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Presentation

Coherus BioSciences, Inc. misses on earnings expectations. Reported EPS is $-0.35 EPS, expectations were $-0.31.

Operator: Good day and thank you for standing by. Welcome to the Coherus BioSciences First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. Now, it’s my pleasure to turn the call over to the Jodi Sievers, Head of Investor Relations. Please go ahead.

Jodi Sievers: Thank you, Shannon. Good afternoon and welcome to Coherus BioSciences first quarter 2025 earnings conference call. Joining me today to discuss our results are Denny Lanfear, Chief Executive Officer of Coherus; Bryan McMichael, Chief Financial Officer; Dr. Rosh Dias, Chief Medical Officer; Dr. Theresa LaVallee, Chief Scientific and Development Officer; and Sameer Goregaoker, Executive Vice President, Commercial. Before we get started, I would like to remind you that today’s call includes forward-looking statements regarding Coherus’ current expectations about future events. These statements include, but are not limited to, the following; expectations about repurchasing Coherus’ remaining convertible notes, projections of cost savings from headcount reductions, timing for Coherus to release data from its clinical trials, and projections of future expenses.

All of these forward-looking statements involve substantial risks and uncertainties that are beyond our control and could cause actual results, performance, or achievements to differ from those implied by the forward-looking statements. These statements are not guarantees of future performance and are subject to substantial risks and uncertainties that are discussed in our press release that we issued today, as well as our quarterly report on Form 10-Q. Forward-looking statements provided on the call today are made as of this date, and we undertake no duty to update or revise any for-looking statement. And now, I hand the call over to Denny.

Denny Lanfear: Thank you, Jodi, and thank you all for joining us today on our Q1 2025 earnings call. First, let me say that with our biosimilar divestitures behind us and our promising innovative oncology business in front of us, we are fully focused on innovative oncology. We are now a commercial stage innovative oncology company with an FDA-approved next-generation PD-1 inhibitor, LOQTORZI, as well as two highly promising proprietary pipeline products moving quickly through early to mid-stage clinical trials and demonstrating positive data for large markets. Our strategy is anchored around three core pillars that drive both our near-term revenue growth as well as our long-term innovation as we strive to extend [ph] the level of cancer patients.

The first pillar is toripalimab, our next-generation PD-1 inhibitor, brand name, LOQTORZI, which is the only FDA approved and available treatment for metastatic recurrent locally-advanced nasopharyngeal carcinoma in all lines of therapy and the standard-of-care in NPC. Demonstrated to be efficacious in a number of cancers and active and low PD-L1 tumor types, toripalimab derives its differentiation from its unique binding epitope on PD-1, the FG lobe of the receptor. We have demonstrated that this results in differential and superior signaling within the T cell. Clinically, in at least three Phase 3 studies, toripalimab, in combination with chemotherapy, has shown efficacy irrespective of PD-L1 status. These properties make toripalimab ideal as a combination agent for other cancer therapeutics, which I will discuss directly.

The LOQTORZI growth is now focused on increasing the breadth and depth of market penetration, driven by strong NCCN guidelines as well as the duration of treatment in patients to maximize patient benefit. Unencumbered by the strategic diversions of the last two quarters, that is the divestiture and the supply interruption issues as well as the field team remapping efforts, it’s now clear that our commercial team will be able to deliver consistent growth going forward. Sameer Goregaoker, our Executive Vice President, Commercial, will be describing this for you in greater detail in just a moment. We project LOQTORZI in just the NPC indication alone will grow to about $150 million to $200 million annually over the next three years, providing non-dilutive funding for the development pipeline as well as being an important source of revenue going forward as we seek to expand its indications and non-NPC sales.

Once we exceed about $15 million per quarter, we will cover our commercial costs and begin to contribute to corporate expenses progressively moving to cover R&D costs with revenues. A key development focus is on expanding the indications for LOQTORZI in combination with other agents, including our own, to extend patient survival across tumor types, which creates a market opportunity for current pipeline candidates of over $15 million annually. A key part of this is an elegant, efficient and aggressive indication expansion strategy based on partnerships, whereby we supply drug to various partners who then fund all other clinical trial costs themselves. Once approved, these partner combination agent labels will specify toripalimab. We have put several of these agreements in place, which include pivotal trials such as with INOVIO in HPV-positive head and neck cancer as well as a number of earlier-stage assets.

Our objective is to be the preferred partner of choice for companies needing a safe and highly efficacious next-generation PD-1 inhibitor. More such arrangements are in the process. Additionally, our partner, Junshi, has a pivotal study underway with toripalimab in combination with BTLA in small cell lung cancer subtype, which would also provide an additional approved indication. We are also developing additional indications for toripalimab in combination with our proprietary pipeline, which includes Casdozokitug, a first-in-class anti-IL-27 antibody, and CHS-114, our CCR8 cytolytic antibody in several cancers. Particularly, we believe that the broad therapeutic promise of selective Treg depletion in a tumor microenvironment, facilitating the infiltration of CD8-positive T cells to attack the tumor may finally be realized with a sufficiently selective CCR8 cytic antibody such as CHS-114.

Ourselves and others believe the anti-CCR8 class could see broad applicability across a number of solid tumors, turning cold tumors hot and constituting an emerging cancer therapeutic super class synergistic with other modalities such as T cell engagers, ADCs, bispecifics and others. Accordingly, our development efforts with CHS-114 constitute the second pillar of our value creation strategy. We believe that CHS-114 is potentially best-in-class as it is highly selective in a product with an extensive product candidate selection process that resulted in the only CCR8 agent with no off-target binding. What is most striking about this program and what gives us such confidence is the translational read-through from binding to Treg depletion to CD8-positive T cell tumor infiltration to clinical efficacy.

We recently presented the first US clinical data with a CCR8 at AACR last week, showing visually compelling biomarker data illustrating the elimination of T-regs, infiltration and inflammation of the TME by CD8+ T cells. Remarkably, in this study, there was also a personal response showing tumor shrinkage in a very advanced fourth-line head and neck cancer patient, which will Dr. Dias will discuss directly. We believe that our very thorough and deliberate scientific translational approach in developing data sets, physician Coherus, as the thought leader expert in this rapidly evolving field with such a promise. The third pillar of our development value creation strategy focuses on pioneering novel treatment paradigms in the first-line hepatocellular carcinoma, a significant unmet need with large market potential.

These efforts are centered on casdozokitug, our first-in-class anti-IL-27. Earlier this year, we announced very compelling data in first-line liver cancer, where five out of 28 patients, some 17% had complete response in our Phase 2 efficacy study of casdozokitug combined with atezo and bev. This compares very favorably to the standard of care alone or even other studies in this indication. Building on this very positive data, we are now conducting Phase 2 trial, evaluating casdozokitug with LOQTORZI and pembrolizumab. We expect data in the first half of next year. Also in liver cancer, our partner Junshi is conducting a Phase 3 pivotal study with LOQTORZI combined with Lenvatinib. We should read out in the next three to six months. If successful, we will seek to engage the FDA regarding potential approval of purchase.

In summary to the development and value creation strategy now, let me make two key points for you. First, as you know, we felt it essential as an innovative oncology company to have an approved and proprietary PD-1 inhibitor. It is now apparent why. Such an approach first allows great latitude and cost savings, while developing your own synergistic combination agents. This offers the opportunity for others to embrace your PD-1 co-develop it with their own assets at minimal cost to Coherus, as we realize expanded label indications and result in higher revenues. Additionally, when your PD-1 is combined and approved with your own proprietary agents, you set up the opportunity to realize sales multiples by realizing revenues on both agents because as your novel agents get approved, you can mark your PD-1 right alongside.

My second key point is that clinical data readouts that are occurring in 2025 support these product candidates with safety, initial efficacy and proof of mechanism data that builds momentum as we look forward to initial key data readouts for these studies projected in the first half 2026. Today, you will hear next from Dr. Theresa LaVallee, our Chief Scientific and Development Officer, who will be followed by Dr. Rosh Dias, our Chief Medical Officer. Dr. Dias will provide you with an update on clinical trial rationale, study designs and progress to date. Then, you will hear from Sameer Goregaoker, our Executive Vice President of Commercial. Sameer joined us late last year to lead the LOQTORZI franchise and we’ll give you a detailed rundown on the key market drivers impacting revenues, uptake and the like.

Following that, I will turn the call over to Bryan McMichael, our Chief Financial Officer. Bryan will review the closeout of Q1, the divestiture of the UDENYCA business and the financial impact of these discontinued operations. He will also review the Q1 overall numbers and provide SG&A guidance looking forward through the end of 2025. Now with that, I’ll turn the call over to Dr. LaVallee to review the scientific rationale of our pipeline product candidates and the expansion strategy of Coherus. Theresa will particularly focus on the biology of the emergent CCRE class, including CHS-114, which is a preeminent candidate given its high productivity. Theresa?

Theresa LaVallee: Thank you, Denny, and good afternoon. We are pleased to update you on our continued progress in 2025 with key regulatory and clinical translational advancements of our promising pipeline in combination with our next-generation and differentiated PD-1 inhibitors toripalimab. There are 3 key components to Coherus value creation scientific and development strategy. And I will focus my remarks today on what we view as a high potential impact our CTRA targeted antibody, CHS-114. First, let me review for you what Denny alluded to earlier, are elegant and efficient toripalimab label expansion strategy. Our strategy for expanding toripalimab indications beyond MPC in the United States, is first to put in place drug supply collaboration where we evaluate toripalimab with other novel drugs across a variety of mechanisms.

We have prioritized collaborations with strong MOA rationale and clinical safety and efficacy data, evaluating tumor types, such as head and neck and lung cancer in clinical trials. These are tumors that overlap with our existing commercial call points. The second area of toripalimab indication expansion is combination therapy with our own pipeline of potent and selective antibodies, positioned in tumor types with strong biologic rationale to establish proof of concept. For each clinical indication that advances casdozokitug or CHS-114 into a pivotal study. That study also advances toripalimab into a potential new indication as a combination regimen. These efforts include casdozokitug in liver and lung cancers and CHS-114 across a wide variety of solid tumor types.

Given our recent head and neck cancer presentation at AACR, today I will focus on CHS-114 as we believe CCR8 to be an emerging target that may address unmet medical needs for a variety of tumor types and combination agents and our compound CHS-114 has the requisite pharmacology and clinical proof of mechanism needed for success. For background, key regulatory cells, or Tregs, are known for their ability to suppress effector T cell function in the tumor microenvironment and are associated with PD-1 resistance. Genetic defects with complete knockout of all Tregs in humans, we sit inflammation and auto immunity. Effective drugs targeting of Tregs in cancer patients requires antibody-based strategies that target selective expression of a protein on Tregs and tumors and not in normal tissue and secondly, selective target Tregs and not normal CD8 and CD4 T cells.

Immune cells needed for anti-tumor immunity. CCR8 was identified from single cell sequencing experiments of Tregs in tumors and is a G-protein-coupled receptor that is upregulated preferentially on tumor resident Tregs, and has limited expression in other tissues or on other cells, including CD8 and CD4 T cells. While there are over 450 drugs targeting GPCRs and approximately one-third of all FDA-approved drugs target this class of receptors. Only about 5 antibody drugs targeting GPCRs have been approved so far, highlighting the challenges in generating and develop therapeutic antibodies for these receptors. GPCRs are seven transmembrane spanning receptors with a limited amount of protein on the outside of the cell, which makes some difficult targets to generate antibodies with selectivity.

Said another way, having an antibody drug candidate that has no off-target binding or non CCR8 protein binding is a challenge. To date, CHS-114 is the only known selective CCR8 antibody. As we profiled some of the competitor antibodies, we identified off-target binding, including one that binds J-chain. This off-target binding has the potential to lead toxicity. Let me now discuss the dosing and clinical biomarker data for CHS-114 that has shown targeting CCR8 results in selective depletion of CCR8 positive Tregs, but not CD8 or CD4 T cells. Furthermore, the safety profile has not shown autoimmunity and has a manageable safety profile to date. Two critical aims for advancing the development of CHS-114 is addressing FDA’s project optimum sufficiently to define a recommended Phase 2 dose and establishing that the drug candidate does what it is intended to do, deplete Tregs in the tumor.

At the AACR meeting last month, we presented the results from our ongoing clinical trial in a head and neck cancer expansion phase, evaluating treatment with CHS-114 alone or in combination with toripalimab at two pharmacologically active doses. I will highlight the CHS-114 monotherapy dosing and biomarker aspects of the study and Dr. Dias, will further elaborate on the clinical safety and efficacy data. Importantly, paired tumor biopsies, we show that following treatment with CHS-114 and there is greater than 50% depletion of CCR8 positive T regs. These data strongly support the CHS-114 doses as being pharmacologically relevant. And this targeted therapy leads to selective depletion of Tregs in tumors. We are pleased to say that, we recently had a Type C meeting with FDA to review these data and gained alignment on the acceptability of the approach and doses for addressing project Optimus and defining a recommended Phase 2 dose.

We are on track for defining the dose early in 2026. The second aspect of the biomarker studies that I want to call out as being a surprise and exciting is that this CHS-114-mediated Treg depletion was accompanied by a marked increase in tumor-infiltrating CD8 T cells. We did not expect T-reg depletion to promote this level of CD8 T cell recruitment in the tumor. Why this is important, is that it is evident that Treg depletion with CHS-114 is a potentially promising combination for immunotherapies broadly. Internally, we are focused on combination with Toripalimab and addressing mechanisms of PD-1 resistance with the aim of bringing treatment to many of the 70% of cancer patients that are underserved by PD-1 inhibitors. Moreover, this impressive increase in tumor immune infiltrate supports combination with T-cell engagers, bispecific antibodies, ADCs, radioligands, and CARs, to name a few.

We own global rights for CHS-114, and these exciting and compelling clinical data can support discussions with potential partners to evaluate CHS-114 with agents other than Toripalimab while we work to rapidly advance our sponsored clinical studies. Dr. Dias, will update you further, on clinical data for Casdozokitug and CHS-114. Raj?

Rosh Dias: Thank you, Theresa. Let me focus on the significant progress we’ve seen with our internal pipeline of CHS-114 and Casdozokitug, which we’re developing in combination with Toripalimab. We’re very excited about the positive data with CHS-114, our highly selective CCR8 cytolytic antibody, as its part of an emerging class of immunotherapies with significant potential to impact solid tumor therapies across a number of modalities. The promise, as Theresa explained, is to turn cold tumors hot, enabling immune response and overcoming PD-1 resistance. We’re exploring CHS-114 in Head and Neck Squamous Cell Carcinoma as well as gastric cancer, both tumor types where CCR8 density and prevalence are high, and therefore, a strong supporting biological rationale exists for a therapeutic impact.

Data is now emerging that validates that rationale. At AACR two weeks ago, we presented CHS-114 data from our Head and Neck Squamous Cell program, which was to our knowledge, the first U.S.-focused trial data presented to-date within the CCR8 class. We reported data from 21 patients with advanced Head and Neck Squamous Cell Carcinoma in late lines of therapy; 12 of the 21 received CHS-114 Monotherapy, and seven received combination therapy of CHS-114 with Toripalimab. We’re very excited and encouraged to report that of the seven patients receiving combination therapy, there was one confirmed partial response. This advanced, very late-in-therapy, fourth-line patient with Oropharyngeal Squamous Cell Carcinoma had lung metastases and low Immunogenicity features and had received prior therapy with multiple agents, including a prior PD-1, TKI, and a taxane.

Impressively, this patient achieved a 40% reduction in target lesions as well as response in non-target lesions. The fact that we saw this response is impressive for several reasons. First, this was in a very late-line patient who had endured substantial and multiple prior therapies and was additionally refractory to prior PD-1 treatment. This is important to note because the head and neck squamous cell patient population anytime after failure of a first-line agent tends to have very limited additional treatment options in the second-line setting and even more limited in even late line. Additionally, the fact that we achieved a partial response in fourth-line suggests that the CHS-114 toripalimab combination may have reversed PD-1 resistance, in effect, turning a core team of heart.

Deep and sustained partial response in this resistant population sets us back very well as we move into the earlier line setting. And our focus moving forward is in the second-line setting, specifically in less refractory patients. Secondly, this clinical observation is scientifically consistent with the biomarker data that Theresa has outlined, which showed impressive T-reg depletion and immune activation, suggesting that the clinical data follows the biology of the tumor. This is consistent with a robust and deliberate biologically driven approach we follow throughout our program. Safety was also accessible and manageable with overall treatment emergent AEs being generally well balanced for monotherapy and combination, which is a very important consideration in this late line population that tends to have a worse performance status.

In the CHS-114 study, in addition to the partial response observed, we also report a stable disease in two subjects in the combination arm and four subjects in the monotherapy arm. Considering that this was in a heavily pretreated population that was refractory to prior therapies and in a target where one may not typically expect monotherapy activity. These positive results are highly encouraging. ASCO 2024 last year, we presented data from the dose escalation portion of this trial, reporting a 47% stable disease rate in a heavily pretreated population. These most recent findings are consistent with those data, reinforcing our biological and scientific rationale. We’re now actively accruing an additional 40 head and neck squamous cell patients to an expansion cohort of this study in an earlier line therapy, that is second-line patients using CHS-114 in combination with toripalimab and we anticipate reporting results on dating the first half of next year.

We’ve also opened a CHS-114 study in a second tumor type, second-line gastric cancer, where, again, the strong biological rationale and where clinical proof of concept exists. This 40-patient study will explore the same two biologically active CHS-114 dose levels in combination with toripalimab. This multinational study includes both U.S. and ex U.S. sites with an anticipation of results in 2026. As you’ve heard from Theresa, the T-reg depletion mechanism is synergistic and complementary with other modalities as well as across other tumor types. Accordingly, we’re in the process of evaluating additional tumor types and modalities to explore with CHS-114 both on our own and with potential partners. Regarding casdozokitug, our first-in-class IL-27 antagonist, our focus remains on both non-small cell lung cancer and hepatocellular carcinoma.

For non-small cell, our focus is in squamous cell carcinoma specifically, where we have seen our signal to date, and we anticipate reporting further news on this program over the coming months. For HCC, our multinational study in first-line explored the triple combination of casdozo in combination with toripalimab and bevacizumab active and is currently accruing patients. As a reminder, this study builds upon the very exciting data presented at ASCO GI in January, which reported an overall response rate of 38% with a 17% CR rate with casdozo and bev combination with the atezo. Importantly, this compares very favorably with current standard benchmarks in this setting where no other agents have reported CRAs in double-digits in the Phase 3 setting.

Our safety profile was consistent with the atezo/bev alone. We’re currently actively accruing patients in the toripalimab triplet study exploring two biologically active dose of casdozo in combination with Tori and BEV compared to Tori-BEV-alone in a total of 72 subjects. The objective is to address project optimists and provide contribution of components as we advance the development pathway to Phase 2/3. With that, I’ll hand over to Sameer. Sameer?

Sameer Goregaoker: Thank you, Rosh. Over the course of Q1, the commercial team has been focused on two priorities. First, concurrent with the UDENYCA divestiture, we remapped territories, updated customer assignments and assess our talent pool for the highly clinical cell demanded by LOQTORZI. We are happy to report that our sales force restructure work is complete and all field staff were in place in their new assignments immediately following the divestiture. While the restructure is a short-term headwind, our LOQTORZI only sales team is now laser-focused on driving rapid growth in appropriate NPC patients. Second, we drew HCP education on the new NCCN guidelines, which accurately reflect the strength of our data and placed LOQTORZI in a preferred position for recurrent and metastatic patients.

There are still a significant number of patients receiving non-preferred chemo-only and off-label IO treatment. Thus, we continue our efforts to educate physicians on the survival benefit of LOQTORZI in combination with chemotherapy. While Q1 was a transitional quarter in the middle of a significant corporate transformation, we are excited to share that patient demand grew 15%. Revenue was flat at $7.3 million due to a seasonal inventory drawdown despite strong demand growth. Demand growth came from an increase in new patient starts and an increase in duration of treatment. New patient starts came from two sources. First, is new accounts and oncologists starting using LOQTORZI for the first time in their NPC patients. We’re happy to see an increasing breadth of offers we use in both the academic and community settings.

Over 400 accounts now have experience with the brand. The second source of new patient starts was depth a repeat use in accounts with prior LOQTORZI experience. Feedback from physicians who have tried LOQTORZI have been very positive. And in Q1, we saw a growing number of accounts using LOQTORZI on a subsequent patient. Duration of treatment also continued to increase. Earlier stage patients would be expected to stay on therapy longer, and we see about two-thirds of our business coming from relapse locally advanced and first-line metastatic setting. While it’s too early to comment on the average duration of therapy, growth in duration is progressing according to our expectations. As a singularly focused oncology and commercial organization, we will further establish LOQTORZI as the standard of care for all eligible NPC patients.

Our commercial execution centers on three priorities: first, enabling the sales force to leverage real-time data to drive patient and HCP identification at the time of diagnosis; second, expanding the breadth and depth of adoption by educating oncologists on our strongly differentiated clinical profile and preferred NCCN guidelines; and finally, engagement with key customers to encourage updating NPC pathways and order sets to reflect our label and preferred MCC and recommendations. In summary, we continue to expect that LOQTORZI will achieve a dominant share in the NPC market that we estimate to be valued at $150 million to $200 million. With that, I’ll now turn the call over to Bryan McMichael, our Chief Financial Officer. Bryan?

Bryan McMichael: Thank you, Sameer, and good afternoon, everyone. Today, I will discuss the successful closing of the UDENYCA divestiture, which occurred at the beginning of Q2 and the related discontinued operations presentation reflected in Coherus’ financial reporting. I will then conclude with the first quarter 2025 results. In accordance with the relevant accounting rules, the results of the biosimilar business, which comprises UDENYCA, CIMERLI and YUSIMRY have been collapsed into a single discounted operations line in the Coherus’s team. The balance sheet includes a similar treatment. This presentation is retroactive, so comparative periods such as Q1 2024 have been recast. The remainder of the P&L comprises continuing operations, including LOQTORZI, the I-O pipeline and transition services transactions for divestitures.

The proceeds from the UDENYCA divestiture and the use of a portion of those proceeds will not be reflected in our financial reporting until we report our Q2 results. As a reminder, we received $483 million of upfront cash in April. Also in April, we repurchased $170 million principal amount of our convertible notes and privately negotiated transactions. We expect to purchase the remaining $60 million of convertible notes by mid-May, provided that they are tendered by the holders of those notes. Finally, also in April, we paid $48 million to buy the remaining royalty on UDENYCA in conjunction with the close of the divestiture. The net cash from these transactions is almost $200 million after deducting transaction fees and taxes and is in addition to the $82 million in cash Coherus had on its balance sheet at March 31, 2025.

The majority of the $60 million in accounts receivable and $148 million in accrued rebate fees and reserves reflected on the March 31, 2025 balance sheet were related to UDENYCA and were not transferred in the divestiture. Most of these balances are expected to be settled in a front-loaded fashion over the remainder of the year. Following the divestiture, we expect to achieve approximately $25 million in annualized savings from lower headcount with more than half already being realized due to the transfer of approximately 40 employees at deal closed in April. We anticipate realizing the full-annualized savings benefit by year-end. We further expect additional savings in SG&A due to lower commercial and other costs. Costs associated with reimbursed transaction services paid fully by acquirers are expected to be several million dollars through the end of this year.

Net of non-reimbursed transaction service costs, SG&A incurred solely for Coherus programs and expenses for full year 2025 is projected to be between $90 million and $100 million. R&D expense will be a function of data readouts and our portfolio prioritization process and we’ll be able to provide more detail on this later in the year. Turning to the results for the quarter compared to Q1 last year, starting with COGS because Sameer already covered revenue. COGS from continuing operations was $2.7 million, an increase from $1.4 million in Q1 last year due to increased LOQTORZI sales. As a reminder, there is a royalty of the low 20% range on net sales of LOQTORZI. We do not expect tariffs to have a significant impact on Coherus’ margins. R&D from continuing operations was $24.4 million, a decrease of just over $4 million or 14% from Q1 last year.

The change reflects savings from reduced co-development with Junshi, partially offset by increased investments in Coherus’ internal programs, CHS-114 and casdozokitug. SG&A from continuing operations was $26 million, a decrease of $14.2 million or 35% from Q1 last year. $6.8 million of the decrease was due to nonrecurring charges for the net write-down of acquired out license in Q1 last year. The remainder of the decrease was primarily due to savings from lower headcount. The net loss from discontinued operations for the quarter was $9.2 million as compared to net income of $170.9 million in Q1 last year. The primary driver for the difference was $153.6 million gain on sale of the CIMERLI franchise in March 2024. In addition, net revenues from discontinued operations were $32.1 million in Q1 2025 and $24.8 million from Q1 2024, driven by divestitures in 2024 and wholesaler allocations allowed following the Q4 2024 supply interruption that were not listed until the end of February.

With that, I’ll hand the call back over to Denny.

Denny Lanfear: Thank you, Bryan. With our strategic transformation now complete, we are well positioned to execute on our mission to bring innovative therapies that extend the survival of the cancer patients while building a sustainable oncology franchise that delivers long-term value for our shareholders. We’re happy to open the line for questions. Operator?

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Kripa Devarakonda with Truist Securities. Your line is now open.

Kripa Devarakonda: Hey, guys. Thank you so much for taking my question, and congratulations on all the progress, especially with CHS-114 presentation at AACR. I have a question on LOQTORZI. Given the drugs preferred position with the NCCN guidelines, what do you think needs to happen? I know you provided a lot of color during your prepared remarks, but what do you think really needs to happen to see a significant inflection point, as you’re running more to trials and ahead of substantial data next year, do you think the awareness at LOQTORZI is increasing amongst providers. And then maybe a big picture question, in the context of all the macro elements — headwinds that the industry is facing. A lot of changes at FDA, I would just love to hear your comments on the recent changes, and if you’re concerned about any of them? Thanks.

Denny Lanfear: Thank you, Kripa. Let me start with the last point first. I want Theresa [ph] LaValle address the issue of the FDA changes treatment.

Theresa LaValle: Sure and thanks for the question. Obviously, we spent a lot of time observing what changes are occurring and also trying to keep our fingers on the pulse. But the aspects that I think are to our advantage is as the FDA has staff that’s turning over, you’re losing some of the experience there, and so having well thought through high-quality packages with strength of development really is an advantage to people with strong development expertise. And so I think that we always do that, Michael, is to have the packages we submit very readable, describing how this is in line with the guidance, and exactly what we’re doing and why. Our experience to-date has not seen anything. We had — we were surprised to get a Type B meeting instead of just written responses only for dosing discussion.

And the other thing I’ll say is going through challenges is something that I think we’ve done repeatedly. So, getting tori approved through COVID, travel restrictions to China was not your usual rule book, but we just will find a way to get it done.

Denny Lanfear: Just to dovetail Theresa’s remarks before Sameer addresses your second question, Kripa, we were the first ones out of the gate with pegfilgrastim biosimilars, they were handing out a lot of complete response letters at the time. We were there when the FDA changed direction with respect to the applicability of Chinese data. And I think this is a business really where you just have to adapt and do good science, as Theresa said, and feel very straightforward with the FDA. And we have a very strong track record of doing so. Now, regarding your questions about tori and the inflection point for the sales and secondarily, any issues in housing clinical trial program can increase awareness, I’ll let Sameer address that. Sameer?

Sameer Goregaoker: Thank you for the question, Kripa. So, let me add a couple of points here, right? So, what we’re really excited about Q1 was we saw 15% growth in end user demand. So, these are real physician-level patient demand that we saw increasing in Q1. We also saw an increase in the breadth, we define that as a number of new accounts starting LOQTORZI, and we had about 75 new accounts starting in Q1 that have never used LOQTORZI in the past. We also had 25% of the former users have used LOQTORZI again for subsequent use. And what we’re seeing is when we ask physicians who have used of LOQTORZI in the past, they are very satisfied with the product. And the next time they have a new patients, they usually start them on the product, right?

So, those are all the great things that we saw in Q1. That being said, I do want to, kind of, reemphasize what we discussed in the last earnings call and also I alluded to you today, the supply interruption was real. Our sales force in Q4 lost a bit of momentum because the focus has to change on UDENYCA in Q4. And in Q1, we did have the restructure of the sales force, the territory where we mapped, and the reps set new customer relationships to build. So that did impact the momentum a little bit. But despite that, we did see a 15% growth in the demand, right? These are going to be transitional and temporary events. In Q2 and onwards, our sales force will be firing on all cylinders, and we expect to see an acceleration in the growth. And one last point I’ll make is, as we’ve said in the past, NPC is a rare cancer, so it will be a steady ramp-up, right?

We expect to get market leadership in terms of share in the near future this year and next year. But until a physician has an NPC patient, which happens once or twice a year, they’re not actually thinking about LOQTORZI. So, it is going to take a steady ramp-up period for us to get there.

Denny Lanfear: Thank you, Kripa.

Kripa Devarakonda: Thank you so much.

Operator: Our next question comes from the line of Brian Cheng with JPMorgan. Your line is now open.

Brian Cheng: Hey guys, thanks for taking our call this afternoon. Can you clarify what you meant by patient demand LOQTORZI? I just want to confirm if that 15% that you quoted is referring to the number of patients that are on commercial supply. And I have a quick follow-up. Thank you.

Sameer Goregaoker: Yes. So we look at revenue and demand in two different things, right? So wholesalers purchasing our products have that going into inventory. And then the end users, which is the actual clinics buying the product from the wholesaler that’s the demand. And the demand is usually a direct indicator of actual patient growth because in this release date, physicians are not stocking inventory on their shelves. So two things to remember, right? The revenue reflected by actual demand and inventory and the end-user demand is actually through patient demand.

Denny Lanfea: Thanks, Brian, your follow-up.

Q – Brian Cheng: And then one quick one just on the sales force restructure here. Can you talk a little bit more about whether there will be still be impact in the second quarter as we model out the rest of the year, how should we think about just the projection for LOQTORZI for the remainder of the year and also into 2026. Thank you.

Denny Lanfea: Yes. Thanks for that question. So we believe that the sales force restructure impact was felt primarily in Q1. We did a lot of work during the restructure phase of retraining the sales force, reestablishing relationships. So we believe that Q2 is going to be a time for us to grow the business, time for us to grow demand. So we expect that Q2 and Q3 will be time for growth for the brand.

Sameer Goregaoker: Yes. I would just add, Brian, that on the August call, we report Q2, we’ll probably have some interesting projections for you and how we’ll land for the year and how the sort of the sales team went.

Operator: Thank you. Our next question comes from the line of Mike Nedelcovych with TD Cowen. Your line is now open.

Q – Mike Nedelcovych: Hi. Thank you for the questions. I have two. One is a follow-up on LOQTORZI. You noted that it could take some time to take share in MPC in part because LOQTORZI is not stocked at all institutions. Should we take that to mean that PD-1s like KEYTRUDA and OPDIVO are still being used off label to a high degree in MPC? And then my second question was about the CCR8 landscape. Theresa, you noted that you guys have thoroughly surveyed the competitive landscape here and found that most competitor molecules are less selective. But I’m curious if on the efficacy side, are there any molecules that you think have served as stocking horses that help to prove out the mechanism and provide proof of concept for CCR8 targeting? Or have none really gotten far enough or there to — it’s too difficult to interpret the data because of the selectivity issue. Thank you.

Denny Lanfea: Thanks for that, Michael. Let’s take the last one first. Theresa?

A –Theresa LaVallee: Yes. So the two things on the selectivity. We, in our screen — there was only one antibody identified that exclusively bound CCR8. That is very unusual to only have one in a full lead identification screen. We’ve screened some competitors and some have reported out their screening and no one else has demonstrated selectivity to date. So that is where we ask for people to please provide that evidence. In fact, there was a poster at ACR, where one of the competitors showed two off-target binding. In terms of — so they all do bind CCR8. So the mechanism is still relevant. It’s just whether or not there could be issues with pharmacokinetics or toxicity and LaNova Medicine last year at ASCO presented data with their CCR8 antibody, LM-108 in combination with toripalimab no less in gastric cancer.

And to me, this data was very exciting for the class because in the overall second-line and greater gastric cancer population who have progressed from PD-1, they showed a 36% response rate. In second line only, which was 11 patients, a small number, but they showed a 63% response rate. And why scientifically, I find that incredibly exciting is that there are a very high density and prevalence of CCR8 positive T-regs in gastric cancer. So there are many mechanisms of PD-1 resistance getting a 63% response rate suggests that T-regs are the prominent mechanism for PD-1 resistance in gastric cancer. So we think that, that really bodes well for these tumor types, which is a large number of solid tumors that have a high density and prevalence of CCR8 positive T-regs.

So super excited to see in the safety cohort, one PR in the head and neck study and now are waiting for the 40 patients that Rosh described.

Denny Lanfear: Thank you, Theresa. Michael, regarding your question, how we view the sort of old habit of contributors or PD-1 use and how we’re going to address that regarding using the new NCCN guidelines. I’ll let Sameer offer you a little more color for you.

Sameer Goregaoker: So again, the Keytruda and chemo only use is real. It’s real, especially in the community setting, less for the academic setting. And this is despite the NCCN guidelines recommending a chemo combination, including LOQTORZI as the preferred regimen. And the reason this happens is frankly, it’s a matter of habit, right? That’s the reason that’s happening. But when we talk to physicians, it’s a very clear story. The story is simply, we are the only brand, only IO with an OS survival benefit that we demonstrated in a Phase 3 trial, and we’re the only NCCN approved preferred regimen for these patients. So the story is really simple. And when we talk to physicians, we are able to get the physicians on board but what happens is after we talk to physicians, there is a time lag between that conversation with the physicians and by the time a patient is available for that office.

So just to reiterate, this is going to be a steady ramp-up because of the delay from the time that we have the conversation at the time that a patient becomes available.

Mike Nedelcovych: Thank you, Sameer.

Sameer Goregaoker: Thank you, Mike.

Operator: Our next question comes from the line of Colleen Kusy with Baird. Your line is now open.

Colleen Kusy: Great. Good afternoon. Thanks for taking our questions and congrats on the progress. Can you talk a little more about the Type D meeting you had with the FDA for CHS-114? It sounds like you aligned on project optimists, but any other interesting feedback coming out of that meeting?

Denny Lanfear: Thank you, Coleen. Theresa?

Theresa LaVallee: Yes. I mean the focus of that, I mean — so our approach is to collaborate with the FDA and not just show up with data but really have a conversation about our approaches and how we do things. So the Type D meetings in particular, are very focused on single topics and that was — I mean, project optimist is something a lot of people have struggled with. And so really walking them through the data we have and the data we plan to bring to them early next year and ensuring that this would meet what they’re looking for was important and I think very exciting that they found it acceptable.

Denny Lanfear: A positive development.

Theresa LaVallee: Yes. I mean, of course, it always depends on the data, which is what they’ll always say. But they didn’t say go do five other things or change this.

Colleen Kusy: That’s helpful. And then following the restructuring of the sales force, can you speak to the level of interest in potentially adding another commercial stage asset to further leverage the existing infrastructure?

Denny Lanfear: That’s a very interesting topic. Certainly, I would offer you this. We think that it’s probably another 12 months or so before Sameer and his team really get the doctors sort of trained and focused and I think routinely writing all the scripts with LOQTORZI. But we are keen to put something else in the bag at some point in the future to enhance sales. That’s one bogey that we focus on, I think, a lot as we go through various strategic options and so on. But I think the sales force has about a year, I would say, maybe a little more just getting the MPC market moving up the escalators.

Colleen Kusy: Got it. Thanks for taking my questions.

Denny Lanfear: Thank you, Colleen.

Operator: Our next question comes from the line of Douglas Tsao with H.C. Wainwright. Your line is now open.

Douglas Tsao: Hi. Good afternoon. Thanks for taking the questions. Just one as a follow-up in terms of educating physicians, I’m just curious, is it the — sort of — does it take convincing a physician in terms of the value of a PD-1? Or is it sort of demonstrating the value of LOQTORZI, meaning do they have some skepticism because of other PD-1s not demonstrating efficacy and so you need to convince them there and the differentiation of the asset? Thank you.

Denny Lanfear: Well, let me get that one first, Doug. I’ll let Dr. Dias address that. I want to say that the clinical data is irrefutable and the positioning on the NCCN guidelines reflects that. Rosh, can you talk about how physicians view the data that we’re presenting. If you were a physician prescribing for your patient, how you would — what lens you would use?

Rosh Dias: Yeah. Thanks for the question, Doug. So a couple of points I’ll make. So first of all, up until now, you know there’s been no approved therapies and no data actually in this tumor type. So this is a real area of unmet medical need. So we’ve come along with the first real data, the first positive data. And as you know, what LOQTORZI has shown is over chemotherapy alone. We have shown a really profound survival benefit. That is the gold standard, right? So whenever a doctor hears this data, they’re very impressed to date. It is impressive data. And again, it’s a 37% risk reduction. Now that’s now accompanied by premier listing on the NCCN. So there are no real objections to the data whatsoever. Just remember, this is a rare disease, right?

So when — so it takes some time for patients to really show up to — for this. But again, when they hear the date, there’s no real objections based on the strength of the data itself, but also the NCCN positioning as well and impressively also that the experience so far, when they’ve had a patient when they’ve used it, we are generally hearing very positive experience and taking that forward.

Rosh Dias: Yes. I just want to make one more comment. Just one thing I’d like us to remember is just 3 months ago, the NCCN guidelines basically were saying, you can use either LOQTORZI of chemo, you could use chemo or you could use the off-label IOs to your depression, right? That was 3 months ago, but now it’s completely changed. There’s only been 3 months since the NCCN unequivocally said that you should be using LOQTORZI plus chemo. So our real education at person those guidelines have really taken off in the last 3 months, and we do expect that it’s going to pay off in the coming months and quarters.

Douglas Tsao: Sure. Can I get a follow-up? I think Rosh, you referenced sort of positive experience of physicians being experienced. I’m just curious, when they talk to you, are they speaking — I’m sort of curious, what are they speaking to when they say that they’re having good experiences early on. Are they seeing patients with extended survival, partial responses? I’m just curious if you could sort of characterize what doctors are seeing? Thank you very much.

Rosh Dias: Yes. Generally, they’re saying that what the data — I mean, it’s going to be variable from patient to patient, right, depending on whether it’s metastatic patients or recurrent locally advanced patient. But generally, what they’re saying is the data that we count he clinical trial, we’re able to see those experiences in their actual patients.

Operator: Thank you. I would now like to turn the call back over to Denny Lanfear for closing remarks.

Denny Lanfear: Thank you, operator, and thank you all for joining us today. Regarding our upcoming presentation schedule, next week, we’ll be attending the HC Wainwright BioConnect Conference at NASDAQ in New York. Then on May 27, we will be presenting at the TD Cowen Sixth Annual Virtual Oncology Innovation Summit. And later on in June, we’ll be at the Jefferies Global Healthcare Conference in New York. We’ll see you all there. Thank you.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.