Coherus BioSciences, Inc. [CHRS] Filings

10-Q 1 chrs-20240630x10q.htm 10-Q

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 June 30, 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 July 31, 2024, 115,208,583 shares of the registrant’s common stock were outstanding.

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COHERUS BIOSCIENCES, INC.

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 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	36
ITEM 3	Quantitative and Qualitative Disclosure About Market Risk	53
ITEM 4	Controls and Procedures	54
PART II	OTHER INFORMATION	55
ITEM 1.	Legal Proceedings	55
ITEM 1A.	Risk Factors	55
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds, and Issuer Purchases of Equity Securities	111
ITEM 3	Defaults Upon Senior Securities	111
ITEM 4	Mine Safety Disclosures	111
ITEM 5	Other Information	111
ITEM 6.	Exhibits	112

Exhibit Index		112
Signatures		114
UDENYCA®, UDENYCA® ONBODY™ 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.

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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;

●

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;

●

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

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●

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 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.

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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)


	June 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	159,240	$	102,891
Investments in marketable securities		—		14,857
Trade receivables, net		175,251		260,522
TSA receivables, net (Note 6)		138,317		—
Inventory		62,162		62,605
Prepaid manufacturing		9,179		23,657
Other prepaids and current assets		13,782		11,099
Total current assets		557,931		475,631
Property and equipment, net		3,334		5,119
Inventory, non-current		49,879		67,495
Intangible assets, net		55,455		71,673
Other assets, non-current		8,256		9,686
Total assets	$	674,855	$	629,604

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	76,818	$	35,219
Accrued rebates, fees and reserves		177,455		169,645
TSA payables and other accrued liabilities (Note 6)		133,536		—
Accrued compensation		14,152		21,521
Accrued and other current liabilities		61,044		105,386
Total current liabilities		463,005		331,771
Term loans, non-current		36,541		246,481
Convertible notes		227,555		226,888
Lease liabilities, non-current		4,165		5,328
Other liabilities, non-current		27,697		12,561
Total liabilities		758,963		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 June 30, 2024 and December 31, 2023)		—		—
Common stock ($0.0001 par value; shares authorized: 300,000,000; shares issued and outstanding: 115,198,655 and 112,215,260 at June 30, 2024 and December 31, 2023, respectively)		12		11
Additional paid-in capital		1,405,698		1,386,312
Accumulated other comprehensive loss		(272)		(248)
Accumulated deficit		(1,489,546)		(1,579,500)
Total stockholders' deficit		(84,108)		(193,425)
Total liabilities and stockholders’ deficit	$	674,855	$	629,604

See accompanying notes.

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Coherus BioSciences, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net revenue	$	64,979	$	58,716	$	142,042	$	91,152
Costs and expenses:
Cost of goods sold		28,368		24,848		62,954		41,722
Research and development		21,955		23,267		50,425		57,421
Selling, general and administrative		35,165		45,144		91,697		94,297
Total costs and expenses		85,488		93,259		205,076		193,440
Loss from operations		(20,509)		(34,543)		(63,034)		(102,288)
Interest expense		(5,334)		(9,943)		(16,450)		(19,655)
Gain on Sale Transactions, net (Note 6)		24,085		—		177,732		—
Loss on debt extinguishment		(12,630)		—		(12,630)		—
Other income (expense), net		1,467		1,617		4,336		3,345
Income (loss) before income taxes		(12,921)		(42,869)		89,954		(118,598)
Income tax provision		—		—		—		—
Net income (loss)	$	(12,921)	$	(42,869)	$	89,954	$	(118,598)

Net income (loss) per share:
Basic	$	(0.11)	$	(0.49)	$	0.79	$	(1.42)
Diluted	$	(0.11)	$	(0.49)	$	0.73	$	(1.42)

Weighted-average number of shares used in computing net income (loss) per share:
Basic		114,819,965		87,269,614		113,784,636		83,469,247
Diluted		114,819,965		87,269,614		126,174,802		83,469,247

See accompanying notes.

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Coherus BioSciences, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net income (loss)	$	(12,921)	$	(42,869)	$	89,954	$	(118,598)
Other comprehensive income (loss):
Unrealized loss on available-for-sale securities, net of tax		—		(18)		(24)		(47)
Foreign currency translation adjustments, net of tax		—		(1)		—		(1)
Comprehensive income (loss)	$	(12,921)	$	(42,888)	$	89,930	$	(118,646)

See accompanying notes.

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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)
Net loss	—		—		—		—		(12,921)		(12,921)
Issuance of common stock upon vesting of RSUs	21,583		—		—		—		—		—
Issuance of common stock - partial payout of 2023 bonus in RSUs	1,976,750		1		4,407		—		—		4,408
Offering costs associated with ATM Offering	—		—		(52)		—		—		(52)
Taxes paid related to net share settlement of RSUs	(767,971)		—		(1,711)		—		—		(1,711)
Issuance of common stock under the employee stock purchase plan ("ESPP")	471,439		—		685		—		—		685
Stock-based compensation expense	—		—		7,327		—		—		7,327
Balances at June 30, 2024	115,198,655	$	12	$	1,405,698	$	(272)	$	(1,489,546)	$	(84,108)


						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)
Net loss	—		—		—		—		(42,869)		(42,869)
Issuance of common stock upon exercise of stock options	8,182		—		14		—		—		14
Issuance of common stock upon vesting of RSUs	142,982		—		—		—		—		—
Issuance of common stock under Public Offering, net of issuance costs	13,529,411		1		53,624		—		—		53,625
Offering costs associated with ATM offering	—		—		(74)		—		—		(74)
Taxes paid related to net share settlement of RSUs	(48,529)		—		(305)		—		—		(305)
Issuance of common stock under the ESPP	321,672		—		1,337		—		—		1,337
Stock-based compensation expense	—		—		10,034		—		—		10,034
Other comprehensive loss, net of tax	—		—		—		(19)		—		(19)
Balances at June 30, 2023	94,442,014	$	9	$	1,285,730	$	(297)	$	(1,460,206)	$	(174,764)

See accompanying notes.

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Coherus BioSciences, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended
	June 30,
	2024		2023
Operating activities
Net income (loss)	$	89,954	$	(118,598)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		2,694		1,829
Stock-based compensation expense		14,550		22,359
Impairment of out-license asset and remeasurement of CVR liability, net		6,772		—
Loss on debt extinguishment		12,630		—
Gain on Sale Transactions, net (Note 6)		(177,732)		—
Inventory write-downs, net		2,481		2,894
Other non-cash adjustments, net		(1,267)		(556)
Changes in operating assets and liabilities:
Trade receivables, net		85,217		(31,350)
Inventory		(18,557)		(15,715)
Prepaid manufacturing		7,170		302
Other prepaid, current and non-current assets		(4,249)		4,785
Accounts payable		40,077		17,786
Accrued rebates, fees and reserves		6,523		26,383
TSA related operating assets and liabilities, net (Note 6)		(4,781)		—
Accrued compensation		(2,643)		(8,472)
Accrued and other current and non-current liabilities		(45,871)		(9,294)
Net cash provided by (used in) operating activities		12,968		(107,647)

Investing activities
Proceeds from maturities of investments in marketable securities		6,200		64,750
Proceeds from sale of investments in marketable securities		8,688		13,282
Cash received from CIMERLI Sale (Note 6)		187,823		—
Cash received from YUSIMRY Sale (Note 6)		40,000		—
Milestone based license fee payment to Junshi Biosciences		(12,500)		—
Purchases of investments in marketable securities		—		(19,507)
Other investing activities, net		208		366
Net cash provided by investing activities		230,419		58,891

Financing activities
Proceeds from 2029 Term Loan, net of debt discount & issuance costs		37,120		—
Proceeds from Revenue Purchase and Sale Agreement, net of issuance costs		36,495		—
Proceeds from issuance of common stock under ATM Offering, net of issuance costs		1,455		6,761
Proceeds from issuance of common stock under Public Offering, net of issuance costs		—		53,625
Proceeds from issuance of common stock upon exercise of stock options		291		117
Proceeds from purchase under the employee stock purchase plan		685		1,337
Taxes paid related to net share settlement		(2,456)		(3,086)
Repayment of 2027 Term Loans, premiums and exit fees		(260,387)		—
Other financing activities		(241)		(625)
Net cash (used in) provided by financing activities		(187,038)		58,129

Net increase in cash, cash equivalents and restricted cash		56,349		9,373
Cash, cash equivalents and restricted cash at beginning of period		103,343		63,987
Cash, cash equivalents and restricted cash at end of period	$	159,692	$	73,360

Supplemental disclosures of non-cash activities
Non-cash employee bonuses settled in common stock	$	4,408	$	—
Financing issuance costs in accrued and other current liabilities	$	1,008	$	—

See accompanying notes.

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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 it believes 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.

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”). The Company also sells UDENYCA® (pegfilgrastim-cbqv), a biosimilar to Neulasta, a long-acting granulocyte-colony stimulating factor, in the United States.

The Company launched YUSIMRY® (adalimumab-aqvh), a biosimilar to Humira (adalimumab), in the United States in July 2023. On June 26, 2024, the Company entered into an Asset Purchase Agreement (the “YUSIMRY Purchase Agreement”) with Hong Kong King-Friend Industrial Company Ltd. (“HKF”). Pursuant to the YUSIMRY Purchase Agreement, the Company completed the sale of its YUSIMRY (adalimumab-aqvh) franchise (the “YUSIMRY Sale”) for upfront, cash consideration of $40.0 million and the assumption of $17.0 million of inventory purchase commitments by HKF. The Company launched CIMERLI® (ranibizumab-eqrn), a biosimilar to Lucentis, in the United States in October 2022. On January 19, 2024, the Company entered into a Purchase and Sale Agreement (the “CIMERLI Purchase Agreement”) with Sandoz Inc. (“Sandoz”). Pursuant to the terms and subject to the conditions set forth in the CIMERLI 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 (the “CIMERLI Sale” and, together with the YUSIMRY Sale, the “Sale Transactions”). Proceeds from the CIMERLI Sale 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 senior secured term loan facility that was entered into January 5, 2022 (as amended on April 7, 2022, February 6, 2023 and February 5, 2024, the “2027 Term Loans”). During the second quarter of 2024, the Company repaid in full all the remaining outstanding indebtedness and terminated all commitments under the 2027 Term Loans, resulting in a $12.6 million loss on debt extinguishment from the 2027 Term Loans (see Note 8. Financial Liabilities).

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 have been 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.

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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.

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

	June 30,
At end of period:	2024		2023
Cash and cash equivalents	$	159,240	$	72,920
Restricted cash		452		440
Total cash, cash equivalents and restricted cash	$	159,692	$	73,360

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.

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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 June 30, 2024 and December 31, 2023.

Revenue Purchase and Sale Agreement

The Revenue Purchase and Sale Agreement (see Note 8. Financial Liabilities) contains an embedded derivative that meets the criteria to be bifurcated and accounted for separately from the Revenue Purchase and Sale Agreement (the "Royalty Fee Derivative Liability"). The Royalty Fee Derivative Liability was recorded at fair value upon entering into the Revenue Purchase and Sale Agreement and is subsequently remeasured to fair value at each reporting period with the corresponding change in fair value recognized in other income (expense), net in the condensed consolidated statements of operations. The Revenue Purchase and Sale Agreement was initially valued and is remeasured using Monte Carlo simulation models to perform the “with-and-without” method, which involves valuing the Revenue Purchase and Sale Agreement with the embedded derivative and then valuing it without the embedded derivative. The difference between values is determined to be the estimated fair value of the Royalty Fee Derivative. Refer to Note 3. Fair Value Measurements for details regarding the fair value.

The Revenue Purchase and Sale Agreement is accounted for as a liability net of a discount comprising issuance costs and the fair value of the embedded derivative requiring bifurcation. The Company imputes interest expense associated with this liability using the effective interest rate method. The effective interest rate is calculated based on the rate that would enable the liability to be repaid in full over the anticipated life of the arrangement. Interest expense is recognized over the estimated term on the condensed consolidated statement of operations. The interest rate on this revenue participation liability may vary during the term of the agreement depending on a number of factors, including the level of actual and forecasted net sales. The Company evaluates the interest rate quarterly based on actual and forecasted net sales utilizing the prospective method. A significant increase or decrease in actual or forecasted net sales could materially impact the revenue participation liability, interest expense, and the time period for repayment.

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 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. For awards other than condition-based performance stock options, the fair values are recognized as compensation expense on a straight-line basis over the vesting period. For condition-based performance stock options, expense is recognized only when performance conditions are considered probable of being achieved and is recognized over the period from the grant date through the time the milestone is expected to be achieved. The related costs are recorded in cost of goods sold, research and development, and selling, general and administrative expense, as appropriate. The Company accounts for forfeitures as

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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. The amendments in this update expand annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. 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.

2. Revenue

The Company launched LOQTORZI in December 2023, YUSIMRY in July 2023 and CIMERLI in October 2022. Net revenue for sales of YUSIMRY and CIMERLI effectively ceased to be recognized in the Company’s condensed consolidated statements of operations on June 26, 2024 and March 1, 2024, respectively (see Note 6. Acquisition and Dispositions). All net product revenue was generated in the United States, and the Company’s net revenue was as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2024		2023		2024		2023
Products
UDENYCA	$	50,917	$	31,729	$	93,584	$	57,908
CIMERLI		—		26,728		28,194		32,902
YUSIMRY		3,766		—		7,660		—
LOQTORZI		3,789		—		5,777		—
Total net product revenue		58,472		58,457		135,215		90,810
Other revenue		6,507		259		6,827		342
Total net revenue	$	64,979	$	58,716	$	142,042	$	91,152

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
McKesson Corporation	38	%	34	%	40	%	34	%
Cencora (previously known as AmeriSource-Bergen Corporation)	41	%	50	%	41	%	47	%
Cardinal Health, Inc.	19	%	14	%	17	%