10-Q 1 chrs-20240331x10q.htm 10-Q
0001512762--12-312024Q1false00112215260113496854http://fasb.org/us-gaap/2023#SellingGeneralAndAdministrativeExpenseP10Yhttp://fasb.org/us-gaap/2023#SellingGeneralAndAdministrativeExpenseP4YP10D0001512762us-gaap:AdditionalPaidInCapitalMemberchrs:AtMarketOfferingMember2024-01-012024-03-310001512762us-gaap:AdditionalPaidInCapitalMemberchrs:AtMarketOfferingMember2023-01-012023-03-310001512762us-gaap:CommonStockMemberchrs:AtMarketOfferingMember2024-01-012024-03-310001512762chrs:PublicOfferingMember2023-05-162023-05-160001512762us-gaap:CommonStockMemberchrs:AtMarketOfferingMember2023-01-012023-03-310001512762us-gaap:RetainedEarningsMember2024-03-310001512762us-gaap:AdditionalPaidInCapitalMember2024-03-310001512762us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001512762us-gaap:RetainedEarningsMember2023-12-310001512762us-gaap:AdditionalPaidInCapitalMember2023-12-310001512762us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001512762us-gaap:RetainedEarningsMember2023-03-310001512762us-gaap:AdditionalPaidInCapitalMember2023-03-310001512762us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001512762us-gaap:RetainedEarningsMember2022-12-310001512762us-gaap:AdditionalPaidInCapitalMember2022-12-310001512762us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001512762us-gaap:CommonStockMember2024-01-012024-03-310001512762us-gaap:CommonStockMember2023-01-012023-03-310001512762us-gaap:OverAllotmentOptionMember2023-05-1600015127622024-03-280001512762us-gaap:CallOptionMember2020-04-1400015127622020-04-140001512762chrs:EmployeeAndNonemployeeStockOptionRestrictedStockUnitsMember2024-01-012024-03-310001512762us-gaap:ProductMember2024-01-012024-03-310001512762us-gaap:ProductAndServiceOtherMember2024-01-012024-03-310001512762chrs:YusimryMember2024-01-012024-03-310001512762chrs:UdenycaMember2024-01-012024-03-310001512762chrs:ToripalimabMember2024-01-012024-03-310001512762chrs:CimerliMember2024-01-012024-03-310001512762us-gaap:ProductMember2023-01-012023-03-310001512762us-gaap:ProductAndServiceOtherMember2023-01-012023-03-310001512762chrs:UdenycaMember2023-01-012023-03-310001512762chrs:CimerliMember2023-01-012023-03-310001512762chrs:TermLoansMemberus-gaap:SubsequentEventMember2024-05-082024-05-080001512762chrs:TermLoansMemberus-gaap:SubsequentEventMember2024-04-012024-04-300001512762chrs:AccruedAndOtherCurrentLiabilitiesMemberchrs:YusimryProductMember2024-03-310001512762us-gaap:MachineryAndEquipmentMember2024-03-310001512762us-gaap:LeaseholdsAndLeaseholdImprovementsMember2024-03-310001512762us-gaap:LeaseholdImprovementsMember2024-03-310001512762us-gaap:FurnitureAndFixturesMember2024-03-310001512762us-gaap:ComputerEquipmentMember2024-03-310001512762us-gaap:MachineryAndEquipmentMember2023-12-310001512762us-gaap:LeaseholdsAndLeaseholdImprovementsMember2023-12-310001512762us-gaap:LeaseholdImprovementsMember2023-12-310001512762us-gaap:FurnitureAndFixturesMember2023-12-310001512762us-gaap:ComputerEquipmentMember2023-12-3100015127622022-04-012022-04-300001512762chrs:PublicOfferingMember2023-05-182023-05-180001512762us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001512762us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001512762us-gaap:RetainedEarningsMember2024-01-012024-03-310001512762us-gaap:RetainedEarningsMember2023-01-012023-03-310001512762chrs:AccruedRebatesFeesAndReservesMember2024-03-310001512762chrs:AccruedRebatesFeesAndReservesMember2023-12-310001512762us-gaap:OtherNoncurrentLiabilitiesMemberchrs:YusimryProductMember2023-01-012023-12-310001512762us-gaap:CostOfSalesMemberchrs:YusimryProductMember2023-01-012023-12-310001512762us-gaap:CostOfSalesMemberchrs:CimerliOphthalmologyFranchiseMember2023-01-012023-12-310001512762us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberchrs:CimerliOphthalmologyFranchiseMember2023-01-012023-03-310001512762chrs:OutLicensesWithNovartisInstitutesMember2024-01-012024-03-310001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TrancheaBAndDLoansMember2024-03-310001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TermLoansMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMember2024-03-310001512762chrs:TermLoansMember2024-01-012024-03-310001512762chrs:AnkuraTrustCompanyLlcMemberchrs:TwoThousandTwentyNineTermLoansMemberus-gaap:SubsequentEventMember2024-05-080001512762chrs:TermLoansMemberus-gaap:FairValueInputsLevel2Member2024-03-310001512762chrs:ConvertibleSeniorSubordinatedNotesDue20261.5Memberus-gaap:FairValueInputsLevel2Member2024-03-310001512762chrs:TermLoansMemberus-gaap:FairValueInputsLevel2Member2023-12-310001512762chrs:ConvertibleSeniorSubordinatedNotesDue20261.5Memberus-gaap:FairValueInputsLevel2Member2023-12-310001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TrancheBLoanMember2023-03-310001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TrancheDLoanMember2022-09-140001512762chrs:BiopharmaCreditInvestmentsVGpLlcMembersrt:MaximumMemberus-gaap:ScenarioPlanMemberchrs:ConvertibleSeniorSubordinatedNotesDue20261.5Member2022-01-310001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberus-gaap:LineOfCreditMemberchrs:TermLoansMember2022-01-310001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TrancheCLoanMember2022-01-310001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TrancheLoanMember2022-01-050001512762chrs:TermLoansMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-03-310001512762us-gaap:ScenarioPlanMemberchrs:ConvertibleSeniorSubordinatedNotesDue20261.5Memberus-gaap:ConvertibleDebtMember2024-01-012024-03-310001512762chrs:McKessonMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2024-01-012024-03-310001512762chrs:CardinalMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2024-01-012024-03-310001512762chrs:AmeriSourceBergenCorpMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2024-01-012024-03-310001512762chrs:McKessonMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-03-310001512762chrs:CardinalMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-03-310001512762chrs:AmeriSourceBergenCorpMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-03-310001512762us-gaap:CommonStockMember2024-03-310001512762us-gaap:CommonStockMember2023-12-310001512762us-gaap:CommonStockMember2023-03-310001512762us-gaap:CommonStockMember2022-12-310001512762chrs:PublicOfferingMember2023-05-160001512762chrs:SurfaceOncologyInc.Memberus-gaap:LicensingAgreementsMember2023-09-080001512762chrs:SurfaceOncologyInc.Memberus-gaap:InProcessResearchAndDevelopmentMember2023-09-080001512762chrs:SurfaceOncologyInc.Memberchrs:OutLicensesWithNovartisInstitutesMember2023-09-080001512762chrs:SurfaceOncologyInc.Memberchrs:OutLicensesWithGrkMember2023-09-080001512762chrs:SurfaceOncologyInc.Memberchrs:InProcessResearchAndDevelopmentSrf388Member2023-09-080001512762chrs:SurfaceOncologyInc.Memberchrs:InProcessResearchAndDevelopmentSrf114Member2023-09-080001512762chrs:SurfaceOncologyInc.Member2024-01-012024-03-310001512762us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberchrs:CimerliOphthalmologyFranchiseMember2024-01-012024-03-310001512762us-gaap:MoneyMarketFundsMember2024-03-310001512762us-gaap:MoneyMarketFundsMember2023-12-310001512762us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-310001512762us-gaap:CorporateNoteSecuritiesMember2023-12-310001512762us-gaap:USTreasurySecuritiesMember2023-12-310001512762us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001512762chrs:PrepaidExpensesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001512762us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001512762us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001512762us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001512762chrs:PrepaidExpensesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001512762us-gaap:FairValueMeasurementsRecurringMember2024-03-310001512762us-gaap:FairValueInputsLevel3Memberchrs:ContingentConsiderationMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateNoteSecuritiesMember2023-12-310001512762us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001512762us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001512762us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateNoteSecuritiesMember2023-12-310001512762us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2023-12-310001512762us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-310001512762chrs:PrepaidExpensesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001512762chrs:ContingentConsiderationMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateNoteSecuritiesMember2023-12-310001512762us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001512762us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2023-12-310001512762us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-310001512762us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateNoteSecuritiesMember2023-12-310001512762us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001512762us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001512762us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001512762chrs:PrepaidExpensesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001512762us-gaap:FairValueMeasurementsRecurringMember2023-12-310001512762us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310001512762chrs:EmployeesAndNonemployeesStockOptionMember2024-01-012024-03-310001512762chrs:ConvertibleNotesMemberchrs:ConvertibleSeniorSubordinatedNotesDue20261.5Member2023-01-012023-03-310001512762us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001512762chrs:EmployeesAndNonemployeesStockOptionMember2023-01-012023-03-310001512762chrs:ConvertibleSeniorSubordinatedNotesDue20261.5Memberus-gaap:ConvertibleDebtMember2024-01-012024-03-310001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TermLoansMember2024-01-012024-03-310001512762chrs:ConvertibleSeniorSubordinatedNotesDue20261.5Memberus-gaap:ConvertibleDebtMember2023-01-012023-03-310001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TermLoansMember2023-01-012023-03-310001512762us-gaap:SellingGeneralAndAdministrativeExpensesMember2024-01-012024-03-310001512762us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-03-310001512762us-gaap:CostOfSalesMember2024-01-012024-03-310001512762us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-012023-03-310001512762us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-03-310001512762us-gaap:CostOfSalesMember2023-01-012023-03-310001512762us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001512762us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001512762chrs:SurfaceOncologyInc.Memberchrs:OutLicensesWithNovartisInstitutesMember2023-09-082023-09-080001512762chrs:SurfaceOncologyInc.Memberchrs:OutLicensesWithGrkMember2023-09-082023-09-0800015127622024-04-300001512762srt:WeightedAverageMemberchrs:AtMarketOfferingMember2024-01-012024-03-310001512762srt:WeightedAverageMemberchrs:AtMarketOfferingMember2023-01-012023-03-310001512762us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberchrs:CimerliOphthalmologyFranchiseMember2024-03-310001512762chrs:AccruedAndOtherCurrentLiabilitiesMemberchrs:YusimryProductMember2023-01-012023-12-310001512762us-gaap:OverAllotmentOptionMember2023-05-162023-05-160001512762chrs:AtMarketOfferingMember2023-05-150001512762srt:MaximumMemberchrs:AtMarketOfferingMember2023-09-110001512762srt:MaximumMemberchrs:AtMarketOfferingMember2023-05-150001512762srt:MaximumMemberchrs:PublicOfferingMember2022-11-170001512762srt:MaximumMemberchrs:AtMarketOfferingMember2022-11-080001512762us-gaap:SubsequentEventMember2024-05-080001512762chrs:RebatesMember2024-03-310001512762chrs:OtherFeesCoPayAssistanceAndReturnsMember2024-03-310001512762chrs:ChargebacksAndDiscountsForPromptPaymentMember2024-03-310001512762chrs:RebatesMember2023-12-310001512762chrs:OtherFeesCoPayAssistanceAndReturnsMember2023-12-310001512762chrs:ChargebacksAndDiscountsForPromptPaymentMember2023-12-310001512762chrs:RebatesMember2023-03-310001512762chrs:OtherFeesCoPayAssistanceAndReturnsMember2023-03-310001512762chrs:ChargebacksAndDiscountsForPromptPaymentMember2023-03-3100015127622023-03-310001512762chrs:RebatesMember2022-12-310001512762chrs:OtherFeesCoPayAssistanceAndReturnsMember2022-12-310001512762chrs:ChargebacksAndDiscountsForPromptPaymentMember2022-12-3100015127622022-12-310001512762chrs:AtMarketOfferingMember2024-01-012024-03-310001512762chrs:AtMarketOfferingMember2023-01-012023-03-310001512762chrs:CimerliOphthalmologyFranchiseMember2023-12-310001512762chrs:NovartisAgreementMember2016-01-012016-01-310001512762chrs:RebatesMember2024-01-012024-03-310001512762chrs:OtherFeesCoPayAssistanceAndReturnsMember2024-01-012024-03-310001512762chrs:ChargebacksAndDiscountsForPromptPaymentMember2024-01-012024-03-310001512762chrs:RebatesMember2023-01-012023-03-310001512762chrs:OtherFeesCoPayAssistanceAndReturnsMember2023-01-012023-03-310001512762chrs:ChargebacksAndDiscountsForPromptPaymentMember2023-01-012023-03-310001512762chrs:ConvertibleSeniorSubordinatedNotesDue20261.5Member2024-03-3100015127622024-02-052024-02-0500015127622024-03-012024-03-310001512762chrs:YusimryProductMember2023-01-012023-12-310001512762chrs:TwoThousandTwentyNineTermLoansMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:SubsequentEventMember2024-05-082024-05-080001512762chrs:TwoThousandTwentyNineTermLoansMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMemberus-gaap:SubsequentEventMember2024-05-082024-05-080001512762chrs:TwoThousandTwentyNineTermLoansMemberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:SubsequentEventMember2024-05-082024-05-080001512762chrs:TwoThousandTwentyNineTermLoansMemberus-gaap:SubsequentEventMember2024-05-082024-05-080001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberus-gaap:ScenarioPlanMemberchrs:TermLoansMember2024-02-052024-02-050001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TermLoansMember2022-01-012022-01-310001512762chrs:AtMarketOfferingMember2023-09-112023-09-1100015127622023-01-012023-03-310001512762chrs:SurfaceOncologyInc.Memberchrs:OutLicensesWithNovartisInstitutesMember2024-01-012024-03-3100015127622024-03-012024-03-010001512762chrs:ConvertibleSeniorSubordinatedNotesDue20261.5Memberus-gaap:ConvertibleDebtMember2020-04-012020-04-300001512762chrs:TermLoansMemberus-gaap:SubsequentEventMember2024-05-080001512762chrs:TermLoansMemberus-gaap:SubsequentEventMember2024-04-010001512762us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberchrs:CimerliOphthalmologyFranchiseMember2024-03-0100015127622024-03-010001512762chrs:JunshiBiosciencesMember2024-01-012024-03-3100015127622024-02-050001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TrancheaBAndDLoansMember2024-01-012024-03-310001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TermLoansMember2022-01-050001512762chrs:BiopharmaCreditInvestmentsVGpLlcMemberchrs:TermLoansMember2022-01-310001512762chrs:ConvertibleSeniorSubordinatedNotesDue20261.5Memberus-gaap:ConvertibleDebtMember2020-04-300001512762chrs:ConvertibleSeniorSubordinatedNotesDue20261.5Member2024-01-012024-03-310001512762chrs:TermLoansMemberus-gaap:SubsequentEventMember2024-04-012024-04-010001512762chrs:ConvertibleSeniorSubordinatedNotesDue20261.5Memberus-gaap:ConvertibleDebtMember2024-03-310001512762chrs:AtMarketOfferingMember2024-03-310001512762chrs:JunshiBiosciencesMember2021-02-010001512762chrs:ToripalimabMemberchrs:JunshiBiosciencesMember2021-02-012021-02-0100015127622022-03-012022-03-310001512762chrs:ExclusiveLicenseAndCommercializationAgreementMember2021-02-012021-02-010001512762chrs:JunshiBiosciencesMember2021-02-012021-02-010001512762chrs:SurfaceMemberchrs:GskAgreementMember2022-03-012022-03-310001512762chrs:AntiTigitAntibodyAndIl2CytokineMemberchrs:ExclusiveLicenseAndCommercializationAgreementMember2022-03-310001512762chrs:ToripalimabMemberchrs:JunshiBiosciencesMember2021-02-010001512762chrs:VaccinexLicenseAgreementMember2021-03-212021-03-210001512762chrs:AdimabDevelopmentAndOptionAgreementMember2018-10-012018-10-310001512762chrs:GskAgreementMember2020-12-012020-12-310001512762us-gaap:AccountsPayableMemberchrs:JunshiBiosciencesMember2024-03-310001512762chrs:AccruedAndOtherCurrentLiabilitiesMemberchrs:JunshiBiosciencesMember2024-03-310001512762us-gaap:CallOptionMember2020-04-012020-04-300001512762chrs:SurfaceOncologyInc.Member2023-09-080001512762chrs:SurfaceOncologyInc.Member2024-03-310001512762chrs:CoherusOphthalmologyLlcMemberchrs:CimerliDivestitureTransactionMember2024-03-012024-03-010001512762chrs:SurfaceOncologyInc.Memberchrs:SurfaceSrf388ProprietaryDrugProductAgreementMember2023-09-082023-09-080001512762chrs:SurfaceOncologyInc.Memberchrs:SurfaceSrf114ProprietaryDrugProductAgreementMember2023-09-082023-09-080001512762chrs:SurfaceOncologyInc.Memberchrs:SurfaceGlaxosmithklineAgreementMember2023-09-082023-09-080001512762chrs:SurfaceOncologyInc.Member2023-09-082023-09-0800015127622024-01-012024-03-310001512762chrs:IntangibleAssetsNetAndAccruedAndOtherCurrentLiabilitiesMemberchrs:JunshiBiosciencesMember2024-03-3100015127622024-03-3100015127622023-12-31iso4217:USDxbrli:purechrs:itemxbrli:sharesiso4217:USDxbrli:shareschrs:tranchechrs:product

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to

Commission File Number: 001-36721

Coherus BioSciences, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

 

27-3615821

(State or Other Jurisdiction of
Incorporation or Organization)

333 Twin Dolphin Drive, Suite 600

Redwood City, California

(Address of Principal Executive Office)

 

(I.R.S. Employer Identification No.)

94065

(Zip Code)

(650) 649-3530

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

CHRS

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

As of April 30, 2024, 114,725,740 shares of the registrant’s common stock were outstanding.

COHERUS BIOSCIENCES, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2024

TABLE OF CONTENTS

    

Page

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

3

PART I

FINANCIAL INFORMATION

5

ITEM 1

Unaudited Condensed Consolidated Financial Statements

5

 

Condensed Consolidated Balance Sheets

5

Condensed Consolidated Statements of Operations

6

Condensed Consolidated Statements of Comprehensive Income (Loss)

7

Condensed Consolidated Statements of Stockholders’ Deficit

8

Condensed Consolidated Statements of Cash Flows

9

Notes to Condensed Consolidated Financial Statements

10

ITEM 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

35

ITEM 3

Quantitative and Qualitative Disclosure About Market Risk

50

ITEM 4

Controls and Procedures

51

PART II

OTHER INFORMATION

52

ITEM 1.

Legal Proceedings

52

ITEM 1A.

Risk Factors

52

ITEM 2

Unregistered Sales of Equity Securities and Use of Proceeds, and Issuer Purchases of Equity Securities

109

ITEM 3

Defaults Upon Senior Securities

109

ITEM 4

Mine Safety Disclosures

109

ITEM 5

Other Information

109

ITEM 6.

Exhibits

109

Exhibit Index

110

Signatures

112

UDENYCA®, UDENYCA® ONBODY™, YUSIMRY® and LOQTORZI®, whether or not appearing in large print or with the trademark symbol, are trademarks of Coherus, its affiliates, related companies or its licensors or joint venture partners, unless otherwise noted. Trademarks and trade names of other companies appearing in this Quarterly Report on Form 10-Q are, to the knowledge of Coherus, the property of their respective owners.

2

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements contained herein that are not statements of historical facts contained in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by words such as “aim,” “anticipate,” “assume,” “attempt,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “seek,” “should,” “strive,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

whether we will be able to continue to maintain or increase sales for our products;

our expectations regarding our ability to develop and commercialize our product candidates in the United States and Canada;

our ability to maintain regulatory approval for our products and our ability to obtain and maintain regulatory approval of our product candidates, if and when approved;

our expectations regarding government and third-party payer coverage and reimbursement;

our ability to manufacture our products and product candidates in conformity with regulatory requirements and to scale up manufacturing capacity of these products for commercial supply;

our reliance on third-party contract manufacturers to supply our products candidates and product for us;

our expectations regarding the potential market size and the size of the patient populations for our products and product candidates, if approved for commercial use;

our expectations about making required future interest and principal payments as they become due in connection with our debt obligations;

our financial performance, including, but not limited to, projected future performance of our gross margins, projected future cash reserves, research and development expenses and selling and general administrative expenses;

the implementation of strategic plans for our business, products and product candidates;

the initiation, timing, progress and results of future preclinical and clinical studies and our research and development programs;

the scope of protection we are able to establish and maintain for intellectual property rights covering our products and product candidates;

our expectations regarding the scope or enforceability of third-party intellectual property rights, or the applicability of such rights to our products and product candidates;

the cost, timing and outcomes of litigation involving our products and product candidates;

3

our reliance on third-party contract research organizations to conduct clinical trials of our product candidates;

the benefits of the use of our products and product candidates;

our expectations about potential risks, disruptions and losses from future cyberattacks and security incidents;

the rate and degree of market acceptance of our current or any future products and product candidates;

our ability to compete with companies currently producing competitor products, including Neulasta and Humira and other biosimilar products made by other companies;

developments and projections relating to our competitors, our market opportunity and our industry; and

the potential impact of COVID-19 and the continuation of the war in Ukraine and conflicts in the Middle East on our business and prospects.

We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified in Part II, Item 1A Risk Factors and discussed elsewhere in this Quarterly Report on Form 10-Q. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission (“SEC”), we do not undertake, and specifically decline, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make or enter into, except for the acquisition of Surface to the extent described herein.

This Quarterly Report on Form 10-Q also contains estimates, projections, market opportunity estimates and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, publicly filed reports and similar sources.

4

PART I. FINANCIAL INFORMATION

ITEM 1.              Unaudited Condensed Consolidated Financial Statements

Coherus BioSciences, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

March 31, 

December 31, 

    

2024

    

2023

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

259,775

$

102,891

Investments in marketable securities

14,857

Trade receivables, net

 

251,951

 

260,522

TSA receivables, net (Note 6)

32,194

Inventory

 

61,978

 

62,605

Prepaid manufacturing

 

7,498

 

23,657

Other prepaids and current assets

 

14,081

 

11,099

Total current assets

 

627,477

 

475,631

Property and equipment, net

 

4,188

 

5,119

Inventory, non-current

 

65,645

 

67,495

Intangible assets, net

 

57,104

 

71,673

Other assets, non-current

 

9,131

 

9,686

Total assets

$

763,545

$

629,604

Liabilities and Stockholders’ Deficit

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

38,289

$

35,219

Accrued rebates, fees and reserves

 

155,775

 

169,645

TSA payables and other accrued liabilities (Note 6)

30,770

Accrued compensation

 

22,762

 

21,521

Accrued and other current liabilities

 

115,707

 

105,386

Term loans, current

175,000

Total current liabilities

 

538,303

 

331,771

Term loans, non-current

72,452

246,481

Convertible notes

227,220

226,888

Lease liabilities, non-current

 

4,680

 

5,328

Other liabilities, non-current

 

2,734

 

12,561

Total liabilities

 

845,389

 

823,029

Commitments and contingencies (Note 9)

 

  

 

  

Stockholders’ deficit:

 

  

 

  

Preferred stock ($0.0001 par value; shares authorized: 5,000,000; shares issued and outstanding: 0 at March 31, 2024 and December 31, 2023)

Common stock ($0.0001 par value; shares authorized: 300,000,000; shares issued and outstanding: 113,496,854 and 112,215,260 at March 31, 2024 and December 31, 2023, respectively)

 

11

 

11

Additional paid-in capital

 

1,395,042

 

1,386,312

Accumulated other comprehensive loss

 

(272)

 

(248)

Accumulated deficit

 

(1,476,625)

 

(1,579,500)

Total stockholders' deficit

 

(81,844)

 

(193,425)

Total liabilities and stockholders’ deficit

$

763,545

$

629,604

See accompanying notes.

5

Coherus BioSciences, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

Three Months Ended

March 31, 

    

2024

    

2023

Net revenue

$

77,063

$

32,436

Costs and expenses:

 

 

Cost of goods sold

 

34,586

 

16,874

Research and development

 

28,470

 

34,154

Selling, general and administrative

 

56,532

 

49,153

Total costs and expenses

 

119,588

 

100,181

Loss from operations

 

(42,525)

 

(67,745)

Interest expense

 

(11,116)

 

(9,712)

Gain on Sale Transaction, net (Note 6)

153,647

Other income (expense), net

 

2,869

 

1,728

Income (loss) before income taxes

 

102,875

 

(75,729)

Income tax provision

 

 

Net income (loss)

$

102,875

$

(75,729)

 

  

 

  

Net income (loss) per share:

 

 

  

Basic

$

0.91

$

(0.96)

Diluted

$

0.83

$

(0.96)

Weighted-average number of shares used in computing net income (loss) per share:

Basic

112,749,306

79,268,853

Diluted

 

125,529,971

 

79,268,853

See accompanying notes.

6

Coherus BioSciences, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

Three Months Ended

March 31, 

    

2024

    

2023

Net income (loss)

$

102,875

$

(75,729)

Other comprehensive income (loss):

 

 

Unrealized loss on available-for-sale securities, net of tax

(24)

(29)

Comprehensive income (loss)

$

102,851

$

(75,758)

See accompanying notes.

7

Coherus BioSciences, Inc.

Condensed Consolidated Statements of Stockholders’ Deficit

(in thousands, except share and per share data)

(unaudited)

Accumulated

Additional

Other

Total

Common Stock

Paid-In

Comprehensive

Accumulated

Stockholders'

    

Shares

    

Amount

    

Capital

    

Loss

    

Deficit

    

Deficit

Balances at December 31, 2023

 

112,215,260

$

11

$

1,386,312

$

(248)

$

(1,579,500)

$

(193,425)

Net income

 

 

 

 

102,875

 

102,875

Issuance of common stock upon exercise of stock options

174,651

 

 

291

 

 

 

291

Issuance of common stock upon vesting of restricted stock units ("RSUs")

741,213

 

 

 

 

 

Issuance of common stock under ATM Offering, net of issuance costs

650,005

1,507

1,507

Taxes paid related to net share settlement of RSUs

(284,275)

(745)

(745)

Stock-based compensation expense

 

 

7,677

 

 

 

7,677

Other comprehensive loss, net of tax

 

 

 

 

(24)

 

 

(24)

Balances at March 31, 2024

 

113,496,854

$

11

$

1,395,042

$

(272)

$

(1,476,625)

$

(81,844)

Accumulated

Additional

Other

Total

Common Stock

Paid-In

Comprehensive

Accumulated

Stockholders'

    

Shares

    

Amount

    

Capital

    

Loss

    

Deficit

    

Deficit

Balances at December 31, 2022

 

78,851,516

$

8

$

1,204,431

$

(249)

$

(1,341,608)

$

(137,418)

Net loss

 

 

 

 

 

(75,729)

 

(75,729)

Issuance of common stock upon exercise of stock options

 

24,107

 

 

103

 

 

 

103

Issuance of common stock upon vesting of RSUs

 

771,167

 

 

 

 

 

Issuance of common stock under ATM Offering, net of issuance costs

1,131,450

7,059

7,059

Taxes paid related to net share settlement of RSUs

(289,944)

(2,781)

(2,781)

Stock-based compensation expense

 

 

 

12,288

 

 

 

12,288

Other comprehensive loss, net of tax

 

 

 

 

(29)

 

 

(29)

Balances at March 31, 2023

 

80,488,296

$

8

$

1,221,100

$

(278)

$

(1,417,337)

$

(196,507)

See accompanying notes.

8

Coherus BioSciences, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended

March 31, 

    

2024

    

2023

Operating activities

 

 

  

Net income (loss)

$

102,875

$

(75,729)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

Depreciation and amortization

 

1,507

 

949

Stock-based compensation expense

 

7,319

 

12,282

Impairment of out-license asset and remeasurement of CVR liability, net

6,772

Gain on Sale Transaction, net (Note 6)

(153,647)

Inventory write-downs, net

2,481

3,241

Other non-cash adjustments, net

(2,695)

(129)

Changes in operating assets and liabilities:

 

 

Trade receivables, net

 

8,579

 

8,529

Inventory

(11,455)

 

(2,671)

Prepaid manufacturing

 

9,589

 

1,861

Other prepaid, current and non-current assets

 

(4,426)

 

2,057

Accounts payable

 

616

 

11,739

Accrued rebates, fees and reserves

 

(15,157)

 

1,236

TSA related operating assets and liabilities, net (Note 6)

(1,424)

Accrued compensation

 

1,559

 

(10,188)

Accrued and other current and non-current liabilities

 

741

 

(21,909)

Net cash used in operating activities

 

(46,766)

 

(68,732)

Investing activities

 

  

 

  

Proceeds from maturities of investments in marketable securities

 

6,200

 

17,500

Proceeds from sale of investments in marketable securities

8,688

Cash received from Sale Transaction (Note 6)

187,823

Other investing activities, net

52

26

Net cash provided by investing activities

 

202,763

 

17,526

Financing activities

 

  

 

  

Proceeds from issuance of common stock under ATM Offering, net of issuance costs

1,507

6,835

Proceeds from issuance of common stock upon exercise of stock options

 

291

103

Taxes paid related to net share settlement

 

(745)

(2,781)

Other financing activities

(166)

(353)

Net cash provided by financing activities

 

887

 

3,804

Net increase (decrease) in cash, cash equivalents and restricted cash

 

156,884

 

(47,402)

Cash, cash equivalents and restricted cash at beginning of period

 

103,343

 

63,987

Cash, cash equivalents and restricted cash at end of period

$

260,227

$

16,585

See accompanying notes.

9

Coherus BioSciences, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1.       Organization and Summary of Significant Accounting Policies

Organization

Coherus BioSciences, Inc. (the “Company” or “Coherus”) is a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative immunotherapies to treat cancer. The Company is developing an innovative immuno-oncology pipeline that we believe will be synergistic with its proven commercial capabilities in oncology. The Company’s headquarters and laboratories are located in Redwood City, California and in Camarillo, California, respectively.

The Company sells UDENYCA® (pegfilgrastim-cbqv), a biosimilar to Neulasta, a long-acting granulocyte-colony stimulating factor, in the United States. On August 2, 2022, the FDA approved CIMERLI® (ranibizumab-eqrn), a biosimilar to Lucentis, and commercial launch commenced in October 2022 in the United States. The Company launched YUSIMRY® (adalimumab-aqvh), a biosimilar to Humira (adalimumab), in the United States in July 2023. On January 2, 2024, the Company announced the launch in the U.S. of LOQTORZI in combination with cisplatin and gemcitabine for the first-line treatment of adults with metastatic or recurrent locally advanced nasopharyngeal carcinoma (“NPC”), and as monotherapy for the treatment of adults with recurrent, unresectable, or metastatic NPC with disease progression on or after platinum-containing chemotherapy. LOQTORZI is a novel PD-1 inhibitor that the Company developed in collaboration with Shanghai Junshi Biosciences Co., Ltd. (“Junshi Biosciences”). On January 19, 2024, the Company entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Sandoz Inc. (“Sandoz”). Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, on March 1, 2024, the Company completed the sale of its CIMERLI ophthalmology franchise through the sale of its subsidiary, Coherus Ophthalmology LLC (“Coherus Ophthalmology”), to Sandoz for upfront, all-cash consideration of $170.0 million plus an additional $17.8 million for CIMERLI product inventory and prepaid manufacturing assets (“Sale Transaction”). Proceeds from the divestiture received in March were used in April 2024 to pay down $175.0 million of the total principal balance of $250.0 million on the Company’s loan agreement that it entered into in January 2022 (see Note 13. Subsequent Events).

The Company’s product pipeline comprises the following three product candidates: CHS-1000, an antibody targeting ILT4; casdozokitug (CHS-388, formerly SRF388), an antibody targeting interleukin 27 (“IL-27”); and CHS-114 (formerly SRF114), a highly specific afucosylated immunoglobulin isotype G1 (“IgG1”) antibody targeting CCR8. In addition to the Company’s internally developed portfolio of product candidates, the Company has two product candidates, NZV930 and GSK4381562, which are exclusively licensed to Novartis Institutes for Biomedical Research, Inc. (“Novartis Institutes”) and GlaxoSmithKline Intellectual Property No. 4 Limited (“GSK”), respectively. The exclusive license of NZV930 to Novartis Institutes was terminated by Novartis Institutes with an effective date of October 2, 2024.

Basis of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Coherus and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring accruals that the Company believes are necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period.

10

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”) filed with the SEC.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities when these values are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current information. Accounting estimates and judgments are inherently uncertain and therefore actual results could differ from these estimates.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets, which, in aggregate, represent the amount reported in the condensed consolidated statements of cash flows:

(in thousands)

January 1,

At beginning of period:

    

2024

    

2023

Cash and cash equivalents

$

102,891

$

63,547

Restricted cash

452

440

Total cash, cash equivalents and restricted cash

$

103,343

$

63,987

March 31, 

At end of period:

2024

    

2023

Cash and cash equivalents

$

259,775

$

16,145

Restricted cash

 

452

 

440

Total cash, cash equivalents and restricted cash

$

260,227

$

16,585

Proceeds from the divestiture of the CIMERLI ophthalmology franchise received in March were used to pay down $175.0 million out of the total principal balance of $250.0 million on the Company’s 2027 Term Loan in April 2024 (see Note 13. Subsequent Events). Restricted cash consists of deposits for letters of credit that the Company has provided to secure its obligations under certain leases and is included in other assets, non-current on the condensed consolidated balance sheets.

Trade Receivables

Trade receivables are recorded net of allowances for chargebacks, cash discounts for prompt payment and credit losses. The Company estimates an allowance for expected credit losses by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The corresponding expense for the credit loss allowance is reflected in selling, general and administrative expenses. The credit loss allowance was immaterial as of March 31, 2024 and December 31, 2023.

Contingent Consideration

Contingent consideration relates to the potential payments to holders of Contingent Value Rights (“CVRs”) that are contingent upon the achievement of the Company and certain third-parties meeting product development or financial performance milestones. For transactions accounted for as business combinations, the Company records

11

contingent consideration at fair value at the date of the acquisition based on the consideration expected to be transferred. Liabilities for contingent consideration are remeasured each reporting period and subsequent changes in fair value are recognized within selling, general and administrative expense in the condensed consolidated statements of operations. The assumptions utilized in the calculation of the fair values include probability of success and the discount rates. Contingent consideration involves certain assumptions requiring significant judgment and actual results may differ from estimated amounts.

Stock-Based Compensation

The Company’s compensation programs include stock-based awards, and the related grants under these programs are accounted for at fair value. The fair values are recognized as compensation expense on a straight-line basis over the vesting period with the related costs recorded in cost of goods sold, research and development, and selling, general and administrative expense, as appropriate. The Company accounts for forfeitures as they occur. The Company accounts for stock issued in connection with business combinations based on the fair value of the Company’s common stock on the date of issuance.

Recent Accounting Pronouncements

The following are recent accounting pronouncements that the Company has not yet adopted:

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures, which enhances the disclosures required for operating segments by requiring disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, among other expanded. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. The new standard is effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the amendments in this update should be applied retrospectively to all periods presented. The Company is currently evaluating the impact this ASU may have on its financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The new standard is effective for the Company for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments in this ASU should be applied prospectively; however, retrospective application is also permitted. The Company is currently evaluating the impact this ASU may have on its financial statement disclosures.

The Company has reviewed other recent accounting pronouncements and concluded they are either not applicable to the business or that no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

12

2.        Revenue

The Company launched LOQTORZI and YUSIMRY in the United States in December and July 2023, respectively, and initiated sales of CIMERLI in October 2022. Net revenue for sales of CIMERLI effectively ceased to be recognized in the Company’s statements of operations on March 1, 2024. All net product revenue was generated in the United States, and the Company’s net revenue was as follows:

Three Months Ended

March 31, 

(in thousands)

    

2024

2023

Products

UDENYCA

$

42,667

$

26,179

CIMERLI

28,194

6,174

YUSIMRY

3,894

LOQTORZI

1,988

Total net product revenue

76,743

32,353

Other

 

320

 

83

Total net revenue

$

77,063

$

32,436

Gross product revenues by significant customer as a percentage of total gross product revenues were as follows:

Three Months Ended

 

March 31, 

2024

 

2023

 

McKesson Corporation

42

%

35

%

Cencora (previously known as AmeriSource-Bergen Corporation)

42

%

43

%

Cardinal Health, Inc.

14

%

21

%

Product Sales Discounts and Allowances

Provisions that reduce net revenue include chargebacks and discounts for prompt payment, which are recorded as a reduction in trade receivables, and rebates, other fees, co-pay assistance and returns, which are recorded as current liabilities and other liabilities, non-current in the unaudited condensed consolidated balance sheets. In connection with the Sale Transaction, the Company retained and will continue to be responsible for sales discounts and allowance liabilities incurred prior to March 1, 2024. Sales discounts and allowances incurred on behalf of the TSA in March 2024 are reflected within TSA receivables, net and TSA payables and other accrued liabilities in the unaudited condensed consolidated balance sheets and are excluded from the below table (see Note 6. Acquisition and Disposition). The

13

activities and ending reserve balances for each significant category of discounts and allowances, which constitute variable consideration, were as follows:

Three Months Ended March 31, 2024

    

Chargebacks

    

    

Other Fees,

    

and Discounts

Co-pay

for Prompt

Assistance

(in thousands)

Payment

Rebates

and Returns

Total

Balances at December 31, 2023

$

73,953

$

121,137

$

49,795

$

244,885

Provision related to sales made in:

Current period

223,619

56,432

42,359

322,410

Prior period - increase (decrease)

(504)

1,399

410

1,305

Payments and customer credits issued

 

(228,278)

(74,958)

(40,799)

(344,035)

Balances at March 31, 2024

$

68,790

$

104,010

$

51,765

$

224,565

Three Months Ended March 31, 2023

    

Chargebacks

    

    

Other Fees,

    

and Discounts

Co-pay

for Prompt

Assistance

(in thousands)

Payment

Rebates

and Returns

Total

Balances at December 31, 2022

$

42,677

$

38,713

$

19,113

$

100,503

Provision related to sales made in:

Current period

 

93,906

13,000

14,603

121,509

Prior period - increase (decrease)

(738)

(701)

1,829

390

Payments and customer credits issued

 

(101,108)

 

(14,243)

 

(16,617)

 

(131,968)

Balances at March 31, 2023

$

34,737

$

36,769

$

18,928

$

90,434

3.       Fair Value Measurements

The fair values of financial instruments are classified into one of the following categories based upon the lowest level of input that is significant to the fair value measurement:

Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair values of cash equivalents approximate their carrying values due to the short-term nature of such financial instruments.

Unrealized gains and losses on available-for-sale debt securities are reported as a component of accumulated comprehensive income (loss), with the exception of unrealized losses believed to be related to credit losses, if any, which are recognized in earnings in the period the impairment occurs. Impairment assessments are made at the individual

14

security level each reporting period. When the fair value of an available-for-sale debt investment is less than its cost at the balance sheet date, a determination is made as to whether the impairment is related to a credit loss and, if it is, the portion of the impairment relating to credit loss is recorded as an allowance through net income. Realized gains and losses, if any, on available-for-sale securities are included in other income (expense), net, in the condensed consolidated statements of operations based on the specific identification method.

In connection with the acquisition (the “Surface Acquisition”) of Surface Oncology, Inc. (“Surface”) on September 8, 2023 (see Note 6. Acquisition and Disposition), the Company recorded a contingent consideration liability related to CVRs issued in connection with the acquisition. The fair value of the CVR liability was determined using a Monte Carlo simulation-based model discounted to present value and represents a Level 3 measurement within the fair value hierarchy. Assumptions used in this calculation include estimated revenue, discount rate and various probability factors. If different assumptions were used for the various inputs, the estimated fair value could be significantly higher or lower than the fair value the Company determined. For example, increases in discount rates and the time to payment may result in lower fair value measurements. There is no assurance that any of the conditions for payment of the CVR liability will be met. During the three months ended March 31, 2024, the Company impaired the out-licensed partnership program with Novartis Institutes (NZV930), which resulted in a net impairment charge of $6.8 million in selling, general and administrative expenses in the condensed consolidated statements of operations relating to the write-off of the net carrying value of the Novartis Institutes out-license intangible asset of $10.6 million and the final remeasurement of the CVR liability of $3.8 million to its fair value of zero. The remaining CVR liability associated with GSK of $0.5 million and other contingent consideration are recorded in other liabilities, non-current on the condensed consolidated balance sheets at March 31, 2024.

Financial liabilities related to long-term debt obligations are summarized in Note 8. Debt Obligations. Other financial liabilities and financial assets measured at fair value on a recurring basis are summarized as follows:

Fair Value Measurements

March 31, 2024

(in thousands)

    

Level 1

    

Level 2

    

Level 3

    

Total

Financial Assets:

 

 

  

 

  

 

  

Cash equivalents(1)

$

259,413

$

$

$

259,413

Prepaid financial instrument in Prepaid manufacturing(2)

432

432

Total

$

259,413

$

$

432

$

259,845

Financial Liabilities:

 

 

  

 

  

 

  

Contingent consideration

$

$

$

632

$

632

15

Fair Value Measurements

December 31, 2023

(in thousands)

    

Level 1

    

Level 2

    

Level 3

    

Total

Financial Assets:

 

 

  

 

  

 

  

Cash equivalents(1)

$

88,460

$

998

$

$

89,458

Marketable debt securities:

 

 

 

 

U.S. government agency securities

5,195

5,195

U.S. treasury securities

2,993

2,993

Commercial paper and corporate notes

6,669

6,669

Prepaid financial instrument in Prepaid manufacturing(2)

625

625

Total

$

96,648

$

7,667

$

625

$

104,940

Financial Liabilities:

Contingent consideration

$

$

$

4,472

$

4,472

(1)Cash equivalents consist of money market funds, U.S treasury securities and commercial paper and corporate notes with original maturities of 90 days or less.
(2)Relates to Optional Stock Purchase Agreement as described in the Company’s 2023 Form 10-K.

Proceeds from the divestiture of the CIMERLI ophthalmology franchise received in March were used to pay down $175.0 million out of the total principal balance of $250.0 million on the Company’s 2027 Term Loans in April 2024 (see Note 13. Subsequent Events).

The cost, unrealized gains or losses, and fair value by investment type are summarized as follows:

March 31, 2024

(in thousands)

    

Cost

    

Unrealized Gain

    

Unrealized (Loss)

    

Fair Value

Money market funds

$

259,413

$

$

$

259,413

Total

$

259,413

 

$

$

$

259,413

December 31, 2023

(in thousands)

    

Cost

    

Unrealized Gain

    

Unrealized (Loss)

    

Fair Value

Money market funds

$

79,484

$

$

$

79,484

U.S. government agency securities

5,200

 

(5)

5,195

U.S. treasury securities

11,967

2

11,969

Commercial paper and corporate notes

7,673

(6)

7,667

Total

$

104,324

 

$

2

$

(11)

$

104,315

16

4.       Inventory

Inventory consisted of the following:

    

March 31, 

December 31,

(in thousands)

2024

2023

Raw materials

$

13,941

$

12,975

Work in process

 

90,400

 

82,588

Finished goods

 

23,282

 

34,537

Total

$

127,623

$

130,100

Inventory as of December 31, 2023 included $16.4 million related to the CIMERLI ophthalmology franchise (see Note 6. Acquisition and Disposition). Inventory is stated at the lower of cost or estimated net realizable value with cost determined under the first-in first-out method. The determination of excess or obsolete inventory requires judgment including consideration of many factors, such as estimates of future product demand, current and future market conditions, product expiration information, and potential product obsolescence, among others. During 2023, the Company recorded a $47.0 million charge for the write-down of slow moving YUSIMRY inventory, which included the recognition of $20.5 million in certain firm purchase commitments. Of this charge, $11.5 million was reflected in accrued and other current liabilities and $9.0 million in other liabilities, non-current as of December 31, 2023. As of March 31, 2024, $8.6 million of accrued YUSIMRY firm purchase commitments remained within accrued and other current liabilities.

Inventory expected to be sold more than twelve months from the balance sheet date is classified as inventory, non-current on the condensed consolidated balance sheets. As of March 31, 2024 and December 31, 2023, the non-current portion of inventory primarily consisted of raw materials and work in process inventory. The following table presents the inventory balance sheet classifications:

    

March 31, 

December 31,

(in thousands)

2024

2023

Inventory

$

61,978

$

62,605

Inventory, non-current

 

65,645

 

67,495

Total

$

127,623

$

130,100

Prepaid manufacturing of $7.5 million as of March 31, 2024 includes prepayments of $3.8 million to contract manufacturing organizations (“CMOs”) for manufacturing services, which the Company expects to be converted into inventory within the next twelve months, and prepayments of $3.7 million to various CMOs for research and development pipeline programs. Prepaid manufacturing of $23.7 million as of December 31, 2023 included prepayments of $12.6 million to CMOs for manufacturing services, including $6.4 million related to the CIMERLI ophthalmology franchise (see Note 6. Acquisition and Disposition), and prepayments of $11.1 million to various CMOs for research and development pipeline programs.

17

5.       Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consisted of the following:

    

March 31, 

December 31, 

(in thousands)

2024

    

2023

Machinery and equipment