40 million in stock-based compensation and excludes business development activities and other unforeseen activities. With that, I will turn the call back over to Denny for closing remarks.

Thank you, Brian.

As we have emphasized throughout our remarks today, we are executing well in our four-part plan to deliver shareholder value. First, driving the top line of our revenues. And secondarily, controlling our operating expenses. We are making great progress advancing our pipeline of tumor microenvironment-focused assets. And lastly, as I disclosed, improving our capital structure. I'm fully confident in both the progress we are making and, of course, we are chartered as an innovative oncology company.

Operator, we're now happy to open the line for questions.

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. Your first question comes from the line of Yigal Nakumovitz with Citi. Your line is open.

Hi, guys. This is Ashim Mubarak. I'm for Yigal. Thanks for taking my questions. And congrats on the quarter. I joined a little bit late, so I apologize if I missed this. But how are you thinking about the contribution of each presentation of Eugenica to the revenue mix for the quarter? And more importantly, how is that going to look like? moving forward. I kind of assume that waiting will increase towards the new presentations, but I'm wondering how you're thinking about it.

Hi, thank you very much for your question. Paul Reeder would be happy to further describe the contribution revenues for the three presentations that we now have on the market. Paul?

So, in the first quarter, the Refilled syringe still represented the largest share of our SKU mix. It was around 90%. The autoinjector was around 8%. And the odd body came in around 2%, recalling that we launched mid-quarter. So we only had about half of the quarter of the odd body. So that's the breakdown of the SKU mix. It varies a little bit by segment. Clinics and hospitals, you know, tend to customize the SKU that works best for them, which is exactly how we are now competitively positioning the franchise. And we're the only franchise that can offer providers and patients three different options to meet the unique needs of each individual patient or how they deliver PEG Fulgrastim. You know, you can see how that differentiation has translated into market share growth, 10% points, quarter over quarter to 25%. And so we're going to continue to drive that differentiation as the remainder of the year unfolds.

Paul, how do we see the market share of each of the presentations evolving through the rest of the year? Do you have any line of sight on that?

Yeah, I think it's still early in the on-body launch, so we are gaining feedback from customers as where it's fitting in. I can tell you right now that it's moving primarily in the clinic segment and also different segments of the hospitals. But I think we're still going to see throughout this year at least the pre-filled syringe still holding a good percentage of the skew mix with the remainder being auto-injector and the odd body. But the odd body growth has largely been in the clinic segment. We would expect that to continue throughout the year.

Thank you for your question. Got it. That's super helpful.

Next question comes from the line of Creepa de Veraconda with Truist Securities. Your line is open.

Hey, guys. Thank you so much for taking my question. For Unlock Torzy, you mentioned that the launch is going well. Can you maybe provide some color on whether the drug has been used more in frontline or second line setting? And also, I think it's a new launch and it's relatively rare to see. So you mentioned it can take time. to get on the formulary. You talked about 55% being on 55% of the 33 NCCN hospitals. Is this in line with your expectations? Thank you.

Kripa, thank you for your question. Paul, I'd be happy to come a little bit about the frontline versus second line utilization and the 55% NCCN conversion. Paul? Yeah, thanks for your question.

So going back to the labeled indication for Lactorsi, it's indicated in the earlier stage of the recurrent locally advanced patients. And we are seeing Lactorsi use in those patients. It's typically, in that case, combined with chemotherapy. What we also saw as expected was contribution of Lactorsi in both the metastatic setting in both the frontline and the second line plus. And in those cases, if it's frontline, it was being combined with chemotherapy consistent with the Jupiter 2 trial and our labeled indication and more as monotherapy when it's second line plus. So as expected, it's being positioned all throughout the indicated uses. The only thing, and I think you mentioned this, was like when in the second line and the later lines of therapy, you know, these patients' duration is likely going to be less. And if when we have eligible patients, though, that are already on an off-label PD-1, those will be difficult for, you know, Loctorsi to capture. So the value of the franchise will occur over the next three years as we, you know, build up the the large majority of the new standard of care in the frontline setting. As for the formularies, yeah, that's very much in line with our expectations. Academic medical centers have processes. You know, it takes time to go through those formularies. And as I mentioned, we would expect all the remaining NCCN institutions, you know, to be completed by the end of the year. Great.

Thank you. Thank you, Kripa.

Next question comes from the line of Mike Nedelkovich with TD Cowen. Your line is open.

Thank you for the questions. I have two. The first is also on Lactorsi. Your progress in gaining formulary access is impressive. Is that basically the lever that's needed to be pulled in order to displace any residual off-label prescription of other checkpoint inhibitors, or is there additional work that needs to be done from a marketing or physician education perspective. So that's one question. And then my second question is on USMRI. I think in the past you've suggested that 2025 could be an inflection year for a biosimilar like USMRI based on some of the IRA provisions. Are you still thinking about it that way? Does USMRI have a bright future ahead, or what is your latest thinking on USMRI's outlook?

Great. Thank you for the question. I'll let Dr. Raj Dias firstly address the issue of the therapy selection decision that physicians now have with the launch of lactorsy, and then Paul can secondarily talk about your summary. Raj? Yes, thanks very much for the question.

I would say doctors tend to be pretty... evidence-driven, and we have three things that no other PD-1 has. First of all, we have an indication. Secondly, we have a profound survival advantage in the first-line setting, 37% risk reduction of death. And again, that's in the context of negative trials with other PD-1s in nasopharyngeal carcinoma. And then the third thing we have is also a preeminent positioning on the NCCN. So first-line We are the only category one designated IO therapy and in second line and beyond, we have the, you know, we are the only preferred regimen actually. I think, you know, as we start seeing patients, I think these three things are key and Paul's team is continuing to message on those three things.

Thank you. Paul, do you want to comment a little about our expectations for your summary going to 2025 with IRA?

Sure, Denny. Thanks for your question, Mike. Yeah, the 2025 formulary negotiations are ongoing. And USMRI and Coheris are actively engaged in that process. So we continue to believe that that will be, I think, the point where we see even greater inflection of biosimilars in the adalumin map space. So I think we're well positioned there based on our price point and the value that this product brings to the healthcare systems and patients.

Thank you. Thank you for your question. Again, if you would like to ask a question, press star 1 on your telephone keypad.

Your last question comes from the line of Balaji Prasad with Barclays. Your line is open.

Good afternoon. This is Shao for Balaji. Thanks for taking our question. Just a quick follow-up question on the Udantica franchise. MNEO recently announced that they licensed the PEG Felgrastim on-body injector and pre-filled auto-injector, and they expect to submit the BRA in first quarter of 2025. and there are a few other players that are trying to get into this landscape. So, what is your expectation for the PagFuel Grass Team's onboarding injector landscape and the entire market for the next two to three years? And do you have any plans or mechanism to build and defend your market shares against those potential new entrants? Thank you.

I'm sorry, we're having a difficult time hearing you. I want to understand your question. Is your question with respect to future entrants in the on-body space with the like Fograston market or with auto injectors?

Fograston market, like, you know, especially the on-body injector and the pre-filled auto injector. As Amnio recently announced that, you know, they have, you know, something in plan and they plan to fill a BLA in first quarter of 2025, so.

Paul, would you like to address how we view the competition in the Pegfograsta market for future auto contractors?

Yeah. Well, first of all, we've been operating in this Pegfograsta market now. We're in our sixth year and maintain one of the leadership positions here. So what we're going to continue to do is focus on our business and the positioning of Udenica, which is to be the total solution for providers and patients. And we're doing this, as I mentioned, because today we've got all three presentations. It's tried and true and well-established in the market. Secondly, we've got strong payer coverage. And so that's being recognized by payers. That Udenica brand is a go-to brand because of all of these benefits that we bring to not only the consistency in the marketplace, the predictability, but also the high quality and reliability of this brand. So we'll be prepared for any competition if anybody else comes, but we believe we'll continue to be well-positioned to compete and win, whatever that landscape unfolds.

Thank you, Paul. The other point that I would make is consistent with Paul's remarks. Our on-body ejector represents an innovative, de novo, highly sophisticated device with a five-minute injection time. And the enthusiasm with which it has been received by the market, the physicians and the patients, is due to that. We believe there are significant technical hurdles to such an approach, and we investigated a number of approaches before settling on this one. So we think this is very important. We think we got it right. But lastly, as Paul said, we are first competitors in the PEG Philgraston market. And our track record over the last six years demonstrates that. We are the only team with all three presentations, each filling a particular need in the market. So I believe that we're very confident in our ability to compete and remain successful and grow share in this market.

Thank you.

Another question comes from the line of Douglas Chow with HC Wainwright. Your line is open.

Hi, good afternoon and thanks for taking the questions and congrats on the progress. You know, obviously there are a number of sort of dates that you need to clear in terms of the ramp up for La Torze in particular, you know, getting on to formulary. You know, how quickly do you, think you can get through those and sort of have access at sort of the majority of the market? And what other steps do you think you might need to clear before we really start to see an acceleration in the revenue trajectory?

Thanks for your question, Doug.

Paul, would you like to comment a little bit on the gating of the adoption of Lactorsi and how we do that?

Yeah, thanks for your question, Doug. Yeah, so obviously the payer coverage is the first one, and that's well established. And I don't really foresee any further hurdles on the payer side. The second gate is now that we've got the NCCN guidelines, what we have to ensure now is in each of the accounts that the guidelines that are translated into the order sets. So, again, this enables the doctor at the time of, you know, prescribing, you know, that when they click through the order set that, you know, Lactorsi chemo combination is there. That's ongoing, but that will typically, you know, settle in here over this next quarter. You know, then, Doug, I really think, you know, the The next gate is just, you know, sort of washing out all of the current patients that are on, you know, current off-label PD-1s and establishing the new patients with Loctorsi as the new start and getting anybody that's on chemo today or not on a PD-1, you know, treated with Loctorsi. And that's just going to take a continued effort, you know, in terms of promotion, both for our sales team from the K-wells, from the podium, and through the referral networks, but also through our digital efforts. And we're going to continue to invest and deploy those so that at the time of decision, the oncologist knows that Lactorsi And chemo is the regimen of choice for those patients. But, you know, again, it's a rare disease. You know, it's going to ramp up, which is why we think peak's going to, you know, occur around, you know, year three of this. But we feel very confident we're going to achieve that.

For all the reasons that Paul just elucidated, we see the growth of this market as a steady ramp up to peak market share and penetration probably out around year three. So this isn't a market such as a replacement enzyme market or something where you can get out to these patients and just find them, immediately convert them. These patients are in various stages of therapy. They may have been exposed to another PD-1. We're going to catch the patients that are on chemotherapy. Those are eligible. They'll all benefit. Some patients, we'll have to wait for them to progress to second line. But the key issue is, as Raj Jai has pointed out, we are the only first-line therapy from the FDA. We've gotten position on all of the formularies. We're doing very, very well with the NCCM. But I would say where the building blocks are in place for the market, we see a steady ramp forward over the future.

Okay, great. And maybe a follow-up question on the Udanica franchise. I'm just curious, you know, we're starting to see uptake of both your on-body device as well as the auto-injector. I'm just curious if you have any insight in terms of how physicians are using those two, you know, dosage forms or product types. You know, are there sort of themes in terms of the types of patients that are getting the on-body versus the auto-injector and vice versa? Thank you.

Paul, I guess Doug's question is, what sort of patient settings would they go for the auto-injector, what patient settings for the on-body, and so on?

Yeah, Doug, so let me frame this in a couple different ways. First, let's take the clinics. So the clinic segments are going to gear more towards all three of the presentations because they have patients that like to come back to the office the next day. They like the high-touch connectivity with their nurse and with their doctor. and so therefore the pre-filled syringe or the auto-injector, you know, are positioned for those patients. But some patients in the clinic, you know, they want their injection experience at home. Therefore, we give them the option of the on-body device, you know, with a well-designed five-minute injection. But if the patient wants to self-inject and not wear the device, they can choose, you know, the auto-injector. and under 10 seconds inject themselves, you know, at the time and place that they like. So that's really how we're positioning by the patients and by the provider. The hospitals, you know, they tend to go a little bit more with the on-body device or the pre-filled syringe. So we've had good uptake with auto-injector in the hospital but not nearly as much in the clinic. because they prefer either the pre-filled syringe or the on-body as the at-home preference. So that's kind of how we're seeing it. And, again, being the only franchise with all three options really sets us apart from a competitive differentiation, and I think you see that in our market share growth.

Okay, great. And, Hank?

Question comes from the line of Colleen Cousy with Beard. Your line is open.

Thanks. Good afternoon and thanks for taking our questions. So realizing you're not providing guidance at this point, but how to think about what the growth drivers for Eudenica will be in 2024? Is it growing the on-body? Is it you know, just focusing on the pre-filled syringe and the auto-injector. Just kind of thoughts around growth for Udenica this year. And then, sorry if I miss this in the prepared remarks, but if you could just speak towards the potential of reaching cash flow positivity and if that goal is still set for 2024. Thank you.

Great. Thank you, Colleen. I'll let Paul handle the growth drivers for Udenica first, and then I'll handle your secondary question with respect to 2024. Paul?

Yeah, thanks for your question. Yeah, I think we fully expect the on-body to be the predominant driver of our growth in 2024. You know, as Denny mentioned, the approval of that product now opens up segments of the market that have been difficult to penetrate with our pre-filled syringe and auto-injector. So, you know, we're really looking, you know, for that SKU, that presentation to drive market share growth for the remainder of the year. It'll be buoyed and facilitated by our payer coverage, which I mentioned was doubled this year versus last year, and that payer coverage extends to all three product presentations. So really not inhibited by payer coverage by each of those presentations. So where we've got it, we've got all three, and we will leverage that as we continue to execute.

Thanks, Paul. With respect to your secondary question, I would first say 2024 is shaping up to be a more predictable year than 2023. And so far as 2023, we had to focus a lot on getting approvals. We focused on getting the on-body approval. We did that successfully. We went and got Lactorsi approved in the FDA. That took a little time. We got that done. And then we rolled into the launches, you know, particularly the launch of the on-body, the launch of the auto-injector, and now the launch of Lactorsi. So the trajectory over 2024 is continued revenue growth. We'll see more Lactorsi as we go on in the year, quarter to quarter, and we believe that we'll also see continued growth with respect to Udenica for the reasons that Paul just laid out. The issue is, like, how steep will that growth curve be? How much growth? And What we are constrained by is the rearward-looking experience, looking backwards, right? We're very early in these launches. We've just gotten out there. With respect to Lactorsi, we're making very good progress on the formularies, but it's a rare disease. Now we have to acquire the patients and so on. But I think we're off to a very good start. So we don't want to forecast with respect to our forward-looking, although clearly we As I indicated, growth will continue. So it's a question of when and how that will go up, but that remains very clearly in our sights is to move forward in that direction. But the growth is something that we're happy with.

Great. Thanks for taking our questions. Thank you, Colleen.

There are no further questions at this time. Mr. Danny Lanphier, I turn the call back over to you.

Thank you, Operator. Thank you all for joining us on our call today, and thank you for the opportunity to enumerate for you the progress we've made across all of our key overtures, particularly with respect to driving our sales and advancing our tumor microenvironment-focused pipeline, and we look forward to pricing you of our progress at our next call.

Thank you.

To this conference call, you may now disconnect.