Discounted Assets, Premium Potential: The Case for Coherus Oncology
Taking a Look at Coherus Oncology (CHRS), Special Situation Arbitrage Idea.
Over the weekend we published a special situation report on one of the stocks we cover: Coherus Oncology (CHRS). Below is a sneak peek of our findings on this name, along with a small preview of our valuation that subscribers can access for all our covered stocks.
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Coherus’s Oncology Pivot – An Undervalued Gem & M&A Candidate?
Coherus BioSciences (now Coherus Oncology) has completely transformed itself from a biosimilar-focused firm into a pure-play cancer therapeutics company — & the market still doesn’t want to budge. In April 2025, CHRS sold off its last biosimilar (the Udenyca franchise) for $558M (with $483M upfront), using the proceeds to wipe out $230M in convertible debt. Post-deal, CHRS is flush with cash (around $250M, maybe higher) & now focused on immuno-oncology.
The stock has been crushed over the years: recently trading around $0.80 (market cap around $90M), which is actually lower than the cash on its balance sheet. Translation? The market is effectively valuing Coherus’s drug portfolio & pipeline at less than $0 — implying investors think all that cash will be burned with nothing to show. That makes no sense with the runway of cash until 2027 & a growing FDA-approved franchise. This disconnect sets the stage for a special situation: at current prices, investors buying CHRS stock are essentially getting its oncology assets for free. Our take is that the pessimism is overdone, & it’s exactly the kind of deep-value dislocation that can create an arbitrage-like opportunity if the company delivers even modestly on its plans.
Why are we optimistic? Coherus’s remaining arsenal is small but potent. Its flagship drug LOQTORZI (toripalimab) is an FDA-approved PD-1 immunotherapy for a rare cancer (nasopharyngeal carcinoma). Granted, that’s a niche (2,000 U.S. patients), but LOQ is already showing 200%+ YoY growth & gaining traction even in this tiny market. More importantly, the drug’s potential goes far beyond that niche: in China, toripalimab is approved in 8+ indications (demonstrating remarkable versatility), and Coherus is partnering with other firms to expand its U.S. label into bigger cancers (through combo trials funded by the partners, not CHRS). In other words, CHRS is smartly broadening LOQ’s use at minimal cost — any new indications could unlock a much larger revenue stream down the road.
On top of that, they have two promising clinical-stage immunotherapies: a cutting-edge CCR8 antibody (CHS-114) targeting regulatory T-cells in tumors, and an IL-27 cytokine inhibitor (casdozokitug/casdozo) that’s already shown eye-opening early results (including some complete responses in tough-to-treat liver cancer when combined with other agents). These are hot areas in immuno-oncology, & Coherus is among the leaders pushing them forward. In fact, CHS-114 has delivered proof-of-concept in humans – it depletes immunosuppressive T-cells in tumors & even notched a confirmed tumor response in a PD-1–resistant patient — a clear signal that it’s working as designed. Big Pharma is acutely aware of these kinds of assets; there’s a reason we’re seeing a wave of acquisitions in biotech, even for mid-stage programs. Coherus, uniquely, isn’t a pre-revenue shot in the dark like many small biotechs — it’s already generating revenue with an approved product, has cash in hand, and possesses two differentiated pipeline drugs. That combo makes CHRS stand out as a potential takeover target. In our premium report, we explore why this isn’t just idle speculation: from industry trends (pharma’s shopping spree for innovative cancer drugs) to Coherus management’s own moves, the clues are adding up that an acquirer could swoop in while the stock is absurdly cheap.
Management’s actions are certainly hinting at something big. Over the past year they have methodically streamlined/de-risked its profile — a playbook we often see from companies positioning for a buyout. They’ve rebranded to emphasize oncology, shed all non-core businesses, & aggressively cleaned up the balance sheet (no debt, no confusing convertible notes, just cash). They even made intriguing leadership tweaks: the Chief Commercial Officer resigned after the pivot but is sticking around as an advisor through 2026 with a generous retention package — a move that suggests CHRS wants to stay lean while keeping expertise on deck (often a sign of “sale mode” readiness). Meanwhile, management is striking cost-efficient partnerships to advance the pipeline (for example, letting partners sponsor costly trials using LOQ in new combos) instead of burning cash themselves. And here’s a telling detail: CEO Denny Lanfear is nearly 70, which makes him one of the oldest biotech CEOs in the game -– & he owns a sdecent chunk of CHRS stock. After founding the company & orchestrating this big pivot, it wouldn’t be surprising if he’s looking to seal his legacy with a successful sale rather than spend another 5+ years fighting the market’s skepticism.
All these factors point in the same direction: Coherus is making itself as attractive & acquisition-ready as possible. If a larger oncology player is eyeing assets to strengthen their pipeline, CHRS offers a rare package — cash (which effectively subsidizes the deal), an FDA-approved immunotherapy that can slot into combination regimens, & two clinical assets in high-interest targets (CCR8 | IL-27) that could be future blockbusters. And at this valuation, any buyer would be getting a fire-sale price. For instance, even a $3–4 per share buyout (several times the current price) would value Coherus around $350M–$450M, yet the company comes with $250M cash in hand, so the net cost to acquire its pipeline & commercial asset could be barely $100M–200M. We’d bet that more than a few business development teams out there have Coherus on their radar right now.
One more interesting twist to this story: the massive short interest hanging over CHRS. Roughly 30% of the float (about 33 million shares) has been sold short, a carryover from the old Coherus days when bears were betting on biosimilar woes & debt fears. That short thesis is now outdated & flawed, CHRS reinvented itself, but the shorts haven’t left. In fact, by standard metrics the stock’s “days to cover” is off the charts (it could take weeks for all shorts to buy back shares at typical volumes). This pent-up buying pressure could act like rocket fuel if any positive catalyst hits. A solid clinical update, a big partnership, or especially any whiff of a buyout could send CHRS skyrocketing as shorts scramble to cover their positions.
In a takeover scenario, it’s not crazy to imagine a chain reaction where the stock overshoots the buyout price in the short-term, squeezed by the sheer urgency of 33 million shorted shares trying to close out. The bottom line here, their current valuation looks like an anomaly. We see a company with real assets & cash being treated as if it’s on life support — & a management team that’s taking all the right steps to prove the market wrong (or perhaps cash out via M&A). It’s a classic case of deep value in biotech, with multiple ways to win. If a buyout materializes, great, you catch a big pop (& possibly a squeeze). If not, & CHRS simply executes on its oncology strategy, the stock still has significant upside to close the gap toward its intrinsic value. It’s not often you find a dollar selling for pocket change, especially not in a sector where big fish are hungry to snap up bargains. CHRS might just be one of those rare situations, & that’s exactly why we dug in with this special report.
Valuation Overview: Given the extreme disconnect, we revisited our model for CHRS. As of our latest update (after Q1 2025), we estimate Coherus’s intrinsic value below our original target $7.50. After trimming some assumptions, we revised this down in light of slightly slower initial sales ramp for LOQ & a more conservative timeline (we pushed certain label expansions out by 1 year & assumed a modest capital raise in late 2026 to ensure funding). Even with those cautious tweaks, the valuation remains orders of magnitude above the current share price. The market’s gloominess has, in our view, swung the pendulum too far into fear. Their cash runway is secure (they guide over two years of funding), & they’re keeping expenses lean. If their oncology franchise delivers even baseline success, the upside is substantial. In short, our model reflects optimism balanced with realism — & still lands below our original $7.50 range which is still 6–7 times the recent trading price. That kind of gap is highly unusual for a profitable, revenue-generating biotech with an FDA-approved drug. It signals just how deeply undervalued CHRS has become, & why it wouldn’t surprise us to see a strategic acquirer take notice.
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