Coherus BioSciences: More Buying Opportunities Ahead?

Examining Coherus BioSciences' (NYSE: CHRS) Crucial FDA Response, Company Future, & My Take

The Good & The Bad

Coherus BioSciences (CHRS) has been in the limelight with two significant regulatory updates that were announced on September 25th. The mixed developments included a Complete Response Letter (CRL) from the FDA regarding the Udenyca On-Body Injector (OBI) formulation and a progression in the regulatory procedure for Toripalimab, an under-trial treatment for nasopharyngeal carcinoma (NPC).

The bad news first… the FDA’s CRL for the Udenyca OBI was prompted by observations made during inspections at a third-party filler. Interestingly, the CRL didn’t question the drug product, device, clinical trial design, labeling, or other elements, avoiding any requirements for additional clinical trials or submissions of chemistry, manufacturing, and controls (CMC) data (Which is actually not “bad”). This seems to indicate that the resolution might be swift, although no regulatory decisions are expected until 2024 at the earliest. Regardless, CHRS has remained strategically inconspicuous regarding the development, regulatory, and commercial timelines for Udenyca OBI, and the CRL is not anticipated to impact the company’s modeling/forecasts, which they predict the initiation of revenue generation in 2025.

The predicaments with the FDA continue a tradition of regulatory challenges, most originating from third-party partnerships or in-licensing assets, highlighting the inherent risks in such strategies. However, this setback does not alter the thesis in any way or forecast, but a prolonged delay in FDA approval could potentially affect expected revenue model in 2025. I would also advise not to be apprehensive about the current cash burn rate or potential dilution at this juncture.

In addition to this, Amgen, owning Neulasta Onpro, the only OBI formulation in the pegfilgrastim market with a robust 42% market share,

has constructed an extensive patent fortification including the OBI device. This could pose legal challenges and potentially demand concessions and royalties from CHRS’s on sales of Udenyca OBI, considering Amgen's formidable legal standing in the pharmaceutical world.