Coherus BioSciences, Inc.

Good day and thank you for standing by. Welcome to the Coherence Biosciences First Quarter 2025 earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's 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. 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 your speaker today, Jody Severs, Head of Investor Relations. Please go ahead.

Thank you, Shannon. Good afternoon and welcome to Coherence Biosciences First Quarter 2025 earnings conference call. Joining me today to discuss our results are Denny Lamphere, Chief Executive Officer of Coherence, Brian McMichael, Chief Financial Officer, Dr. Raj Dias, Chief Medical Officer, Dr. Theresa LaValle, Chief Scientific and Development Officer, and Samir Gurkhaukar, Executive Vice President, Commercial. Before we get started, I would 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. Expectations about repurchasing Coherence's remaining convertible notes, projections of cost savings from headcount reductions, timing for Coherence to release data from its clinical trials, and projections of future 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 that are discussed in our press release that we issued today, as well as our quarterly report on Form 10-Q. 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 hand the call over to Denny.

Thank you, Jody, and thank you everyone for joining us today on our Q1 2025 earnings call. First, let me say that with our biosimilar divestitures behind us and our promising, innovative oncology business in front of us, we are fully focused on innovative oncology. We are now a commercial-stage innovative oncology company with an FDA-approved next-generation PD-1 inhibitor, Lactorazine, as well as two highly promising proprietary pipeline products moving quickly through early to mid-stage clinical trials and demonstrating positive data for large markets. Our strategy is anchored around three core pillars that drive both our near-term revenue growth as well as our long-term innovation as we strive to extend the survival of cancer patients. The first pillar is Tora Palomab, our next-generation PD-1 inhibitor, brand-name Lactorazine, which is the only FDA-approved and available treatment for metastatic recurrent, locally advanced nasopharyngeal carcinoma in all lines of therapy and the standard of care in MPC. Demonstrated to be efficacious in a number of cancers and active in low PD-L1 tumor types, Tora Palomab derives its differentiation from its unique binding epitope on PD-1, the FG loop of the receptor. We have demonstrated that this results in differential and superior signaling within the T cell. Clinically, in at least three phase three studies, Tora Palomab, in combination with chemotherapy, has shown efficacy irrespective of PD-L1 status. These properties make Tora Palomab ideal as a combination agent for other cancer therapeutics, which I will discuss directly. The Lactorazine growth is now focused on increasing the breadth and depth of market penetration, driven by strong NCCN guidelines, as well as the duration of treatment in patients to maximize patient benefit. Unencumbered by the strategic diversions of the last two quarters, that is the divestiture and the supply interruption issues, as well as the field team remapping efforts, it's now clear that our commercial team will be able to deliver consistent growth going forward. Samir Gorogauker, our executive vice president commercial, will be describing this for you in greater detail in just a moment. We project Lactorazine, and just the NPC indication alone, will grow to about 150 to 200 million annually over the next three years, providing non-dilutive funding for the development pipeline, as well as being an important source of revenue going forward as we seek to expand its indications and non-NPC sales. Once we exceed about 15 million per quarter, we will cover our commercial costs and begin to contribute to corporate expenses, progressively moving to cover R&D costs with revenues. A key development focus is on expanding the indications for Lactorazine in combination with other agents, including our own. To extend patient survival across tumor types, which creates a market opportunity for current pipeline candidates of over 15 million annually. A key part of this is an elegant, efficient, and aggressive indication expansion strategy based on partnerships, whereby we supply drugs to various partners who then fund all other clinical trial costs themselves. Once approved, these partner combination agent labels will specify Tor Palmet. We have put several of these agreements in place, which include pivotal trials, such as with in-obio and HPV positive head and neck cancer, as well as a number of earlier stage assets. Our objective is to be the preferred partner of choice for companies meeting a safe and highly efficacious next generation PD-1 inhibitor. More such arrangements are in the process. Additionally, our partner Junxi has a pivotal study underway with Tor Palmet in combination with BTLA in small cell lung cancer subtype, which would also provide an additional approved indication. We are also developing additional indications for Tor Palmet in combination with our proprietary pipeline, which includes Cazdozo Ketone, a first in class anti-islet 27 antibody, and CHS114, our CCR8 citalytic antibody in several cancers. Particularly, we believe that the broad therapeutic promise of selective Treg depletion in a tumor microenvironment facilitating the infiltration of CD8 positive T cells to attack the tumor may finally be realized with a sufficiently selective CCR8 citalytic antibody, such as CHS114. Our cells and others believe the anti-CCR8 class could see broad applicability across a number of solid tumors, turning cold tumors hot and constituting an emerging cancer therapeutic superclass synergistic with other modalities, such as T cell engagers, ADCs, bispecifics, and others. Accordingly, our development efforts with CHS114 constitute the second pillar of our value creation strategy. We believe that CHS114 is potentially best in class as it is highly selective in the product of an extensive product candidate selection process that resulted in the only CCR8 agent with no off-target binding. What is most striking about this program and what gives us such confidence is the translational read-through from binding to Treg depletion to CD8 positive T cell tumor infiltration to clinical efficacy. We recently presented the first US clinical data with a CCR8 at AACR last week, showing visually compelling biomarker data illustrating the elimination of Tregs, infiltration and inflammation of the TME by CD8 positive T cells. Remarkably, in this study, there was also a partial response showing tumor shrinkage in a very advanced fourth-line head and neck cancer patient, which Dr. Dias will discuss directly. We believe that our very thorough and deliberate scientific translational approach and developing data sets position coherence as the thought leader expert in this rapidly evolving field, such high promise. The third pillar of our development value creation strategy focuses on pioneering novel treatment paradigms in the first line hepatocytotic carcinoma, a significant unmet need with large market potential. These efforts are centered on -O'Keehtoog, our first in class anti-IL27. Earlier this year, we announced very compelling data in first-line liver cancer, where five out of 28 patients, some 17%, had complete response in a phase two efficacy study of -O'Keehtoog combined with Patezzo and Beva. This compares very favorably to the standard of care alone or even other studies in this indication. Building on this very positive data, we are now conducting phase two trial evaluating -O'Keehtoog with Lactorazine and Bevacizumab. We expect data in the first half of next year. Also in liver cancer, our partner Jun Xie is conducting a phase three pivotal study with Lactorazine combined with Lumbatinib, which should read out the next three to six months. If successful, we will seek to engage the FDA regarding potential approval approaches. In summary to the development value creation strategy now, let me make two key points for you. First, as you know, we felt it essential as an innovative oncology company to have an approved and proprietary PD-1 inhibitor. It is now apparent why. Such an approach first allows great latitude and cost savings while developing your own synergistic combination agents. This offers the opportunity for others to embrace your PD-1, co-develop it with their own assets, at minimal cost to coherence, as we realize expanded legal indications and result in higher revenues. Additionally, when your PD-1 is combined and approved with your own proprietary agents, you set up the opportunity to realize sales multiples by realizing revenues on both agents, because as your novel agents get approved, you can mark your PD-1 right alongside. My second key point is that clinical data readouts that are occurring in 2025 support these product candidates with safety, initial efficacy, and proof of mechanism data that builds momentum as we look forward to initial key data readouts for these studies projected in the first half of 2026. Today you will hear next from Dr. Teresa Lavalli, our Chief Scientific and Development Officer, who will be followed by Dr. Raj Dias, our Chief Medical Officer. Dr. Dias will provide you with an update on clinical trial rationale, study designs, and progress today. Then you will hear from Samir Gorgaonkar, our Executive Vice President of Commercial. Samir joined us late last year to lead the LactoRy franchise, and will give you a detailed rundown on the key market drivers impacting revenues, uptake, and the like. Following that, I will turn the call over to Brian McMichael, our Chief Financial Officer. Brian will review the closeout of Q1, the divestiture of the eugenic of business, and financial impact of these discontinued operations. He will also review the Q1 overall numbers and provide ST and A guidance looking forward through the end of 2025. Now with that, I'll turn the call over to Dr. Lavalli to review the scientific rationale of our pipeline product candidates and the expansion strategy for LactoRy. Teresa will particularly focus on the biology of the emerging CCRE class, including CHS114, which is a preeminent candidate, given its high selectivity. Teresa.

Thank you, Denny, and good afternoon. We are pleased to update you on our continued progress in 2025 with key regulatory and clinical translational advancements of our promising pipeline in combination with our next generation and differentiated PD-1 inhibitor, Tora Palomap. There are three key components to Coherence Value Creation Scientific and Development Strategy. And I will focus my remarks today on what we view is a high potential impact our CCRE targeted antibody, CHS114. First, let me review for you what Denny alluded to earlier, our elegant and efficient Tora Palomap label expansion strategy. Our strategy for expanding Tora Palomap indications beyond MPC in the United States is first to put in place drug supply collaborations where we evaluate Tora Palomap with others novel drugs across a variety of mechanisms. We have prioritized collaborations with strong MOA rationale and clinical safety and efficacy data evaluating tumor types such as head and neck and lung cancer and clinical trials. These are tumors that overlap with our existing commercial call points. The second area of Tora Palomap indication expansion is combination therapy with our own pipeline of potent and selective antibodies positioned in tumor types with strong biologic rationale to establish proof of concept. For each clinical indication that advances Ceptozoketug or CHS114 into a pivotal study, that study also advances Tora Palomap into a potential new indication as a combination regimen. These efforts include Ceptozoketug and liver and lung cancers and CHS114 across a wide variety of solid tumor types. Given our recent head and neck cancer presentation at AACR, today I will focus on CHS114 as we believe CCRA to be an emerging target that may address unmet medical needs for a variety of tumor types and combination agents and our compound CHS114 has the requisite pharmacology and clinical proof of mechanism needed for success. For background, T regulatory cells or Tregs are known for their ability to suppress effector T cell function in the tumor microenvironment and are associated with PD1 resistance. Genetic defects with complete knockout of all Tregs in humans leads to inflammation and autoimmunity. Effective drugs targeting of Tregs in cancer patients requires antibody-based strategies that target selective expression of a protein on Tregs in tumors and not in normal tissue and secondly, selective target Tregs and not normal CD8 and CD4 T cells, immune cells needed for anti-tumor immunity. CCRA was identified from single cell sequencing experiments of Tregs in tumors and is a G protein coupled receptor that is upregulated preferentially on tumor resident Tregs and has limited expression in other tissues or on other cells including CD8 and CD4 T cells. While there are over 450 drugs targeting GPCRs and approximately one third of all FDA approved drugs target this class of receptors, only about five antibody drugs targeting GPCRs have been approved so far, highlighting the challenges in generating and developing therapeutic antibodies for these receptors. GPCRs are seven transmembrane spanning receptors with a limited amount of protein on the outside of the cell which makes them difficult targets to generate antibodies with selectivity. Said another way, having an antibody drug candidate that has no off-target binding or non-CCRA protein binding is a challenge. To date, CHS114 is the only known selective CCRA antibody. As we profiled some of the competitor antibodies, we identified off-target binding including one that binds J chain. This off-target binding has the potential to lead to get toxicity. Let me now discuss the dosing and clinical biomarker data for CHS114 that has shown targeting CCR8 results in selective depletion of CCR8 positive T-regs, but not CD8 or CD4 T-cells. Furthermore, the safety profile has not shown autoimmunity and has a manageable safety profile to date. Two critical aims for advancing the development of CHS114 is addressing FDA's Project Optimist efficiently to define a recommended phase two dose and establishing that the drug candidate does what it is intended to do, deplete T-regs in the tumor. At the AACR meeting last month, we presented the results from our ongoing clinical trial in a head and neck cancer expansion phase evaluating treatment with CHS114 alone or in combination with torapalemab at two pharmacologically active doses. I will highlight the CHS114 monotherapy dosing and biomarker aspects of the study and Dr. Gaias will further elaborate on the clinical safety and efficacy data. Importantly, impaired tumor biopsies, we show that following treatment with CHS114, there is greater than 50% depletion of CCRA positive T-regs. These data strongly support the CHS114 doses as being pharmacologically relevant and this targeted therapy leads to selective depletion of T-regs in tumors. We are pleased to say that we recently had a type D meeting with FDA to review these data and gained alignment on the acceptability of the approach and doses for addressing Project Optimus and defining a recommended phase two dose. We are on track for defining the dose early in 2026. The second aspect of the biomarker studies that I want to call out as being a surprise and exciting is that this CHS114-mediated T-reg depletion was accompanied by a marked increase in tumor infiltrating CD8 T-cells. We did not expect T-reg depletion to promote this level of CD8 T-cell recruitment in the tumor. Why this is important is that it is evidence that T-reg depletion with CHS114 is a potentially promising combination for immunotherapies broadly. Internally, we are focused on combination with Tora Palamab and addressing mechanisms of PD-1 resistance with the aim of bringing treatment to many of the 70% of cancer patients that are underserved by PD-1 inhibitors. Moreover, this impressive increase in tumors, immune infiltrate supports combination with T-cell engagers, five specific antibodies, ABCs, radio ligands, and CARs to name a few. We own global rights for CHS114, and these exciting and compelling clinical data can support discussions with potential partners to evaluate CHS114 with agents other than Tora Palamab while we work to rapidly advance our sponsored clinical studies. Dr. Gaias will update you further on clinical data for CasDoZaKetag and CHS114. Raj.

Thank you, Theresa. Let me focus on the significant progress we've seen with our internal pipeline of CHS114 and CasDoZaKetag, which we're developing in combination with Tora Palamab. We're very excited about the positive data with CHS114, our highly selective CCRH phytolytic antibody, as it's part of an emerging class of moieties with significant potential to impact solid tumor therapies across a number of modalities. The promise, as Theresa explained, is to turn cold tumors hot, enabling immune response and overcoming PD-1 resistance. We're exploring CHS114 in head and neck squamous cell carcinoma as well as gastric cancer, both tumor sites where CCRH density and prevalence are high, and therefore a strong supporting biological rationale exists for a therapeutic impact. Data is now emerging that validates that rationale. At AACR two weeks ago, we presented CHS114 data from our head and neck squamous cell program, which was, to our knowledge, the first US-focused trial data presented to date within the CCRH class. We reported data from 21 patients with advanced head and neck squamous cell carcinoma in late lines of therapy. 12 of the 21 received CHS114 monotherapy, and seven received combination therapy of CHS114 with -PAL-MAG. We're very excited and encouraged to report that of the first seven patients receiving combination therapy, there was one confirmed partial response. This advanced, very late in therapy fourth-line patient with all referential squamous cell carcinoma had lung metastases and low immunogenicity features and had received prior therapy with multiple agents, including a prior PD-1, a TKI, and a taxane. Impressively, this patient achieved a 40% reduction in target lesions, as well as response in non-target lesions. The fact that we saw this response is impressive for several reasons. First, this was in a very late-line patient who had endured substantial and multiple prior therapies and was additionally refractory to prior PD-1 treatment. This is important to note because the head and neck squamous cell patient population anytime after failure of a first-line agent tends to have very limited additional treatment options in the second-line setting and even more limited in even late-lines. Additionally, the fact that we achieved a partial response in fourth-line suggests that the -PAL-MAG combination may have reversed PD-1 resistance, in effect, turning a cold tumor hot. Deep and sustained partial response in this resistant population sets us up very well as we move into the earlier-line setting. And our focus moving forward is in the second-line setting specifically in less refractory patients. Secondly, this clinical observation is scientifically consistent with the biomarker data that Theresa has outlined, which showed impressive Treg depletion and immune activation, suggesting that the clinical data follows the biology of the tumor. This is consistent with a robust and deliberate biologically-driven approach we follow throughout our program. Safety was also acceptable and manageable, with overall treatment emergent AEs being generally well-balanced for monotherapy and combination, which is a very important consideration in this late-line population that tends to have a worse performance status. In the CHS114 study, in addition to the partial response observed, we also report a stable disease in two subjects in the combination arm and four subjects in the monotherapy arm, considering that this was in a heavily pretreated population that was refractory to prior therapies and in a target where one may not typically expect monotherapy activity. These positive results are highly encouraging. At ASCA 2024 last year, we presented data from the dose escalation portion of this trial, reporting a 47% stable disease rate in a heavily pretreated population. These most recent findings are consistent with those data, reinforcing our biological and scientific rationale. We're now actively accruing an additional 40 head and neck squamous cell patients to an expansion cohort of this study in an earlier line of therapy, that is second-line patients, using CHS114 in combination with toripalamab, and we anticipate reporting results of data in the first half of next year. We've also opened a CHS114 study in a second tumor type, second-line gastric cancer, where again, there's strong biological rationale and where clinical proof of concept exists. This 40 patient study will explore the same two biologically active CHS114 dose levels in combination with toripalamab. This multinational study includes both US and ex-US sites with an anticipation of results in 2026. As you've heard from Theresa, the Treg depletion mechanism is synergistic and complementary with other modalities, as well as across other tumor types. Accordingly, we're in the process of evaluating additional tumor types and modalities to explore with CHS114, both on our own and with potential partners. Regarding Calcosa Keto, our -in-class IL-27 antagonist, our focus remains on both non-small cell lung cancer and hepatosilulocarsinoma. For non-small cell, our focus is in squamous cell carcinomas specifically, where we have seen our signal to date and we anticipate reporting further news on this program over the coming months. For HCC, our multinational study in first line explored the triplet combination of Caldozo in combination with toripalamab and bevacizumab is active and is currently approving patients. As a reminder, this study built upon the very exciting data presented at ASCA-GI in January, which reported an overall response rate of 38% with a 17% CR rate with Caldozo and bev in combination with the T-zo. Importantly, this compares very favorably with current standard benchmarks in this setting, where no other agents have reported CR rates in double digits in the phase three setting. Our safety profile was consistent with the T-zo bev alone. We're currently actively accruing patients in the toripalamab triplet study, exploring two biologically active doses of Caldozo in combination with tori and bev, compared to tori bev alone in a total of 72 subjects. The objective is to address project optimism and provide contribution of components as we advance the development pathway to phase two three. With that, I'll hand over to Simeon. Simeon?

Thank you, Raj. Over the course of Q1, the commercial team has been focused on two priorities. First, concurrent with the Eudenica divestiture, we remapped territories, updated customer assignments, and assessed a talent pool for the highly clinical cell demanded by Locturzie. We are happy to report that a Salesforce restructure work is complete and all field staff were in place in their new assignments immediately following the divestiture. While the restructure is a short-term headwind, our Locturzie-only sales team is now laser-focused on driving rapid growth in appropriate NPC patients. Second, we drove HCP education on the new NCCN guidelines, which accurately reflect the strength of our data and placed Locturzie in a preferred position for recurrent and metastatic patients. There are still a significant number of patients receiving non-preferred chemo-only and off-label IO treatments. Thus, we continue our efforts to educate physicians on the survival benefit of Locturzie in combination with chemotherapy. While Q1 was a transitional quarter in the middle of a significant corporate transformation, we are excited to share that patient demand grew 15%. Revenue was flat at 7.3 million due to a seasonal inventory drawdown despite strong demand growth. Demand growth came from an increase in new patient stars and an increase in duration of treatment. New patient stars came from two sources. First, is new accounts and oncologists starting using Locturzie for the first time in their NPC patients. We're happy to see an increasing breadth of Locturzie use in both the academic and community setting. Over 400 accounts now have experience with the brand. The second source of new patient stars was depth, a repeat use in accounts with prior Locturzie experience. Feedback from physicians who have tried Locturzie has been very positive. And in Q1, we saw a growing number of accounts using Locturzie on a subsequent patient. Duration of treatment also continued to increase. Earlier stage patients would be expected to stay on therapy longer, and we see about two thirds of our business coming from relapse locally advanced and first time metastatic setting. While it's too early to comment on the average duration of therapy, growth in duration is progressing according to our expectations. As a singularly focused oncology commercial organization, we will further establish Locturzie as the standard of care for all eligible NPC patients. Our commercial execution centers on three priorities. First, enabling the Salesforce to leverage real-time data to drive patient and HCP identification at the time of diagnosis. Second, expanding the breadth and depth of adoption by educating oncologists on our strongly differentiated clinical profile and preferred MCCN guidelines. And finally, engagement with key customers to encourage updating NPC pathways and order sets to reflect our label and preferred MCCN recommendations. In summary, we continue to expect that Locturzie will achieve a dominant share in the NPC market that we estimate to be valued at 150 to $200 million. With that, I'll now turn the call over to Brian McMichael, our Chief Financial Officer. Brian.

Thank you, Samir, and good afternoon, everyone. Today I will discuss the successful closing of the Udenica divestiture, which occurred at the beginning of Q2 and the related discontinued operations presentation reflected in Coherence's financial reporting. I will then conclude with the first quarter 2025 results. In accordance with the relevant accounting rules, the results of the biosimilar business, which comprises Udenica, Simmerly, and Usimery, have been collapsed into a single discounted operations line in the Coherence's P&L. The balance sheet includes a similar treatment. This presentation is retroactive, so comparative periods such as Q1 2024 have been recast. The remainder of the P&L comprises continuing operations, including L'Octorzi, the IO Pipeline, and Transition Services Transactions for divestitures. The proceeds from the Udenica divestiture and the use of a portion of those proceeds will not be reflected in our financial reporting until we report our Q2 results. As a reminder, we received $483 million upfront cash in April. Also in April, we repurchased $170 million principal amount of our convertible notes in privately negotiated transactions. We expect to purchase the remaining $60 million of convertible notes by mid-May, provided that they are tenured by the holders of those notes. Finally, also in April, we paid $48 million to buy the remaining royalty on Udenica in conjunction with the close of the divestiture. The net cash from these transactions is almost $200 million after deducting transaction fees and taxes and is in addition to the $82 million in cash Coherence had on its balance sheet at March 31st, 2025. The majority of the $60 million in accounts receivable and $148 million in accrued rebates fees and reserves reflected on the March 31st, 2025 balance sheet were related to Udenica and were not transferred into the divestiture. Most of these balances are expected to be settled in a front-loaded fashion over the remainder of the year. Following the divestiture, we expect to achieve approximately $25 million in annualized savings from lower headcount with more than half already being realized due to the transfer of approximately 40 employees that deal close in April. We anticipate realizing the full annualized savings benefit by year end. We further expect additional savings in SG&A due to lower commercial and other costs. Costs associated with the reimburse, excuse me, costs associated with reimbursed transaction services paid fully by acquirers are expected to be several million dollars through the end of this year. Net of non-reimbursed transaction service costs, SG&A incurred solely for Coherence programs and expenses for full year 2025 is projected to be between 90 and 100 million dollars. R&D expense will be a function of data readouts and our portfolio prioritization process and we'll be able to provide more detail on this later in the year. Turning to the results for the quarter, compared to Q1 last year, starting with COGS because Samir already covered revenue. COGS from continuing operations was $2.7 million and increase from $1.4 million in Q1 last year due to increased L'Octurzie sales. As a reminder, there is a royalty of the low 20% range on net sales of L'Octurzie. We do not expect tariffs to have a significant impact on Coherence's margins. R&D from continuing operations was $24.4 million, a decrease of just over $4 million or 14% from Q1 last year. The change reflects savings from reduced co-development with Junxi, partially offset by increased investments in Coherence's internal programs, CHS 114 and Castoso-Quita. SG&A from continuing operations was $26 million, a decrease of $14.2 million or 35% from Q1 last year. $6.8 million of the decrease was due to non-recurring charges for the net write-down of acquired outlicenses in Q1 last year. The remainder of the decrease was primarily due to savings from lower headcount. The net loss from discontinued operations for the quarter was $9.2 million as compared to net income of $170.9 million in Q1 last year. The primary driver for the difference was $153.6 million gain on sale of the similarly ophthalmology franchise in March 2024. In addition, net revenues from discontinued operations were $32.1 million in Q1 2025 and $24.8 million from Q1 2024, driven by divestitures in 2024 and wholesaler allocations allowed following the Q4 2024 supply interruption that were not listed until the end of February. With that, I'll hand the call back over to Denny.

Thank you, Brian. With our strategic transformation now complete, we are well positioned to execute on our mission to bring innovative therapies that extend the survival of cancer patients while building a sustainable oncology franchise that delivers long-term value for our shareholders. We're happy to open the line for questions. Operator?

Thank you. As a reminder, to ask a question, 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 comes from the line of Kripa Devrakanjha with Truist Securities. Your line is now open.

Hey, guys. Thank you so much for taking my question and congratulations on all the progress, especially with CFS 114 presentation at ASER. I have a question on Dr. Aziz. Given the drug's preferred position with the enthusiasm guidelines, what do you think needs to happen? I know you provided a lot of color during your preparation process. What do you think really needs to happen to see a significant inflection point? As you're running more TORI trials and ahead of substantial data next year, do you think the awareness around TORI is increasing amongst providers? And then maybe a big picture question in the context of all the macro elements, headwinds that the industry is facing. A lot of changes at FDA. I would just love to hear your comments on the recent changes and if you're concerned about any of them, thanks.

Thank you, Kripa. Let me start with the last point for fellow Dr. Lavallee address the issue of the FDA changes.

I'm sure. Thanks for that question. Obviously, we spend a lot of time observing what changes are occurring and also trying to keep our fingers on the pulse. The aspects that I think are to our advantage is as the FDA has staff that's turning over, you're losing some of the experience there. And so having well thought through high quality packages with strength of development really is an advantage to people with strong development expertise. So I think that we always do that. My goal is to have the packages we submit very readable, describing how this is in line with the guidance and exactly what we're doing and why. Our experience to date has not seen anything. We were surprised to get a type D meeting instead of just written responses only for our dosing discussion. And the other thing I'll say is going through challenges is something that I think we've done repeatedly. So getting TORI approved through COVID travel restrictions to China was not your usual rule book, but we'll find a way to get it done.

Just to tell Teresa's remarks before Samir addresses your secondary question, we were the first ones out of the gate with Pegvo, Braston, Biosimilars. They were handing out a lot of complete response letters at the time. We were there when the FDA changed direction with respect to the applicability of Chinese data. And I think this is a business really where you just have to adapt and do good science, as Teresa said, and deal very straightforwardly FDA. And we have a very strong track record of doing so. Now, regarding your questions about TORI and the inflection point for the sales and secondarily any issues and how the clinical trial program can increase awareness. I'll let Samir address that. Samir?

Yeah, thank you for the question,

Pripa.

So let me make a couple points here. So what we're really excited about Q1 is we saw 15% growth in end user demand. So these are real physician level patient demands that we saw increasing in Q1. We also saw an increase in the breadth. We defined that as a number of new accounts starting LogTorzi. And we had about 75 new accounts starting in Q1 that had never used LogTorzi in the past. We also had 25% of the former users have used LogTorzi again for subsequent use. And what we're seeing is when we ask physicians who have used LogTorzi in the past, they are very satisfied with the product and the next time they have a new patient, they usually start them on the product, right? So those are all the great things that we saw in Q1. That being said, I do wanna kind of reemphasize what we discussed at the last learning call and also I alluded to today. The supply interruption was real. Our sales force in Q4 lost a bit of momentum because the focus had to change on Udentica in Q4. And in Q1, we did have the restructure of the sales force, their territories were remapped and the reps had new customer relationships to build. So that did impact the momentum a little bit, but despite that we did see a 15% growth in the demand, right? These are gonna be transitional and temporary events. In Q2 and onwards, a sales force will be firing in all cylinders and they expect to see an acceleration in the growth. And one last point I'll make is, as we said in the past, MPC is a rare cancer, so it will be a steady ramp up, right? We expect to get market leadership in terms of a share in the near future, this year or next year, but until a physician has an MPC patient, which happens once or twice a year, they're not actually thinking about Lofthorzi. So it is gonna take a steady ramp up period for us to get there. Thank you, Krivan.

Thank

you so much.

Our next question comes from the line of Brian Chang with JP Morgan, your line is now open.

Guys, thanks for calling this afternoon. Can you clarify what you meant by patient demand for Lofthorzi? I just wanna confirm if that 15% that you quoted is referring to the number of patients that are in commercial supply. And I have a quick follow up, thank you.

Yeah, so we look at revenue and demand in two different things, right? So wholesalers purchasing our product, they have that going in inventory, and then the end user, which is the actual clinics, buying the product from the wholesaler, that's the demand. And the demand is usually a direct indicator of actual patient growth, because in this disease state, physicians are not stocking inventory on their shelf. So two things to remember, right? The revenue reflected by actual demand and inventory, and the end user demand is actual true patient demand. Thanks, Brian, your follow up?

And then one quick one just on the Salesforce restructure here, can you talk a little bit more about whether there will be still be impact in the second quarter? As we model out the rest of the year, how should we think about just the projection for Lofthorzi for the remainder of the year and also into 2026? Thank you.

Yeah, thanks for that question. So we believe that the Salesforce restructure impact was felt primarily in Q1. We did a lot of work during the restructure phase of retraining the Salesforce, re-establishing relationships. So we believe that Q2 is gonna be time for us to grow the business, time for us to grow demand. So we expect that Q2 and Q3 will be time for growth for the brand. Yeah, I would just add, Brian, that

on the August call we report Q2, we'll probably have some interesting projections for you and how we'll land for the year and how the sorting out sales

team went.

Thank you. Thank you. Our next question comes from the line of Mike Nettelkowich with TD Cowan. Your line is now open.

Hi, thank you for the questions. I have two. One is a follow-up on Lofthorzi. You noted that it could take some time to take share in MPC in part because Lofthorzi is not stocked at all institutions. Should we take that to mean that PD1s like Keytruda and Opdivo are still being used off-label to a high degree in MPC? And then my second question is about the CCR8 landscape. Theresa, you noted that you guys have thoroughly surveyed the competitive landscape here and found that most competitor molecules are less selective. But I'm curious if on the efficacy side, are there any molecules that you think have served as stocking horses that help to prove out the mechanism and provide proof of concept for CCR8 targeting or have none really gotten far enough or is too difficult to interpret the data because of the selectivity issue? Thank you.

Thanks for that, Michael. Let's take the last one first. Theresa?

Yeah, so two things on the selectivity. We, in our screen, there was only one antibody identified that exclusively bound CCR8. That is very unusual to only have one in a full lead identification screen. We've screened some competitors and some have reported out their screening and no one else has demonstrated selectivity to date. So that is where we ask for people to please provide that evidence. In fact, there was a poster at ACR where one of the competitors showed two off-target bindings. In terms of, so they all do bind CCR8, so the mechanism is still relevant. It's just whether or not there could be issues with pharmacokinetics or toxicity. Lenovo Medicine, last year at ASCO, presented data with their CCR8 antibody LM108 in combination with torapalumab, no less, and gastric cancer. And to me, this data was very exciting for the class because in the overall second line in greater gastric cancer population who have progressed on PD-1, they showed a 36% response rate. In second line only, which was 11 patients, a small number, but they showed a 63% response rate. And why, scientifically, I find that incredibly exciting is that there are a very high density and prevalence of CCR8-positive Tregs in gastric cancer. So there are many mechanisms of PD-1 resistance. Getting a 63% response rate suggests that Tregs are the prominent mechanism for PD-1 resistance in gastric cancer. So we think that that really bodes well for these tumor types, which is a large number of solid tumors that have a high density and prevalence of CCR8-positive Tregs. So super excited to see in the safety cohort, one PR in the head and neck study, and now are waiting for that 40 patients that Rosh described.

Thank you, Theresa. Michael, regarding your question, how we view the sort of old habit of Cotruda use or PD-1 use, and how we're gonna address that regarding using the new NCCN guidelines, I'll let Samir offer you a little more color

for

you.

Sir?

So again, the Cotruda and Timo only use is real. It's real, especially in the community setting, less so in the academic setting. This is despite the NCCN guidelines recommending chemo combination, including Lactose as a preferred regimen. And the reason this happens is, frankly, it's a matter of habit, right? That's the reason it's happening. But when we talk to physicians, it's a very clear story. The story is simply we are the only brand, only IO with an OS survival benefit that's been demonstrated in a phase three trial. And we're the only NCCN approved preferred regimen for these patients. So the story is really simple. And when we talk to physicians, we are able to get the physicians on board. But what happens is, after we talk to physicians, there's a time lag between that conversation with the physicians and by the time a patient is available for that office. So just to reiterate, this is gonna be a steady ramp up because of the delay from the time that we have the conversation and the time that a patient becomes available. Thank you, Samir. Thank you, Mike.

Our next question comes from the line of Colleen Cousy with BAERS. You're gonna sound open.

Great, good afternoon. Thanks for taking our questions and congrats on all the progress. Can you talk a little more about the type D meeting you had with the FDA for CHS114? Sounds like you aligned on Project Optimist, but any other interesting feedback coming out of that meeting?

Thank you, Colleen. Tristan?

Yeah, I mean, the focus of that, I mean, so our approach is to collaborate with the FDA and not just show up with data, but really have a conversation about our approaches and how we do things. So the type D meetings in particular are very focused on single topics. And that was, I mean, Project Optimist is something a lot of people have struggled with. And so really walking them through the data we have and the data we plan to bring to them early next year and ensuring that this would meet what they're looking for was important and I think very exciting that they found it acceptable.

A positive development.

Yeah, I mean, of course it always depends on the data, which is what they'll always say. But they didn't say, go do five other things or change this.

That's helpful, thank you. And then following the restructuring of the Salesforce, can you speak to the level of interest in potentially adding another commercial sage asset to further leverage the existing infrastructure?

Thank you, that's a very interesting topic. Certainly I would offer you this. We think that it's probably another 12 months or so before Samir and his team really get the doctors sort of trained and focused and I think routinely writing all the scripts of the blog tourism. But we are keen to put something else in the bag at some point in the future to enhance sales. That's one bogey that we focus on, I think a lot as we go through various strategic options and so on. But I think the Salesforce has about a year, I would say maybe a little more, just getting the MPC market moving up the escalators.

Got it, thanks for taking our questions.

Thank you, Karline.

Our next question comes from the line of Douglas Sough with HCWayne Wright, your line is now open.

Hi and good afternoon, thanks for taking the questions. Just one as a follow up in terms of educating physicians, I'm just curious, is it the, is sort of does it take convincing a physician in terms of the value of a PD-1 or is it sort of demonstrating the value of Lactose, meaning do they have some skepticism because of other PD-1 not demonstrating efficacy? And so you need to convince them there and the differentiation of the asset, thank you.

Thank you, well, let me get that one first, Doug. I'll let Dr. Dias address that. I'd once say that the clinical data is irrefutable and the positioning on the NPC and guidelines reflect that. Ross, can you talk about how physicians view the data that we're presenting, if you were a physician prescribing to your patient what lens you would use?

Yeah, thanks for the question, Doug. So a couple of points I'll make. So first of all, up until now, you know there's been no approved therapies and no data actually in this tumor type. So this is a real area of unmet medical needs. So we've come along with the first real data, the first positive data, and as you know, what Lactose has shown is over chemotherapy alone, we have shown a really profound survival benefit. That is the gold standard, right? So whenever a doctor hears this data, they're very impressed with the data. It is impressive data. And again, it's a 37% risk reduction. Now that's now accompanied by a premier listing on the NCCN. So there are no real objections to the data whatsoever. Just remember, this is a rare disease, right? So it takes some time for patients to really show up for this. But again, when they hear the data, there's no real objections based on the strength of the data itself, but also the NCCN positioning as well. And impressively also their experience so far when they've had a patient, when they've used it, we are generally hearing very positive experience and taking that forward.

Yeah,

I just wanna make

one more comment. One thing I'd like us to remember is just three months ago, the NCCN guidelines basically were saying, you can use either Lactose plus chemo, you could use chemo or you could use the off-label IOs to your discretion, right? That was three months ago, but now it's completely changed. It only needs three months since the NCCN unequivocally said you should be using Lactose plus chemo. So our real educational efforts in those guidelines have really taken off in the last three months. And we do expect that it's gonna pay off in the coming months and quarters.

Just as a follow

up.

Can I get a follow up? Sure. I think while you referenced sort of positive experience of physicians being experienced, I'm just curious, when they talk to you, are they speaking, I'm sure they're curious, what are they speaking to when they say that they're having good experiences early on? Are they seeing patients with extended survival, partial responses? I'm just curious if you could sort of characterize what doctors are seeing. Thank you very much.

Yeah, generally they're saying that what the data, I mean, it's gonna be variable from patient to patient, depending on whether it's a metastatic patient or a recurrent locally advanced patient. But generally what they're saying is the data that we show them in the clinical trial, they're able to see those experiences in their actual patients. Thanks, Doug.

Thank you. I would now like to turn the call back over to Denny Lanfear for closing remarks.

Thank you, operator. And thank you all for joining us today. Regarding our upcoming presentation schedule, next week we'll be attending the H.C. Wainwright Bioconnect Conference at NASDAQ in New York. Then on May 27th, we'll be presenting at the T.D. Cowan Sixth Annual Virtual Oncology Innovation Summit. And later on in June, we'll be at the Jefferies Global Healthcare Conference in New York. We'll see you all there. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect. Goodbye.