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Coherus BioSciences, Inc. (CHRS)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 net product revenue was $91.4M, up 23% q/q, driven by CIMERLI (+31% q/q to $52.4M) and UDENYCA (+10% q/q to $36.2M); LOQTORZI posted $0.6M initial stocking ahead of its January 2024 launch .
  • GAAP gross margin compressed to 8% due to a $47M inventory write-down (primarily CIMERLI); excluding the charge, gross margin would have been 59% for the quarter .
  • FY 2023 net product revenue reached $256.6M (+22% y/y), at the upper end of the preliminary guidance ($255–$260M) disclosed on Jan 10, 2024 .
  • Management tightened costs and guided 2024 combined R&D + SG&A to $250–$265M and executed balance sheet actions (ophthalmology divestiture; plan to repay $175M term loan), positioning for improved cash flow and efficiency .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line momentum: Q4 net product revenue grew 23% q/q to $91.4M, finishing FY 2023 at $256.6M (+22% y/y) .
  • UDENYCA franchise expansion and payer access: market share reached 26% on a rolling four-week basis by March 1, 2024; auto-injector adoption accelerated, and on-body was launched in February with confirmed payer coverage .
  • Strategic focus and cost discipline: 2024 OpEx guidance reduced to $250–$265M, with a 30% headcount reduction and renegotiated debt to lower interest burden ~70% on the term loan, targeting sustainability and a return to profitability .
  • “We experienced double-digit sales growth in 2023…we are announcing a 30% headcount reduction for 2024…cash flow positivity in 2024 remains our goal.” — CEO Dennis Lanfear .

What Went Wrong

  • Gross margin hit by non-core inventory charge: Q4 COGS included ~$40M write-down for slow-moving CIMERLI inventory and commitments; GAAP gross margin was 8% (would have been 59% excluding the charge) .
  • UDENYCA pricing pressure: despite demand growth, net selling price declined mid-single digits q/q as the brand prioritized profitable share; analysts probed about continued pricing dynamics .
  • Revenue visibility: management opted not to provide 2024 revenue guidance given early-stage ramps for UDENYCA on-body and LOQTORZI, deferring more specificity to subsequent quarters .

Financial Results

MetricQ2 2023Q3 2023Q4 2023
Revenue ($USD Millions)$58.7 $74.6 $91.4
GAAP Diluted EPS ($USD)$(0.49) $(0.41) $(0.71)
Gross Margin (%)N/A56% 8% (59% ex-$47M write-down)
Revenue Consensus Mean ($USD Millions)N/A – SPGI unavailableN/A – SPGI unavailableN/A – SPGI unavailable
Primary EPS Consensus Mean ($USD)N/A – SPGI unavailableN/A – SPGI unavailableN/A – SPGI unavailable

Note: Consensus estimates from S&P Global were unavailable due to data access limitations. Where estimates are missing, they are not shown.

Segment breakdown:

Segment Net Revenue ($USD Millions)Q2 2023Q3 2023Q4 2023
UDENYCA$31.7 $33.0 $36.2
CIMERLI$26.7 $40.0 $52.4
LOQTORZIN/AN/A$0.6
YUSIMRYN/A$1.4 $2.2
Other/royalties~$0.2 ~$0.2 N/A

KPIs:

KPIQ2 2023Q3 2023Q4 2023
UDENYCA Market Share (rolling)12.2% 16.5% 26% (rolling 4-week as of Mar 1, 2024)
UDENYCA Auto-injector accountsLaunch; early adoption noted ~300 accounts ordering 727 accounts ordering AI since May 2023
UDENYCA On-body accountsAwaiting approval Approved late Q4, launch imminent 138 accounts ordering OBI (Feb launch)
LOQTORZI accounts orderingN/AN/A59 accounts; 55% of NCCN centers added to formulary
CIMERLI Market Share (ranibizumab)17% 28.6% 34%
CIMERLI ordering accounts321 (72% reordering) ~550 accounts, 80% reordering N/A

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2023≥ $275M (Aug 2, 2023) $250–$260M (Nov 6, 2023) Lowered
Combined R&D + SG&AFY 2023$315–$335M (Aug 2, 2023) $300–$310M (Nov 6, 2023) Lowered
Combined R&D + SG&AFY 2024N/A$250–$265M (includes ~$40M SBC) Initiated (lower vs 2023 actual $301M cited)
Q4 RevenueQ4 2023$85–$95M (company target) Actual $91.4M In-line
HeadcountFY 2024N/A~30% reduction; target ~215 FTE by YE 2024 Initiated
Term Loan Repayment2024N/APlan to repay $175M by Apr 1, 2024 New action
Milestone to Junshi2024–2025$25M in Q1 2024 Deferred: $12.5M in Q2 2024; $12.5M in Q1 2025 (potentially reduced via monetization) Deferred

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2023)Previous Mentions (Q3 2023)Current Period (Q4 2023)Trend
UDENYCA device strategy & payer accessAuto-injector launched; OBI pending; ASP stewardship; payer coverage building Market share up; AI uptake; OBI approval imminent; guidance framed AI demand surged; OBI launched with 138 accounts and strong coverage; 26% share rolling Strengthening
CIMERLI growth & shareQ-code catalyzed growth; 17% share; quadrupled demand 28.6% share; strong adoption; >100k doses 34% share; $52.4M Q4; inventory write-down impacts gross margin Strong but inventory risk realized
LOQTORZI (toripalimab) launch & positioningApproval process progressing; NPC as unmet need Approved; first-in-class for NPC; broad indication; launch early Q1 2024 Launch underway; NCCN Category 1 in 1L NPC; accounts onboard; $0.6M stocking Ramping
Cost discipline & profitabilityCost-cutting underway; portfolio prioritization planned Reduced FY23 OpEx guidance; focus on cash flow positivity in 2024 2024 OpEx $250–$265M; 30% headcount reduction; debt interest burden reduced Accelerating
Pipeline & combinations (IL‑27, CCR8, ILT4)Surface merger to add TME assets; planned combos with PD‑1 IL‑27 monotherapy activity in NSCLC; HCC combo signal; CHS‑114 dose escalation progress Additional positive data; combination arms enrolling; external partnerships (INOVIO) Advancing
HUMIRA biosimilar market formationLow WAC strategy; gradual build expected Slower growth through 2024; IRA expected to catalyze in 2025 $2.2M Q4; strategy unchanged Steady, long-tail
Capital structure actionsN/AIndicated intent to align balance sheet Completed CIMERLI divestiture ($170M + $17.8M inventory); term loan paydown Executed

Management Commentary

  • “For the fourth quarter, combined net product revenue was $91.4 million, an increase of 23% over Q3. Full year 2023 net product revenue was $256.6 million, a 22% increase over 2022.” — Chief Commercial Officer Paul Reider .
  • “Gross margin for the fourth quarter was 8%; excluding the $47 million write-down, gross margin for the quarter would have been 59%.” — Interim CFO Bryan McMichael .
  • “We are announcing a 30% headcount reduction for 2024 and cost reductions as part of our transformation…cash flow positivity in 2024 remains our goal.” — CEO Dennis Lanfear .
  • “LOQTORZI is the only PD‑1 with a Category 1 designation with NCCN for first-line use.” — Chief Commercial Officer Paul Reider .
  • “UDENYCA is now a franchise and the only pegfilgrastim brand with 3 presentation offerings…strengthens our competitive position and allows us to compete on factors other than price.” — Chief Commercial Officer Paul Reider .

Q&A Highlights

  • UDENYCA pricing: mid-single-digit net selling price decline q/q; focus on profitable revenue and market share growth with 3 presentations in 2024 .
  • LOQTORZI usage: early uptake across lines of therapy; stronger visibility expected next quarter .
  • Revenue guidance: company chose not to provide 2024 revenue guidance given early-stage ramps; emphasized quality (margin) of revenues and sustainability .
  • Cash flow positivity: goal remains for 2024, but dependent on revenue trajectory; organization running lean with SG&A/R&D reductions and interest cost savings .
  • HCC program: encouraging response rates with IL‑27 combinations; safety profile clean; biomarker-driven development planned .
  • CHS‑114 (CCR8): dose escalation data expected in 1H; planning combination with PD‑1 thereafter .

Estimates Context

  • S&P Global consensus estimates for Q4 2023 revenue and EPS were unavailable due to data access limitations; therefore, comparison to Wall Street consensus cannot be provided at this time.
  • Company-level guidance context: Q3 management targeted Q4 net sales of $85–$95M; actual Q4 net product revenue was $91.4M, within that range .

Key Takeaways for Investors

  • Core oncology execution is driving the story: UDENYCA franchise breadth (PFS, AI, OBI) and LOQTORZI’s differentiated NPC positioning (NCCN Category 1) underpin sustainable, higher-quality revenue mix .
  • Q4 margin was transitorily impacted by a CIMERLI inventory write-down; underlying gross margin ex-charge (59%) highlights improving economics as mix shifts and royalties moderate over time .
  • 2024 is an operationally de-risking year: OpEx guidance down to $250–$265M, headcount cut, and term loan paydown reduces interest costs, supporting the cash flow-positive goal contingent on ramp execution .
  • Pipeline-story optionality: IL‑27 and CCR8 assets present partnership and combo potential across solid tumors; external deals (e.g., INOVIO) allow label expansion with limited capital intensity .
  • Near-term trading implications: watch UDENYCA OBI adoption versus Neulasta Onpro share (42%) and LOQTORZI formulary uptake at NCCN centers as catalysts for revenue visibility and sentiment .
  • Medium-term thesis: a leaner, oncology-focused CHRS with improving revenue quality and advancing TME combinations offers asymmetric upside if ramps and partnerships crystallize; monitor estimates once consensus data becomes available .

Additional Source Documents Reviewed

  • Preliminary Q4 2023 8‑K (Item 2.02) with Exhibit 99.1 indicating FY 2023 net revenues $255–$260M and Q4 revenues >$90M .
  • Q4 2023 earnings call (Mar 13, 2024) — full transcript –.
  • Prior quarters: Q3 2023 earnings call (Nov 6, 2023) and Q2 2023 earnings call (Aug 2, 2023) — full transcripts – –.
  • 8‑K (Mar 4, 2024) completing ophthalmology divestiture; press release and pro forma financial information; term loan repayment plan –.
  • 8‑K (Jan 10, 2024) terminating TIGIT program; continued collaboration on LOQTORZI .