Coherus Oncology, Inc. (CHRS) Q4 2021 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Fourth Quarter and Full Year 2021 Coherus Biosciences Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference may be recoded. I would now like to hand the conference over to your host today, McDavid Stilwell, Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and thank you for joining us. We issued our press release earlier announcing our 2021 fourth quarter and full year results. This release can be found on the Coherus BioSciences' website. Today's call includes forward-looking statements regarding Coherus' current expectations about future events. These statements include, but are not limited to, our ability to advance our product candidates through development and registration, the status of product candidate clinical profile, our timing and ability to commercialization our products and product candidates in the future, our R&D and SG&A expense guidance for 2022 and our ability to meet the same. Our projections about margin as well as our ability to drive down amounts under our new credit facility, all of which involve substantial risks and uncertainties that are beyond our control and could cause actual results, performance or achievement to differ from the results, performance or achievement implied by the forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks and uncertainties that are discussed in our press release that we issued today, as well as in the document that we file with the Securities and Exchange Commission, including those in our annual report on Form 10-K and quarterly report on Form 10-Q. The forward-looking statements provided on the call today are made as of this date, and we undertake no duty to update or revise any forward-looking statements. With me on today's call are Denny Lanfear, CEO of Coherus; Paul Reider, EVP of Commercial Operations and Theresa LaVallee, Chief Development Office. And I will now turn the call over to Denny.

Thank you, McDavid. And thank you all for joining us this afternoon. Today, I'll describe how over the past year we've delivered our objective to transform Coherus into an innovative immuno- oncology company supported by income from a diversified portfolio of FDA approved products. I’ll begin today with a brief review of our achievement toward our strategic initiative in immuno- oncology. Detailing progress of our foundational assets toripalimab, and of our preclinical and clinical stage innovative combination agents. Then I’ll review recent progress to grow and diversify our commercial portfolio. With respect to our immuno-oncology programs, you may recall that in November, we announced the FDA granted priority review for the BLA for toripalimab for the treatment of nasal pharyngeal carcinoma, an indication with no FDA approved cancer immunotherapy options, and for which toripalimab has Breakthrough Therapy and orphan drug designation. The BLA review is progressing well towards the target action date of April 30, which is about 10 days from now. Toripalimab’s clinical profile continues to strengthen across indications. In December, we announced that toripalimab plus chemotherapy demonstrated a statistically significant overall survival benefit in a pre-specified interim analysis and choice one clinical trial for the first line treatment of advanced non-small cell lung cancer. This builds on other first line indications in esophageal squamous cell carcinoma and nasal pharyngeal carcinoma where we have seen a robust benefit in both the progression free survival and overall survival. We've also made progress with our clinical stage mid stage IO asset strategy. In January, we initiated the process to exercise our option license JS006, TIGIT-targeted antibody developed by Junshi Biosciences, our partner, which they're evaluated in a study combination with toripalimab. Dr. Theresa LaVallee, our new Chief Development Officer will provide additional details about JS006 and our development plans for you just a moment. Our immuno-oncology, preclinical research and development team has proven to be highly productive. In January, we announced that we're advancing an internally generated pipeline of PD PD-1 candidates and we expect to file the first IND in mid-2023. With toripalimab nearing its first potential approval, a TIGIT-targeted immune checkpoint blocker entering mid stage development and our in-house early stage immuno-oncology candidates successfully advancing towards human clinical trials. Coherus is evolving into an innovative immuno-oncology company with a broad pipeline of product candidates and the potential to drive long-term growth over this decade. I'd now like to introduce Dr. Theresa LaVallee, our recently appointed Chief Development Officer who brings more than 25 years of drug discovery and development experience and is recognized for her immuno-oncology expertise. Most recently, Dr. LaVallee was Vice President of Translational Medicine and Regulatory Affairs at the Parker Institute for Cancer Immunotherapy, where she provided scientific leadership for the clinical strategy for development of novel immuno-oncology therapies and help establish Institute's translation and regulatory organization. Further, from 2008 to 2013. Dr. LaVallee was a member of the immuno-oncology team, developing checkpoint inhibitors and related diagnostics, MedImmune in AstraZeneca. Theresa?

Thank you, Denny. It is exciting to join Coherus as the company gains momentum and its transition to an innovative immune-oncology leader. I believe our broadening product portfolio with early, mid and late stage complimentary IO products is well positioned to clinically succeed in immuno- oncology, commercially, our oncology focused organization has proven but Coherus can be very successful in highly competitive fields. Coherus has both the in-house expertise and assets needed to support a successful transformation. Antibody development for PD-1combination and CO formulation required world class analytics, pristine science and informat bioinformatics capabilities. We have that at our Camarillo, California site in 25,000 square foot facility we moved into two years ago. On the development side, our clinical and regulatory teams have repeatedly demonstrated the ability to develop drugs that gain FDA approval. Our Scientific Advisory Board have recognized IO experts from academia and industry is actively involved in our target MOAD selection playing a key role for example in selecting toripalimab from a due diligence review of more than 10 PD-1 product candidates as well as vetting the TIGIT assets from Junshi. For, Coherus, these investments are paying off, toripalimab, our foundational immuno-oncology asset is establishing an excellent safety and efficacy profile in the ongoing clinical trials. The toripalimab BLA for nasal pharyngeal carcinoma, an unmet medical need with no approved immunotherapies is under priority review by the FDA with an action date of April 30. Denny mentioned earlier that toripalimab clinical profile continues to strengthen across indications. Case in point the positive progression free survival and overall survival data from the JUPITER-06 study in esophageal squamous cell carcinoma, which showed a significant overall survival benefit even in low PD-1 patients. We have and will continue to engage the FDA on the potential for submission later this year of a supplemental BLA for toripalimab in combination with chemotherapy for first line treatment of EFCC. Another important immune response of tumor type hepatocellular carcinoma, which also is highly prevalent in patients of Asian descent, and which the FDA has said could warrant Regulatory Flexibility for new PD-1. We are conducting two pivotal clinical trials evaluating toripalimab and HCC including a front line trial, randomizing approximately 520 advanced HCC patients to lenvatinib placebo versus lenvatinib plus toripalimab. An adjuvant therapy we have a trial with approximately 400 HCC patients randomized toripalimab or placebo following resection. Initial clinical data from these studies are expected later this year. The February 10th ODAC meeting discussing the in event flowing BLA for non-small cell lung cancer provided helpful insights into the FDA expectations for sponsors seeking approval for PD-1 for indications with available immunotherapy options. We believe it is wise to fully engage with the FDA early and prior to submission decisions to fully understand their views. We are continuing to meet with the FDA frequently for toripalimab for multiple potential indications, and we'll discuss with them this year the pathway for toripalimab in combination with chemotherapy for first line treatment of non-small cell lung cancer. Although there are FDA approved checkpoint inhibitors for non-small cell lung cancer, new and more effective treatment options are needed as the majority of patients still die rapidly from this deadly disease. We are focused on addressing unmet patient needs. The non-small cell lung cancer will be the first tumor type we pursue for the combination of toripalimab with JS006. We are excited about the development of this TIGIT antibody, TIGIT is emerging as an important checkpoint to enhance PD-1 anti-tumor immunity. After a decade of translational research with I-O, the field understands better how PD-1inhibitors work, and why they have been foundational for I-O treatments. Cancer trick attacking T cells into studying off prematurely. A subset of T cells that exhibit stemness have the potential to be reactivated by the unique crosstalk between PD-1 and antigen pathways. All of this is consistent with the observed improve clinical activity with PD-1 antigen inhibitors in the clinic and specifically in non-small cell lung cancer. In preclinical studies, JS006 has demonstrated excellent binding affinity and strong inhibition of the TIGIT pathway as well as enhanced anti-tumor activity in combination with toripalimab in preclinical mouse models. A clinical study evaluating JS006 as monotherapy and in combination with toripalimab in patients with advanced solid tumors is ongoing. The IND for JS006 is open in the United States. And we are planning to advance JS006 in combination with toripalimab in a clinical trial in the US later this year. Clinical data news flow will continue this year as results come in from trials evaluating toripalimab for first line treatment of small cell lung cancer and two additional non-small cell lung cancer studies. One in the Neoadjuvant setting, as well as a trial in patients with EGFR mutations who have failed prior TKI therapy and also pivotal studies in triple negative breast cancer, hepatocellular cellular carcinoma and intrahepatic pharyngeal carcinoma. Depending on clinical outcomes and conversations with the FDA, these studies could lead to additional indications for toripalimab in the United States. I’ll now turn the call back to Denny.

Thank you, Theresa. It's great to have you on the team directing our mid and late stage I-O development efforts. Let me briefly summarize our recent accomplishments with respect to our commercial stage portfolio. And our goal to grow and diversify our commercial portfolio FDA approved products. You may recall in December the FDA approved our second product YUSIMRY, a Humira biosimilar. Paul will address our planning for this important launch in 2023. And some of the key issues we are considering to ensure that we reach our market share objects. Cancer breast, the market continues to be very important to us. It has only about 50% biosimilar penetration in terms of presentation segment mix. We've had good success with additional presentation development to address all the segments. In October, UDENYCA on-body injector demonstrated pharmacokinetic and pharmacodynamics similarity in randomized clinical trial, enabling the submission this year of prior approval of supplements to UDENYCA BLA. If it is approved we project that 2023 launch of UDENYCA on-body injector which would compete directly with Neulasta, Onpro which would provide a second wave of growth for UDENYCA. UDENYCA in the prefilled syringe format continued to provide a significant source of funding for our pipeline investments and support upcoming commercial launches. Net sales of UDENYCA declined to $73 million in the fourth quarter within the context of increasingly competitive tight forecasted market. We anticipate UDENYCA net revenue in 2022 will decrease relative to the $327 million of net revenue generated in 2021. Our strategy is to balance price and market share to optimize long-term revenues is best format in 2022 and then getting significant share through the accessing the untapped on-body segments in 2023 In October 2021, the FDA accepted for review, BLA CIMERLI, a Lucentis biosimilar, mid cycle review meeting occurred recently and the BLA is progressing well towards the target action date in August this year. As Paul will elaborate we plan to launch CIMERLI in the second half of this year assuming approval. We are also planning for the launch of toripalimab in NPC maker further and diversifying our product portfolio in 2022. These two launches in 2022 should be followed by the two 2023 launches of YUSIMRY and UDENYCA on-body injector, accelerating the revenue growth. We expect these four new products to market inflection point for revenues, filling top line growth starting later this year. We expect growth to continue with the potential expansion of toripalimab label and project longer term growth with the JS006 for toripalimab combination and our innovative I-O pipeline that we've discussed. I'll now turn the call over to Paul Reider, our Chief Commercial Officer. And Paul will review UDENYCA’s fourth quarter performance and update you in the launch preparation for toripalimab, CIMERLI and YUSIMRY. Paul?

Thank you, Denny. As Denny indicated previously, UDENYCA net sales were $73 million in the fourth quarter, down 12% from the prior quarter. This was driven by a 4% decline in demand units, as well as continued price erosion due to intense competitive pressures and the tight progress and surge market. Our share declined slightly from 18% to 17.5% in the fourth quarter, market share gains in the clinic segment were offset by declines in both 340B and non 340B hospitals. On a unit basis, the overall pegfilgrastim market declined modestly in the fourth quarter, a period in which historically we've seen slight market growth. We expect to return to low single digit market growth in 2022. Until COVID recedes more broadly, there will continue to be a short term advantage favoring the originators on body device which retains approximately 50% share of the overall market. As Denny indicated, we expect UDENYCA sales to grow again once we introduce our UDENYCA on-body injector next year, if approved. Our strategy is to balance price and market share and optimize long-term revenues with the PFS format in 2022 and then gain significant share through accessing the untapped on-body segment in 2023. Now I'd like to talk about commercializing our pipeline, we were preparing for the launch of three new brands in the next 18 months. Toripalimab or PD-1 inhibitor for nasal pharyngeal carcinoma. CIMERLI, our Lucentis biosimilar and YUSIMRY, our HUMIRA biosimilar. According toripalimab, nasal pharyngeal carcinoma, or NPC is a rare cancer, where there are currently no PD-1 inhibitor good for use by the FDA. Toripalimab not only has the potential to be the first and only PD-1 inhibitor indicated for this tumor type. But has the potential to also establish a new first line standard of care. Our oncology commercial capabilities have been built to scale and the toripalimab launch effort will be efficiently integrated into our existing commercial infrastructure. Commercial launch preparations are proceeding on track. I'd also like to note that the NCCN guidelines for nasal pharyngeal carcinoma recently added the JUPITER-02 study in toripalimab for the first line treatment of NPC as a reference, which serves to validate the significance of this important clinical trial. Now with respect to CIMERLI, our FDA action date in August 2022, will allow us to launch into the $1.4 billion we set this market in the early stages of biosimilar market formation and we look forward to competing in retinal therapeutic area. Retinal specialist opinion leaders have expressed positive receptivity to Coherus entering this market and our documented track record of success in oncology give them confidence that Coherus understands the dynamics of a viable market and that we will deliver a safe and effective alternative to Lucentis along with a compelling value proposition. Similar to our playbook with UDENYCA, we plan to launch a similar education campaign to the retina community in the second quarter. We've also completed our account segmentation work and intend to launch with a focused and dedicated ophthalmology sales team, while at the same time leveraging our commercial organizations, the existing key account, market access and patient support capabilities. Now on to YUSIMRY, we're preparing for the launch in July 23. Humira has been the top selling drug in the United States with net sales of $17 billion in 2021. And we look forward to competing in this market. While we expect significant competition. Our commercial goals to achieve at peak at least 10% share the overall adalimumab market. We believe payers will drive biosimilar adalimumab adoption, and have completed extensive market research with national and regional payers as well as PBMs. The insights gleaned from this research confirm that Coherus can and expects to deliver on all of the payers critical expectations. These include a competitive price that delivers value to key stakeholders, robust and reliable supply, the high quality manufacturing, a non-stinking citrate free formulation, prefilled syringe and auto injector presentations with high gauge needles that are comparable to the reference product and that are comfortable, reliable, and easy for patients to use. Robust patient support services to facilitate access and to address patient out of pocket costs. Also, according to our research, interchangeability was regarded as a nice to have attributes, but not essential, since pairs already have the mechanisms to drive product selection based on their formularies and utilization management tools that they use routinely today in multiple product categories. So to meet these expectations, Coherus has previously invested in large scale manufacturing and expects to be well positioned to compete on supply guarantees and price. We will have quality prefilled syringes and auto injector presentations. Our YUSIMRY device uses 29 gauge needle comparable to the originators. And we also use our proprietary non-stinking citrate- free formulation. In addition, for Coherus Complete, which is our patient and provider services are considered best-in-class, one of the pegfilgrastim class today, we have an established and high touch service offering to facilitate access and affordability. Some large competitors may position their adalimumab biosimilar within a portfolio offering to payers. Coherus by contrast, will have a singular focus on competing successfully in the adalimumab market. Without the constraints trying to minimize the collateral impacts of price erosion on a portfolio of premium price branded products. Our interest is in seeing the overall adalimumab market become as large as possible. We believe this is also in the best interest of payers and patients. In short, we are confident we can deliver a compelling overall value proposition and expect results consistent with our market share forecasts with YUSIMRY. I'll now turn the call to McDavid for review of the quarter’s financial results.

Thank you, Paul. The details of our financial results are in the press release. So I'll focus now on a few highlights. For the fourth quarter and full year 2021, we reported net losses of $46 million, and $287 million, respectively on a GAAP basis. Cash used in operating activities was $52 million for the fourth quarter and $37 million for the full year 2021. As detailed earlier in the call, net revenue was $73 million for the quarter and $327 million for the year. This is a decrease for both periods reflecting lower unit volumes and lower net realized price. Wholesaler inventory remained within the normal range at year end. Cost of Sales was $12 million for the quarter and $58 million for the year, resulting in gross margins of 84% and 82% respectively. Recall that in the first quarter of 2021, we depleted the inventory manufactured and expense prior to approval, and since then per unit acquisition costs are fully reflected within costs. Accordingly, cost of goods as a percentage of net revenues has increased since 2020. In the long run, starting in 2024, we expect UDENYCA prefilled syringe gross margins to return to 90% or higher as we realize the benefits of a significant manufacturing process improvement and also royalty exploration. Research and Development expenses were $51 million for the quarter and $363 million for the year. This is an increase over 2020 and includes the $136 million upfront payments to Junshi for the toripalimab license, as well as cost to advance our late stage pipeline. Activities such as regulatory affairs and manufacturing scale up for YUSIMRY, clinical development and BLA filings for toripalimab, a clinical trial for UDENYCA on-body injector, as well as the ongoing three-way PK study evaluating CHS-305, the Avastin biosimilar. Selling, general and administrative expenses were $50 million for the quarter and $170 million for the year, an increase that was primarily driven by higher UDENYCA commercialization activities as well as stock-based compensation expense. We ended the year with $417 million in cash and cash equivalents. Recall that subsequent to year end, we entered into a credit facility agreement with Pharmakon Advisors for a $300 million term loan payable across four tranches. We drew the first $100 million tranche at closing and simultaneously paid off a $75 million term loan, prior to April 1, we plan to draw a second $100 million tranche and simultaneously pay off the convertible notes that come due at the end of March. Two additional tranches of $15 million each will become available to us upon the FDA approval of toripalimab and CIMERLI. We are introducing full year 2022 guidance for R&D and SG&A expenses of $415 million to $450 million. Not including the $35 million upfront fee to Junshi Biosciences we expected to pay later in the first quarter for rights of JS006 or the $25 million milestone payments will become due on approval of toripalimab for NPC. This guidance range includes approximately $55 million to $60 million in non-cash stock -based compensation expense. Let me provide some additional color on these anticipated operating expenses, much of which is investment that will convert back to cash quickly with a high IRR. This year, we will spend approximately $50 million manufacturing inventory for new product launches. You'll recall that one lesson from our successful UDENYCA launch is that going to market with ample supply is a critical success factor. Also recall that low cost inventory manufacturing and expense prior to FDA approval subsequently delivers P&L benefit in the form of lower COGS. Another $40 million to $50 million of operating expense this year will fund the completion of development of additional presentations of products we expect to introduce over the next two years, as well as manufacturing scale up projects that will deliver ongoing benefits in the form of significantly lower cost of goods. Finally, from the investor relations front, we will present and host investor meetings in March at two conferences, the Cowen Conference and also the Barclays Conference. And we're planning to host the Coherus Analyst Day event in late March in New York City, hopefully in person. And I will now turn the call back to Denny for closing remarks.

Thanking McDavid. A year ago, we told you that our vision for Coherus was to become an innovative immuno-oncology company with a commercial I-O asset promising clinical stage programs and novel in-house preclinical pipeline, with the potential approval of toripalimab in April, initiation of clinical trial evaluating TIGIT in combination with toripalimab later this year, and the advancement of the first of our in-house I-O asset towards IND, we are delivering on this vision that we laid out to investors a year ago. The levers of success are now in our own hands. I am proud of the execution of my team and confident that we will fulfill the promise of our strategy. On the commercial side, we are uniquely positioned to launch multiple new products in the next 18 months. With these launches, the total addressable market opportunity by product portfolio will increase tenfold, from about $2.5 billion to more than $25 billion. Our commercial opportunity will continue to expand as additional toripalimab indications are added. And as our immuno-oncology pipeline candidates advanced to commercialization. This growing product portfolio will fund our continued growth in immuno-oncology through the end of this decade. Operator, we're ready for the questions.

[Operator Instructions] And our first question comes from the line of Salim Syed with Mizuho.

Hey, Good afternoon, guys. Thanks so much for the color. A couple for me if I can, one on toripalimab. So I would like to understand a little bit more about the strategy here in long post and assumed NPC approval, late April, specifically, the prospects of getting toripalimab listed as a category to be medication on NCC guidelines and the prospects of a subsequent Medicare reimbursement off label uptake in lung? Or do you really think you'll need an additional trial in lung that's head to head versus a PD-1 and how those costs would be allocated or shared? And then the second question is on the UDENYCA guidance for ‘22. So Denny, I appreciate that it's going to be lower than -- revenues will be lower than ‘21. But how are you thinking about ASP declined in ’22, 2021, by my math had roughly about a 20% to 30% ASP declined. So this is now the fourth year of post launch, should we be thinking about that moderating in ‘22, and then also with COVID cases largely declining, here and On Prestel, having 50% of the pegfilgrastim market. Just maybe you could speak about qualitative here, your views on units, please, thanks so much.

Thank you for that, Salim. I would ask that follow on questions limit themselves to one question, then so we can work through and then if your question is not answered, we're happy to go through. So let me direct the question of the non-small cell regulatory strategy that you posed to Dr. LaVallee. Theresa, do you want to answer that one?

Yes. Thanks, Denny, and thanks for the question. I mean, for non-small cell lung cancer, we haven't had any meetings with the FDA since the ODAC. And look forward to discussing the path forward with them, continue to be impressed with the data. And I think for the overall tone of how the FDA is reviewing the data, and kind of given some gain between the NPC indication and non-small cell lung cancer. So our strategy is to have frequent and often conversations with them and aligned on the packages.

Thank you, Theresa. Any additional comment with respect to the endpoints of our study or other aspects to Salim’s question.

And the endpoints that we have are for overall survival was a pre-specified secondary endpoint and was part of the statistical analysis plan, which was designed to meet FDA finally.

Thank you. Thank you for that. And I think your second question, Salim, was with respect to second half of the year sales for 2022 sales. Paul, can you offer Salim any additional color on what we see for UDENYCA through the rest of this year?

Yes, thanks for your question, Salim. Yes. So, I think it's reasonable to expect continued price declines in this market throughout 2022, as it's becoming increasingly competitive. And I think if you look at our ASPs, we've been averaging mid-single digits over the last three quarters. Our strategy has really been to balance price and market share, as we look to optimize longer-term revenues for UDENYCA in 2022, it's going to be within the context of the prefilled syringe segment. But we're going to be ready to go with the launch of an on-body device in 2023, if approved, to go after that, remaining 50% of the on pro market that's, I think just been able to entrench itself through for the persistence of COVID. So that's what we're thinking.

I hope that answers your question, Salim. We'll be happy to loop back with you if we have a little more follow on to that. Operator, can we have that next question?

We'll move to our next question, which is Georgi Yordanov with Cowen and Company.

Hey, guys. Thank you so much for taking our questions. We're going to limit to one. So on the recently announced partnership for the TIGIT asset, could you maybe talk about how these being differentiated from the more advanced TIGIT antibodies that are in later stages of development out there? And then you mentioned your intentions to run trials here in the US in combination with [Indiscernible] monotherapies? Could you remind us of the expected R&D costs for that associated with that development and what percentage of that you're responsible for?

Now let me take the last part first with respect to cost. And then I'll let Theresa describe our strategy around the TIGIT. With respect to costs, you may recall that the agreement with Junshi limits our share of clinical costs to $25 million per year per product. That is the same for toripalimab as it is for the opted in products, which TIGIT JS006 is one. So we presume that this will be done under the auspices of the joint steering committee above the partnership and subject to those caps. Now if there's additional work that we want to do, outside of that, that may be some additional things that is not paid for to the partnership. And then Junshi has the opportunity to opt back into that data later. Given that this asset, however, will be developed internationally, globally, across all markets, it's probably safe to assume that this will be primarily developed through the joint steering committee of the partnership. With respect to TIGIT development, potential differentiation, and our strategy of going into alone, Theresa, would you like to make a few comments on that?

Yes, and I think the data we've seen from our partner Junshi on the TIGIT antibody is it has significant potency in preclinical models. And we look to develop it in tumor types, such as non-small cell lung cancer, obviously to establish proof of principle in combination with toripalimab with a translational strategy to really understand where we see activity and not activity to advance it with urgency.

Do you have any other additional color and provide with respect to the TIGIT, as we have developed co formulated approaches to the product, which would be single vial. Operator, we're ready for the next caller.

And our next question comes from the line of Chris Schott with JPMorgan.

Great. Thanks so much. I'm going to slip up one and a half questions and come back to the toripalimab discussion earlier. Would you run a US based head-to-head study in non-small cell lung cancer, if FDA required it or is that kind of a nonstarter as you think about? I know you still need to meet with the FDA. But if that's what they're asking for, is that something that makes sense for Coherus or not? And my core question was coming back to biosimilar Humira. And there's been a lot of debate about how much volume this going to be able to contract here and how many biosimilars each payer is going to cover. So can you just elaborate a little bit more on how you think that plays out as you look out to 2023 and beyond? Do you think it's going to be a situation where there's multiple biosimilars, and it's kind of a jump when it's about commercial execution? Or do you expect the payers to kind of focus in on like one or two biosimilars and expect that do you expect ABI is going to retain a sizable portion of the market? Or do you expect that a lot of the volume in this space is going to be available to the biosimilar players? Thanks so much.

Thank you for your one and a half, I think at one of the three quarters questions there, Chris, but that's okay. Let Paul first address the YUSIMRY, HUMIRA about similar question for you and then we'll move back on to toripalimab. Paul?

Yes, thanks for your question. So, at the time of our launch in July 2023, we will expect to be one of a number of biosimilars entering the market at same time. And what we'll be prepared to do at that time is to bring, a value proposition, that includes those factors that I mentioned in my prepared remarks, very competitive price, substantial supply, guarantees, and all of the prefilled syringe and auto injector types of presentations. The non-stink citrate-free formulation will be another differentiator. And so I think what we expect to happen is, we're going to through our payer segmentation is not look at them all, as a one size fits all, but to fit their particular objectives based on their plans, their covered lives and their businesses. And into deliver the value proposition that depending upon the control level of the plan might be a single biosimilar and a rapid conversion away from the innovator, or in the short term of launch, HUMIRA plus YUSIMRY, in which case, it'll be a slower transition over time, either way, we'll have a portfolio of the value proposition that will meet their needs. And we will expect to be one of the most compelling high volume, low cost providers at the time of commercialization mid-year, we expect to do very well.

The other point I would make with respect to that, Chris, as we think with the number of competitors in the market, there's going to be tremendous cost pressure all around. And we wouldn't be surprised if it had be, two or three years ahead of the market did not have a relatively small share of that market, as opposed to a majority greater percent share. So we think that probably just down to the 20%, 25% type of share gain. With respect to your question on toripalimab and the potential regulatory pathway, they're in line, it's, we believe it's probably prudent for us not to preempt our conversations, that we have any idea with the FDA, as Theresa said, we haven't really had a chance to interact with FDA, post the ODAC. And we look forward to doing that, we are convinced that we have a very high quality molecule demonstrating significant efficacy and safety across a number of indications, including lung. So we're very enthusiastic about talking to the FDA about that. But we really think it's probably not prudent to talk about what sort of studies they might require and when and what types of things. That being said though, we are planning on moving into lung with the TIGIT asset in conjunction with toripalimab and you'll be hearing more of that later in her prepared remarks. Theresa, of course, talked about that, and how we were going to move in towards the end of this year. So stay tuned on that one.

And our next question comes from the line of Balaji Prasad with Barclays.

Thank you. Hi, good evening, everyone. So firstly, getting back to biosimilar Humira, can you quantify better the non-stink and citrate-free formulation and what kind of advantage it provides to you? And also probably importantly, do you expect to be the only citrate-free formulation on the market next year? One, and two, if you can just also quantify with your clinical trials, with the multiple trials going on with $417 million in cash, if you need to prioritize your clinical trials, what would be the top one or two ones that are going to advance next year? Thank you.

Thank you, Balaji. Let me first address the issue of the formulation. It's very important from the viewpoint of patient comfort upon injection, that the formulation does not stink that it's not unduly uncomfortable. And there's anecdotal data that patients found the previous low concentration formulation of ABI very uncomfortable because it does have citrate. So several years ago when we approached the HUMIRA biosimilar which was 1420 at that time, we developed a proprietary non-stink citrate free formulation. Now I won't speak for others, but I think this is very, very important from the viewpoint and patient comfort and being able to penetrate the markets as Paus said. Now with respect to the clinical trials in 2022, at various costs, and as McDavid pointed out to there are significant spends on matters, such as manufacturing, one of the ways that we succeeded with UDENYCA and you may recall, we stockpile 800,000 syringes prior to launch, at significant manufacturing expense it was $25 million or $35 million when we did it. And however, I think that served us very, very well post launch, we were able to do supply guarantees, and did very well in that market, while others were not able to do so. And I think that was one of the reasons why we achieved in excess of 20% market share in that market. We think that very same formula applies here, for example, with Humira, we have gone to large scale, and we’ve made those investments. And we will be prepared, for example, for fierce competition in price that we have to, but we think that we want to be the team that has the inventory and the supply guaranteed to be able to call in the market for that. And that's where I think, some significant parts of our spent go. But on the other hand, we think that's very wide and as McDavid indicated in his remarks, that pays back later that goes into COGS , it’s expense now, but that gives you an advantage and there's a significant IRR. Hope that answers your question.

Our next question comes from the line of Jason Gerberry with Bank of America.

He, guys. Thanks for taking my question. Mine is on the NPC US market opportunity. Can you talk a little bit about your expectations here with this, you expected to be used more first line with the chemo combination or second line mono therapy? How many of these patients are really addressable? Is it going to be hard to find these patients because it's a pretty small population? And it seems like there's a pretty big swing factor if you're first line verse second line, I think the interim PFS was 12-months for first line. But I think in like second line, it was much, much shorter. So just trying to get a sense of you can kind of frame the key parameters of an oncology forecast.

Thanks for the question on that, of course, as we expect to get first line with NPC. I’ll Paul fill in the rest of your question with respect to the market size and so on. Paul?

Thanks for your question, Jason. So yes, it's a rare cancer, the data suggests that there's a couple thousand patients treated with NPC annually. And about a third of those patients, are cycled through in the first line setting. And so as we expect, if approved to be the first and only PD-1 anti-body approved for NPC, including first line, that's where we believe we have the potential to establish a new standard of care and really in combination with chemotherapy plus toripalimab will be the standard of care in first line patients, the patients are treated with chemotherapy only in first line, it's likely they're going to progress. And then we've got the data and later lines of therapy that will, we'll expect to pick them up later on. But we want to get these patients treated first line. Yes, so there's not a lot of them, Jason. But, looking at our data with about 1,500 HCPs, that we see you're using PD-1 for NPC, they account for over half of the patient volume, and we've got significant overlap with our current new data kind of base. And so we'll high overlap very synergistic at the time of launch to drive share of voice and the toripalimab NPC story there in the fact that the data has already been widely presented by ASCO Plenary in 2021. A study was published in Nature Medicine last year. And of course, now NCCN guidelines is added it, provides a real tailwind for us going into potential launch here.

Jason, the other thing we could add here, of course, I will also get second and third line. And so we're going to pursue MPC quite holistically. And as Paul indicated, we think we have a very strong case therapeutically with the ASCO Plenary session and Nature Medicine and so forth. After we get the approval under our belts and we get into the market through a few months. I think your question is fair game with respect to forecasts and so on, we'll be happy to loop back to.

Can you just remind me in the first line setting what the PFS was and you say one third cycle through first line, so basically, of a couple thousand only a third of them make it to second line, was that the point or only a third of a couple thousands ultimately get treated in the first line setting.

Theresa, do you want to cover that one?

Yes, the PFS and first line was 11.7 months with a one year PFS of 49%.

Yes, Jason and then couple thousands patients treated annually about a third get treated in the first line setting.

Our next question comes from the line of Douglas Tsao with H.C. Wainwright.

Now added sort of your own internal R&D capabilities, discovery and I-O. I'm just curious.

Forgive me, Doug. I think we missed the first part of your question, could you restart.

Oh, yes, sorry. You've now started your sort of own internal discovery effort in I-O, it sounds. And I'm just curious, as you sort of add your own capabilities, how do you see your vision for growing the business versus business development? Obviously, you're going to be launching a number of products, your cash flow should be quite significant. Do you have a sort of bias towards now focusing on sort of internally developed assets versus ones that you might want to acquire? And as the cash flow comes in, do you potentially think about business development and M&A more aggressively? Thank you.

That's great question, Doug. It's very important to us that we have a portfolio that's balanced across all three stages of development, preclinical, early stage development, mid stage development, Representative by, for example, the TIGIT, the TIGIT toripalimab combinations. And then late stage, of course, with this central approval of toripalimab. I'll let Theresa talk a little bit about our early stage development efforts. But to cut to the chase and answer your question directly, we certainly would be open for business development opportunities with I-O. There's a lot of opportunities out there. And we have a number of folks who approach us from time to time with various assets. We haven't locked in anything so far. But we continue to look at them. Theresa, do you want to say a few things about our early stage pipeline?

Yes, no, I think having recently joined, one of the things that really attracted me to Coherus was the people and the talent. And in addition to having great assets, what surprised me was how strong the science was, and the preclinical aspects and looking at the early pipeline, and how well and put together and really targeting important aspects of the tumor microenvironment that the field is really going after broadly to think about we have starting on the T Cell PD-1, the toripalimab is an excellent molecule, and then coming in with the TIGIT as an important way to really get the T cells activated and have that anti-tumor immunity. But if you have a suppress microenvironment and active T cell, so it's hindered. So I think the portfolio was looking at that it's going to be exciting. And as we advance the stages, I mean, I'm really looking forward to getting it in-house IND next year and starting an in-house clinical trial.

The other comment I would offer you, Doug, is we will be covering our in-house assets in more detail at our investor meeting I think as McDavid indicates around quite a bit around the end of March in New York. And we'll bring out some of the key personnel that were working on this and explain the mechanism of action, a few things that we're doing, so I think you'll find it interesting. Thank you. And I'm showing no further questions at this time. And I would like to turn the conference back over to Denny Lanfear for any further remarks.

Thank you. We want to thank you all for joining us today for end of the year in our fourth quarter conference call. We look forward to seeing you at the upcoming conferences in Cowen and so forth. And we also look forward to talking to you in more detail at our Investor Day event end of March. Thank you.

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