Coherus BioSciences, Inc.

Good day and thank you for standing by. Welcome to the Coherus Biosciences second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jamie Taylor, Head of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon and welcome to Coherus Biosciences' second quarter 2024 earnings conference call. Joining me today to discuss our results are Denny Lanphier, Chief Executive Officer of Coherus, Brian McMichael, Chief Financial Officer, Paul Reeder, Chief Commercial Officer, Dr. Rosh Diaz, Chief Medical Officer, and Dr. Theresa Lavalley, Chief Development Officer. Before we get started, I would like to remind you that today's call includes forward-looking statements regarding COHERIS's current expectations about future events. These statements include, but are not limited to, the following. expectations for the timing of future clinical studies, expectations about future partnerships, projections of future revenue and expenses. 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 the documents that we file with the FCC. 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. Today we're pleased to share updates from the second quarter of 2024, a period in which we made definitive progress in executing upon our plan to align all aspects of our business to a focus on oncology. Our strategic focus on oncology is proving its merit. With streamlined operations and a recently streamlined portfolio, we grew total sales 10% year-over-year in the second quarter, from $59 million to $65 million, even without, similarly, the ophthalmology biosimilar we divested earlier this year. Udenica is delivering impressively as Lactorsi builds very nicely. As our Chief Commercial Officer, Paul Reeder, will describe shortly, the three presentations within our Udenica franchise continue to expand our opportunities in the marketplace. As the only brand offering three presentation options, refilled syringe, the auto-injector, and the on-body injector, we hold a clear competitive advantage that we believe will endure and increase over the long term. Our average selling price remains consistently strong, and our market share is growing. As an oncology company, our mission is to extend the survival of patients with cancer. Central to the fulfillment of that mission is Lactorsi. our first commercial immuno-oncology agent, which demonstrated a profound survival advantage in the data supporting its FDA approval late last year for the treatment of nasopharyngeal carcinoma. The launch of Lactorsi continues to proceed according to plan, and Paul will provide further updates on this during our call today. Beyond our commercial portfolio, we maintain our strong conviction in our pipeline of innovative immuno-oncology drug candidates. We are advancing clinical studies across areas of clear, unmet medical need, including head and neck cancers, non-small cell lung cancer, and hepatocellular carcinoma. Dr. Teresa Lavallee, our Chief Development Officer, and Dr. Raj Dias, our Chief Medical Officer, will describe these studies further on our call today. I'm especially pleased to report today that as a direct result of our continued efforts to manage our cash, reduce both our debt and headcount, Brian McMichael will report that we ended Q2 with $159 million on the balance sheet, positioning us well for the second half of this year and beyond. I'd like to congratulate Brian on the exceptional skill and leadership he has demonstrated since taking the role of interim CFO earlier this year. As announced in our press release this morning, Brian has now been appointed to the Chief Financial Officer role at O'Hare's, and with my support, the full support of the Board of Directors. Brian's deep financial expertise, owned throughout his time at Gilead Sciences, and further demonstrated since his arrival at Coherence a few years ago, gives me great confidence. My confidence extends to our product portfolio. Lactorsine, plus our competitively positioned pipeline, represents long-term value creation for shareholders. The pace of executing our strategy has been brisk. and we have strong momentum carrying us forward into the quarters ahead. And now with that, I'll turn the call over to Paul.

Thank you, Denny, and good afternoon, everyone. Our focused execution in oncology is delivering results. I am pleased to report a fifth consecutive quarter of top-line revenue growth for Udenica, strong progress on Lactorsi following its second quarter of commercial launch. Regarding the quarter's performance, Total net revenue was $65 million, which included $58.5 million from sales of marketed products and $6.3 million from a non-recurring, upfront cash payment received for the out-licensing of Lactorsi's rights in Canada. Q2 Udenica net revenue was $50.9 million, a 19% increase quarter-over-quarter and a 60% increase over Q2 2023. Lactorsi net revenue nearly doubled to $3.8 million in Q2 compared to $2 million in Q1. I'll now speak in more detail about each brand starting with Lactorsi. First half, 2024, a top priority was setting up Lactorsi to become the future standard of care in NPC. We remain very confident in achieving this ambition. Lactorsi offers unprecedented efficacy for NPC patients. like all new product launches, requires substantial groundwork to ensure providers have access to Loctorsi. Pleased to report that many operational milestones have been achieved, setting Loctorsi up for future growth. Examples of these include, first, Loctorsi was included in NCCN, ASCO, and TwinPath guidelines. In NCCN, Loctorsi is the only PD-1 with a category one designation for first-line use and the only preferred regimen in second-line plus. Second, payer coverage has now been confirmed on nearly 100% targeted medical benefit lives in health plans including Medicare fee-for-service, Medicare Advantage, and national and regional commercial plans. Third, product-specific permanent J-code has been granted by CMS took effect July 1st, which will enable electronic billing and faster, more predictable reimbursement for providers. Fourth, among the top academic research hospitals, Lactorsi is now accessible in all 33 NCCN institutions. With the foundation now set to enable broad access to Lactorsi, our efforts are solely focused on driving new patient starts in the Lactorsi-eligible patient segments, which we believe constitute approximately 2,000 patients annually. I'll now speak in more detail about the NPC patient populations, the progress we've made in Q2, and our priorities for the second half of 2024. NPC patients within the Lactorsi-eligible indications include three patient segments. those with recurrent locally advanced disease. Majority of NPC patients are diagnosed in the local or locally advanced setting. Here, patients are diagnosed at early stages and receive radiation or chemo plus radiation as their first treatment, with many patients being cured. These patients drop out of the NPC treatment pool unless they experience local recurrence at any point in time. Then they become Lactorsi-eligible and will receive Lactorsi plus chemotherapy. These patients account for approximately one-third of the 2,000 who are Lactorsi-eligible. The second patient segment are those with first-line metastatic disease, which could be metastatic recurrence from early-stage disease or de novo metastatic. These patients account for approximately one-third of the 2,000 who are Lactorsi-eligible. Historical treatment for these two patients' subpopulations include chemotherapy or a combination of chemo plus off-label PD-1 treatment. Real-world data shows current off-label PD-1 use of approximately 25% a second. This is important in the near term from a sales ramp perspective, as we do not expect that patients currently on an off-label PD-1 regimen will be switched to Lactorsi if the patient is already responding to treatment. Now, the third patient segment is Second Line Plus with metastatic disease. These patients account for the remaining one-third of Lactorsi-eligible patients and will receive Lactorsi as monotherapy. Patients in the first two segments I described are our primary focus for the following two reasons. based on the results of the Jupiter-2 trial, these are the patients who can derive the greatest survival benefit. And second, these patients are likely to deliver the longest duration of treatment, which is a key driver of Loctorsi's revenue ramp over time. In Q2, the total number of Loctorsi-treated patients more than doubled by an estimated 100 new patients. And real-world data shows two key findings. First, A minority of drug-treated NPC patients are new to treatment in any given quarter, so it will take time for us to acquire these new patients. Second, we are acquiring our targeted patient types, with 40% of Lactorsi patients being treated in the locally advanced setting, and approximately 75% of total Lactorsi patients being treated in combination with chemotherapy. These real-world data combined with the current off-label PD-1 use, confirms our view that Lactorsi will follow a steady revenue ramp in the near term, fueled by new patient acquisition with sustained growth over time driven by duration. Eighty percent of long-term value is from early-line continuing patients, which we estimate will take three to four years to fully materialize. Overall, the launch is progressing well. and we remain confident that Lactorsi will achieve a dominant market share position, the NPC market, that we estimate to be valued at $150 to $200 million. In the near term, our priorities are focused on three revenue drivers. Driving new patient share, strong HCP, patient identification, ensuring Lactorsi messaging is delivered at the time of treatment decision, and optimizing the duration of Lactorsi treatment. Now, regarding Udenica. Udenica delivered another quarter of revenue growth driven by continued strong execution and fueled by three drivers. First, the commercial launch of Udenica OnBody. Second, Udenica is the only Pegfill Graston brand with three device options to meet the unique needs providers, and patients. And third, broad payer coverage, which opens access to significantly more patient lives. As for key performance indicators for the quarter, Udenica franchise demand grew 25% in the quarter. All three product presentations grew in the quarter, with OnBody representing 60% of the total unit growth. OnBody and AutoInjector ended the quarter at 13.5% and 10% of the total SKU mix respectively. Franchise market share was 29%, an increase of four market share points quarter over quarter. Regarding the launch of Udenica OnBody, we're very pleased with the launch performance to date and customer receptivity continues to be very positive. Fueling customer adoption, are innovative and differentiated features, such as Udenica OnBody's five-minute ejection time compared to the 45-minute delivery time for New Lassa OnPro. In summary, our long-term strategy for Udenica is delivering as planned, and we expect continued revenue growth over the second half of 2024. I'll now turn the call to Dr. Teresa LaValley. Teresa.

Thank you, Paul, and good afternoon, everyone. Firstly, we congratulate our partner, Junshi Biosciences, for continued progress with advancing toropalimab development. The Committee for Medicinal Products for Human Use, or CHMP, in Europe adopted a positive opinion recommending approval of LOC4Z, a next-generation PD-1 inhibitor, for the first-line treatment of patients with nasopharyngeal carcinoma in combination with cisplatin and gemcitabine. And secondly, for the first-line treatment of adult patients with unresectable advanced recurrent or metastatic esophageal squamous cell carcinoma in combination with cisplatin and paclitaxel. The CHMP positive opinion is based on data from the Phase III study Jupiter-2 for MPC and Jupiter-6 for esophageal squamous cell carcinoma, demonstrating statistically significant and clinically meaningful improvements in survival in these two indications. Importantly, while toropalimab has demonstrated efficacy in these studies, Torapalimab's safety profile is consistent with the PD-1 inhibitor class. If approved, this will expand marketing of Torapalimab beyond the U.S. into the EU. This potential approval is important to further demonstrate the efficacy and safety of Torapalimab, as well as the quality of the drug and clinical data sets. For our tumor microenvironment targeting pipeline, we have global rights. And as we look to develop these assets in combination with toropalimab, EU approval will facilitate future approvals with novel agents, executing on our combination strategy for toropalimab indication expansion. Furthermore, while the U.S. FDA will not accept Phase III single country data for approval, They have stated on several occasions the datasets will support contribution of components. Development of our novel pipeline and tumor types where toropalimab has data may simplify any phase three study design. In China, toropalimab now has 10 marketed indications. Following the recent approval of toropalimab in combination with paclitaxel, for the first-line treatment of recurrent or metastatic triple-negative breast cancer based on the Phase III torchlight data. Chloropalimab is a foundational asset in the COHERIS pipeline and now is being evaluated in COHERIS-sponsored clinical studies with Cas-Doza-Ketad, an anti-IL-27 antagonist, and with CHS114. an anti-CCR8 antibody preferentially targeting tumor-resident immune-suppressive T regulatory cells. In addition to our internal development and our partner GMC's development, we have several partnership discussions ongoing and look forward to the potential to progress and advance these exciting clinical studies. For our internal efforts, as doza-ketog development with toropalimab continues. Tomorrow, at the I-O Summit Conference in Philadelphia, there's an oral presentation on the strong data package supporting development in HCC. While inhibiting cytokines is a validated approach in inflammatory diseases with multiple approved antibodies, as doza-ketog is the first cytokine antagonist to show safety, immune activation, and monotherapy responses in cancer patients. In preclinical models, blocking IL-27 results in immune activation in brain, liver, and lung. Preclinical tumor models only show antitumor activity in response to IL-27 inhibition in liver and lung models. Three different HCC mouse models, carcinogen-induced, NASH-induced, or HEPA16 HCC cell line, show antitumor response to IL-27 inhibition. Further, in liver cancer, Junshi has recently announced the positive results from a Phase III study of toropalimab and first-line hepatocellular carcinoma in combination with bevacizumab. These results will be important in supporting the randomized Phase II study of castozaketag in combination with toropalimab and bevacizumab in first-line HCC for efficacy, safety, and relative contribution data. Our second key pipeline asset, DHS114, a highly selective cytolytic anti-CCR8 antibody, continues to progress in the clinic. Eliminating immune-suppressive Treg cells in the tumor has been attempted by the field, evaluating several approaches, but with the problem of depleting Treg cells broadly, leading to autoimmune toxicity and also depleting T cells and thus limiting anti-tumor activity. The CHS114 clinical data demonstrating peripheral depletion of CCR8-positive Treg cells and not depleting T-reg cells broadly establishes proof of mechanism in cancer patients. BCR8-positive T-reg cells have a high prevalence and density in a number of solid tumors, with the highest levels in head and neck, gastric, and cervical cancer. For this reason, our CHS114 dose expansion in the Phase 1 study is evaluating head and neck cancer and includes pre- and on-treatment biopsies to evaluate Treg depletion in the tumor. At ASCO this year, one of the experimental therapeutics presentations that impressed me most was by Lenovo Medicines, evaluating their CCR8 antibody LM108 in combination with Toropilumab in advanced gastric cancer patients. We were encouraged by these early clinical data showing an acceptable safety profile and an overall response rate of 36.1%, which we believe demonstrates proof of principle for CCR8 targeting in combination with toropalimab in a tumor type expected to show benefit. Lastly, to update you on the internal development of our discovery agent, I am proud of the Coherent CHS1000 ILT4 team for submitting a quality IND package to the FDA that has been accepted. And we plan to advance CHS1000 to the clinic to establish single agent safety and rapidly move into combination with toropalimab for treatment of solid tumors. It is designed to block IL-T4 activity and promote an active or pro-inflammatory immune response. The IL-T receptor family modulates the activity of the innate and adaptive immune system and plays a role in innate immune cell mechanisms that lead to tumor escape and PD-1 resistance. This is a promising target in a potent antibody that Coher has discovered. I'll now turn the call to Dr. Diaz, our Chief Medical Officer. Raj?

Thank you, Teresa. Loptorzy, with a profound survival advantage demonstrated in nasopharyngeal carcinoma and its accompanying approval across all lines of therapy for NPC, continues to form the foundation of our IO franchise and, in addition, continues to demonstrate efficacy outside NPC, most recently in first-line hepatocellular carcinoma patients, the published Phase II tauripalimab, bevacizumab-based clinical cancer research, and the Phase III hepatology study, meeting its primary endpoints of PFS and OS, as Teresa has pointed out. We've been clear in articulating three very distinct strategies for further development of our IF franchise, including development of Loctosi outside NPC. Firstly, combination with our internal IO pipeline of the competitively well-positioned assets, as does the KETO and CHS114. Secondly, combinations with external partners at the discovery or close to discovery stage, where we would provide Loctosi in combination with partner companies' early-stage assets, where the partner company would fully fund development. And thirdly, combinations with external partners at the late trials of registration intent, where, again, we would provide Loctosi for combination with partner companies' late-stage assets, and where, again, the partner company would fully fund development. This strategic approach enables effective resource allocation focused towards our internal pipeline development, and I'm pleased to report that we're making good progress on all three fronts. HES-DOZO, our IL-27 targeting antibody, continues to progress to plan in our combination study for Loctosi second to fourth line non-small cell lung cancer. As a reminder, this is intended to be followed by a phase three randomized control trial in second line non-small cell lung cancer. We're also on track to start first line HCC combination study with Loctosi in quarter four this year, building upon the impressive triplet combination data presented at ASCO GI at the start of this year. DHS114, our CCRA-targeting antibody, has completed dose escalation and is now progressing through indication expansion into head and neck cancer, both as monotherapy and in combination with Loctorsi. The data from the dose escalation portion of the study was presented at ASCO in June, showing an acceptable safety profile with no dose-limiting toxicities, decay dose proportionality, proof of mechanism with depletion rate of 47% in an advanced solid tumor population that was heavily pre-treated. Our partner programs incorporating Loctozy in early stage with ENB Therapeutics in collaboration with the Cancer Research Institute in ovarian cancer, as well as the later stage multinational programs in combination with BTLA in limited stage small cell lung cancer and with the Inovio vaccine in the HPV positive early stage head and neck cancer continue to plan, with the latter in particular being in the same physician group of head and neck oncologists who also treat NPC. We look forward to announcing further partnerships over the coming months. And with that, I'll hand over to Brian McMichael, Chief Financial Officer.

Brian.

Thank you, Rosh, and good afternoon, everyone. Following the summary of revenues provided by Paul, I will focus on the rest of the P&L and cash. Cost of goods sold for Q2 2024 was $28.4 million compared to $24.8 million in Q2 last year. The increase was driven primarily by increased demand for Edemica and non-recurring costs related to Yosemite. Q2 marked the first full quarter following the divestiture of Sermalee, a product that had a significant gross profit share in the mid-50% range, taken before internal commercial expenses. In addition, the mid-single-digit royalty on Udenica net revenues payable to Amgen expired this past July 1st. R&D expense totaled $22 million and decreased 1.3 million and 6% from Q2 a year ago. The decrease was driven primarily by lower headcount. Additionally, decreases came from costs not recurring for programs terminated in previous periods and divested products partially offset by investments in our current pipeline. SG&A totaled $35.2 million and decreased $10 million and 22% compared to Q2 in the prior year. The decrease primarily reflects savings from lower headcount, expenses for divested products that did not recur, and our ongoing cost reduction efforts. Interest expense of $5.3 million decreased $4.6 million and 46% compared to Q2 in the prior year. Q2 2024 was the first quarter we started to see savings from the full payoff of our $250 million principal amount term loan, which occurred during the quarter. The Q2 2024 net loss was $12.9 million, or 11 cents per diluted share, compared to a net loss of $42.9 million, or 49 cents per diluted share for the same period in 2023. Non-GAAP net loss per share, which excluded the gain on divested share of USMRI, was $16.4 million, or 14 cents per diluted share, in Q2 2024, compared to $32.8 million, or 38 cents per diluted share, for the same period in 2023. Cash equivalents and investments in marketable securities were $159.2 million as of June 30, 2024, compared to $117.7 million at year end. As a reminder, during the quarter, we paid off $250 million in term loan, as I mentioned earlier, entered into a new $38.7 million term loan due May 2029, sold revenue rights for $37.5 million, and received $40 million and $6.3 million in exchange for the sale of Yosemite and the outlicense of the Canadian rights to La Torze, respectively. Today, we are reiterating our expected range of combined 2024 R&D and SG&A expenses of $250 to $265 million. This guidance includes approximately $40 million of stock-based compensation expense and excludes certain business development activities. These strong quarterly results are the outcome of tremendous execution on the part of our team. With that, I will turn the call back over to Denny for closing remarks.

Thank you, Brian. I'm happy to report today we are executing very well on our four-part plan to deliver shareholder value.

First, as Paul described, driving the top line. Secondly, as Brian's described, controlling our operating expenses. Third, as Tricia and Raj described, advancing our pipeline of tumor microenvironment-focused assets. And lastly, making substantial improvements in our capital structure. We're proud of our accomplishments over the second quarter, and we remain dedicated to our mission of extending the survival of cancer patients. We're now happy to open the line for questions. Operator?

As a reminder, if you'd like to ask a question at this time, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question will come from the line of Yagal Nakomovitz with Citi.

Hi, this is Asha Yagal. Thanks for taking my questions, and congrats on the quarter. I just had a few on the Lactorsi launch in NPC. Can you give us any color on which types of patients you're treating? Are they primarily newly diagnosed patients, or are you seeing switches from other patients on off-label PD-1s? And on the same topic, where are you with the payer coverage access and how should we think about the J-code as an inflection point for sales growth this year? Thanks.

Hey, Ashik. Thank you very much for your questions. Paul, do you want to cover the issue of the NPC launch and whether we've bumped into any switching problems and secondarily the payer coverage question?

Yeah, sure. Thanks for your question. So the NPC launches... delivering in line with our expectations. The patient share that we're seeing is really a very heterogeneous mix, as we expected. We've got patients, you know, in later lines of therapy, and these patients are getting log torsia as monotherapy, but they're going to have shorter durations because they're going to be second, third, fourth line. We're also very encouraged to be seeing patients in these early launch periods of the early line patients. And these patients are very, very important because these are the patients who will have longer durations of treatment. And as these patients continue quarter over quarter that long duration, that's how we see the revenue ramp over the long term. But in the short term, we see it as a steady ramp as we work through this heterogeneous mix of patients. And that patient mix begins to stabilize. As it relates to the payer coverage, we have virtually no payer issues right now. We've got now nearly 100% of the targeted payer medical benefit lives across Medicare Fee-for-Service, the national and regional health plans, both on commercial and the Medicare Advantage. So we are very, very pleased with the unrestricted coverage we have in NPC right now. And as it relates to the J code, your question was, you know, is it going to be an inflection point? You know, the way that we see the J code here is really enabling the electronic billing and faster, more predictable reimbursement for providers. So I wouldn't necessarily characterize it as a significant immediate revenue inflection per se, but certainly its availability will remove any operational barrier in any account that you know, doesn't allow for use of products until the J code is in effect. So I think we're very, I think we're really set from an access standpoint now moving into the second half of the year. I feel very encouraged that those, any of those impediments are behind us.

Paul, can you just comment a bit with respect to the issue of the switch? And I think, which was one of our six questions. And then secondarily, progress on the NCCN formularies.

Yeah, sure. You know, as I mentioned in my prepared remarks, any patient that is currently on an off-label PD1 or PD1 chemo regimen, you know, we don't believe that they're going to switch if the patient is responding to treatment. That being said, what we've seen in the real-world data here in just the first couple quarters is that we are seeing patients who have been re-challenged after prior PD1 treatment. And usually the off-label PD-1 was typically prescribed in the earlier line of treatment in combination with chemotherapy. And therefore, you know, by the time the patient was retreated with Lactorsi, you know, the patient had already progressed to a later line. So in these cases, you know, we would expect a shorter duration of Lactorsi use. That being said, we're encouraged, you know, that doctors are willing to consider retreatment with PD-1 failures and that patients were, you know, or that payers were approving the product. So those are encouraging signs. And then as it relates to the access on the NCCN institutions, we've now, you know, got accessibility to Lock Torzy on all 33 NCCN institutions. So, you know, again, that, you know, operational milestone was achieved here in the second quarter.

Thanks very much.

Our next question will come from the line of Brian Chang with JPMorgan.

Hey, guys. Thanks for taking our questions this afternoon. Maybe just one on the unit growth that you saw this past quarter. You mentioned that most of the unit growth came from on body, so we're just kind of trying to better understand the dynamics here. Can you tell us a little bit more about the biggest contributor that's driving the uptick across all the presentations this past quarter? And more importantly, how sustained do you think this momentum that we're seeing today across all three presentations? Thanks.

Thanks, Brian. Great question. Paul, do you want to address the issue of the SKU mix and the growth across the quarter for Brian?

Sure. Thanks for your question, Brian. Let me start just by reiterating our goal for the Udenica franchise, and that's to maximize the long-term profitability and sustainability of the franchise. Brian, our investments to bring these innovative device presentations to market combined with our consistent, strong execution is really what's delivering these results. Udenica now is strongly positioned the PEG Fulgrast to market. And, you know, we said multiple times that once we launch these new devices, you know, we're going to drive market share gains. And, you know, that's what you're seeing. We're delivering on that promise. You know, and these market share gains, you know, are coming basically in the last five quarters from an 11% share to 29% share. And we remain confident that Udenica will continue to grow in the second half of 2024. And it's going to be fueled by three of these growth drivers, Brian. The first is the commercial launch of OnBody. And that's really because we now can compete head to head and access the entire PEG Philgraston market. And secondly, the payer coverage, which nearly doubled in 2024 compared to 2023. So that opens up significantly more patient lives. And then the third is our discipline management of ASP. And that's really important for our customers, providers, payers, et cetera, hospitals, because it provides them greater predictability, which they value. So moving forward in the second half of the year, we still are very confident that the franchise is going to grow. All three product presentations grew in Q2. But we see the on-body device as really being the driving force of the growth in the second half of the year. largely because of the accessibility to the entire market. That being said, you're still seeing nice uptake in the pre-filled syringe and the auto-injector presentations, and we're finding now that customers are really able to now choose amongst the presentations that fit their unique needs and the needs of their patients. So we remain very confident in the second half of the year and the continued growth of the franchise.

Thanks, Paul. Thank you.

Our next question will come from the line of Douglas Sell with H.C. Wainwright.

Hi, good afternoon. Thanks for taking the question. Hi, Doug. Can you repeat your question? We can't hear you.

It looks like Doug may have disconnected. We'll move to the next question. This question will come from the line of Bilal Jahangiri with Truist Securities. Hi.

Congrats on the quarter. We had a couple questions here. We were wondering what differences would you expect to see from using Tori versus Tizo in the triplet for HCC? And given that a bunch of your pipeline targets don't have precedence of approval in the U.S., Which permutation and indication do you envision as your next phase three after HCC?

Dr. Teresa Valle, the company's chief development officer, is with us today. Teresa, can you comment on the question, Tori, with the triplet?

Yeah, so for the HCC study, looking at toropalimab plus bevacizumab, Casdos, Akitab, Obviously, in a Phase III study, we would compare it with a TezoBev. The differences, obviously, are PD-L1 versus PD-1. The data set for ToriBev from Junshi in a Phase III study has been reported positive, but we're waiting to see the data. There was a Phase II study that was published showing overall response rate and PFS. that was numerically higher than what was seen with the Imbrov 150 Atezo Bev Phase III study. So based on the data there, we would expect Tori to be well-suited and positioned to go against Atezo. And then, of course, adding Costoza-Keetog should add increased benefit. So really extending the survival for those first-line HCC patients without an increase in toxicity, really good tolerability to date. In terms of the second question was, could you repeat that? I'm sorry, was it about the next study?

Yeah, what combination or triplet, doublet, and what indication is your gut feel, I guess?

Yeah, so in development right now, we're building off of the activity that's been observed in the early phase studies for casdosaketag, both in non-small cell lung cancers. So as Rash mentioned, we're actively enrolling in the second to fourth line non-small cell lung cancer study with casdosaketag and toropalimab. We'd also like to look in other areas areas in non-small cell lung cancer, giving the strong disease linkage there. And then the HCC study is on deck to open later this year.

Rush has some additional comments with respect to this question.

Pretty awesome. Rush, go ahead. Yes, thanks very much for your question. Just one point to add to your first question on essentially some of the differences between ATISO and also TORI. So one thing that we do know that the ADA, the anti-drug antibodies with Atezo is reasonably high, probably in the 40% range, whereas we also know for toripalimab, it's in the single-digit range. So I think that's one additional consideration I'd add to what Teresa already mentioned about the Atezo and the tori.

Great. Thank you so much.

Our next question will come from the line of Douglas Sao with HC Wainwright.

Hi, good afternoon. Sorry about that earlier. Just curious your perspectives on now that you're all in the NCNN centers, how much of the market is there versus patients being treated in the community setting and how quickly or how long do you think it will take to penetrate the sort of broader community for the NPC market?

Thanks for the question, Doug. Paul, do you want to give Doug a little insight on the patient proportion split and NCCN in the uptake projection?

Yeah, sure. Thanks for your question, Doug. You know, we believe that about 60% of all the NPC in the United States is treated in, you know, some kind of academic NCCN type of setting of care. Forty percent, you know, is still in the community. And the, you know, after the first couple quarters are locked towards the business is about two thirds in the hospital. So it's, you know, it's tracking, you know, very closely to that in, you know, in In relation to their, you know, to the overall treatment, you know, I think we'd all as it relates to the uptake in the community setting. You know, Doug, with a rare cancer, you know, a lot of these oncologists in the community might be, you know, seeing NPC, you know, one, maybe two patients a year. It's a rare cancer, as you know. So, you know, what we've got, you know, to do and our plans are all focused on, you know, is continually engaging with these community oncologists that are treating NPC. And so when they get that patient that's Lactorsi eligible across one of those three patient segments that I described, you know, we've got that locked towards the message and we've got everything set up to get that new patient start. So, you know, that's where, you know, our complete focus is right now in the second half of the year is really to drive the new patient acquisition across both segments, community and the NCC and academic institutions. And I believe we're going to make great progress there as the year unfolds.

Great. That's really helpful. And Paul, maybe Just on Eugenica, I'm just curious, you know, you guys have had a really nice recovery in terms of share and a rebound in terms of revenue performance. I'm just curious, you know, are there particular segments where you're having more success with the on-body and auto-injector or pre-filter and just your overall portfolio products, you know, versus the other, or is it pretty widespread right now?

Yeah, Doug, with Udenica, you know, we're seeing growth across all segments of the business. You know, when I talked to you last in May on the Q1 call, we were only a few weeks into the call, and most of the uptake at that time was in the clinics. You know, now we're seeing it across all segments of the business. Auto-injector, if there's one segment where that's probably being used more than the other, it's going to be in the clinics. But essentially, the entire franchise is growing. And on body, we're still only one full quarter in, but we're really, really pleased with the penetration it's making across all the segments. So I think that's where we're going to continue to see the growth in the second half of the year, and we're very confident in that.

Okay, great. Right on the progress.

Thanks, Doug.

Our next question will come from the line of Mike Edelkiewicz with TD Cowan.

Great. Thank you for the question. I just have one on toropalimab. Can you remind us what milestones and or royalties are owed to Junshi based on your current indication? And what obligations do you have to them relative to the development path for toropalimab, so the various combinations that you plan to test? Thank you.

Oh, great question, Mike. So Junshi gets a $25 million approval milestone, which we have paid half. So we paid 12 and a half. The other 12 and a half is due in Q1 2025. Secondarily, Junshi gets a 20% royalty on net sales, which is pay as you go. With respect to your cost-sharing question and the development programs, we are not obligated to share costs, for example, of the TORPAL-MEV plus BTLA program, which is going into a segment of small cell lawn. So one of the advantages of our development strategy, as Raj pointed out in his prepared remarks, is that We sought deliberately to have others develop products and go into pivotal trials and pay for those pivotal trials. And then when the label gets done by the FDA, we can sell into these commercially. So our objective is to line up a number of these. We have, I think, two now, one with Junshi and one with Inovio. We'll continue to focus on that over the next six to 12 months. You'll probably see more of those. But we think this is a very effective strategy for development that reduce costs. So, no, we're not obligated for further development unless we choose to.

Got it. And does Junshi have any – does the royalty extend to potential future approvals and other dedications, potentially in combination with your in-house assets?

The royalty extends to any 12-pound map sold in the United States, regardless of indication, whether it's MPC or long or gastric or whatever. It's just simply straightforward royalty on 12-pound map sales. You're not obligated to pay any royalty, of course, on any June Shea assets.

Okay. And then are there any associated milestone payments as well, or is it in the review here now? No.

There's some additional sales milestones down the road. However, we don't feel that those are really relevant because most of those milestones were constructed at a time when we expected to have much larger indications, such as not small, so long, the number of things there. Indications will take a bit to get to. So we don't think those are really economically relevant to the modeling.

Got it. Thanks a lot. Thank you, Mike.

Our next question will come from the line of Colleen Cousy with Baird.

Great. Good afternoon. Congrats on the progress. Thanks for taking our questions. For you, Danica, can you comment on what's been resonating with prescribers when choosing the on-body, and what do you think is going to be kind of the big growth drivers for on-body adoption? And then I have a couple of development follow-up questions.

Great. Paul, do you want to talk a little bit about our experience in the field, the reaction to the customer base with OnBody and the growth drivers for Colleen?

Yeah, Colleen, thanks for your question. I think what's really resonating amongst our customers is the innovative and differentiated features of Udenica OnBody. Probably the most common you know, feedback we've been getting from customers is how much they appreciate the five-minute injection time for Udenica on body compared to the 45-minute injection time for the innovator. You know, that doesn't sound like it would be, you know, that important, but for a patient, you know, the next day that has to, you know, wait for this injection to occur, you know, five minutes, it's done, and they can then get on with their day and their lives. And so that's been one of the most important differentiated features. I think the other drivers too, Colleen, is really what I mentioned in my prepared remarks. We have now broad payer coverage, so it's highly accessible to more patients. And equally as important is our stable ASP. So you set everything else aside and having a predictable ASP, which drives provider reimbursement, it's very, very valuable. So you put the total value proposition together, innovative device features, broad payer coverage, a consistent and stable ASP, and now you have a Udenica value proposition that customers are really driving towards. And so we are very pleased with the launch progress and we're very confident in the second half of the year and our continued performance there.

Got it. That's helpful. Thank you. And then can you just comment for Casdozo plus Tori in non-small cell lung cancer? Can you comment on when we might be able to expect data from that? And then for the triplet study that's going to be starting soon in HCC, can you ask, does that have a control arm and what you're hoping to learn from that study before starting the phase three?

Thanks, Kelly. And I'll let our Chief Medical Officer, Dr. Rush, take that one.

Rush? Hi, Colleen. Thank lung cancer. Just a very quick reminder, obviously, this goes upon the data that we presented at ESMO-IO at the end of last year, showing a couple of monotherapy responses in PD-L1 refractory subjects. So the ongoing study is in combination with toripalimab, so toripalimab plus castose ketone. in second to fourth line non-small cell lung cancer. This study is recruiting very well and continues to recruit, and we anticipate results in next year, essentially in 2025. The second question was on hepatocellular carcinoma, so we are on track to start the HCC study late this year, which is what we've communicated previously. Obviously, this builds upon the very encouraging data presented at ASCO GI earlier this year. You asked about the design. So, first of all, we will be looking at a couple of doses. So, the current standard of care, obviously, is the TdoBev, and our Phase III study will look at the the comparison against that current standard of care. But prior to that, we will look at a couple of doses of Casdozo in combination with Tori, and then also look at a contribution of components, so probably a third arm as well. And then once we've done that, we'll move on into the phase three, as we've discussed.

Great. That's helpful.

Thanks for taking our questions. Questions around that, Colleen? That concludes today's question and answer session.

I'd like to turn the call back to Danny Lanphier for closing remarks.

Thank you, operator. Thank you all for joining us this afternoon for our call. As I indicated in my prepared remarks, we're very pleased with the company's progress broadly here in Q2. We're looking forward to another good quarter in Q3, and we look forward to seeing you all at the investment conferences. Bye-bye.

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