Coherus Oncology Inc (CHRS) 2014 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Coherus BioSciences third-quarter 2014 financial results conference call. (Operator Instructions). As a reminder this conference call may be recorded. I would now like to hand the conference over to Mr. Jean Viret, Chief Financial Officer for Coherus BioSciences. Sir, you may begin.

Thank you, Sahid. Good afternoon. I am Jean Viret, Coherus BioSciences' Chief Financial Officer, and it is my pleasure to welcome you to our third-quarter 2014 financial results call. Joining me this afternoon is Denny Lanfear, Chairman and Chief Executive Officer of Coherus.

As you may already know, we issued a press release at the close of the market today highlighting Coherus' third-quarter 2014 performance. The press release is posted on our website at www.coherus.com.

I will begin with a review of the Company's financial performance for the quarter and nine months ended September 30, 2014. Denny will then add some perspective on the results and provide a corporate update. After that we will open the call to your questions and then Denny will make a few concluding remarks.

Now please permit me to make the following reminder. Financial results in today's press release are unaudited. This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This includes statements about the Company's current operating plans, financial guidance, objectives and intentions with respect to future operations and products.

As such they are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically Coherus' prospectus filed with the Securities and Exchange Commission on November 6, 2014, the most recent report on Form 10-Q, and any applicable amendments which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.

Coherus has a policy to not comment on financial performance or guidance during the quarter unless it is done through an appropriate public disclosure. Coherus retains its policy and practice to not update financial performance or guidance during the quarter unless required by law.

With that let's turn to Coherus' financial highlights. Revenue for the third quarter 2014 totaled $16.1 million as compared to $0.5 million in the third quarter of 2013. Revenue for the nine months ended September 30, 2014 totaled $24.6 million as compared to $1.5 million over the same period in 2013. The increases over the same period in 2013 were both due to the recognition of Baxter collaboration revenue.

Research and development expenses for the third quarter 2014 were $18.5 million compared to $4.9 million for the same period in 2013. R&D expenses for nine months ended September 30, 2014 were $51.4 million compared with $22.1 million for the same period in 2013.

Increases in R&D expenses were mainly attributable to an increase in program costs associated with advancements of Coherus' late stage clinical product candidates, CHS-0214 and CHS-1420, as well as increased personnel expenses.

General and administrative expenses for the third quarter 2014 were $4 million compared to $2.4 million for the same period in 2013. G&A expenses for the nine months ended September 30, 2014 were $11.4 million compared with $5 million for the same period in 2013.

Increases in G&A expenses were mainly attributable to increased employee-related expenses and increased legal and accounting services in preparation of becoming a public Company.

Net loss attributable to Coherus for the third quarter 2014 was $7.9 million or $1.79 per share compared to $21.5 million or $6.23 per share for the same period in 2013. For the nine months ended September 30, 2014 the net loss attributable to Coherus was $58 million or $13.62 per share compared to $39 million or $12.48 per share for the same period in 2013.

Cash and cash equivalents totaled $100.9 million as of September 30, 2014 compared to $108.9 million as of June 30, 2014. I will now turn the call over to Denny who will provide some perspective on our operations during the third quarter 2014.

Thank you, Jean, and thank everyone for joining us this afternoon. As you know, in early November we completed our initial public offering which of course is a landmark event for any company. Since some of you may be new to the story I wanted to provide a brief overview of the Company for you and then I will discuss our most recent product highlights.

We are a late stage clinical Biologics platform Company focused on the global biosimilar market. Biosimilars, you may know, are an emerging class of protein-based therapeutics with high similarity to approved [reengineered] products on the basis of various physiochemical and structural properties as well in terms of safety, purity and potency.

Our goal here at Coherus is to become the global leader in the biosimilar market by leveraging our team's collective expertise, key areas such as process science, analytical characterization, protein production and clinical regulatory expertise and development.

Since our founding in 2010 we have advanced one product candidate into phase 3 clinical development and have two others into or through phase 1 clinical development. We have entered into two partnerships with two global pharmaceutical companies, Daiichi Sankyo and Baxter. We are also advancing other products in pre-phase 1 development.

Our three disclosed products in development include first, CHS-1420, a biosimilar to AbbVie's Humira. Secondly, CHS-0214, a biosimilar to Amgen's Enbrel. And third, CHS-1701, a biosimilar to Amgen's Neulasta. The addressable market opportunity in 2014 for these products is over $20 billion.

There is an increasing need for patients to have access to effective and therapeutically equivalent low-cost alternatives to these very costly biological drugs. We have been approached by payers who have a strong appetite for biosimilars to increase competition and patient access and there is high interest with these parties to adopt biosimilars as soon as they are available. For this reason we believe they will be a driving force in the adoption of biosimilars in the US.

And now the highlights for the third quarter. After voluntarily stopping the dosing enrollment of our two phase 3 trials for CHS-0214, our etanercept Enbrel biosimilar candidate, we have not restarted these trials in rheumatoid arthritis and psoriasis. Although this has created a shift in our plans, we still expect to file the MAA application in Europe in 2016.

This program has partnered with Daiichi Sankyo in Japan and Baxter in Europe and Brazil, Canada and China. We received $25 million in milestone payments from Baxter during the third quarter for achieving two milestones. In July 2014 we achieved a $15 million milestone for the initiation of the global psoriasis phase 3 study.

In September 2014 we achieved a $10 million milestone for meeting regulatory expectations for biosimilarity of the CHS-0214 bulk drug substance manufactured in Europe. We retain the development commercial rights in the United States, but we do not expect the originator's composition of matter patent to expire in the US until 2029.

In August we announced that we had met the primary endpoint in a pivotal phase 1 clinical pharmacokinetic similarity study that compared our second product, adalimumab biosimilar candidate CHS-1420 to Humira in healthy subjects. We plan to initiate a phase 3 trial during the first half of 2015 to support the planned filing of a marketing application in the US in 2016 and in the European Union in 2017. As a reminder, we retain full worldwide commercial rights to this product.

Now turning to our last product candidate, CHS-1701, our pegfilgrastim Neulasta biosimilar. We initially pursued a 351(a) novel biologic regulatory approval pathway for 1701 and completed a phase 1 pharmacokinetic and a pharmacodynamic study. However, this October we have met with FDA to inform them of our decision to transfer to a 351(k) biosimilar pathway.

We believe the 351(k) biosimilar approval pathway may enable us to file for US regulatory approval for 1701 in the fourth quarter of 2015 or the first quarter of 2016, which comprises approximately a six to 12 months earlier than we previously projected developing the product under a 351(a) novel biologic pathway.

We continue to have dialogue with FDA and expect final development plans in the first quarter of 2015. We believe that it may be possible to advance 1701 to 351(k) approval for an application in the US without a US collaboration or licensing partner.

In closing, we are pleased with the recent pipeline advancements and the additional funds from our initial public offering which will help drive in particular the CHS-1420 development program. We look forward to finalizing the development plan with FDA for 1701, our pegfilgrastim Neulasta biosimilar in the near-term. And as Jean just mentioned, we expect to end 2014 with about $150 million in cash.

With the leverage in our biosimilar path from our internal expertise and process science, molecular biology, protein production and our clinical regulatory commercial strategies we believe that we are strongly positioned to advance our lead programs through clinical development and secure approvals in major markets and bring biosimilars to patients over the next few years. With that now I'd be very happy to take any of your questions.

(Operator Instructions). Chris Schott, JPMorgan.

Congrats on your first quarter out here. So a couple ones here. First, just on the 1701 program, given the 351(k) pathway can you just elaborate a little more on those comments about the willingness to partner this asset versus continuing to move forward on your own? Kind of what are the decision points at this point that we should be kind of watching on that front?

My second question was on -- there has been a bunch of news flow recently from some other biosimilar players on the patent resolution process with originators. I guess we're thinking about some of your products filing. How are you thinking about approaching that process and just how should investors be thinking about how Coherus is going to kind of address some of the IP around some of these pipeline assets?

And then a final comment, just a really quick one, just any outlook on operating expenses for 2015, just how should we be thinking about those? Thanks very much.

Thanks, Chris, thank you for your thoughtful questions. In terms of the CHS-1701 pegfilgrastim asset, the issue there is that the abbreviated 351(k) pathway should allow us to develop that asset in the US to BLA filing without a partner. And our previous construct for that asset was that we would pursue two phase 3 studies which are recommended, as you know, as part of a 351(a) strategy.

The biosimilar pathway is a bit shorter. We feel that we can execute that in the context of the Company's existing cash post-IPO and look forward to doing that. We may eventually partner that asset in the EU however, or for commercialization reasons in various places. But in terms of all the commercialization I think we're well-positioned for that. And we believe that the (k) pathway is advantageous for us obviously both in terms of time and development expense.

To your second point for the patent resolution process and how Coherus thinks about that, our strategy and philosophy is that we will not launch products in the face of intellectual property such as composition of matter or other substantial patents.

Our strategy really is to embrace the biosimilar pathway both in terms of the regulatory guidance from FDA and the regulators abroad and also the biosimilar legal process here in the US in the patent exchange process.

We have tried to be very, very careful in terms of observing others' intellectual property along the way and we feel that we are well-positioned in that regard. So for Coherus I think it is fair to say that we believe that we have leveraged our scientific and biological expertise to good cause in terms of that.

And we believe that we will have a relatively straightforward process, both on the regulatory and the legal side. Not to say that some things won't come up, but I think that we are doing our very best to avoid those -- any sort of IP issues along the way.

And to respond to your questions on operating expenses to 2015, at this point we're not providing guidances on expenses for 2015. However, our focus right now is on our development activities with our two fully owned assets. These expenses we believe can be addressed out of our existing post-IPO cash.

Great, thanks so much.

Tyler Van Buren, Cowen and Company.

With respect to the 1701 program, I was just hoping to see if it would be possible with you to share any of that -- any of the specifics on the feedback from the FDA with respect to the 351(k) pathway and just hear a little bit more about what informed your decision to take that pathway as opposed to the previous.

In addition, you know if there was anything in addition to the expedited pathway -- expedited timeline. Thanks.

Thank you. We received the FDA guidance from our October 9 meeting in November, as we previously reported. And based on that guidance we updated our plans for 1701 and then have submitted these plans back to FDA for their review and additional feedback.

As you know, the process with regulatory agencies is iterative and on their schedule. And we don't expect to have a much more to say about this probably until the JPMorgan conference in the second week of January where I think we will have this fully sorted out.

But I would say that those conversations with FDA appear to be on track and very consistent with our previous guidance on the matter. And once we get things finalized in terms of the regulators and so on we will have a little bit more to say about that.

Thank you. I am showing no further questions in the queue. At this time I would like to hand the conference back over to Mr. Denny Lanfear for closing remarks.

Thank you all for joining us today. We are available this afternoon if you have any additional questions. As I indicated, we will be presenting at the JPMorgan conference next month and look forward to seeing many of you there. So with that, thank you very much for your time this afternoon, Happy Holidays and Happy New Year from all the team here at Coherus. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect and have a wonderful day.