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What changed in Coherus Oncology, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Coherus Oncology, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+655 added−625 removedSource: 10-K (2024-03-15) vs 10-K (2023-03-06)

Top changes in Coherus Oncology, Inc.'s 2023 10-K

655 paragraphs added · 625 removed · 386 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

101 edited+111 added−67 removed143 unchanged
Biggest changeUnder the terms of the Collaboration Agreement, we paid $150.0 million upfront for exclusive rights to toripalimab in the United States and Canada, an option in these territories to Junshi Biosciences’ anti-TIGIT antibody CHS-006, an option in these territories to a next-generation engineered IL-2 cytokine, and certain negotiation rights to two undisclosed preclinical immuno-oncology drug candidates.
Biggest changeSuch consideration is subject to certain adjustments that will be finalized following the closing pursuant to the Purchase Agreement. ​ ​ License Agreement with Junshi Biosciences On February 1, 2021, we entered into the Collaboration Agreement with Junshi Biosciences for the co-development and commercialization of toripalimab, Junshi Biosciences’ anti-PD-1 antibody in the United States and Canada (the “Collaboration Agreement”). 10 Table of Contents Under the terms of the Collaboration Agreement, we paid $150.0 million upfront for exclusive rights to LOQTORZI in the United States and Canada, an option in these territories to Junshi Biosciences’ anti-TIGIT antibody CHS-006, an option in these territories to a next-generation engineered IL-2 cytokine, and certain negotiation rights to two undisclosed preclinical immuno-oncology drug candidates.
For a discussion of risks related to sales and marketing, please see “Risk Factors—Risks Related to Launch and Commercialization of our Products and our Product Candidates.” Manufacturing We have entered into agreements with several contract manufacturing organizations (“CMOs”) for the manufacture and clinical drug supply of our commercial and products candidates.
For a discussion of risks related to sales and marketing, please see “Risk Factors—Risks Related to Launch and Commercialization of our Products and our Product Candidates.” Manufacturing We have entered into agreements with several contract manufacturing organizations (“CMOs”) for the manufacture and clinical drug supply of our commercial products and product candidates.
(“Genentech”), Imfinzi® (durvalumab) from AstraZeneca plc (“AstraZeneca”), Bavencio® (avelumab) from EMD Serono Inc. and Pfizer Inc. (“Pfizer”), and Libtayo® (cemiplimab-rwlc) from Regeneron Pharmaceuticals, Inc. (“Regeneron”) and Sanofi S.A. (“Sanofi”), and Jemperli (dostarlimab-gxly) from GlaxoSmithKline plc (“GlaxoSmithKline”).
(“Genentech”), Imfinzi® (durvalumab) from AstraZeneca plc (“AstraZeneca”), Bavencio® (avelumab) from EMD Serono Inc. and Pfizer Inc. (“Pfizer”), Libtayo® (cemiplimab-rwlc) from Regeneron Pharmaceuticals, Inc. (“Regeneron”) and Sanofi S.A. (“Sanofi”), and Jemperli (dostarlimab-gxly) from GlaxoSmithKline plc (“GlaxoSmithKline”).
Bioeq will supply to us the Bioeq Licensed Products in accordance with terms and conditions specified in the agreement and a manufacturing and supply agreement to be executed by the parties in accordance therewith.
Bioeq will supply us the Bioeq Licensed Products in accordance with terms and conditions specified in the agreement and a manufacturing and supply agreement to be executed by the parties in accordance therewith.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”), among other things, imposed new reporting requirements on drug manufacturers for payments made by them to physicians (defined to include doctors, dentists, optometrists, podiatrists, chiropractors, certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, and certified nurse midwives) and teaching hospitals, as well as ownership and investment interests held by such physicians and their immediate family members.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”), among other things, imposed new reporting requirements on drug manufacturers for payments made by them to physicians (defined to include doctors, dentists, optometrists, podiatrists, chiropractors, certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, and certified nurse midwives) and teaching hospitals, as well as ownership and investment interests held by such physicians and their immediate family members.
Biologic and drug development in the United States typically involves the completion of preclinical laboratory and animal tests in accordance with good laboratory practices (“GLP”), the submission to the FDA of an IND, which must become effective before clinical testing may commence, the performance of adequate and well-controlled clinical trials to establish the safety and effectiveness of the biologic or drug for each indication for which FDA approval is sought in compliance with good clinical practice (“GCP”) requirements, the submission to the FDA of an original BLA under Section 351(a) of the PHSA (“original BLA”) or an NDA, as appropriate, satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug or biologic is produced, and FDA approval and review of the original BLA or NDA.
Biologic and drug development in the United States typically involves the completion of certain preclinical laboratory and animal tests in accordance with good laboratory practices (“GLP”), the submission to the FDA of an IND, which must become effective before clinical testing may commence, the performance of adequate and well-controlled clinical trials to establish the safety and effectiveness of the biologic or drug for each indication for which FDA approval is sought in compliance with good clinical practice (“GCP”) requirements, the submission to the FDA of an original BLA under Section 351(a) of the PHSA (“original BLA”) or an NDA, as appropriate, satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug or biologic is produced, and FDA approval and review of the original BLA or NDA.
We will share a percentage of gross profits on sales of Bioeq Licensed Products in the United States with Bioeq in the low to mid fifty percent range. ​ The Bioeq Agreement’s initial term continues in effect for ten years after the first commercial sale of a Bioeq Licensed Product in the United States, which occurred on October 3, 2022, and thereafter renews for an unlimited period of time unless otherwise terminated in accordance with its terms.
We share a percentage of gross profits on sales of Bioeq Licensed Products in the United States with Bioeq in the low- to mid-fifty percent range. ​ The Bioeq Agreement’s initial term continues in effect for ten years after the first commercial sale of a Bioeq Licensed Product in the United States, which occurred on October 3, 2022, and thereafter renews for an unlimited period of time unless otherwise terminated in accordance with its terms.
You may find electronic copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 on our website at https://www.coherus.com free of charge.
You may find electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 on our website at https://www.coherus.com free of charge.
On January 9, 2023, we announced that we entered into a binding term sheet (the “Term Sheet”) with Klinge Biopharma GmbH (“Klinge Biopharma”) for the exclusive commercialization rights to FYB203, a biosimilar candidate to Eylea® (aflibercept), in the United States.
Term Sheet with Klinge Biopharma On January 9, 2023, we announced that we entered into a term sheet (the “Term Sheet”) with Klinge Biopharma GmbH (“Klinge Biopharma”) for the exclusive commercialization rights to FYB203, a biosimilar candidate to Eylea® (aflibercept), in the United States.
Specifically, under regulations issued by the FDA, a combination product may be: ● a product composed of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity; ● two or more separate products packaged together in a single package or as a unit and composed of drug and device products, device and biological products, or biological and drug products; ● a drug, or device, or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved individually specified drug, or device, or biological product where both are required to achieve the intended use, indication, or effect and where upon approval of the proposed product the labeling of the approved product would need to be changed, e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in dose; or ● any investigational drug, or device, or biological product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect.
Specifically, under regulations issued by the FDA, a combination product may be: ● a product composed of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity; ● two or more separate products packaged together in a single package or as a unit and composed of drug and device products, device and biological products, or biological and drug products; 18 Table of Contents ● a drug, or device, or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved individually specified drug, or device, or biological product where both are required to achieve the intended use, indication, or effect and where upon approval of the proposed product the labeling of the approved product would need to be changed, e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in dose; or ● any investigational drug, or device, or biological product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect.
We offer incentive programs that provide cash bonus opportunities to encourage and reward participants for our achievement of financial and other key performance metrics and strengthen the connection between pay and performance.
We offer incentive programs that provide bonus opportunities to encourage and reward participants for our achievement of financial and other key performance metrics and strengthen the connection between pay and performance.
Pharmaceutical Coverage, Pricing and Reimbursement In the United States and other countries, sales of UDENYCA, CIMERLI, YUSIMRY and any other products for which we receive regulatory approval for commercial sale will depend in part on the availability of coverage and reimbursement from third-party payers, including government health administrative authorities, managed care providers, private health insurers and other organizations.
Pharmaceutical Coverage, Pricing and Reimbursement In the United States and other countries, sales of UDENYCA, YUSIMRY, LOQTORZI and any other products for which we receive regulatory approval for commercial sale will depend in part on the availability of coverage and reimbursement from third-party payers, including government health administrative authorities, managed care providers, private health insurers and other organizations.
In response to the COVID-19 pandemic, we implemented additional safety measures for the protection of our employees, including work-from-home measures for applicable employees and additional cleaning and protective measures. We require that all employees are fully-vaccinated and get all booster shots recommended by the United States Centers of Disease Control and Prevention.
In response to the COVID-19 pandemic, we implemented additional safety measures for the protection of our employees, including work-from-home measures for applicable employees and additional cleaning and protective measures. We require that all employees are fully vaccinated for COVID-19 and recommend they get all booster shots recommended by the United States Centers of Disease Control and Prevention.
We believe that having a truly diverse workplace helps our company to achieve the best results, including by striving for diversity in terms of gender, ethnicity, nationality, disability status, veteran status and other factors. We launched our Diversity and Inclusion Program to our employees in 2020 and intend to continue implementation of the program in 2023.
We believe that having a truly diverse workplace helps our company to achieve the best results, including by striving for diversity in terms of gender, ethnicity, nationality, disability status, veteran status and other factors. We launched our Diversity and Inclusion Program to our employees in 2020 and intend to continue implementation of the program in 2024.
We also 20 Table of Contents grant equity compensation awards that vest over time through our long-term incentive plan to employees to align such employees’ incentives with our long-term strategic objectives and the interests of our stockholders. ​ We also offer competitive benefits to our employees, including paid vacation and holidays, family leave, disability insurance, life insurance, healthcare, dental and vision coverage, dependent care flexible spending accounts, a 401(k) plan with a company match, and an Employee Stock Purchase Plan.
We also grant equity compensation awards that vest over time through our long-term incentive plan to employees to align such employees’ incentives with our long-term strategic objectives and the interests of our stockholders. ​ We also offer competitive benefits to our employees, including paid vacation and holidays, family leave, disability insurance, life insurance, healthcare, dental and vision coverage, dependent care flexible spending accounts, a 401(k) plan with a company match, and an Employee Stock Purchase Plan.
The $35.0 million payment for the option to license CHS-006 was reflected in our first quarter of 2022 financial statements. We recorded research and development expense of $145.0 million during the first quarter of 2021, related to an upfront payment for exclusive rights to toripalimab in the United States and Canada.
The $35.0 million payment for the option to license CHS-006 was reflected in our first quarter of 2022 financial statements. We recorded research and development expense of $145.0 million during the first quarter of 2021, related to an upfront payment for exclusive rights to LOQTORZI in the United States and Canada.
In addition to toripalimab, multiple other competitors are seeking to develop and approve novel anti-PD-1 or PD-L1 antibody drugs in the United States in the coming years, including but not limited to BeiGene, Ltd. (in collaboration with Novartis International AG (“Novartis”)).
In addition to LOQTORZI, multiple other competitors are seeking to develop and approve novel anti-PD-1 or PD-L1 antibody drugs in the United States in the coming years, including but not limited to BeiGene, Ltd. (in collaboration with Novartis International AG (“Novartis”)).
The higher standard of interchangeability must be demonstrated by information sufficient to show that: ● the proposed product is biosimilar to the reference product; ● the proposed product is expected to produce the same clinical result as the reference product in any given patient; and ● for a product that is administered more than once to an individual, the risk to the patient in terms of safety or diminished efficacy of alternating or switching between the biosimilar and the reference product is no greater than the risk of using the reference product without such alternation or switch.
The higher standard of interchangeability must be demonstrated by information sufficient to show that: ● the proposed product is biosimilar to the reference product; ● the proposed product is expected to produce the same clinical result as the reference product in any given patient; and 17 Table of Contents ● for a product that is administered more than once to an individual, the risk to the patient in terms of safety or diminished efficacy of alternating or switching between the biosimilar and the reference product is no greater than the risk of using the reference product without such alternation or switch.
Additionally, we are responsible for certain associated regulatory and technology transfer costs for toripalimab and other licensed compounds and will reimburse Junshi Biosciences for such costs. We accounted for the licensing transaction as an asset acquisition under the relevant accounting rules.
Additionally, we are responsible for certain associated regulatory and technology transfer costs for LOQTORZI and other licensed compounds and will reimburse Junshi Biosciences for such costs. We accounted for the licensing transaction as an asset acquisition under the relevant accounting rules.
The central focus of an IND submission is on the general investigational plan and the protocol(s) for human studies, although the IND must also include the results of preclinical testing and animal testing assessing the toxicology, pharmacokinetic, pharmacology and pharmacodynamic characteristics of the product along with other information, including information about product chemistry, manufacturing and controls and a proposed clinical trial protocol.
The central focus of an IND submission is on the general investigational plan and the protocol(s) for human studies, 14 Table of Contents although the IND must also include the results of preclinical testing and animal testing assessing the toxicology, pharmacokinetic, pharmacology and pharmacodynamic characteristics of the product along with other information, including information about product chemistry, manufacturing and controls and a proposed clinical trial protocol.
For a discussion of risks related to our sources and availability of supplies, please see “Risk Factors—Risks Related to Our Ability to Hire and Retain Highly Qualified Personnel and Risks Related to Manufacturing and Supply Chain.” Competition While we believe that our biologics platform, knowledge, experience and scientific resources provide us with competitive advantages, we face potential competition from many different sources.
For a discussion of risks related to our sources and availability of supplies, please see “Risk Factors—Risks Related to Our Ability to Hire and Retain Highly Qualified Personnel” and “Risk Factors—Risks Related to Manufacturing and Supply Chain.” Competition While we believe that our biologics platform, knowledge, experience and scientific resources provide us with competitive advantages, we face competition from many different sources.
A number of states have either implemented or are considering implementation of drug price transparency legislation. Requirements under such laws include advance notice of planned price increases, reporting price increase amounts and factors considered in taking such increases, wholesale acquisition cost information disclosure to prescribers, purchasers, and state agencies, and new product notice and reporting.
A number of states have either implemented or are considering implementation of drug price transparency legislation. Requirements under such laws include advance notice of planned price increases, reporting price increase amounts and factors considered in taking such increases, wholesale acquisition cost information disclosure to prescribers, purchasers, and 22 Table of Contents state agencies, and new product notice and reporting.
If we, Bioeq or either party’s respective affiliates initiate, participate, or assist any other person in bringing or prosecuting any challenge to the validity of any patent rights licensed under the Genentech Agreement, Genentech may terminate the licenses granted under such 9 Table of Contents licensed patent rights or terminate the Genentech Agreement in its entirety, unless we, Bioeq, or the applicable affiliates withdraw all such challenges or stop assisting in any such challenges.
If we, Bioeq or either party’s respective affiliates initiate, participate, or assist any other person in bringing or prosecuting any challenge to the validity of any patent rights licensed under the Genentech Agreement, Genentech may terminate the licenses granted under such licensed patent rights or terminate the Genentech Agreement in its entirety, unless we, Bioeq, or the applicable affiliates withdraw all such challenges or stop assisting in any such challenges.
A REMS plan may be required to include various elements, such as a medication guide or patient package insert, a communication plan to educate health care providers of the risks, limitations on who may prescribe or dispense the drug or biologic, or other measures that the FDA deems necessary to assure the safe use of the drug 13 Table of Contents or biologic.
A REMS plan may be required to include various elements, such as a medication guide or patient package insert, a communication plan to educate health care providers of the risks, limitations on who may prescribe or dispense the drug or biologic, or other measures that the FDA deems necessary to assure the safe use of the drug or biologic.
For a discussion of risks related to our proprietary technology and processes, please see “Risk Factors — Risks Related to Intellectual Property.” Government Regulation Our operations and activities are subject to extensive regulation by numerous government authorities in the United States, the E.U. and other countries, including laws and regulations governing the testing, manufacture, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of our products.
For a discussion of risks related to our proprietary technology and processes, please see “Risk Factors — Risks Related to Intellectual Property.” Government Regulation Our operations and activities are subject to extensive regulation by numerous government authorities in the United States, the European Union (the “E.U.”) and other countries, including laws and regulations governing the testing, manufacture, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of our products.
Decreases in third-party reimbursement for UDENYCA, CIMERLI or other products for which we receive regulatory approval or a decision by a third-party payer to not cover our products could reduce physician utilization of our products and have a material adverse effect on our sales, results of operations and financial condition.
Decreases in third-party reimbursement for UDENYCA, YUSIMRY, LOQTORZI or other products for which we receive regulatory approval or a decision by a third-party payer to not cover our products could reduce physician utilization of our products and have a material adverse effect on our sales, results of operations and financial condition.
These four agencies are the VA, the U.S. Department of Defense, the U.S. Coast Guard, and 19 Table of Contents the U.S. Public Health Service (including the Indian Health Service). We must also pay rebates on products purchased by military personnel and dependents through the TRICARE retail pharmacy program.
These four agencies are the VA, the U.S. Department of Defense, the U.S. Coast Guard, and the U.S. Public Health Service (including the Indian Health Service). We must also pay rebates on products purchased by military personnel and dependents through the TRICARE retail pharmacy program.
Additionally, we offer an Employee Assistance Program (“EAP”) that includes professional support for employees to balance the stress of personal and professional demands. ​ Inclusion and Diversity ​ People are a critical component of our efforts to drive growth and deliver value for stockholders.
Additionally, we offer an Employee Assistance Program (“EAP”) that includes professional support for employees to balance the stress of personal and professional demands. ​ 23 Table of Contents Inclusion and Diversity ​ People are a critical component of our efforts to drive growth and deliver value for stockholders.
Any waiver of our Code of Business Conduct and Ethics for any of our directors or executive officers must be disclosed on a Current Report on Form 8-K within four business days, or such shorter period as may be required under applicable law. ​
Any waiver of our Code of Business Conduct and Ethics for any of our directors or executive officers must be disclosed on a Current Report on Form 8-K within four business days, or such shorter period as may be required under applicable law. ​ 24 Table of Contents ​
Noncompliance with such beneficiary inducement provision of the federal Civil Monetary Penalties Law can result in civil money penalties for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from the federal healthcare programs.
Noncompliance with such beneficiary inducement provision of the federal Civil Monetary 20 Table of Contents Penalties Law can result in civil money penalties for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from the federal healthcare programs.
Under the Bioeq Agreement, Bioeq must use commercially reasonable efforts to develop and obtain regulatory approval of the Bioeq Licensed Products in the United States in accordance with a development and manufacturing plan, and we must use commercially reasonable efforts to commercialize the Bioeq Licensed Products in accordance with a commercialization plan.
Under the Bioeq Agreement, Bioeq must use commercially reasonable efforts to develop and obtain regulatory approval of the Bioeq Licensed Products in the United States in accordance with a development and manufacturing plan, and we must use commercially 9 Table of Contents reasonable efforts to commercialize the Bioeq Licensed Products in accordance with a commercialization plan.
Third-party payers are increasingly examining the medical necessity and cost effectiveness of medical products and services in addition to safety and efficacy and, accordingly, significant uncertainty exists as to the reimbursement status of newly approved therapeutics.
Third- 21 Table of Contents party payers are increasingly examining the medical necessity and cost effectiveness of medical products and services in addition to safety and efficacy and, accordingly, significant uncertainty exists as to the reimbursement status of newly approved therapeutics.
Regulatory authorities may withdraw product approvals, request product recalls or impose marketing restrictions through labeling changes or product removals if a company fails to comply with regulatory standards, if it encounters problems following initial marketing or if previously unrecognized problems are subsequently discovered.
Regulatory authorities may withdraw product approvals, 19 Table of Contents request product recalls or impose marketing restrictions through labeling changes or product removals if a company fails to comply with regulatory standards, if it encounters problems following initial marketing or if previously unrecognized problems are subsequently discovered.
The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Such filings are placed on our website as soon as reasonably 21 Table of Contents possible after they are filed with the SEC.
The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Such filings are placed on our website as soon as reasonably possible after they are filed with the SEC.
To help reduce the risk of the introduction of adventitious agents with use of biological products, the PHSA emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined.
To help reduce the risk of the introduction of adventitious agents with use of 15 Table of Contents biological products, the PHSA emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined.
We will have the right to conduct all commercial activities of toripalimab in the United States and Canada. We will be obligated to pay Junshi Biosciences a 20% royalty on net sales of toripalimab and up to an aggregate $380.0 million in one-time payments for the achievement of various regulatory and sales milestones.
We have the right to conduct all commercial activities of LOQTORZI in the United States and Canada. We are obligated to pay Junshi Biosciences up to a 20% royalty on net sales of LOQTORZI and up to an aggregate $380.0 million in one-time payments for the achievement of various regulatory and sales milestones.
Privacy and security laws, regulations and other obligations are constantly evolving, may conflict with each other to 18 Table of Contents complicate compliance efforts and can result in investigations, proceedings or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.
Privacy and security laws, regulations and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts and can result in investigations, proceedings or actions that lead to significant civil or criminal penalties or both and restrictions on data processing.
Under the Collaboration Agreement, we retain the right to collaborate in the development of toripalimab and the other licensed compounds, including CHS-006, and will pay for a portion of these co-development activities up to a maximum of $25.0 million per licensed compound per year.
Under the Collaboration Agreement, we retain the right to collaborate in the development of LOQTORZI and the other licensed compounds and will pay for a portion of these co-development activities up to a maximum of $25.0 million per licensed compound per year.
Under the United States settlement, our license period in the United States commences on July 1, 2023. 8 Table of Contents Settlement and License Agreements with Pfizer In October 2019, we entered into a license and settlement agreement with Pfizer relating to Coherus’ patents and applications for patents directed to Humira (adalimumab) formulations.
Under the United States settlement, our license period in the United States commenced on July 1, 2023. Settlement and License Agreements with Pfizer In October 2019, we entered into a license and settlement agreement with Pfizer relating to Coherus’ patents and applications for patents directed to Humira (adalimumab) formulations.
On March 3, 2023, we committed to a plan to reduce our workforce by approximately 20% to focus resources on strategic priorities including the commercialization of our diversified product portfolio and development of innovative immuno-oncology product candidates. We initiated a reduction in force impacting approximately 60 full-time and part-time employees effective March 10, 2023 for most employees.
Human Capital Management On March 3, 2023, we committed to a plan to reduce our workforce to focus resources on strategic priorities including the commercialization of our diversified product portfolio and development of innovative immuno-oncology product candidates. We initiated a reduction in force impacting approximately 50 full-time and part-time employees effective March 10, 2023 for most of these employees.
An IND is a request for authorization from the FDA to administer an investigational new drug or biologic to humans.
An IND is a request for allowance from the FDA to administer an investigational drug or biologic to humans.
FDA Regulation of Combination Products Certain products or product candidates, such as the OBI presentation of UDENYCA we are developing, may be composed of components, such as drug components and device components that would normally be regulated under different types of regulatory 15 Table of Contents authorities, and frequently by different centers at the FDA.
FDA Regulation of Combination Products Certain products or product candidates, such as the OBI presentation of UDENYCA we developed, may be composed of components, such as drug components and device components that would normally be regulated under different types of regulatory authorities, and frequently by different centers at the FDA. These products are known as combination products.
Toripalimab, if approved, will enter a competitive market in the United States where a number of anti-PD-1 or PD-L1 antibody drugs have been approved by the FDA including the following marketed products from several competitors: Keytruda® (pembrolizumab) from Merck & Company, Inc. (“Merck”), Opdivo® (nivolumab) from Bristol-Myers Squibb Company (“BMS”), Tecentriq® (atezolizumab) from Genentech, Inc.
LOQTORZI, following its recent launch, faces a competitive market in the United States where a number of anti-PD-1 or PD-L1 antibody drugs have been approved by the FDA including the following marketed products from several competitors: Keytruda® (pembrolizumab) from Merck & Company, Inc. (“Merck”), Opdivo® (nivolumab) from Bristol-Myers Squibb Company (“BMS”), Tecentriq® (atezolizumab) from Genentech, Inc.
Healthcare Reform, including the Inflation Reduction Act of 2022 (the “IRA”) The United States federal and state governments continue to propose and pass legislation designed to regulate the healthcare industry, including legislation that seeks to indirectly or directly regulate pharmaceutical drug pricing. Most significantly, on August 16, 2022, President Biden signed the IRA into law.
Healthcare Reform, including the IRA The United States federal and state governments continue to propose and pass legislation designed to regulate the healthcare industry, including legislation that seeks to indirectly or directly regulate pharmaceutical drug pricing. Most significantly, on August 16, 2022, the IRA was signed into law.
Human Capital Management As of December 31, 2022, we had 359 full-time and part-time employees. All were located in the United States and none of our employees are represented by a labor union. We have not experienced any work stoppages and believe we have good relations with our employees and contractors.
As of December 31, 2023, we had 306 full-time and part-time employees. All were located in the United States and none of our employees were represented by a labor union. We have not experienced any work stoppages and believe we have good relations with our employees and contractors.
Fee waivers or reductions are available in certain circumstances, such as where a waiver is necessary to protect the public health, where the fee would present a significant barrier to innovation, or where the applicant is a small business submitting its first human therapeutic application for review.
Fee waivers or reductions are available in certain circumstances, such as where a waiver is necessary to protect the public health, where the fee would present a significant barrier to innovation, where the product candidate has received orphan drug designations for the sought indication or where the applicant is a small business submitting its first human therapeutic application for review.
Our common stock is currently listed on The Nasdaq Global Market under the symbol “CHRS.” Our principal executive offices are located at 333 Twin Dolphin Drive, Suite 600, Redwood City, CA 94065, and our telephone number is (650) 649-3530.
We completed the initial public offering of our common stock in November 2014. Our common stock is currently listed on The Nasdaq Global Market under the symbol “CHRS.” Our principal executive offices are located at 333 Twin Dolphin Drive, Suite 600, Redwood City, CA 94065, and our telephone number is (650) 649-3530.
As of December 31, 2022, ethnically diverse employees represented approximately 41% of our employees and women comprised 51% of our employees. We donate to non-profit organizations such as Life Science Cares, an organization focused on eliminating the impact of poverty on our neighbors.
As of December 31, 2023, ethnically diverse employees represented approximately 37% of our employees and women composed 49% of our employees. We donate to non-profit organizations such as Life Science Cares, an organization focused on eliminating the impact of poverty on our neighbors.
In both standard and Priority Reviews, the review process may also be extended by FDA requests for additional information or clarification. During the product approval process, the FDA also will determine whether a risk evaluation and mitigation strategy (“REMS”) is necessary to assure the safe use of the product.
In both standard and Priority Reviews, the review process may also be extended for a three-month period by the FDA to review additional information deemed a major amendment to the application. During the product approval process, the FDA also will determine whether a risk evaluation and mitigation strategy (“REMS”) is necessary to assure the safe use of the product.
Failure to comply with applicable United States requirements may subject a company to a variety of administrative or judicial sanctions, 11 Table of Contents such as FDA refusal to approve a pending BLA or NDA, withdrawal of approvals, clinical holds, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal penalties.
Failure to comply with applicable United States requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve a pending biologics license application (“BLA”) or new drug application (“NDA”), withdrawal of approvals, clinical holds, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal penalties.
Our second product, CIMERLI ® (ranibizumab-eqrn), a biosimilar to Lucentis ® , was approved by the FDA in August 2022 as a biosimilar product interchangeable with Lucentis for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization.
Another product, CIMERLI® (ranibizumab-eqrn), was approved by the FDA in August 2022 as a biosimilar product interchangeable with Lucentis (ranibizumab injection) for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization. We launched CIMERLI commercially in the United States in October 2022.
In certain instances, the FDA may mandate the performance of such “Phase 4” clinical trials. 12 Table of Contents The FDA may order the temporary or permanent discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients.
The FDA may order the temporary or permanent discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients.
In addition, an application submitted under the Section 351(k) pathway must include information demonstrating that: ● the proposed biosimilar product and reference product utilize the same mechanism of action for the condition(s) of use prescribed, recommended or suggested in the proposed labeling, but only to the extent the mechanism(s) of action are known for the reference product; ● the condition or conditions of use prescribed, recommended or suggested in the labeling for the proposed biosimilar product have been previously approved for the reference product; ● the route of administration, the dosage form and the strength of the proposed biosimilar product are the same as those for the reference product; and ● the facility in which the biological product is manufactured, processed, packed or held meets standards designed to assure that the biological product continues to be safe, pure and potent. 14 Table of Contents Biosimilarity is defined to mean that the proposed biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity and potency of the product.
In addition, an application submitted under the Section 351(k) pathway must include information demonstrating that: ● the proposed biosimilar product and reference product utilize the same mechanism of action for the condition(s) of use prescribed, recommended or suggested in the proposed labeling, but only to the extent the mechanism(s) of action are known for the reference product; ● the condition or conditions of use prescribed, recommended or suggested in the labeling for the proposed biosimilar product have been previously approved for the reference product; ● the route of administration, the dosage form and the strength of the proposed biosimilar product are the same as those for the reference product; and ● the facility in which the biological product is manufactured, processed, packed or held meets standards designed to assure that the biological product continues to be safe, pure and potent.
In most countries, including the United States, the patent term is generally 20 years from the earliest date of filing a non-provisional patent application in the applicable country.
The term of individual patents depends upon the legal term of the patents in countries in which they are obtained. In most countries, including the United States, the patent term is generally 20 years from the earliest date of filing a non-provisional patent application in the applicable country.
Item 1. Business Overview We are a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative cancer treatments and the commercialization of our portfolio of approved biosimilars. Our strategy is to build a leading immuno-oncology franchise funded with cash generated through net sales of our diversified portfolio of U.S. Food and Drug Administration (“FDA”) -approved therapeutics .
Item 1. Business Overview We are a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative cancer treatments and the commercialization of our portfolio of United States Food and Drug Administration (“FDA”)-approved oncology products, including LOQTORZI® (toripalimab-tpzi). Our strategy is to build a leading immuno-oncology business funded with cash generated from our diversified portfolio of FDA-approved therapeutics.
On August 2, 2022, the FDA approved CIMERLI as a biosimilar product interchangeable with Lucentis for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization. The FDA also granted CIMERLI 12 months of first interchangeable exclusivity .
Ophthalmology Franchise – Sold to Sandoz pursuant to the Sale Transaction CIMERLI On August 2, 2022, the FDA approved CIMERLI as a biosimilar product interchangeable with Lucentis for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization.
The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval.
Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval.
The FDA also may require post-market testing, including Phase 4 testing, a REMS, and surveillance to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product. In addition, manufacture, packaging, labeling, storage and distribution procedures must continue to conform to cGMPs after approval.
The FDA also may require post-market testing, including Phase 4 testing, implementation of a REMS, and/or surveillance to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product.
A supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing supplements as it does in reviewing original application.
A supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing supplements as it does in reviewing original application. There are also continuing annual program user fee requirements for marketed products.
YUSIMRY provides certain therapeutic benefits for treatment of patients with certain inflammatory diseases characterized by increased production of TNF in the body, including rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn’s disease, psoriasis and ulcerative colitis.
Immunology ● YUSIMRY, a biosimilar of Humira (adalimumab), is a monoclonal antibody that can bind to tumor necrosis factor (“TNF”). YUSIMRY provides certain therapeutic benefits for treatment of patients with certain inflammatory diseases characterized by increased production of TNF in the body, including rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn’s disease, psoriasis and ulcerative colitis.
Ophthalmology ● CIMERLI is a Lucentis biosimilar . In November 2019, we entered into a license agreement (the “Bioeq Agreement") with Bioeq AG (“Bioeq”) for the commercialization of CIMERLI in certain dosage forms in both a vial and PFS presentation.
Ophthalmology – Sold to Sandoz pursuant to the Sale Transaction ● CIMERLI is a Lucentis biosimilar. On November 4, 2019, we entered into a license agreement (the “Bioeq Agreement”) with Bioeq IP AG (“Bioeq”) for the commercialization of CIMERLI in certain dosage forms in both a vial and pre-filled syringe (“PFS”) presentation.
Given the significant size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating healthcare providers’ and manufacturers’ compliance with applicable fraud and abuse laws.
The government has obtained multi-million and multi-billion dollar settlements under the False Claims Act in addition to individual criminal convictions under applicable criminal statutes. Given the significant size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating healthcare providers’ and manufacturers’ compliance with applicable fraud and abuse laws.
(“Samsung Bioepis”) (Hadlima TM (adalimumab-bwwd)), Pfizer (Abrilada TM (adalimumab-afzb)), Boehringer Ingelheim GmbH (“Boehringer Ingelheim”) (Cyltezo TM 7 Table of Contents (adalimumab-adbm)) as well as Viatris / Biocon (“Biocon”) (Hulio ® (adalimumab-fkjp)), Alvotech Holdings S.A. and Fresenius, each a company that has disclosed development plans for a Humira biosimilar candidate.
YUSIMRY faces competition in the United States from AbbVie (the holder of rights to Humira), Amgen (Amjevita TM (adalimumab-atto)), Sandoz (Hyrimoz TM (adalimumab-adaz)), Samsung Bioepis (Hadlima TM (adalimumab-bwwd)), Pfizer (Abrilada TM (adalimumab-afzb)), Boehringer Ingelheim GmbH (“Boehringer Ingelheim”) (Cyltezo TM (adalimumab-adbm)) as well as Viatris / Biocon (“Biocon”) (Hulio ® (adalimumab-fkjp)), Alvotech Holdings S.A. and Fresenius, each a company that has disclosed development plans for a Humira biosimilar 8 Table of Contents candidate.
Through our online learning platform, we deliver a variety of required learning modules, including those modules tied to our Code of Business Conduct, unlawful harassment and anti-corruption policies, which are completed annually by all team members. We also have Performance Management Training and Interview Training programs for our managers.
We react to emergencies on an ongoing basis to protect our employees. ​ Training, Development and Engagement ​ Through our online learning platform, we deliver a variety of required learning modules, including those modules tied to our Code of Business Conduct, unlawful harassment and anti-corruption policies, which are completed periodically by all team members.
The improved safety profile observed for approved PD-L1 therapies versus chemotherapy, enables these therapies to be used as a backbone therapy in a broad array of combination regimens. UDENYCA Biosimilar We initiated United States sales of UDENYCA in January 2019, and in 2022 we recorded UDENYCA net product sales of $203.8 million.
The improved safety profile observed for approved PD-L1 therapies versus chemotherapy enables these therapies to be used as a backbone therapy in a broad array of combination regimens.
Our guiding principles are anchored on the goals of being able to recruit, incentivize, retain and integrate talented employees who can develop, implement, and drive long-term value creation strategies.
Our guiding principles are anchored on the goals of being able to recruit, incentivize, retain and integrate talented employees who can develop, implement, and drive long-term value creation strategies. Compensation and Benefits ​ We believe our base salaries are fair and competitive with the external labor markets in which our employees work and are reviewed on a regular basis.
The IRA permits the Secretary of the Department of Health and Human Services (“HHS”) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
The IRA permits the Secretary of the Department of Health and Human Services (“HHS”) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations.
Ophthalmology Franchise Market Opportunity CIMERLI United States net revenues of Lucentis were reported to be approximately $1.1 billion in 2022. On August 2, 2022, the FDA approved CIMERLI as a biosimilar product interchangeable with Lucentis for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization.
Under the Bioeq Agreement, Bioeq granted to us an exclusive royalty-bearing license to commercialize CIMERLI in the field of ophthalmology (and any other approved labelled indication) in the United States. ​ On August 2, 2022, the FDA approved CIMERLI as a biosimilar product interchangeable with Lucentis for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization.
Immuno-oncology agents, and the PD-1/PD-L1 class in particular, have shifted the treatment paradigm across a broad range of tumors, and across the continuum of cancer settings (metastatic to early stage).
By the end of 2032, we expect them to be prescribed mostly in the large and commercially lucrative locoregionally advanced and recurrent or metastatic first-line setting. Immuno-oncology agents, and the PD-1/PD-L1 class in particular, have shifted the treatment paradigm across a broad range of tumors, and across the continuum of cancer settings (metastatic to early stage).
Our commercial portfolio includes three FDA-approved biosimilar products . Our first product, UDENYCA® (pegfilgrastim-cbqv), a biosimilar to Neulasta®, a long-acting granulocyte-colony stimulating factor (“G-CSF”), was launched commercially in the United States in January 2019.
As of March 15, 2024, our commercial portfolio includes two FDA-approved biosimilar products. Our first product, UDENYCA®, a biosimilar to Neulasta, a long-acting G-CSF, was launched commercially in the United States in January 2019.
Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality control to maintain compliance with cGMPs.
Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects manufacturing facilities to assess compliance with cGMPs. Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality control to maintain compliance with cGMPs.
The original BLA for toripalimab is for the use of toripalimab in combination with gemcitabine and cisplatin for first-line treatment of adults with metastatic or recurrent locally advanced nasopharyngeal carcinoma (“NPC”), and for use as a monotherapy in the second- or later-line treatment of patients with recurrent unresectable or metastatic NPC that have progressed on or after a platinum-containing chemotherapy.
On October 27, 2023, we announced that LOQTORZI was approved by the FDA 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.
A CRL may require additional clinical data and/or an additional clinical trial or trials, and/or other significant, expensive and time-consuming requirements related to clinical trials, preclinical trials or manufacturing. Even if such additional information is submitted, the FDA may ultimately decide that the original BLA or NDA does not satisfy the criteria for approval.
A CRL indicates that the review cycle of the application is complete, and the application is not ready for approval. A CRL may require additional clinical data and/or an additional clinical trial or trials, and/or other significant, expensive and time-consuming requirements related to clinical trials, preclinical trials or manufacturing.
There are also continuing annual program user fee requirements for marketed products. 16 Table of Contents Adverse Event Reporting and GMP Compliance Adverse event reporting and submission of periodic reports are required following FDA approval of a marketing application.
Adverse Event Reporting and GMP Compliance Adverse event reporting and submission of periodic reports are required following FDA approval of a marketing application.
Either we or Selexis may terminate the agreement for any material breach by the other party that is not cured within a specified time period or in the event of the other party’s insolvency.
Either party may terminate the Novartis Agreement in full if an undisputed material breach is not cured within a certain period of time or upon notice of insolvency of the other party.
The FDA also granted CIMERLI 12 months of first interchangeable exclusivity. We launched CIMERLI commercially in the United States on October 3, 2022.
The FDA also granted CIMERLI 12 months of first interchangeable exclusivity. On October 3, 2022, we launched CIMERLI commercially in the United States in both 0.3 mg and 0.5 mg dosage forms. ​ On January 19, 2024, we entered into the Purchase Agreement by and between us and Sandoz.
Additionally, before approving an original BLA or NDA, the FDA will typically inspect one or more clinical sites to assure compliance with cGCP. After the FDA evaluates an original BLA or NDA and conducts any inspections in the U.S. or internationally that it deems necessary, the FDA may issue an approval letter or a CRL.
After the FDA evaluates an original BLA or NDA and conducts any inspections in the U.S. or internationally that it deems necessary, the FDA may issue an approval letter or a CRL. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.
Additionally, our commercial success may depend on our ability to obtain and maintain proprietary protection for our technologies where applicable and to prevent others from infringing our proprietary rights. We seek to protect our proprietary technologies by, among other methods, filing United States and international patent applications on these technologies, inventions and improvements that are important to our business.
Additionally, our commercial success may depend on our ability to obtain and maintain proprietary protection for our technologies where applicable and to prevent others from infringing our proprietary rights.
Even if a product receives regulatory approval, the approval may be significantly limited to specific indications and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling.
Even if such additional information is submitted, the FDA may ultimately decide that the original BLA or NDA does not satisfy the criteria for approval. 16 Table of Contents Even if a product receives regulatory approval, the approval may be significantly limited to specific indications and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product.
Commercial availability of UDENYCA AI is planned for the second quarter of 2023. ● Toripalimab is being developed for its ability to block PD-1 interactions with its ligands, PD-L1 and PD-L2, by binding to the FG loop on the PD-1, and for enhanced PD-1 receptor internalization (endocytosis function).
UDENYCA ONBODY became commercially available in the first quarter of 2024. ● LOQTORZI was developed for its ability to block PD-1 interactions with its ligands, PD-L1 and PD-L2, by binding to the FG loop on the PD-1 receptor.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain our current levels of such coverage. ​ Our information technology systems, or those used by our third-party CROs or other contractors or consultants, may fail or suffer security breaches and geopolitical tensions or conflicts, such as the ongoing war in Ukraine, may create a heightened risk of cyberattacks. ​ Despite the implementation of security measures, our internal computer, server, and other information technology systems as well as those of our third-party collaborators, consultants, contractors, suppliers, and service providers, may be vulnerable to damage from physical or electronic break-ins, computer viruses, “phishing” attacks, malware, ransomware, denial of service and other cyber-attacks or disruptive incidents that could result in unauthorized access to, use or disclosure of, corruption of, or loss of sensitive, and/ or proprietary data, including health-related information or other personal information, and could subject us to significant liabilities and regulatory and enforcement actions, and reputational damage.
Biggest changeIt is critical that we do so in a secure manner to maintain the confidentiality and integrity of such Confidential Information. ​ Despite the implementation of security measures, our information technology systems as well as those of our third-party collaborators, consultants, contractors, suppliers, and service providers, may be vulnerable to damage from physical or electronic break-ins, computer viruses, misconfigurations, “bugs” or other vulnerabilities, “phishing” attacks, malware, ransomware, denial of service and other cyberattacks or disruptive incidents that could result in unauthorized access to, use or disclosure of, corruption of, or loss of Confidential Information and could subject us to significant liabilities and regulatory and enforcement actions, and reputational damage.
We entered into a distribution agreement with our licensee Orox for the commercialization of biosimilar versions of etanercept (Enbrel) (for which we discontinued development), rituximab (Rituxan), adalimumab (Humira) and pegfilgrastim (Neulasta) in certain Caribbean and Latin American countries.
We entered into a distribution agreement with our licensee Orox for the commercialization of biosimilar versions of etanercept (Enbrel) (for which we discontinued development), rituximab (Rituxan) (for which we discontinued development), adalimumab (Humira) and pegfilgrastim (Neulasta) in certain Caribbean and Latin American countries.
We expect that healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.
We expect that healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.
Our expenses will increase substantially if and as we: ● further develop our sales, marketing and distribution infrastructure for our current products and develop such infrastructure for new products once they are launched; ● establish a sales, marketing and distribution infrastructure to commercialize any of our product candidates for which we may obtain marketing approval; ● make upfront, milestone, royalty or other payments under any license agreements; ● continue our nonclinical and clinical development of our product candidates; ● initiate additional nonclinical, clinical or other studies for our product candidates; ● expand the scope of our current clinical studies for our product candidates; ● advance our programs into more expensive clinical studies; ● change or add contract manufacturers, clinical research service providers, testing laboratories, device suppliers, legal service providers or other vendors or suppliers; ● seek regulatory and marketing approvals for our product candidates that successfully complete clinical studies; ● seek to identify, assess, acquire and/or develop other product candidates or products that may be complementary to our products; ● seek to create, maintain, protect and expand our intellectual property portfolio; ● engage legal counsel and technical experts to help us evaluate and avoid infringing any valid and enforceable intellectual property rights of third parties; 24 Table of Contents ● engage in litigation, including patent litigation, and Inter Partes Review (“IPR”) proceedings with originator companies or others that may hold patents; ● seek to attract and retain skilled personnel; ● create additional infrastructure to support our operations as a public company and our product development and planned future commercialization efforts; and ● experience any delays or encounter issues with any of the above, including but not limited to failed studies, conflicting results, safety issues, manufacturing delays, litigation or regulatory challenges that may require longer follow-up of existing studies, additional major studies or additional supportive studies or analyses in order to pursue marketing approval. ​ Further, the net loss or net income we achieve may fluctuate significantly from quarter-to-quarter and year-to-year such that a period-to-period comparison of our results of operations may not be a good indication of our future performance quarter-to-quarter and year-to-year due to factors including the timing of clinical trials, any litigation that we may initiate or that may be initiated against us as well as any settlements or judgments from such litigation, the execution of collaboration, licensing or other agreements and the timing of any payments we make or receive thereunder.
Our expenses will increase substantially if and as we: ● further develop our sales, marketing and distribution infrastructure for our current products and develop such infrastructure for new products once they are launched; ● establish a sales, marketing and distribution infrastructure to commercialize any of our product candidates for which we may obtain marketing approval; ● make upfront, milestone, royalty or other payments under any license agreements; ● continue our nonclinical and clinical development of our product candidates; ● initiate additional nonclinical, clinical or other studies for our product candidates; ● expand the scope of our current clinical studies for our product candidates; ● advance our programs into more expensive clinical studies; ● change or add contract manufacturers, clinical research service providers, testing laboratories, device suppliers, legal service providers or other vendors or suppliers; ● seek regulatory approvals for our product candidates that successfully complete clinical studies; ● seek to identify, assess, acquire and/or develop other product candidates or products that may be complementary to our products; ● seek to create, maintain, protect and expand our intellectual property portfolio; ● engage legal counsel and technical experts to help us evaluate and avoid infringing any valid and enforceable intellectual property rights of third parties; ● engage in litigation, including patent litigation, and Inter Partes Review (“IPR”) proceedings with originator companies or others that may hold patents; ● seek to attract and retain skilled personnel; ● create additional infrastructure to support our operations as a public company and our product development and planned future commercialization efforts; and ● experience any delays or encounter issues with any of the above, including but not limited to failed studies, conflicting results, safety issues, manufacturing delays, litigation or regulatory challenges that may require longer follow-up of existing studies, additional major studies or additional supportive studies or analyses in order to pursue marketing approval. ​ Further, the net loss or net income we achieve may fluctuate significantly from quarter-to-quarter and year-to-year such that a period-to-period comparison of our results of operations may not be a good indication of our future performance quarter-to-quarter and year-to-year due to factors including the timing of clinical trials, any litigation that we may initiate or that may be initiated against us as well as any settlements or judgments from such litigation, the execution of collaboration, licensing or other agreements and the timing of any payments we make or receive thereunder.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; ● federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; ● the federal physician “sunshine” requirements under the ACA, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value made by such manufacturers to physicians (defined to include doctors, dentists, optometrists, podiatrists, chiropractors, and certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse midwives)), and teaching hospitals and ownership and investment interests held by physicians and their immediate family members; and ● state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; ● federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; ● the federal physician “sunshine” requirements under the ACA, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value made by such manufacturers to physicians (defined to include doctors, dentists, optometrists, podiatrists, chiropractors, and certain non-physician practitioners (physician assistants, nurse practitioners, 55 Table of Contents clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse midwives)), and teaching hospitals and ownership and investment interests held by physicians and their immediate family members; and ● state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information.
Accordingly, we may become subject to regulatory supervisions, clinical holds, product recalls or other regulatory actions for matters outside of our control that affect the originator product, or other biosimilar, as applicable, if and until we are able to demonstrate to the satisfaction of our regulators that our biosimilar product candidate is not subject to the same issues leading to the regulatory action as the originator product or other biosimilar, as applicable.
Accordingly, we may become subject to regulatory supervisions, clinical holds, product recalls or other regulatory actions for matters outside of our control that affect the originator product, or other biosimilar, as applicable, if and until we are able to demonstrate to the satisfaction of our regulators that our biosimilar product is not subject to the same issues leading to the regulatory action as the originator product or other biosimilar, as applicable.
Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. ​ General Risk Factors ​ The international aspects of our business expose us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States. ​ 60 Table of Contents We currently have limited international operations of our own and have and may have in the future a number of international collaborations, including our significant collaboration with Junshi Biosciences in China.
Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. ​ 61 Table of Contents General Risk Factors ​ The international aspects of our business expose us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States. ​ We currently have limited international operations of our own and have and may have in the future a number of international collaborations, including our significant collaboration with Junshi Biosciences in China.
In the event that use of an originator product, or other biosimilar for such originator product, results in unanticipated side effects or other adverse events, it is likely that our biosimilar product candidate will be viewed comparably and may become subject to the same scrutiny and regulatory sanctions as the originator product or other biosimilar, as applicable.
In the event that use of an originator product, or other biosimilar for such originator product, results in unanticipated side effects or other adverse events, it is likely that our biosimilar product will be viewed comparably and may become subject to the same scrutiny and regulatory sanctions as the originator product or other biosimilar, as applicable.
If the biosimilar product may be administered more than once to a patient, the applicant must demonstrate that the risk in terms of safety or diminished efficacy of alternating or switching between the biosimilar product candidate and the reference product is not greater than the risk of using the reference product without such alternation or switch.
If the biosimilar product may be administered more than once to a patient, the applicant must demonstrate that the risk in terms of safety or diminished efficacy of alternating or switching between the biosimilar product and the reference product is not greater than the risk of using the reference product without such alternation or switch.
We are dependent on Junshi Biosciences, Bioeq, and Orox for the commercialization of our product candidates in certain markets and we intend to seek additional commercialization partners for major markets, and the failure to commercialize in those markets could have a material adverse effect on our business and operating results.
We are dependent on Junshi Biosciences and Orox for the commercialization of our product candidates in certain markets and we intend to seek additional commercialization partners for major markets, and the failure to commercialize in those markets could have a material adverse effect on our business and operating results.
In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition. ​ 68 Table of Contents In addition, the regulatory framework for the receipt, collection, processing, use, safeguarding, sharing and transfer of personal and confidential data is rapidly evolving and is likely to remain uncertain for the foreseeable future as new global privacy rules are being enacted and existing ones are being updated and strengthened.
In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition. 69 Table of Contents ​ In addition, the regulatory framework for the receipt, collection, processing, use, safeguarding, sharing and transfer of personal and confidential data is rapidly evolving and is likely to remain uncertain for the foreseeable future as new global privacy rules are being enacted and existing ones are being updated and strengthened.
Should the originator company succeed in obtaining an approval of an improved biologic product, it may capture a significant share of the collective reference product market in the applicable jurisdiction and significantly reduce the market for the reference product and thereby the potential size of the market for our biosimilar products and product candidates.
Should the originator company succeed in obtaining an approval of an improved biologic product, it may capture a significant share of the collective reference product market in the applicable jurisdiction and significantly reduce the market for the reference product and thereby the potential size of the market for our biosimilar products.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business. ​ Our research and development activities and our third-party manufacturers’ and suppliers’ activities involve the controlled storage, use and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds. 69 Table of Contents We and our manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business. ​ Our research and development activities and our third-party manufacturers’ and suppliers’ activities involve the controlled storage, use and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds. 70 Table of Contents We and our manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials.
The incurrence of indebtedness could result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as those contained in the loan agreement we entered into in January 2022 (as amended to date, the “Loan Agreement”) with BioPharma Credit PLC, (as the “Collateral Agent”), BPCR 25 Table of Contents Limited Partnership, (as a “Lender”) and Biopharma Credit Investments V (Master) LP, acting by its general partner, BioPharma Credit Investments V GP LLC (as a “Lender”) that provides for a senior secured term loan facility of up to $300.0 million, including limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.
The incurrence of indebtedness could result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as those contained in the loan agreement we entered into in January 2022 (as amended to date, the “Loan Agreement”) with BioPharma Credit PLC, (as the “Collateral Agent”), BPCR Limited Partnership, (as a “Lender”) and Biopharma Credit Investments V (Master) LP, acting by its general partner, BioPharma Credit Investments V GP LLC (as a “Lender”) that provides for a senior secured term loan facility of up to $300.0 million, including limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.
Factors that may affect the success of our licenses and collaborations include, but are not limited to, the following: ● our existing and potential collaboration partners may fail to provide sufficient amounts of commercial products, including because of import restrictions, or they may be ineffective in doing so; ● our existing and potential collaboration partners may fail regulatory inspections or RRAs which may preclude or delay the delivery of commercial products; ● our existing and potential collaboration partners may fail to exercise commercially reasonable efforts to market and sell our products in their respective licensed jurisdictions or they may be ineffective in doing so; ● our existing and potential licensees and collaboration partners may incur financial, legal or other difficulties that force them to limit or reduce their participation in our joint projects; ● our existing and potential licensees and collaboration partners may terminate their licenses or collaborations with us, which could make it difficult for us to attract new partners or adversely affect perception of us in the business and financial communities; and ● our existing and potential licensees and collaboration partners may choose to pursue alternative, higher priority programs, which could affect their commitment to us.
Factors that may affect the success of our licenses and collaborations include, but are not limited to, the following: ● our existing and potential collaboration partners may fail to provide sufficient amounts of commercial products, including because of import restrictions, or they may be ineffective in doing so; ● our existing and potential collaboration partners may fail regulatory inspections or RRAs which may preclude or delay the delivery of commercial products; ● our existing and potential collaboration partners may fail to exercise commercially reasonable efforts to market and sell our products in their respective licensed jurisdictions or they may be ineffective in doing so; ● our existing and potential licensees and collaboration partners may incur financial, legal or other difficulties that force them to limit or reduce their participation in our joint projects; 38 Table of Contents ● our existing and potential licensees and collaboration partners may terminate their licenses or collaborations with us, which could make it difficult for us to attract new partners or adversely affect perception of us in the business and financial communities; and ● our existing and potential licensees and collaboration partners may choose to pursue alternative, higher priority programs, which could affect their commitment to us.
The labelling of “interchangeability” is important because, in the United States for example, the first biosimilar determined to be interchangeable with a particular reference, or originator, product for any condition of use is eligible for a period of market exclusivity that delays an FDA determination that a second or subsequent biosimilar product is interchangeable with that originator product for any condition of use until the earlier of: (1) one year after the first commercial marketing of the first interchangeable product; (2) 18 months after resolution of a patent infringement suit instituted under 42 U.S.C. § 262(l)(6) against the applicant that submitted the application for the first interchangeable product, based on a final court decision regarding all of the patents in the litigation or dismissal of the litigation with or without prejudice; (3) 42 months after approval of the first interchangeable product, if a patent infringement suit instituted under 42 U.S.C. § 262(l)(6) against the applicant that submitted the application for the first interchangeable product is still ongoing; or (4) 18 months after approval of the first interchangeable product if the applicant that submitted the application for the first interchangeable product has not been sued under 42 U.S.C. § 262(l)(6).
The labelling of “interchangeability” is important because, in the United States for example, the first biosimilar determined to be interchangeable with a particular reference, or originator, product for any condition of use is eligible for a period of market exclusivity that 52 Table of Contents delays an FDA determination that a second or subsequent biosimilar product is interchangeable with that originator product for any condition of use until the earlier of: (1) one year after the first commercial marketing of the first interchangeable product; (2) 18 months after resolution of a patent infringement suit instituted under 42 U.S.C. § 262(l)(6) against the applicant that submitted the application for the first interchangeable product, based on a final court decision regarding all of the patents in the litigation or dismissal of the litigation with or without prejudice; (3) 42 months after approval of the first interchangeable product, if a patent infringement suit instituted under 42 U.S.C. § 262(l)(6) against the applicant that submitted the application for the first interchangeable product is still ongoing; or (4) 18 months after approval of the first interchangeable product if the applicant that submitted the application for the first interchangeable product has not been sued under 42 U.S.C. § 262(l)(6).
Submarine patents may issue to our competitors covering our biosimilar product candidates or our pipeline candidates and thereby cause significant market entry delay, defeat our ability to market our products or cause us to abandon development and/or commercialization of a molecule. ​ Examples of submarine patents include Brockhaus, et al., United States patents 8,063,182 and 8,163,522 (controlled by Amgen), which are directed to the fusion protein in Enbrel.
Submarine patents may issue to our competitors covering our pipeline candidates and thereby cause significant market entry delay, defeat our ability to market our products or cause us to abandon development and/or commercialization of a molecule. ​ Examples of submarine patents include Brockhaus, et al., United States patents 8,063,182 and 8,163,522 (controlled by Amgen), which are directed to the fusion protein in Enbrel.
The losses and accumulated deficit were primarily due to the substantial investments we made to identify, develop or license our product candidates, including conducting, among other things, analytical characterization, process development and manufacturing, formulation and clinical studies and providing general and administrative support for these operations. ​ We have incurred and anticipate we will continue to incur certain development and pre-commercial expenses for toripalimab, the anti-PD-1 antibody we licensed from Junshi Biosciences in 2021, and have agreed to pay up to $90.0 million for the achievement of certain regulatory approvals and up to $290.0 million for the attainment of certain sales thresholds.
The losses and accumulated deficit were primarily due to the substantial investments we made to identify, develop or license our product candidates, including conducting, among other things, analytical characterization, process development and manufacturing, formulation and clinical studies and providing general and administrative support for these operations. ​ We have incurred and anticipate we will continue to incur certain development and commercial expenses for LOQTORZI, the anti-PD-1 antibody we licensed from Junshi Biosciences in 2021, and have agreed to pay up to $90.0 million for the achievement of certain regulatory approvals and up to $290.0 million for the attainment of certain sales thresholds.
As a result, our business, financial condition and results of operations may be materially harmed. Additionally, if supply from one approved manufacturer is interrupted, an alternative manufacturer would need to be qualified through a BLA supplement, NDA supplement or MAA variation or equivalent foreign regulatory filing, which could result in further delay.
As a result, our business, financial condition and results of operations may be materially harmed. Additionally, if supply from one approved manufacturer is interrupted, an alternative manufacturer would need to be qualified through a PAS, NDA supplement or MAA variation or equivalent foreign regulatory filing, which could result in further delay.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, government shut-downs, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions.
Any failure to report our financial results on an accurate and timely basis could result in sanctions, lawsuits, delisting of our shares from The Nasdaq Global Market or other adverse consequences that would materially harm our business. ​ Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may also lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.
Any failure to report our financial results on an accurate and timely basis could result in sanctions, lawsuits, delisting of our shares from The Nasdaq Global Market or other adverse consequences that would materially harm our business. ​ Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may also lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the 67 Table of Contents manner in which we operate our business in ways we cannot currently anticipate.
Events that may prevent successful or timely completion of clinical development include but are not limited to: ● inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of human clinical studies; ● delays in reaching a consensus with regulatory agencies on study design; ● delays in reaching agreement on acceptable terms with prospective CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical study sites; ● delays in obtaining required IRB approval at each clinical study site; ● imposition of a clinical hold by regulatory agencies, after review of an IND or amendment or equivalent application or amendment, or an inspection of our clinical study operations or study sites or as a result of adverse events reported during a clinical trial; ● delays in recruiting suitable patients to participate in our clinical studies sponsored by us or our partners; ● difficulty collaborating with patient groups and investigators; ● failure by our CROs, other third parties or us to adhere to clinical study requirements; ● failure to perform in accordance with the FDA’s good clinical practices requirements or applicable regulatory guidelines in other countries; 50 Table of Contents ● delays in patients completing participation in a study or return for post-treatment follow-up, or patients dropping out of a study; ● occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits; ● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; ● the cost of clinical studies of our product candidates being greater than we anticipate; ● clinical studies of our product candidates producing negative or inconclusive results, which may result in us deciding or regulators requiring us to conduct additional clinical studies or abandon product development programs; and ● delays in manufacturing, testing, releasing, validating or importing/exporting and/or distributing sufficient stable quantities of our product candidates and originator products for use in clinical studies or the inability to do any of the foregoing.
Events that may prevent successful or timely completion of clinical development include but are not limited to: ● inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of human clinical studies; ● delays in reaching a consensus with regulatory agencies on study design; ● delays in reaching agreement on acceptable terms with prospective CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical study sites; ● delays in obtaining required IRB approval at each clinical study site; ● imposition of a clinical hold by regulatory agencies, after review of an IND or amendment or equivalent application or amendment, or an inspection of our clinical study operations or study sites or as a result of adverse events reported during a clinical trial; ● delays in recruiting suitable patients to participate in our clinical studies sponsored by us or our partners; ● difficulty collaborating with patient groups and investigators; ● failure by our CROs, other third parties or us to adhere to clinical study requirements; ● failure to perform in accordance with the FDA’s good clinical practices requirements or applicable regulatory guidelines in other countries; ● delays in patients completing participation in a study or return for post-treatment follow-up, or patients dropping out of a study; ● occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits; ● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; ● the cost of clinical studies of our product candidates being greater than we anticipate; ● clinical studies of our product candidates producing negative or inconclusive results, which may result in us deciding or regulators requiring us to conduct additional clinical studies or abandon product development programs; and ● delays in manufacturing, testing, releasing, validating or importing/exporting and/or distributing sufficient stable quantities of our product candidates and originator products for use in clinical studies or the inability to do any of the foregoing. 50 Table of Contents Any inability to successfully complete nonclinical and clinical development could result in additional costs to us or impair our ability to generate revenue.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. ​ 65 Table of Contents We or the third parties upon whom we depend may be adversely affected by earthquakes or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster. ​ Our corporate headquarters and laboratory are located in the San Francisco Bay Area and in Southern California (Camarillo), respectively.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. ​ 66 Table of Contents We or the third parties upon whom we depend on may be adversely affected by earthquakes or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster. ​ Our corporate headquarters and laboratory are located in the San Francisco Bay Area and in Southern California (Camarillo), respectively.
We may incorrectly determine that our products are not covered by a third-party patent. 62 Table of Contents ​ Many patents may cover a marketed product, including but not limited to the composition of the product, methods of use, formulations, cell line constructs, vectors, growth media, production processes and purification processes.
We may incorrectly determine that our products are not covered by a third-party patent. 63 Table of Contents ​ Many patents may cover a marketed product, including but not limited to the composition of the product, methods of use, formulations, cell line constructs, vectors, growth media, production processes and purification processes.
We currently have three approved products: UDENYCA, CIMERLI and YUSIMRY. ​ Our product candidates are in varying stages of development and will require additional clinical development, management of nonclinical, clinical and manufacturing activities, regulatory approval, adequate manufacturing supplies, commercial organization and significant marketing efforts before we generate any revenue from product sales.
We currently have three approved products: UDENYCA, YUSIMRY and LOQTORZI. ​ Our product candidates are in varying stages of development and will require additional clinical development, management of nonclinical, clinical and manufacturing activities, regulatory approval, adequate manufacturing supplies, commercial organization and significant marketing efforts before we generate any revenue from product sales.
The laws that may affect our ability to operate include: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or in return for the purchase, 54 Table of Contents recommendation, order or furnishing of an item or service reimbursable, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs.
The laws that may affect our ability to operate include: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or in return for the purchase, recommendation, order or furnishing of an item or service reimbursable, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs.
If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other possibilities: ● issue warning letters; ● impose civil or criminal penalties; ● suspend or withdraw regulatory approval; ● suspend any of our ongoing clinical studies; ● refuse to approve pending applications or supplements to approved applications submitted by us; ● impose restrictions on our operations, including closing our contract manufacturers’ facilities; or ● seize or detain products or require a product recall.
If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other possibilities: ● issue warning letters; ● impose civil or criminal penalties; ● suspend or withdraw regulatory approval; ● suspend any of our ongoing clinical studies; ● refuse to approve pending applications or supplements to approved applications submitted by us; 32 Table of Contents ● impose restrictions on our operations, including closing our contract manufacturers’ facilities; or ● seize or detain products or require a product recall.
The companies that originated the products for which we intend to introduce biosimilar versions, such as Amgen, AbbVie and Genentech, as well as other competitors (including other companies developing biosimilars) have developed, and are continuing to develop, worldwide patent portfolios of varying sizes and breadth, many of which are in fields relating to our business, and it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use.
The companies that originated the products for which we introduced biosimilar versions, such as Amgen, AbbVie and Genentech, as well as other competitors (including other companies developing biosimilars) have developed, and are continuing to develop, worldwide patent portfolios of varying sizes and breadth, many of which are in fields relating to our business, and it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use.
The validity and enforceability of patents are generally uncertain and involve complex legal and factual questions. Any patents that may issue on our pending applications may be challenged, invalidated or circumvented, which could limit our ability to stop competitors from marketing products similar to ours.
The validity and enforceability of patents are generally uncertain and involve complex legal and factual questions. Any patents that may be issued on our pending applications may be challenged, invalidated or circumvented, which could limit our ability to stop competitors from marketing products similar to ours.
Although we have received upfront payments, milestone and other contingent payments and/or funding for development from some of our collaboration and license agreements, our only approved products include UDENYCA, YUSIMRY and CIMERLI which are approved for commercialization in the United States, and we have no products approved in any other territories.
Although we have received upfront payments, milestone and other contingent payments and/or funding for development from some of our collaboration and license agreements, our only approved products include UDENYCA, YUSIMRY and LOQTORZI which are approved for commercialization in the United States, and we have no products approved in any other territories.
Any adverse developments affecting the manufacturing operations of our biosimilar product candidates could substantially increase our costs and limit supply for our product candidates. ● The continuation of the war between Russia and Ukraine may exacerbate certain risks we face. ● Our products or our product candidates may cause undesirable side effects or have other properties that could, as applicable, delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following marketing approval, if granted. ● If we infringe or are alleged to infringe intellectual property rights of third parties, our business could be harmed.
Any adverse developments affecting the manufacturing operations of our products and product candidates could substantially increase our costs and limit supply for our products and product candidates. ● The continuation of the war between Russia and Ukraine and conflicts in the Middle East may exacerbate certain risks we face. ● Our products or our product candidates may cause undesirable side effects or have other properties that could, as applicable, delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following marketing approval, if granted. ● If we infringe or are alleged to infringe intellectual property rights of third parties, our business could be harmed.
These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 64 Table of Contents ​ Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 65 Table of Contents ​ Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, and conduct foreign inspections of manufacturing facilities, or otherwise prevent new or modified products from being developed, or approved or commercialized in a timely manner or at all, which could negatively impact our business.
Disruptions at the FDA and other government agencies caused by funding shortages, government shut-downs or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, and conduct inspections of manufacturing facilities, or otherwise prevent new or modified products from being developed, or approved or commercialized in a timely manner or at all, which could negatively impact our business.
We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses. We currently have rights to certain intellectual property, through licenses from third parties and under patent applications that we own, to develop our product candidates.
We may not be successful in obtaining or maintaining necessary rights to our products and product candidates through acquisitions and in-licenses. We currently have rights to certain intellectual property, through licenses from third parties and under patent applications that we own, to develop and commercialize our products and product candidates.
Among some of the other significant changes to the patent laws are changes that limit 63 Table of Contents where a patentee may file a patent infringement suit and provide opportunities for third parties to challenge any issued patent in the USPTO.
Among some of the other significant changes to the patent laws are changes that limit 64 Table of Contents where a patentee may file a patent infringement suit and provide opportunities for third parties to challenge any issued patent in the USPTO.
Our expenses could increase beyond our expectations if we are required by the FDA, the European Medical Agency (the “EMA”), other regulatory agencies, domestic or foreign, or by any unfavorable outcomes in intellectual 27 Table of Contents property litigation filed against us, to change our manufacturing processes or assays or to perform clinical, nonclinical or other types of studies in addition to those that we currently anticipate.
Our expenses could increase beyond our expectations if we are required by the FDA, the European Medical Agency (the “EMA”), other regulatory agencies, domestic or foreign, or by any unfavorable outcomes in intellectual property litigation filed against us, to change our manufacturing processes or assays or to perform clinical, nonclinical or other types of studies in addition to those that we currently anticipate.
We have financed our operations primarily through the sale of equity securities, convertible notes, credit facilities, license agreements and through recent product sales of our products. However, our operating or investing plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned.
We have financed our operations primarily through the sale of equity securities, convertible notes, credit facilities, license agreements and through recent product sales of our products. 27 Table of Contents However, our operating or investing plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned.
While we have conducted freedom to operate analyses with respect to our 42 Table of Contents products and our product candidates, including our in-licensed biosimilar candidates, as well as our pipeline candidates, we cannot guarantee that any of our analyses are complete and thorough, nor can we be sure that we have identified each patent and pending application in the United States and abroad that is relevant or necessary to the commercialization of our product candidates.
While we have conducted freedom to operate analyses with respect to our products and our product candidates, including our in-licensed biosimilar candidates, as well as our pipeline candidates, we cannot guarantee that any of our analyses are complete and thorough, nor can we be sure that we have identified each patent and pending application in the United States and abroad that is relevant or necessary to the commercialization of our product candidates.
Under the MDRP, as a condition of having federal funds 55 Table of Contents available for our covered outpatient drugs under Medicaid and under Medicare Part B, we must enter into, and have entered into, an agreement with the Secretary of Health and Human Services to pay a rebate to state Medicaid programs for each unit of our covered outpatient drugs dispensed to a Medicaid beneficiary and paid for by the state Medicaid program.
Under the MDRP, as a condition of having federal funds available for our covered outpatient drugs under Medicaid and under Medicare Part B, we must enter into, and have entered into, an agreement with the Secretary of Health and Human Services to pay a rebate to state Medicaid programs for each unit of our covered outpatient drugs dispensed to a Medicaid beneficiary and paid for by the state Medicaid program.
Our future funding requirements will depend on many factors, including but not limited to: ● our ability to continue to successfully commercialize our products; ● the scope, rate of progress, results and cost of any clinical studies, nonclinical testing and other related activities; ● the cost of manufacturing clinical drug supplies and establishing commercial supplies, of our product candidates and any products that we may develop; ● the number and characteristics of product candidates that we pursue; ● the cost, timing and outcomes of regulatory approvals; ● the cost and timing of establishing sales, marketing and distribution capabilities; ● the terms and timing of any licensing or other arrangements to acquire intellectual property rights that we may establish, including any milestone and royalty payments thereunder; ● the timing of conversion in common shares or repayment in cash of our convertible debt, or the timing of repayment in cash, whether due or not, of our long-term debt; and ● the cost, timing and outcomes of any litigation that we may file against third parties or that may be filed against us by third parties.
Our future funding requirements will depend on many factors, including but not limited to: ● our ability to continue to successfully commercialize our products; ● the scope, rate of progress, results and cost of any clinical studies, nonclinical testing and other related activities; ● the cost of manufacturing clinical drug supplies and establishing commercial supplies, of our product candidates and any products that we may develop; ● the number and characteristics of product candidates that we pursue; ● the cost, timing and outcomes of regulatory approvals; ● our ability to successfully integrate the business of Surface following consummation of the Surface Acquisition; ● the cost and timing of establishing sales, marketing and distribution capabilities; ● the terms and timing of any licensing or other arrangements to acquire intellectual property rights that we may establish, including any milestone and royalty payments thereunder; ● the timing of conversion in common shares or repayment in cash of our convertible debt, or the timing of repayment in cash, whether due or not, of our long-term debt; and ● the cost, timing and outcomes of any litigation that we may file against third parties or that may be filed against us by third parties.
For example, over the last several years, the United States 31 Table of Contents government has periodically shut down and certain regulatory agencies, such as the FDA, had to furlough critical FDA employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
For example, over the last several years, the United States government has periodically shut down and certain regulatory agencies, such as the FDA, had to furlough critical FDA employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
These efforts may include or have included: ● settling, or refusing to settle, patent lawsuits with biosimilar companies, resulting in such patents remaining an obstacle for biosimilar approval; ● submitting Citizen Petitions to request the FDA Commissioner to take administrative action with respect to prospective and submitted biosimilar applications; ● appealing denials of Citizen Petitions in United States federal district courts and seeking injunctive relief to reverse approval of biosimilar applications; ● restricting access to reference brand products for equivalence and biosimilarity testing that interferes with timely biosimilar development plans; ● attempting to influence potential market share by conducting medical education with physicians, payers, regulators and patients claiming that biosimilar products are too complex for biosimilar approval or are too dissimilar from originator products to be trusted as safe and effective alternatives; ● implementing payer market access tactics that benefit their brands at the expense of biosimilars; ● seeking state law restrictions on the substitution of biosimilar products at the pharmacy without the intervention of a physician or through other restrictive means such as excessive recordkeeping requirements or patient and physician notification; ● seeking federal or state regulatory restrictions on the use of the same non-proprietary name as the reference brand product for a biosimilar or interchangeable biologic; ● seeking changes to the United States Pharmacopeia, an industry recognized compilation of drug and biologic standards; ● obtaining new patents covering existing products or processes, which could extend patent exclusivity for a number of years or otherwise delay the launch of biosimilars; and ● influencing legislatures so that they attach special patent extension amendments to unrelated federal legislation.
These efforts may include or have included: ● settling, or refusing to settle, patent lawsuits with biosimilar companies, resulting in such patents remaining an obstacle for biosimilar approval; ● submitting Citizen Petitions to request the FDA Commissioner to take administrative action with respect to prospective and submitted biosimilar applications; ● appealing denials of Citizen Petitions in United States federal district courts and seeking injunctive relief to reverse approval of biosimilar applications; ● restricting access to reference brand products for equivalence and biosimilarity testing that interferes with timely biosimilar development plans; ● attempting to influence potential market share by conducting medical education with physicians, payers, regulators and patients claiming that biosimilar products are too complex for biosimilar approval or are too dissimilar from originator products to be trusted as safe and effective alternatives; ● implementing payer market access tactics that benefit their brands at the expense of biosimilars; seeking state law restrictions on the substitution of biosimilar products at the pharmacy without the intervention of a physician or through other restrictive means such as excessive recordkeeping requirements or patient and physician notification; ● seeking federal or state regulatory restrictions on the use of the same non-proprietary name as the reference brand product for a biosimilar or interchangeable biologic; ● seeking changes to the United States Pharmacopeia, an industry recognized compilation of drug and biologic standards; ● obtaining new patents covering existing products or processes, which could extend patent exclusivity for a number of years or otherwise delay the launch of biosimilars; and ● influencing legislatures so that they attach special patent extension amendments to unrelated federal legislation. ​ 34 Table of Contents Our products and our product candidates, if approved, could face price competition from other products or biosimilars of the same reference products for the same indication.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures, such as a single reimbursement code for biosimilar products.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any 54 Table of Contents of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures, such as a single reimbursement code for biosimilar products.
We may also be exposed to a risk of loss or litigation and potential liability, which could materially and adversely affect our business, results of operations or financial condition. Our insurance policies may not be adequate to compensate us for the potential losses arising from such disruptions, failure, or security breach.
We may also be exposed to a risk of loss or litigation and potential liability, which could materially and adversely affect our business, results of operations or financial condition. Our insurance policies may not be 68 Table of Contents adequate to compensate us for the potential losses arising from such disruptions, failure, or security breach.
Grounds for an unenforceability assertion could include an allegation 44 Table of Contents that someone involved in the prosecution of the patent withheld relevant or material information related to the patentability of the invention from the USPTO or made a misleading statement during prosecution. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
Grounds for an unenforceability assertion could include an allegation that someone involved in the prosecution of the patent withheld relevant or material information related to the patentability of the invention from the USPTO or made a misleading statement during prosecution. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
The EMA is responsible for the centralized 52 Table of Contents procedure for the regulation and approval of human medicines. This procedure results in a single marketing authorization that is valid in all E.U. countries, as well as in Iceland, Liechtenstein and Norway. The time required to obtain approval abroad may differ from that required to obtain FDA approval.
The EMA is responsible for the centralized procedure for the regulation and approval of human medicines. This procedure results in a single marketing authorization that is valid in all E.U. countries, as well as in Iceland, Liechtenstein and Norway. The time required to obtain approval abroad may differ from that required to obtain FDA approval.
While we do not believe that we have experienced any significant system failure, accident or security breach to date, if we or our third-party collaborators, consultants, contractors, suppliers, or service providers were to suffer an attack or breach, for example, that resulted in the unauthorized access to or use or disclosure of personal information, including health-related information, we may have to notify individuals, collaborators, government authorities, and the media, and may be subject to investigations, civil penalties, administrative and enforcement actions, and litigation, any of which could harm our business and reputation.
While we do not believe that we have experienced any significant system failure, accident or security breach to date, if we or our third-party collaborators, consultants, contractors, suppliers, or service providers were to suffer an attack or breach, for example, that resulted in the unauthorized access to or use or disclosure of Confidential Information, we may have to notify individuals, collaborators, government authorities, and the media, and may be subject to investigations, civil penalties, administrative and enforcement actions, and litigation, any of which could harm our business and reputation.
Additionally, the milestone and other payments associated with these licenses will make it less profitable for us to develop our product candidates. 45 Table of Contents In the event we breach any of our obligations related to such agreements, we may incur significant liability to our licensing partners.
Additionally, the milestone and other payments associated with these licenses will make it less profitable for us to develop our product candidates. In the event we breach any of our obligations related to such agreements, we may incur significant liability to our licensing partners.
For example, the SEC’s proposed climate disclosure rule 66 Table of Contents would result in significant costs of compliance if final rules that are similar to the proposed rules are approved in the future. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives.
For example, the SEC’s proposed climate disclosure rule would result in significant costs of compliance if final rules that are similar to the proposed rules are approved in the future. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives.
Even if coverage is provided, the approved reimbursement amount may not be adequate to allow us to establish or maintain pricing sufficient to realize a return on our investment. 29 Table of Contents There is significant uncertainty related to third-party coverage and reimbursement of newly approved products.
Even if coverage is provided, the approved reimbursement amount may not be adequate to allow us to establish or maintain pricing sufficient to realize a return on our investment. There is significant uncertainty related to third-party coverage and reimbursement of newly approved products.
Following the receipt of the originator’s patent list, the biosimilar applicant must state either that it will not market its product until the relevant patents have expired or alternatively provide its arguments 46 Table of Contents that the patents are invalid, unenforceable or would not be infringed by the proposed biosimilar product candidate.
Following the receipt of the originator’s patent list, the biosimilar applicant must state either that it will not market its product until the relevant patents have expired or alternatively provide its arguments that the patents are invalid, unenforceable or would not be infringed by the proposed biosimilar product candidate.
We must report 340B ceiling prices to HRSA on a quarterly basis, and HRSA publishes them to 340B covered entities. HRSA has finalized regulations regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities for 340B eligible drugs.
We must report 340B ceiling prices to HRSA on a quarterly basis, and HRSA publishes them to 340B covered entities. HRSA has finalized regulations regarding the calculation of the 340B ceiling price and the imposition of civil 56 Table of Contents monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities for 340B eligible drugs.
With the exception of generating net income of $132.2 million and $89.8 million in 2020 and 2019, respectively, we incurred net losses in each year from our inception in September 2010 through December 31, 2022, including net losses of $291.8 million and $287.1 million in 2022 and 2021, respectively.
With the exception of generating net income of $132.2 million and $89.8 million in 2020 and 2019, respectively, we incurred net losses in each year from our inception in September 2010 through December 31, 2023, including net losses of $237.9 million, $291.8 million and $287.1 million in 2023, 2022 and 2021, respectively.
Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control.
Accordingly, we and others with whom we work must continue to spend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control.
Many of these potential competitors are large, experienced multinational pharmaceutical and biotechnology companies that enjoy significant competitive advantages, such as substantially greater financial, research and development, legal, governmental affairs, manufacturing, personnel, marketing resources, and the benefits of mergers and acquisitions.
Many of these potential competitors are large, experienced multinational pharmaceutical and biotechnology companies that enjoy significant competitive advantages, such as substantially greater financial, research and development, legal, governmental affairs, manufacturing, personnel, and marketing resources, with additional benefits of mergers and acquisitions.
Further, continued market acceptance of UDENYCA and CIMERLI, and the market acceptance of YUSIMRY, once launched, and any future product candidates that may be approved, depends on our efforts to educate the medical community and third-party payers on the benefits of our products and product candidates and will require significant resources from us and we have significantly less resources compared to large, well-funded pharmaceutical entities.
Further, continued market acceptance of UDENYCA, LOQTORZI and YUSIMRY, and any future product candidates that may be approved, depends on our efforts to educate the medical community and third-party payers on the benefits of our products and product candidates and will require significant resources from us and we have significantly less resources compared to large, well-funded pharmaceutical entities.
Our leverage and debt service obligations could adversely impact our business, including by: ● impairing our ability to generate cash sufficient to pay interest or principal, including periodic principal payments; ● increasing our vulnerability to general adverse economic and industry conditions; ● requiring the dedication of a portion of our cash flow from operations to service our debt, thereby reducing the amount of our cash flow available for other purposes, including funds for clinical development or to pursue future business opportunities; ● requiring us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to meet payment obligations; ● limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we compete; and ● placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources.
Our leverage and debt service obligations could adversely impact our business, including by: ● impairing our ability to generate cash sufficient to pay interest or principal, including periodic principal payments; ● increasing our vulnerability to general adverse economic and industry conditions; ● increasing our need to meet minimum net sales requirements when our future sales are uncertain; ● requiring the dedication of a portion of our cash flow from operations to service our debt, thereby reducing the amount of our cash flow available for other purposes, including funds for clinical development or to pursue future business opportunities; ● requiring us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to meet payment obligations; ● limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we compete; and ● placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources.
We believe that any of our future product candidates approved under an original BLA should qualify for the 12-year period of exclusivity.
We believe that LOQTORZI and any of our future product candidates approved under an original BLA should qualify for the 12-year period of exclusivity.
Moreover, any disputes with our licensees and collaboration partners will substantially divert the attention of our senior management from other business activities and will require us to incur substantial costs associated with litigation or arbitration 38 Table of Contents proceedings.
Moreover, any disputes with our licensees and collaboration partners will substantially divert the attention of our senior management from other business activities and will require us to incur substantial costs associated with litigation or arbitration proceedings.
We are marketing UDENYCA and CIMERLI in the United States, and subject to product approvals and relevant patent and settlement agreement expirations, we intend to market our other biosimilar products in the United States and outside the United States on our own or with future collaboration partners.
We are marketing LOQTORZI, UDENYCA and YUSIMRY in the United States, and subject to product approvals and relevant patent and settlement agreement expirations, we intend to market our other biosimilar products in the United States and outside the United States on our own or with future collaboration partners.
CMS could also 56 Table of Contents terminate our Medicaid drug rebate agreement, in which case federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs. We cannot assure you that our submissions will not be found by CMS or other governmental agencies to be incomplete or incorrect.
CMS could also terminate our Medicaid drug rebate agreement, in which case federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs. We cannot assure you that our submissions will not be found by CMS or other governmental agencies to be incomplete or incorrect.
The degree of market acceptance of our newly launched product, CIMERLI, or any of our product candidates, if approved for commercial sale, will depend on a number of factors, including: ● the safety and efficacy of the product, as demonstrated in clinical studies, and potential advantages over competing treatments; ● the prevalence and severity of any side effects and any limitations or warnings contained in a product’s approved labeling; ● the clinical indications for which approval is granted; ● for our immuno-oncology product candidates, our ability to compete in a competitive immuno-oncology market that may differ from the biosimilar market; ● inclusion, in either parity or better position, on commonly accepted clinical guidelines or pathways that influence prescribing patterns and/or affect reimbursement; ● for our biosimilar product candidates, the possibility that a competitor may achieve interchangeability and we may not; ● relative convenience, ease of administration and any real or perceived benefit from administration at home as opposed to in the clinic; ● policies and practices governing the naming of biosimilar product candidates; ● prevalence of the disease or condition for which the product is approved; ● the cost of treatment, particularly in relation to competing treatments; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● the strength of marketing and distribution support and timing of market introduction of competitive products; ● the extent to which the product is approved for inclusion on formularies of hospitals, integrated delivery networks and managed care organizations; ● publicity concerning our products or competing products and treatments; ● the extent to which third-party payers (including government and national/regional commercial plans) provide adequate third-party coverage and reimbursement for our products and product candidates, if approved; ● the price at which we sell our products; 28 Table of Contents ● the potential impact of the IRA on the pharmaceutical industry and the market for biosimilars; ● the actions taken by current and future competitors to delay, restrict or block customer usage of the product; and ● our ability to maintain compliance with regulatory requirements.
The degree of market acceptance of our recently launched product, LOQTORZI, or any of our product candidates, if approved for commercial sale, will depend on a number of factors, including: ● the safety and efficacy of the product, as demonstrated in clinical studies, and potential advantages over competing treatments; ● the prevalence and severity of any side effects and any limitations or warnings contained in a product’s approved labeling; ● the clinical indications for which approval is granted; ● for our immuno-oncology product candidates, our ability to compete in a competitive immuno-oncology market that may differ from the biosimilar market; ● inclusion, in either parity or better position, on commonly accepted clinical guidelines or pathways that influence prescribing patterns and/or affect reimbursement; ● relative convenience, ease of administration and any real or perceived benefit from administration at home as opposed to in the clinic; ● prevalence of the disease or condition for which the product is approved; ● the cost of treatment, particularly in relation to competing treatments; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● the strength of marketing and distribution support and timing of market introduction of competitive products; ● the extent to which the product is approved for inclusion on formularies of hospitals, integrated delivery networks and managed care organizations; ● publicity concerning our products or competing products and treatments; ● the extent to which third-party payers (including government and national/regional commercial plans) provide adequate third-party coverage and reimbursement for our products and product candidates, if approved; ● the price at which we sell our products; 30 Table of Contents ● the potential impact of the IRA on the pharmaceutical industry and the market for biosimilars; ● the actions taken by current and future competitors to delay, restrict or block customer usage of the product; and ● our ability to maintain compliance with regulatory requirements.
Our patent portfolio includes pending patent applications and issued patents, in the United States and globally, covering our biosimilar product candidates and methods of making them. We cannot guarantee that our proprietary technologies will avoid infringement of third-party patents.
Our patent portfolio includes pending patent applications and issued patents, in the United States and globally, covering our biosimilar products and methods of making them. We cannot guarantee that our proprietary technologies will avoid infringement of third-party patents.
Doing business internationally involves a number of risks, including but not limited to: ​ ● failure of the FDA to conduct required inspections in foreign countries such as China or accept clinical trial data obtained by our product candidates in clinical trials in China, which could result in an inability to obtain acceptance or increased costs to pursue clinical trials in the United States; ​ ● multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses, including those that affect our work with a collaboration partner in China; ​ ● failure by us or our collaboration partners to obtain and maintain regulatory approvals for the use of our products in various countries; ​ ● additional potentially relevant third-party patent rights; ​ ● complexities and difficulties in obtaining protection and enforcing our intellectual property; ​ ● difficulties in staffing and managing foreign operations by us or our collaboration partners; ​ ● complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems by our collaboration partners; ​ ● limits in our or our collaboration partners’ ability to penetrate international markets; ​ ● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; ​ ● natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; ​ ● certain expenses including, among others, expenses for travel, translation and insurance; ​ ● expose us to sanctions, such as the sanctions levied by United States, E.U. and Russian regulatory bodies in connection with Russia’s invasion of Ukraine in February 2022; and ​ ● regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the United States Foreign Corrupt Practices Act, its books and records provisions or its anti-bribery provisions. ​ Investors’ expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks. ​ There is an increasing focus from certain investors, employees, regulators and other stakeholders concerning corporate responsibility, specifically related to environmental, social and governance (or “ESG”) factors.
Doing business internationally involves a number of risks, including but not limited to: ​ ● multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses, including those that affect our work with a collaboration partner in China; ​ ● failure by us or our collaboration partners to obtain and maintain regulatory approvals for the use of our products in various countries; ​ ● additional potentially relevant third-party patent rights; ​ ● complexities and difficulties in obtaining protection and enforcing our intellectual property; ​ ● difficulties in staffing and managing foreign operations by us or our collaboration partners; ​ ● complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems by our collaboration partners; ​ ● limits in our or our collaboration partners’ ability to penetrate international markets; ​ ● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; ​ ● natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; ​ ● certain expenses including, among others, expenses for travel, translation and insurance; ​ ● expose us to sanctions, such as the sanctions levied by United States, E.U. and Russian regulatory bodies in connection with Russia’s invasion of Ukraine in February 2022; and ​ ● regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the United States Foreign Corrupt Practices Act, its books and records provisions or its anti-bribery provisions. ​ Investors’ expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks. ​ There is an increasing focus from certain investors, employees, regulators and other stakeholders concerning corporate responsibility, specifically related to environmental, social and governance (or “ESG”) factors.
Other countries allow companies to fix their own prices for medical products but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates.
Other countries allow companies to fix their own prices for 31 Table of Contents medical products but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates.
The Supreme Court declined to rule whether a state injunctive remedy may be available to the originator and remanded that question to the Federal Circuit for further consideration. On December 14, 2017, the Federal Circuit decided that state law claims are preempted by the BPCIA on both field and conflict grounds.
The Supreme Court declined to rule whether a state injunctive remedy may be available to the originator and remanded that question to the Federal 47 Table of Contents Circuit for further consideration. On December 14, 2017, the Federal Circuit decided that state law claims are preempted by the BPCIA on both field and conflict grounds.
In addition, the criteria by which our corporate responsibility practices are assessed may change, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria.
In addition, the criteria by which our corporate responsibility practices are assessed may change, which could result in greater expectations of us and cause us to undertake 62 Table of Contents costly initiatives to satisfy such new criteria.
Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. ​ To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate or unauthorized access to or disclosure or use of confidential, proprietary, or other sensitive, personal information, including health-related information, we could incur liability and suffer reputational harm, and the development and commercialization of our products could be delayed.
Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. ​ To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate or unauthorized access to or disclosure or use of Confidential Information, we could incur liability and suffer reputational harm, and the development and commercialization of our products could be delayed.
However, there is a risk that this exclusivity could be shortened due to Congressional action or otherwise, or that the FDA will 35 Table of Contents not consider our product candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated.
However, there is a risk that this exclusivity could be shortened due to Congressional action or otherwise, or that the FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated.
If we elect not to or are unable to satisfy such new criteria, investors may conclude that our 61 Table of Contents policies with respect to corporate responsibility are inadequate. We may face reputational damage in the event that our corporate responsibility procedures or standards do not meet the standards set by various constituencies.
If we elect not to or are unable to satisfy such new criteria, investors may conclude that our policies with respect to corporate responsibility are inadequate. We may face reputational damage in the event that our corporate responsibility procedures or standards do not meet the standards set by various constituencies.
In addition to such write-offs, we may also have to incur charges and expenses related to firm purchase commitments or for product candidates that fail to meet specifications, undertake costly remediation efforts or seek costlier manufacturing alternatives. We currently engage single suppliers for manufacture, clinical trial services, formulation development and product testing of our product candidates.
In addition to such write-downs, we may also have to incur charges and expenses related to firm purchase commitments or for product candidates that fail to meet specifications, undertake costly remediation efforts or seek costlier manufacturing alternatives. 39 Table of Contents We currently engage single suppliers for manufacture, clinical trial services, formulation development and product testing of our product candidates.
Furthermore, while payers have adopted the Q-Code assigned by CMS for UDENYCA, there remains uncertainty as to whether such payers will continue to cover and pay providers for the administration and use of the product with each patient or may favor a competing product.
Furthermore, while payers have adopted the Q-Codes assigned by CMS for UDENYCA, there remains uncertainty as to whether such payers will continue to cover and pay providers for the administration and use of the product with each patient or may favor competing products.
Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth. 36 Table of Contents Risks Related to Reliance on Third Parties We rely on third parties to conduct our nonclinical and clinical studies and perform other tasks for us.
Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth. Risks Related to Reliance on Third Parties We rely on third parties to conduct our nonclinical and clinical studies and perform other tasks for us.
If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed. ● We are subject to a multitude of manufacturing risks.
If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed. ● We are subject to a multitude of manufacturing risks and the risks of inaccurately forecasting sales of our products.
These factors include those discussed in the “Risk Factors” section of this Annual Report on Form 10-K and others such as: ● the Covid-19 pandemic and other viral pandemics; ● adverse results or delays in preclinical or clinical studies; ● any inability to obtain additional funding; ● any delay in filing an IND, NDA, BLA, Section 351(k) BLA or other regulatory submission for any of our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory agency’s review of that IND, NDA, BLA, Section 351(k) BLA or other regulatory submission; ● the perception of limited market sizes or pricing for our products and product candidates; ● failure to successfully develop and commercialize our product candidates; ● post-marketing safety issues relating to our product candidates or biosimilars generally; ● failure to maintain our existing strategic collaborations or enter into new collaborations; ● failure by us or our licensors and strategic collaboration partners to prosecute, maintain or enforce our intellectual property rights; ● changes in laws or regulations applicable to our products; ● any inability to obtain adequate product supply for our product candidates or the inability to do so at acceptable prices; ● difficulties in the implementation of the shift in our clinical, commercial, manufacturing, regulatory, marketing and general historical focus on biosimilars to a new strategy to build a leading immuno-oncology franchise funded with cash generated by our commercial biosimilar business; ● adverse regulatory decisions; ● introduction of new products, services or technologies by our competitors; ● failure to meet or exceed financial projections we may provide to the public; ● failure to meet or exceed the financial projections of the investment community; ● the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community; ● announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic collaboration partners or our competitors; ● disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; ● additions or departures of key scientific or management personnel; ● lawsuits, including but not limited to complaints initiated by stockholders, customers and collaboration partners, and litigation filed by us or filed against us pertaining to patent infringement or other violations of intellectual property rights; ● the outcomes of any citizen petitions filed by parties seeking to restrict or limit the approval of biosimilar products; 57 Table of Contents ● if securities or industry analysts do not publish research or reports about our business or if they issue an adverse or misleading opinion regarding our stock; ● changes in the market valuations of similar companies; ● general market or macroeconomic conditions, including rising interest rates and inflation; ● sales of our common stock by us or our stockholders in the future; ● trading volume of our common stock; ● issuance of patents to third parties that could prevent our ability to commercialize our product candidates; ● reductions in the prices of originator products that could reduce the overall market opportunity for our product candidates intended as biosimilars to such originator products; and ● changes in biosimilar regulatory requirements that could make it more difficult for us to develop our product candidates.
These factors include those discussed in the “Risk Factors” section of this Annual Report on Form 10-K and others such as: ● adverse results or delays in preclinical or clinical studies; ● the risk of deterioration in our financial conditions, such as reduced collection of cash and increased costs in the future; ● any inability to obtain additional funding; ● any delay in filing an IND, NDA, BLA, Section 351(k) BLA or other regulatory submission for any of our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory agency’s review of that IND, NDA, BLA, Section 351(k) BLA or other regulatory submission; ● the perception of limited market sizes or pricing for our products and product candidates; ● failure to successfully develop and commercialize our product candidates; 57 Table of Contents ● post-marketing safety issues relating to our product candidates or biosimilars generally; ● failure to maintain our existing strategic collaborations or enter into new collaborations; ● failure by us or our licensors and strategic collaboration partners to prosecute, maintain or enforce our intellectual property rights; ● changes in laws or regulations applicable to our products; ● future outbreaks of COVID-19 and other viral pandemics; ● any inability to obtain adequate product supply for our product candidates or the inability to do so at acceptable prices; ● adverse regulatory decisions; ● introduction of new products, services or technologies by our competitors; ● failure to meet or exceed financial projections we may provide to the public; ● failure to meet or exceed the financial projections of the investment community; ● the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community; ● announcements of significant acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments by us, our strategic collaboration partners or our competitors; ● disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; ● additions or departures of key scientific or management personnel; ● lawsuits, including but not limited to complaints initiated by stockholders, customers and collaboration partners, and litigation filed by us or filed against us pertaining to patent infringement or other violations of intellectual property rights; ● the outcomes of any citizen petitions filed by parties seeking to restrict or limit the approval of biosimilar products; ● if securities or industry analysts do not publish research or reports about our business or if they issue an adverse or misleading opinion regarding our stock; ● changes in the market valuations of similar companies; ● general market or macroeconomic conditions, including rising interest rates and inflation; ● sales of our common stock by us or our stockholders in the future; ● trading volume of our common stock; ● issuance of patents to third parties that could prevent our ability to commercialize our product candidates; ● reductions in the prices of originator products that could reduce the overall market opportunity for our product candidates intended as biosimilars to such originator products; and ● changes in biosimilar regulatory requirements that could make it more difficult for us to develop our product candidates.
Lanfear was employed at Amgen during periods when Amgen’s operations included the development and commercialization of Neulasta. Senior members of our commercial team and medical affairs team who will be responsible for any launch of additional presentations of UDENYCA formerly held positions at Amgen.
Lanfear was employed at Amgen during periods when Amgen’s operations included the development and commercialization of Neulasta. Senior members of our commercial team and medical affairs team who were responsible for the launch of additional presentations of UDENYCA formerly held positions at Amgen.
We intend to market our biosimilar product candidates in the United States and may seek to partner commercially all biosimilars outside the United States. In order to market our products in the E.U., the United States and other jurisdictions, we and our collaboration partners must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements.
We intend to market our products in the United States and may seek to partner commercially all products outside the United States. In order to market our products in the E.U., the United States and other jurisdictions, we and our collaboration partners must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements.
In addition, as of December 31, 2022, approximately 29.3 million shares of common stock that are either subject to outstanding options and restricted stock units or reserved for future issuance under our equity incentive plans were eligible or may become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act.
In addition, as of December 31, 2023, approximately 30.6 million shares of common stock that are either subject to outstanding options and restricted stock units or reserved for future issuance under our equity incentive plans were eligible or may become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act.
Successfully transferring complicated manufacturing techniques to contract manufacturing organizations and scaling up these techniques for commercial quantities is time consuming and we may not be able to achieve such transfer or do so in a timely manner.
Successfully transferring complicated manufacturing techniques to contract manufacturing organizations and scaling up these techniques for commercial quantities is time consuming and we 37 Table of Contents may not be able to achieve such transfer or do so in a timely manner.
The market price of our common stock has been highly volatile since our Initial Public Offering (“IPO”) and the intraday sales price per share has ranged from $5.58 to $38.10 per share during the period from November 6, 2014 through December 31, 2022 and could be subject to wide fluctuations in response to various factors, some of which are beyond our control.
The market price of our common stock has been highly volatile since our Initial Public Offering (“IPO”) and the intraday sales price per share has ranged from $1.43 to $38.10 per share during the period from November 6, 2014 through December 31, 2023 and could be subject to wide fluctuations in response to various factors, some of which are beyond our control.

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Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties Our headquarters are located in Redwood City, California, where we occupy office space under a lease that will expire in September 2024 with a five-year renewal option.
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Item 2.05 Costs Associated with Exit or Disposal Activities In addition to our 35 former employees who transferred to Sandoz in connection with the closing of the Sale Transaction, on March 11, 2024 we committed to a plan to reduce our workforce (the “Plan”) by approximately 26 employees effective March 18, 2024 to focus resources on strategic priorities including the research, development and commercialization of innovative cancer treatments and the commercialization of our portfolio of FDA-approved oncology products.
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Our analytical and process development laboratory is located in Camarillo, California under a lease that expires in May 2027, and contains a one-time option to extend the lease term for five years. We believe that our existing facilities are adequate for our current needs.
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One-time restructuring charges associated with the Plan are expected to be approximately $1.5 million, primarily consisting of personnel expenses such as salaries, one-time severance payments, and other benefits. Cash payments related to these expenses will be paid out and the Plan is expected to be completed in the first half of 2024.
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When our leases expire, or if we need to hire more employees, we may exercise our renewal option or look for additional or alternate space for our operations and we believe that suitable additional or alternative space will be available in the future on commercially reasonable terms. ​ Item 3.
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The estimated costs that we expect to incur in connection with the Plan are subject to a number of assumptions, and actual results may differ significantly from these estimates.
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Legal Proceedings The information called for by this Item is incorporated herein by reference to Item 8. “Financial Statements and Supplementary Data,” Note 8. “Commitments and Contingencies.” ​ Item 4. Mine Safety Disclosures Not applicable. ​ PART II
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We may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the Plan. ​ (b) During the three months ended December 31, 2023, neither we nor any of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each such term is defined in Item 408(a) of Regulation S-K. ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePursuant to applicable Securities and Exchange Commission rules, all 70 Table of Contents values assume reinvestment of the full amount of all dividends, however, no dividends have been declared on our common stock to date.
Biggest changePursuant to applicable Securities and Exchange Commission rules, all values assume reinvestment of the full amount of all dividends, however, no dividends have been declared on our common stock to date. The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder return.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been listed on The Nasdaq Global Market under the symbol “CHRS” since November 6, 2014. As of February 28, 2023, there were approximately 26 stockholders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been listed on The Nasdaq Global Market under the symbol “CHRS” since November 6, 2014. As of February 29, 2024, there were approximately 85 stockholders of record of our common stock.
Stock Performance Graph The following graph shows the total stockholder’s return on an investment of $100 in cash at market close on December 29, 2017 (the last trading day before the beginning of our fifth preceding fiscal year) through December 31, 2022 for (i) our common stock, (ii) the Nasdaq Composite Index and (iii) the Nasdaq Biotechnology Index.
Stock Performance Graph The following graph shows the total stockholder’s return on an investment of $100 in cash at market close on December 31, 2018 through December 29, 2023 (the last trading day at the end of our fifth fiscal year) for (i) our common stock, (ii) the Nasdaq Composite Index and (iii) the Nasdaq Biotechnology Index.
Recent Sales of Unregistered Equity Securities From January 1, 2022 through December 31, 2022, there were no sales or issuances of unregistered securities that were not otherwise reported on a Quarterly Report on Form 10-Q or Current Report on Form 8-K.
Recent Sales of Unregistered Equity Securities F rom January 1, 2023 through December 31, 2023, there were no sales or issuances of unregistered securities that were not otherwise reported on a Quarterly Report on Form 10-Q or Current Report on Form 8-K. 73 Table of Contents Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the fourth quarter ended December 31, 2023.
Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the fourth quarter ended December 31, 2022. A total of 15,364 shares were surrendered to Coherus in the fourth quarter of 2022, to satisfy minimum tax withholding obligations in connection with the vesting or exercise of stock-based awards . ​ Item 6. [Reserved]
A total of 96,047 shares were surrendered to Coherus in the fourth quarter of 2023, to satisfy minimum tax withholding obligations in connection with the vesting or exercise of stock-based awards . ​ ​ Item 6. [Reserved]
Removed
The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder return.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeITEM 6. [Reserved] 71 ​ ​ ​ ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 71 ​ ​ ​ ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 86 ​ ​ ​ ITEM 8. Financial Statements and Supplementary Data 87 ​ ​ ​
Biggest changeITEM 6. [Reserved] 74 ​ ​ ​ ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 74 ​ ​ ​ ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 90 ​ ​ ​ ITEM 8. Financial Statements and Supplementary Data 91 ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe expect our net revenue to increase during 2023, as a result of CIMERLI’s launch in October 2022 and the planned launches in 2023 of toripalimab and YUSIMRY and additional presentations of UDENYCA. 78 Table of Contents Cost of Goods Sold ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ ​ 2022 2021 Change Cost of goods sold ​ ​ $ 70,083 ​ $ 57,591 ​ $ 12,492 Gross margin ​ ​ 67 % 82 % ​ ​ The increase in cost of goods sold primarily resulted from t he $26.0 million write-down in the third quarter of 2022 of inventory at risk of expiration compared to the $5.1 million net write-off of inventory in 2021 for inventory that did not meet acceptance criteria, partially offset by decreases in the number of UDENYCA units sold, lower royalty costs by $3.0 million as well as the sale of $3.3 million of previously expensed UDENYCA batches that were required to be expensed as research and development prior to the FDA approval of UDENYCA and, therefore, was not reflected in the cost of goods sold in 2021.
Biggest changeHowever, we believe this will be partially offset by the continued market share growth of UDENYCA, considering its multiple presentations, as well as the launch of LOQTORZI in the U.S. as announced on January 2, 2024, and a full year of sales of YUSIMRY. 81 Table of Contents Cost of Goods Sold ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2023 2022 Change Cost of goods sold ​ $ 158,992 ​ $ 70,083 ​ $ 88,909 Gross margin ​ 38 % 67 % ​ ​ The increase in cost of goods sold in 2023 compared to 2022 was due to a $47.0 million charge in the fourth quarter of 2023 for the write-down of slow moving YUSIMRY inventory and the related partial recognition of certain firm purchase commitments, a $47.5 million increase in royalty costs and $25.0 million increase in product costs, both driven primarily by CIMERLI sales, $3.0 million in contract modification fees with one of our manufacturers for reducing the number of UDENYCA batches to be produced, and $2.3 million in write-downs, net of recoveries for inventory that was damaged during processing.
Net cash provided by financing activities Cash provided by financing activities of $54.3 million in 2022 was primarily due to proceeds of $240.7 million under the 2027 Term Loans, net of debt discount and issuance costs, proceeds of $6.4 million from the ATM Offering, net of issuance costs, and $2.3 million proceeds from purchase under the ESPP.
Cash provided by financing activities of $54.3 million in 2022 was primarily due to proceeds of $240.7 million under the 2027 Term Loans, net of debt discount and issuance costs, proceeds of $6.4 million from the ATM Offering, net of issuance costs, and $2.3 million proceeds from purchase under the ESPP.
Net cash used in investing activities Cash used in investing activities of $166.9 million in 2022 was primarily due to purchases of investments in marketable securities of $127.4 million, the option fee payment of $35.0 million to license CHS-006 from Junshi Biosciences, a $2.4 million milestone payment to Bioeq related to the launch of CIMERLI, and purchases of property and equipment of $2.0 million.
Cash used in investing activities of $166.9 million in 2022 was primarily due to purchases of investments in marketable securities of $127.4 million, the option fee payment of $35.0 million to license CHS-006 from Junshi Biosciences, a $2.4 million milestone payment to Bioeq related to the launch of CIMERLI, and purchases of property and equipment of $2.0 million.
The 2027 Term Loans accrue interest from inception through March 31, 2023 at 8.25% plus three-month LIBOR per annum with a LIBOR floor of 1.0%; and, starting April 1, 2023, accrue interest at 8.25% plus the Adjusted Term SOFR, with a floor on Adjusted Term SOFR of 1.0%. Interest is payable quarterly in arrears.
The 2027 Term Loans accrued interest from inception through March 31, 2023 at 8.25% plus three-month LIBOR per annum with a LIBOR floor of 1.0%; and, starting April 1, 2023, accrue interest at 8.25% plus the Adjusted Term SOFR, with a floor on Adjusted Term SOFR of 1.0%. Interest is payable quarterly in arrears.
Our future funding requirements will depend on many factors, including the following: ● cash proceeds from product sales; ● the costs of manufacturing, distributing and marketing our products; ● the cost of manufacturing clinical supplies and any products that we may develop; ● the terms and timing of any other collaborative, licensing and other arrangements that we have established or may establish; ● the timing, receipt and amount of sales, profit sharing or royalties, if any, from any product candidates that are approved in the future; 81 Table of Contents ● the number and characteristics of product candidates that we pursue; ● the scope, rate of progress, results and cost of our clinical trials, preclinical testing and other related activities; ● the costs of acquiring originator comparator materials and manufacturing preclinical study and clinical trial supplies and other materials from CMOs and related costs associated with release and stability testing; ● the cost, timing and outcomes of regulatory approvals; ● the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; ● the extent to which we acquire or invest in businesses, products or technologies; ● the impact of general economic conditions on our business, including but not limited to increased interest rates and high inflation; and ● the costs of the impact from the COVID-19 pandemic and future outbreaks.
Our future funding requirements will depend on many factors, including the following: ● cash proceeds from product sales; ● the costs of manufacturing, distributing and marketing our products; ● the cost of manufacturing clinical supplies and any products that we may develop; ● the terms and timing of any other collaborative, licensing and other arrangements that we have established or may establish; ● the timing, receipt and amount of sales, profit sharing or royalties, if any, from any product candidates that are approved in the future; ● the number and characteristics of product candidates that we pursue; ● the scope, rate of progress, results and cost of our clinical trials, preclinical testing and other related activities; ● the costs of acquiring originator comparator materials and manufacturing preclinical study and clinical trial supplies and other materials from CMOs and related costs associated with release and stability testing; ● the cost, timing and outcomes of regulatory approvals; ● the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; ● the extent to which we acquire or invest in businesses, products or technologies; ● the impact of general economic conditions on our business, including but not limited to increased interest rates and high inflation; and ● the costs of the impact from the COVID-19 pandemic and future outbreaks.
Our external research and development expense consists primarily of: 76 Table of Contents ● expense incurred under agreements with collaborators, consultants, third-party CROs, and investigative sites where a substantial portion of our preclinical studies and all of our clinical trials are conducted; ● costs of acquiring originator comparator materials and manufacturing preclinical study and clinical trial supplies and other materials from CMOs, and related costs associated with release and stability testing; ● costs associated with manufacturing process development activities, analytical activities and pre-launch inventory manufactured prior to regulatory approval being obtained or deemed to be probable ; and ● upfront and certain milestone payments related to licensing and collaboration agreements.
Our external research and development expense consists primarily of: 79 Table of Contents ● expense incurred under agreements with collaborators, consultants, third-party CROs, and investigative sites where a substantial portion of our preclinical studies and all of our clinical trials are conducted; ● costs of acquiring originator comparator materials and manufacturing preclinical study and clinical trial supplies and other materials from CMOs, and related costs associated with release and stability testing; ● costs associated with manufacturing process development activities, analytical activities and pre-launch inventory manufactured prior to regulatory approval being obtained or deemed to be probable ; and ● upfront and certain milestone payments related to licensing and collaboration agreements.
As a result, cost of goods sold reflects a mid-single digit royalty on net product revenue, which began July 1, 2019 and continues for five years from then.
As a result, cost of goods sold reflects a mid-single digit royalty on UDENYCA net product revenue, which began July 1, 2019 and continues for five years from then.
Although we believe that the assumptions we use in estimating potential inventory write-downs are reasonable, if actual market conditions are less favorable than projected by us, write-downs of inventory, charges related to firm purchase commitments, or both may be required which would be recorded as cost of goods sold in our consolidated statement of operations.
Although we believe that the assumptions we use in estimating potential inventory write-downs are reasonable, if actual market conditions are less favorable than projected by us, write-downs of inventory, charges related to firm purchase commitments, or both may be required which would be recorded as cost of goods sold in our consolidated statements of operations.
Loss on Debt Extinguishment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2022 2021 Change Loss on debt extinguishment ​ $ 6,222 ​ $ — ​ $ 6,222 ​ The $6.2 million loss on debt extinguishment recorded in 2022 resulted from voluntarily prepaying all amounts outstanding under the loan agreement between us and affiliates of Healthcare Royalty Partners dated as of January 7, 2019 (the “2025 Term Loan”) in January 2022.
Loss on Debt Extinguishment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2023 2022 Change Loss on debt extinguishment ​ $ — ​ $ 6,222 ​ $ (6,222) ​ The $6.2 million loss on debt extinguishment recorded in 2022 resulted from voluntarily prepaying all amounts outstanding under the loan agreement between us and affiliates of Healthcare Royalty Partners dated as of January 7, 2019 (the “2025 Term Loan”) in January 2022.
We believe that our available cash, cash equivalents, marketable securities, cash collected from product sales and ATM Offering proceeds will be sufficient to fund our planned expenditures and meet our obligations for at least the twelve months following our financial statement issuance date.
We believe that our available cash, cash equivalents, marketable securities, cash collected from product sales and ATM Offering and Public Offering proceeds received to date will be sufficient to fund our planned expenditures and meet our obligations for at least the twelve months following our financial statement issuance date.
Additionally, we are responsible for certain associated regulatory and technology transfer costs for toripalimab and other licensed compounds and will reimburse Junshi Biosciences for such costs. We accounted for the licensing transaction as an asset acquisition under the relevant accounting rules.
Additionally, we are responsible for certain associated regulatory and technology transfer costs for LOQTORZI and other licensed compounds and will reimburse Junshi Biosciences for such costs. We accounted for the licensing transaction as an asset acquisition under the relevant accounting rules.
Organization and Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” in Part II, Item 8 of this Form 10-K describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. Our estimates are based on our historical experience and on various other factors that we believe to be reasonable under the circumstances.
Organization and Significant Accounting Policies” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. Our estimates are based on our historical experience and on various other factors that we believe to be reasonable under the circumstances.
We caution the reader not to place undue 71 Table of Contents reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this Form 10-K. We undertake no obligation to update forward-looking statements, which reflect events or circumstances occurring after the date of this Form 10-K.
We caution the reader not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this Form 10-K. We undertake no obligation to update forward-looking statements, which reflect events or circumstances occurring after the date of this Form 10-K.
For further discussion of risks related to our financial condition and capital requirements, please see “Risk Factors— Risks Related to Our Financial Condition and Capital Requirements.” Financing arrangements 2027 Term Loans In January 2022, we entered into the 2027 Term Loans which provide for a senior secured term loan facility of up to $300.0 million to be funded in four committed tranches: (i) a Tranche A Loan in an aggregate principal amount of $100.0 million that was funded on January 5, 2022; (ii) a Tranche B Loan in an aggregate principal amount of $100.0 million that was funded on March 31, 2022, in connection with the full repayment of our 2022 Convertible Notes due in March 2022; (iii) a Tranche C Loan in an aggregate principal amount of $50.0 million that was not funded; and (iv) a Tranche D Loan in an aggregate principal amount of $50.0 million that was funded on September 14, 2022.
For further discussion of risks related to our financial condition and capital requirements, please see “Risk Factors—Risks Related to Our Financial Condition and Capital Requirements.” Financing arrangements 2027 Term Loans In January 2022, we entered into the 2027 Term Loans which provide for a senior secured term loan facility of up to $300.0 million to be funded in four committed tranches: (i) a Tranche A Loan in an aggregate principal amount of $100.0 million that was funded on January 5, 2022; (ii) a Tranche B Loan in an aggregate principal amount of $100.0 million that was funded on March 31, 2022, in connection with the full repayment of our $100.0 million aggregate principal amount 8.2% Convertible Senior Notes due in March 2022 (“2022 Convertible Notes”); (iii) a Tranche C Loan in an aggregate principal amount of $50.0 million that was not funded; and (iv) a Tranche D Loan 85 Table of Contents in an aggregate principal amount of $50.0 million that was funded on September 14, 2022.
We will have the right to conduct all commercial activities of toripalimab in the United States and Canada. We will be obligated to pay Junshi Biosciences a 20% royalty on net sales of toripalimab and up to an aggregate $380.0 million in one-time payments for the achievement of various regulatory and sales milestones.
We will have the right to conduct all commercial activities of LOQTORZI in the United States and Canada. We are obligated to pay Junshi Biosciences up to a 20% royalty on net sales of LOQTORZI and up to an aggregate $380.0 million in one-time payments for the achievement of various regulatory and sales milestones.
In 2022, 2021 and 2020, total sales deductions to gross product sales were 73%, 67% and 59%, respectively. Adjustments to provisions for rebates and chargebacks related to sales made in prior periods were less than 3% of the actual payments and customer credits issued in each of the years 2022 and 2021.
In 2023, 2022 and 2021, total sales deductions to gross product sales were 77%, 73% and 67%, respectively. Adjustments to provisions for rebates and chargebacks related to sales made in prior periods were less than 3% of the actual payments and customer credits issued in each of the years 2023 and 2022.
In November 2019, we entered into a license agreement with Bioeq for the commercialization of CIMERLI in certain dosage forms in both a vial and PFS presentation. Under the Bioeq Agreement, Bioeq granted to us an exclusive royalty-bearing license to commercialize CIMERLI in the field of ophthalmology (and any other approved labelled indication) in the United States.
In November 2019, we entered into a license agreement with Bioeq for the commercialization of CIMERLI in certain dosage forms in both a vial and pre-filled syringe (“PFS”) presentation. Under the Bioeq Agreement, Bioeq granted to us an exclusive royalty-bearing license to commercialize CIMERLI in the field of ophthalmology (and any other approved labelled indication) in the United States.
A change of 10% in our total provisions for product sales discounts and allowances as of December 31, 2022, would have resulted in a change of our pre-tax earnings in 2022 by approximately $10.1 million. A summary of the activities and ending reserve balances for each significant category of discounts and allowances, can be found in “Note 2.
A change of 10% in our total provisions for product sales discounts and allowances as of December 31, 2023, would have resulted in a change of our pre-tax earnings in 2023 by approximately $24.5 million. A summary of the activities and ending reserve balances for each significant category of discounts and allowances, can be found in “Note 2.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 23, 2022.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 6, 2023.
The additional milestone payments, option fee for the IL-2 cytokine and royalties are contingent upon future events and, therefore, will be recorded if and when it becomes probable that a milestone will be achieved, or when an option fee or royalties are incurred.
The additional milestone payments and royalties are contingent upon future events and, therefore, will be recorded if and when it becomes probable that a milestone will be achieved, or when an option fee or royalties are incurred.
Revenue” in the “Notes to Consolidated Financial Statements” in Part II, Item 8 of this Form 10-K. Inventory Our inventory is stated at the lower of cost or estimated net realizable value with cost determined under the first-in first-out method.
Revenue” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. Inventory Valuation Our inventory is stated at the lower of cost or estimated net realizable value with cost determined under the first-in first-out method.
This MD&A section generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
This MD&A section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Under the Collaboration Agreement, we retain the right to collaborate in the development of toripalimab and the other licensed compounds, including CHS-006, and will pay for a portion of these co-development activities up to a maximum of $25.0 million per licensed compound per year.
Under the Collaboration Agreement, we retain the right to collaborate in the development of LOQTORZI and the other licensed compounds and will pay for a portion of these co-development activities up to a maximum of $25.0 million per licensed compound per year.
The ability to elect to sell shares of our common stock in the ATM Offering from time to time adds to our financial flexibility. As of December 31, 2022, we had an accumulated deficit of $1.3 billion and cash, cash equivalents, and marketable securities of $191.7 million.
The ability to elect to sell shares of our common stock in the ATM Offering from time to time adds to our financial flexibility. ​ As of December 31, 2023, we had an accumulated deficit of $1.6 billion and cash, cash equivalents, and marketable securities of $117.7 million.
Selling, General and Administrative Expense Selling, general and administrative expense consists primarily of personnel costs, allocated facilities costs and other expense for outside professional services, including legal, insurance, human resources, outside marketing, advertising, audit and accounting services, as well as costs associated with establishing commercial capabilities in support of the commercialization of UDENYCA, CIMERLI, YUSIMRY and our product candidate, toripalimab.
Selling, General and Administrative Expense Selling, general and administrative expense consists primarily of personnel costs, allocated facilities costs and other expense for outside professional services, including legal, insurance, human resources, outside marketing, advertising, audit and accounting services, acquisition-related costs, as well as costs associated with establishing commercial capabilities in support of the commercialization of UDENYCA, CIMERLI, YUSIMRY and LOQTORZI.
Pursuant to the Loan agreement, and subject to certain restrictions, proceeds of the 2027 Term Loans were and will be used to fund our general corporate and working capital requirements except for the following: in January 2022, proceeds of the Tranche A Loan were used to voluntarily repay in full all amounts outstanding under the 2025 Term Loan, as well as all associated costs and expenses; and proceeds of the Tranche B Loan were drawn in connection with the full repayment of our 2022 Convertible Notes due in March 2022. 2025 Term Loan As of December 31, 2021, the carrying amount of our $75.0 million aggregate principal 2025 Term Loan was $75.5 million.
Pursuant to the Loan agreement, and subject to certain restrictions, proceeds of the 2027 Term Loans were and will be used to fund our general corporate and working capital requirements except for the following: in January 2022, proceeds of the Tranche A Loan were used to voluntarily repay in full all amounts outstanding under the 2025 Term Loan, as well as all associated costs and expenses; and proceeds of the Tranche B Loan were drawn in connection with the full repayment of our 2022 Convertible Notes due in March 2022.
In addition, the increase in interest expense was due to $3.9 million of interest expense related to the 2027 Term Loan discount and debt issuance costs that were allocated to unfunded tranches and subsequently amortized over the respective commitment periods for tranches, including $2.3 million allocated to Tranche B that was fully amortized in the first quarter of 2022.
This was partially offset by $3.9 million of interest expense in 2022 related to the 2027 Term Loans discount and debt issuance costs that were allocated to unfunded tranches and subsequently amortized over the respective commitment periods for tranches, including $2.3 million allocated to Tranche B that was fully amortized in the first quarter of 2022.
Additionally, w e will share a percentage of gross profits on sales of Bioeq Licensed Products in the United States with Bioeq in the low to mid fifty percent range, and pursuant to the Genentech Agreement we incur a royalty that is a low single-digit percentage of net sales of CIMERLI that must be paid through the end of 2023.
Additionally, w e share a percentage of gross profits on sales of Bioeq Licensed Products in the United States with Bioeq in the low- to mid-fifty percent range, and pursuant to the Genentech Agreement we incur a royalty that is a low single-digit percentage of net sales of CIMERLI that was incurred through the end of 2023 but that is no longer owed.
Our 2027 Term Loans have a variable interest rate component that resets the first day of every quarter, and the total interest rate ranged from 9.25% in the first quarter of 2022 to 12.00% in the fourth quarter of 2022. The interest rate on the 2027 Term Loans increased to 13.03% for the first quarter of 2023.
Our 2027 Term Loans have a variable interest rate component that resets at the beginning of every quarter, and the total interest rate ranged from 9.25% to 12.00% during 2022 and from 13.03% in the first quarter of 2023 to 13.91% in the fourth quarter of 2023.
Our total non-cancelable contractual obligations arising from these agreements as of December 31, 2022 was $10.3 million, with $4.9 million of these obligations due within twelve months.
Our total non-cancelable contractual obligations arising from these agreements as of December 31, 2023 was $9.1 million, with $2.9 million of these obligations due within twelve months.
YUSIMRY provides certain therapeutic benefits for treatment of patients with certain inflammatory diseases characterized by increased production of TNF in the body, including rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn’s disease, psoriasis and ulcerative colitis.
YUSIMRY provides certain therapeutic benefits for treatment of patients with certain inflammatory diseases characterized by increased production of TNF in the body, including rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn’s disease, psoriasis and ulcerative colitis. In December 2021, the FDA approved YUSIMRY, which we launched in the United States in July 2023.
Overview We are a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative cancer treatments and the commercialization of our portfolio of FDA-approved biosimilars. Our strategy is to build a leading immuno-oncology franchise funded with cash generated through net sales of our diversified portfolio of FDA-approved therapeutics. Our commercial portfolio includes three FDA-approved biosimilar products.
Overview We are a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative cancer treatments and the commercialization of our portfolio of FDA-approved oncology products, including LOQTORZI. Our strategy is to build a leading immuno-oncology business funded with cash generated from our diversified portfolio of FDA-approved therapeutics.
The 2026 Convertible Notes are not redeemable at our election before maturity. If the 2026 Convertible Notes were converted on December 31, 2022, the holders of the 2026 Convertible Notes would have received common shares with an aggregate value of $94.6 million based on our closing stock price of $7.92 as of December 30, 2022.
The 2026 Convertible Notes are not redeemable at our election before maturity. If the 2026 Convertible Notes were converted on December 31, 2023, the holders of the 2026 Convertible Notes would have received common shares with an aggregate value of $39.8 million based on our closing stock price of $3.33 as of December 29, 2023.
(4) In March 2022, we exercised our option to license CHS-006, a TIGIT-targeted antibody, in the United States and Canada from Junshi Biosciences, expanding our 2021 immuno-oncology collaboration agreement. Expenses in 2022 included our reimbursement for certain costs related to an ongoing CHS-006 clinical trial being conducted by Junshi Biosciences.
(4) In March 2022, we paid $35.0 million to exercise our option to license CHS-006, a TIGIT-targeted antibody, in the United States and Canada from Junshi Biosciences. Expenses in 2023 and 2022 included our reimbursement for certain costs related to an ongoing CHS-006 clinical trial being conducted by Junshi Biosciences.
We have built an experienced and robust oncology market access, key account management and medical affairs capability in the United States, which have supported the successful commercialization of UDENYCA and CIMERLI. We expect to leverage these capabilities as we build and launch our immuno-oncology franchise, continue to grow our ophthalmology product portfolio and launch the commercialization of other biosimilar products.
We have built an experienced and robust oncology market access, key account management and medical affairs capability in the United States, which have supported the successful commercialization of UDENYCA across its three FDA-approved presentations. We expect to leverage these capabilities as we build and launch our immuno-oncology franchise.
Commitments and Contingencies” in the “Notes to Consolidated Financial Statements” contained in Part II, Item 8 of this Annual Report on Form 10-K. Leases ​ We lease office and laboratory facilities through arrangements treated as operating leases, and we lease vehicles through finance leases.
Leases ​ We lease office and laboratory facilities through arrangements treated as operating leases, and we lease vehicles through finance leases. Refer to “Note 10. Leases” in the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K for additional information to our leases.
Loss on Debt Extinguishment Loss on debt extinguishment consists of losses incurred related to the early repayment of debt obligations . Other Income (Expense), Net Other income (expense), net consists primarily of interest earned on our cash, cash equivalents and investments in marketable securities, foreign exchange gains (losses) resulting from currency fluctuations, and gains (losses) from disposal of long-lived assets.
Other Income (Expense), Net Other income (expense), net consists primarily of interest earned on our cash and cash equivalents, non-cash accretion of discount on our investments in marketable securities, foreign exchange gains (losses) resulting from currency fluctuations, and gains (losses) from disposal of long-lived assets.
As of December 31, 2022, we sold 916,884 shares of common stock at a weighted-average price per share of $7.30 for gross proceeds of $6.7 million pursuant to the ATM Offering and received net proceeds of $6.5 million, net of $0.2 million of commissions and fees.
For the ATM Offering program to date as of December 31, 2023, we sold 4,476,645 shares of common stock at a weighted-average price per share of $5.81 for gross proceeds of $26.0 million pursuant to the ATM Offering and received net proceeds of $25.4 million, net of $0.6 million of commissions and fees.
Our second product, CIMERLI, was approved by the FDA in August 2022 as a biosimilar product interchangeable with Lucentis for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization. The FDA also granted CIMERLI 12 months of first interchangeable exclusivity .
Another product, CIMERLI (ranibizumab-eqrn), was approved by the FDA in August 2022 as a biosimilar product interchangeable with Lucentis (ranibizumab injection) for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization. We launched CIMERLI commercially in the United States in October 2022.
Other Commitments ​ Non-cancelable purchase commitments ​ We enter into contracts in the normal course of business with CROs for preclinical research studies and clinical trials, research 83 Table of Contents supplies and other services and products for operating purposes.
Other Commitments ​ Non-cancelable purchase commitments ​ We enter into contracts in the normal course of business with CROs for preclinical research studies and clinical trials, research supplies and other services and products for operating purposes. We have also entered into agreements with several CMOs for the manufacture and clinical drug supply of our commercial and product candidates.
Also on November 8, 2022, we entered into a sales agreement (“Sales Agreement”) with Cowen and Company, LLC (“Cowen”) pursuant to which we may issue and sell from time to time up to $150.0 million of our common stock through or to Cowen as our sales agent or principal in an at-the-market offering (“ATM Offering”).
Also on November 8, 2022, we entered into the Sales Agreement with TD Cowen pursuant to which we may issue and sell from time to time up to $150.0 million of our common stock in the ATM Offering .
Our first product, UDENYCA, a biosimilar to Neulasta, a long-acting G-CSF, was launched commercially in the United States in January 2019.
As of March 15, 2024, our commercial portfolio includes two FDA-approved biosimilar products. Our first product, UDENYCA, a biosimilar to Neulasta, a long-acting G-CSF, was launched commercially in the United States in January 2019.
Under the Registration Statement, we may offer and sell up to $150.0 million in the aggregate of our common stock, preferred stock, debt securities, warrants and units from time to time in one or more offerings.
On November 8, 2022, we filed a registration statement on Form S-3, which was declared effective on November 17, 2022 (the “Registration Statement”) . Under the Registration Statement, we could offer and sell up to $150.0 million in the aggregate of our common stock, preferred stock, debt securities, warrants and units from time to time in one or more offerings.
The following table summarizes our research and development expense incurred during the respective periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Development Status as of ​ Year Ended December 31, (in thousands) December 31, 2022 2022 2021 External costs incurred by product candidate: ​ ​ UDENYCA Approved (1) ​ $ 17,358 ​ $ 39,026 YUSIMRY Approved (2) ​ 26,309 ​ 48,326 Toripalimab ​ Pivotal Clinical Trials (3) ​ ​ 36,871 ​ ​ 43,368 CHS-006 ​ Clinical Trials (4) ​ ​ 4,650 ​ ​ — CHS-1000 ​ Early-Stage Development (5) ​ ​ 2,671 ​ ​ — Discontinued projects ​ Discontinued (6) ​ ​ 1,007 ​ ​ 20,262 Junshi Biosciences upfront and option exercise payments ​ ​ ​ ​ 35,000 ​ ​ 136,000 Other research and development expenses (7) ​ 1,838 ​ 5,295 Internal costs ​ 73,654 ​ 70,828 Total research and development expenses ​ $ 199,358 ​ $ 363,105 ​ (1) Expenses related primarily to development efforts to obtain Prior Approval Supplements (“PAS”) for additional presentations of UDENYCA.
The following table summarizes our research and development expense incurred during the respective periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Development Status as of ​ Year Ended December 31, (in thousands) December 31, 2023 2023 2022 External costs incurred by product candidate: ​ ​ UDENYCA Approved (1) ​ $ 4,476 ​ $ 17,358 YUSIMRY Approved (2) ​ 7,273 ​ 26,309 LOQTORZI ​ Approved (3) ​ ​ 17,192 ​ ​ 36,871 CHS-006 (option terminated) ​ Clinical Trials (4) ​ ​ 5,833 ​ ​ 39,650 CHS-1000 ​ Development ​ ​ 7,105 ​ ​ 2,671 Casdozokitug ​ Development (5) ​ ​ 4,129 ​ ​ — CHS-114 ​ Development (5) ​ ​ 1,429 ​ ​ — Other discontinued projects ​ Discontinued (6) ​ ​ 23 ​ ​ 1,007 Other research and development expenses (7) ​ 2,826 ​ 1,838 Internal costs ​ 59,150 ​ 73,654 Total research and development expenses ​ $ 109,436 ​ $ 199,358 ​ (1) Expenses related primarily to development efforts to obtain PAS for additional presentations of UDENYCA.
Under the terms of the Collaboration Agreement, we paid $150.0 million upfront for exclusive rights to toripalimab in the United States and Canada, an option in these territories to Junshi Biosciences’ anti-TIGIT antibody CHS-006, an option in these territories to a next-generation engineered IL-2 cytokine, and certain negotiation rights to two undisclosed preclinical immuno-oncology drug candidates.
Such consideration is subject to certain adjustments that will be finalized following the closing pursuant to the Purchase Agreement. ​ License Agreement with Junshi Biosciences On February 1, 2021, we entered into the Collaboration Agreement with Junshi Biosciences for the co-development and commercialization of LOQTORZI, Junshi Biosciences’ anti-PD-1 antibody in the United States and Canada. 78 Table of Contents Under the terms of the Collaboration Agreement, we paid $150.0 million upfront for exclusive rights to LOQTORZI in the United States and Canada, an option in these territories to Junshi Biosciences’ anti-TIGIT antibody CHS-006, an option in these territories to a next-generation engineered IL-2 cytokine, and certain negotiation rights to two undisclosed preclinical immuno-oncology drug candidates.
Summary Statement of Cash Flows The following table summarizes our cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2022 2021 Net cash used in operating activities ​ $ (241,124) ​ $ (37,432) Net cash used in investing activities ​ (166,850) ​ (138,410) Net cash provided by financing activities ​ 54,326 ​ 51,879 Net decrease in cash, cash equivalents and restricted cash ​ $ (353,648) ​ $ (123,963) ​ Net cash used in operating activities Cash used in operating activities of $241.1 million in 2022 was primarily due to the net loss of $291.8 million adjusted for the classification of the cash option payment to Junshi Biosciences of $35.0 million to investing activities, non-cash items including stock-based compensation expense of $50.7 million, net inventory write-offs of $26.0 million and other non-cash adjustments of $18.2 million, partially offset by the changes in our operating assets and liabilities of $79.3 million.
Cash used in operating activities of $241.1 million in 2022 was primarily due to the net loss of $291.8 million adjusted for the classification of the cash option payment to Junshi Biosciences of $35.0 million to investing activities, non-cash items including stock-based compensation expense of $50.7 million, net inventory write-downs of $26.0 million and other non-cash adjustments of $18.2 million, partially offset by the changes in our operating assets and liabilities of $79.3 million.
Organization and Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” contained in Part II, Item 8 of this Annual Report on Form 10-K. ​
Recent Accounting Pronouncements For a description of the impact of recent accounting pronouncements, see “Note 1. Organization and Significant Accounting Policies” in the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K. 89 Table of Contents ​
(7) Amount consists of expenses for other pipeline candidates and CIMERLI, which was approved by the FDA in August 2022.
(6) The $1.0 million of expense in 2022 relates to CHS-3318 and CHS-305 which were both discontinued during 2022. (7) Amount consists of expenses for other pipeline candidates and CIMERLI, which was approved by the FDA in August 2022.
The original BLA for toripalimab was for the use of toripalimab in combination with gemcitabine and cisplatin for first-line treatment of adults with metastatic or recurrent locally advanced NPC, and for use as a monotherapy in the second- or later-line treatment of patients with recurrent unresectable or metastatic NPC that have progressed on or after a platinum-containing chemotherapy .
On October 27, 2023, we announced that LOQTORZI was approved by the FDA in combination with cisplatin and gemcitabine for the first-line treatment of adults with metastatic or recurrent locally advanced NPC, and as monotherapy for the treatment of adults with recurrent, unresectable, or metastatic NPC with disease progression on or after platinum-containing chemotherapy.
As of December 31, 2022, we sold 916,884 shares of common stock at a weighted-average price per share of $7.30 for gross proceeds of $6.7 million pursuant to the ATM Offering and received net proceeds of $6.5 million, net of $0.2 million of commissions and fees.
During the year ended December 31, 2023, 3,559,761 shares were sold pursuant to the ATM Offering. 84 Table of Contents For the ATM Offering program to date as of December 31, 2023, we sold 4,476,645 shares of common stock at a weighted-average price per share of $5.81 for gross proceeds of $26.0 million and received net proceeds of $25.4 million, net of $0.6 million of commissions and fees.
The $35.0 million payment for the option to license CHS-006 was reflected in our first quarter of 2022 financial statements. We recorded research and development expense of $145.0 million during the first quarter of 2021, related to an upfront payment for exclusive rights to toripalimab in the United States and Canada.
The $35.0 million payment for the option to license CHS-006 was reflected in our first quarter of 2022 financial statements.
These estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Product Sales Discounts and Allowances ​ We recognize revenue when a customer obtains control of the product, which generally occurs upon delivery to and acceptance by the customer.
Product Sales Discounts and Allowances ​ We recognize revenue when a customer obtains control of the product, which generally occurs upon delivery to and acceptance by the customer.
Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2022 2021 Change Interest expense ​ $ 32,474 ​ $ 22,959 ​ $ 9,515 ​ The increase in interest expense in 2022 was primarily due to a higher average outstanding debt balance and interest rate increases in the United States in 2022, which has led to a higher weighted-average interest rate in 2022 as compared to 2021.
Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2023 2022 Change Interest expense ​ $ 40,542 ​ $ 32,474 ​ $ 8,068 ​ The increase in interest expense in 2023 was primarily due to a higher average outstanding debt balance and a higher average interest rate for the 2027 Term Loans.
Commercial availability of UDENYCA AI is planned for the second quarter of 2023. ● Toripalimab is being developed for its ability to block PD-1 interactions with its ligands, PD-L1 and PD-L2 by binding to the FG loop on the PD-1, and for enhanced PD-1 receptor internalization (endocytosis function).
UDENYCA ONBODY became commercially available in the first quarter of 2024. ● LOQTORZI was developed for its ability to block PD-1 interactions with its ligands, PD-L1 and PD-L2, by binding to the FG loop on the PD-1 receptor.
See below for further discussion and “Note 7. Debt Obligations” in the “Notes to Consolidated Financial Statements” contained in Part II, Item 8 of this Annual Report on Form 10-K.
As of December 31, 2023, no payments are due to CVR holders. For further details, see “Note 6. Surface Acquisition” in the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K.
Together with Junshi Biosciences, in the third quarter of 2021 we completed the submission of the original BLA for toripalimab to the FDA seeking approval for the use of toripalimab in combination with gemcitabine and cisplatin for first-line treatment of adults with metastatic or recurrent locally advanced NPC , and for use as a monotherapy in the second- or later-line treatment of patients with recurrent unresectable or metastatic NPC that have progressed on or after a platinum-containing chemotherapy.
Other Updates On October 27, 2023, we announced that LOQTORZI was approved by the FDA in combination with cisplatin and gemcitabine for the first-line treatment of adults with metastatic or recurrent locally advanced NPC, and as monotherapy for the treatment of adults with recurrent, unresectable, or metastatic NPC with disease progression on or after platinum-containing chemotherapy.
We have funded our operations primarily through sales of our common stock, issuance and incurrence of convertible and term debt and sales of UDENYCA. We entered into the Sales Agreement related to the ATM Offering pursuant to which we may issue and sell from time to time up to $150.0 million of our common stock.
We received net proceeds of approximately $53.6 million, after deducting the Underwriters’ discounts and commissions and offering expenses payable by us. ​ On November 8, 2022, we entered into the Sales Agreement related to the ATM Offering pursuant to which we may issue and sell from time to time up to $150.0 million of our common stock.
As of December 31, 2022, a 10% reduction in the carrying value of inventory we expect to sell in 2023 would be approximately $3.9 million. 85 Table of Contents Recent Accounting Pronouncements For a description of the impact of recent accounting pronouncements, see “Note 1.
In 2023, 2022 and 2021, cost of goods sold included inventory write-downs, net of $52.6 million, $26.0 million and $5.1 million, respectively. As of December 31, 2023, a 10% reduction in the carrying value of inventory we expect to sell in 2024 would be approximately $6.3 million.
On October 3, 2022, we launched CIMERLI commercially in the United States in both 0.3 mg and 0.5 mg dosage forms. Discontinued Product Candidates In January 2020, we entered into a license agreement with Innovent for the development and commercialization of a biosimilar version of bevacizumab (Avastin) in any dosage form and presentations in the United States and Canada.
On October 3, 2022, we launched CIMERLI commercially in the United States in both 0.3 mg and 0.5 mg dosage forms. ​ On January 19, 2024, we entered into the Purchase Agreement by and between us and Sandoz.
The FDA has allowed clinical trials for CHS-006 to proceed in the United States under an IND, and we plan to advance toripalimab in combination with CHS-006 in a clinical trial in North America in the second quarter of 2023. ​ ● We are pursuing an early-stage development candidate designed to improve anti-PD-1 clinical benefit by transforming an unfavorable TME to a more favorable TME.
We are enrolling patients with advanced solid tumors in North America in a clinical trial evaluating safety and pharmacokinetics of CHS-114 (clinicaltrials.gov identifier# NCT05635643). ● We are pursuing an early-stage development candidate, CHS-1000, an antibody targeting human ILT4, designed to improve anti-PD-1 clinical benefit by transforming an unfavorable TME to a more favorable TME.
In March 2022, we paid $35.0 million for the exercise of our option to license CHS-006. We and Junshi Biosciences are jointly developing CHS-006 with each party responsible for the associated development costs as set forth in the Collaboration Agreement.
In March 2022, we paid $35.0 million for the exercise of our option to license CHS-006. Subsequent joint development consistent with the Collaboration Agreement commenced. On January 10, 2024, we announced that we had delivered a notice of termination of the TIGIT Program (as defined in the Collaboration Agreement) to Junshi Biosciences pursuant to the Collaboration Agreement.
Our net revenue and market penetration may continue to be adversely impacted by pricing trends and competitive dynamics in the overall pegfilgrastim market. In addition, the COVID-19 pandemic has negatively impacted the pre-filled syringe pegfilgrastim market due to preferences to administer medication at home.
In addition, the COVID-19 pandemic has negatively impacted the pre-filled syringe pegfilgrastim market due to preferences to administer medication at home. We expect our net revenue to decrease during 2024, as a result of the CIMERLI Sale Transaction that closed on March 1, 2024.
We expect our selling, general and administrative expense in 2023 to be lower than in 2022 primarily as a result of decreased commercial costs.
Excluding the potential impact of any acquisitions or business development transactions that have not been consummated, we expect our selling, general and administrative expense for the full year 2024 to be lower than the full year 2023 primarily as a result of the CIMERLI Sale Transaction, reduced headcount and decreased commercial costs.
In addition, a recession, market correction or depression resulting from the world’s ongoing recovery from the COVID-19 pandemic could materially affect our business and the value of our notes and our common stock. Financial Operations Overview Revenue Our first FDA-approved product, UDENYCA, was approved in November 2018, and we initiated United States sales of UDENYCA on January 3, 2019.
Financial Operations Overview Revenue Our first FDA-approved product, UDENYCA, was approved in November 2018, and we initiated United States sales of UDENYCA on January 3, 2019. In December 2021, the FDA-approved YUSIMRY, which we launched in the United States in July 2023. On August 2, 2022, the FDA approved CIMERLI, which we launched in the United States in October 2022.
The following table presents a summary of our active partnerships and collaborations that have contingent regulatory and sales milestones as of December 31, 2022: ​ ​ ​ ​ ​ ​ Counterparty ​ Description ​ Potential Aggregate Milestone Amount (1) Junshi Biosciences ​ Toripalimab ​ $380.0 million (2) ​ ​ CHS-006 anti-TIGIT antibody ​ $255.0 million (3) Bioeq ​ CIMERLI ​ €5.0 million (4) ​ (1) Excludes the potential aggregate upfront and milestone amounts for the Term Sheet with Klinge Biopharma for the exclusive commercialization rights to FYB203.
With the exception of $25.0 million for a milestone payment to Junshi Biosciences, of which we expect to pay $12.5 million in the second quarter of 2024 and $12.5 million in the first quarter of 2025, as of December 31, 2023, no other milestones were accrued because their probability of achievement had not reached the threshold for recognition. 86 Table of Contents ​ The following table presents a summary of our active partnerships and collaborations that have contingent regulatory and sales milestones as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ Counterparty ​ Description ​ Potential Aggregate Milestone Amount Junshi Biosciences ​ LOQTORZI ​ $355.0 million (1) ​ ​ CHS-006 anti-TIGIT antibody ​ $255.0 million (2) Adimab ​ Casdozokitug ​ $13.0 million Vaccinex ​ CHS-114 ​ $15.0 million ​ (1) $290.0 million relates to sales milestones and $65.0 million relates to regulatory milestones, excluding the $25.0 million milestone payment to Junshi Biosciences, of which we expect to pay $12.5 million in the second quarter of 2024 and $12.5 million in the first quarter of 2025.
The net expense in 2021 was due to the realized loss upon liquidating our investments in marketable securities. ​ 80 Table of Contents Liquidity and Capital Resources ​ Certain relevant measures of our liquidity and capital resources are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ December 31, ​ (in thousands) 2022 2021 Financial assets ​ ​ ​ ​ ​ ​ ​ ​ Total Cash, cash equivalents and marketable securities ​ $ 191,681 ​ ​ $ 417,195 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt obligations: ​ ​ ​ ​ ​ ​ 2027 Term Loans ​ $ 245,483 (1) ​ ​ $ — ​ 2025 Term Loan ​ ​ — ​ ​ ​ 75,513 (1) ​ 2022 Convertible Notes ​ — ​ ​ 108,479 (1) ​ 2026 Convertible Notes ​ 225,575 ​ ​ 224,288 ​ Total debt obligations ​ $ 471,058 ​ ​ $ 408,280 ​ ​ (1) The 2027 Term Loans were entered into in January 2022 in connection with the payoff and refinancing of existing debt facilities.
No income tax provision or benefit was recognized for the year ended December 31, 2022. 83 Table of Contents Liquidity and Capital Resources ​ Certain relevant measures of our liquidity and capital resources are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ December 31, (in thousands) 2023 2022 Financial assets ​ ​ ​ ​ ​ ​ ​ Total Cash, cash equivalents and marketable securities ​ $ 117,748 ​ ​ $ 191,681 ​ ​ ​ ​ ​ ​ ​ ​ Debt obligations: ​ ​ ​ ​ ​ 2027 Term Loans ​ $ 246,481 ​ ​ $ 245,483 2026 Convertible Notes ​ 226,888 ​ ​ 225,575 Total debt obligations ​ $ 473,369 ​ ​ $ 471,058 ​ Although we were profitable in 2020 and 2019, due to our research and development expenditures and decline in revenue beginning in 2021, we have generated significant operating losses in all other years since our inception, including in 2023 and 2022.
Products and Product Candidates Our portfolio includes the following products and product candidates: Oncology ● UDENYCA is a biosimilar to Neulasta, a long-acting G-CSF. We launched UDENYCA commercially in the United States in January 2019. In 2022, 2021 and 2020, we recorded UDENYCA net product sales of $203.8 million, $326.5 million and $475.8 million, respectively.
Upon the closing of the Sale Transaction we became liable to repay $175.0 million of the existing principal balance of $250.0 million of the loans outstanding under the Loan Agreement on April 1, 2024 and we plan to repay $175.0 million and the prepayment premium and makewhole amount of $6.8 million to the Lenders on or before April 1, 2024 pursuant to the Consent and Amendment. ​ Products and Product Candidates Our portfolio includes the following products and product candidates: Oncology ● UDENYCA, a biosimilar to Neulasta, a long-acting G-CSF, was launched commercially in the United States in January 2019.
Cash used in investing activities of $138.4 million in 2021 was primarily due to purchases of investments in marketable securities of $182.5 million, upfront license fee of $145.0 million to Junshi Biosciences pursuant to the Collaboration Agreement, partially offset by a $9.0 million adjustment related to the fair value of the DLOM on our common stock purchased by Junshi Biosciences, and purchases of property and equipment of $1.3 million.
Net cash provided by (used in) investing activities Cash provided by investing activities of $144.6 million in 2023 was primarily due to proceeds from maturities of investments in marketable securities of $144.4 million, proceeds from sale of investments in marketable securities of $13.3 million, and $7.0 million of cash acquired from the Surface Acquisition, partially offset by purchases of investments in marketable securities of $19.5 million and a $1.1 million upfront milestone payment due to the first commercial sale of YUSIMRY.
Pursuant to the Stock Purchase Agreement, on April 16, 2021, 75 Table of Contents we issued 2,491,988 unregistered shares of our common stock to Junshi Biosciences, at a price per share of $20.06, for an aggregate amount of approximately $50.0 million in cash.
On October 9, 2023, in accordance with the terms of an Optional Stock Purchase Agreement entered with a CMO on September 28, 2023 (the “Optional Stock Purchase Agreement”), we issued 2,225,513 shares of our common stock to the CMO for a price of $3.675 per share, representing an aggregate value of $8.2 million.
Removed
We launched CIMERLI commercially in the United States on October 3, 2022. In December 2021, the FDA-approved YUSIMRY, which we plan to launch in the United States on or after July 1, 2023, pursuant to the terms of an agreement with Humira’s manufacturer, AbbVie.
Added
The FDA approved the PAS for an AI presentation of UDENYCA on March 3, 2023, and on May 22, 2023 we announced the availability of UDENYCA AI for commercial sale. On December 26, 2023 we announced that the FDA approved the PAS for our third pegfilgrastim presentation, UDENYCA ONBODY. UDENYCA ONBODY became commercially available in the first quarter of 2024.
Removed
In addition to our three FDA-approved biosimilar products, we also have an original BLA under review by the FDA for toripalimab. Toripalimab is being developed for its ability to block PD-1 interactions with its ligands, PD-L1 and PD-L2 by binding to the FG loop on the PD-1, and for enhanced PD-1 receptor internalization (endocytosis function).
Added
Our second product, YUSIMRY (adalimumab-aqvh), a biosimilar to Humira (adalimumab), was launched in the United States in July 2023.
Removed
We believe blocking PD-1 interactions with PD-L1 and PD-L2 have the potential to promote the immune system’s ability to attack and kill tumor cells.
Added
On January 19, 2024, we entered into the Purchase Agreement by and between us and Sandoz.
Removed
On April 29, 2022, we received a CRL from the FDA for the original BLA for toripalimab requesting certain manufacturing process changes that we and Junshi Biosciences believe are readily addressable.
Added
Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, on March 1, 2024, we completed the divestiture of our CIMERLI ophthalmology franchise through the sale of our subsidiary, Coherus Ophthalmology LLC, 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.
Removed
On July 6, 2022, we announced that the FDA accepted the resubmission of the original BLA for toripalimab and announced that the FDA set a PDUFA action date for December 23, 2022. On December 24, 2022, we announced that we did not receive an action letter from the FDA by the PDUFA action date.
Added
Such consideration is subject to certain adjustments that will be finalized following the closing pursuant to the Purchase Agreement. O ur commercial portfolio includes LOQTORZI, a novel PD-1 inhibitor .
Removed
The FDA previously communicated that an on-site inspection of Junshi Biosciences’ manufacturing facility for toripalimab is required before the FDA can approve the original BLA; however, they were unable to conduct the inspection by December 23, 2022 due to the impact of COVID-19 related restrictions on travel in China.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+2 added−2 removed3 unchanged
Biggest changeAs of December 31, 2022, we had $250.0 million principal outstanding on our 2027 Term Loans that accrue interest from inception through March 31, 2023 at 8.25% plus three-month LIBOR per annum with a LIBOR floor of 1.0%; and, starting April 1, 2023, accrue interest at 8.25% plus the Adjusted Term SOFR, with a floor on Adjusted Term SOFR of 1.0%.
Biggest changeWe are exposed to interest rate risk with respect to variable rate debt. As of December 31, 2023, we had $250.0 million principal outstanding on our 2027 Term Loans that starting April 1, 2023, accrue interest at 8.25% plus the Adjusted Term SOFR, with a floor on Adjusted Term SOFR of 1.0%.
A hypothetical 100 basis point increase in the interest rate on our variable rate debt could result in up to a $2.5 million increase in the annual interest expense as of December 31, 2022. In April 2020, we issued $230.0 million aggregate principal amount of 2026 Convertible Notes with a fixed interest rate of 1.5%.
A hypothetical 100 basis point increase in the interest rate on our variable rate debt could result in up to a $2.5 million increase in the annual interest expense as of December 31, 2023. In April 2020, we issued $230.0 million aggregate principal amount of 2026 Convertible Notes with a fixed interest rate of 1.5%.
We carry the 2026 Convertible Notes on our balance sheet at face value less the unamortized discount and issuance costs, and we present the fair value for required disclosure purposes only. Substantially all of our sales are denominated in U.S. dollars. We have exposure to the exchange rate between the U.S.
We carry the 2026 Convertible Notes on our balance sheet at face value less the unamortized discount and issuance costs, and we present the fair value for required disclosure purposes only. Substantially all of our sales are denominated in U.S. dollars. We had exposure to the exchange rate between the U.S.
Our financial instruments that are exposed to concentration of credit risk consist primarily of cash, cash equivalents, investments and accounts receivables. We attempt to minimize the risks related to cash, cash equivalents and investments by investing in a broad and diverse range of financial instruments.
We do not enter into investments for trading or speculative purposes. Our financial instruments that are exposed to concentration of credit risk consist primarily of cash, cash equivalents, investments and accounts receivables. We attempt to minimize the risks related to cash, cash equivalents and investments by investing in a broad and diverse range of financial instruments.
Dollar and the Euro because we make purchases of CIMERLI inventory from and pay royalties to our partner Bioeq that are denominated in Euros and we are therefore subject to fluctuations due to changes in foreign currency exchange rates. Accordingly, fluctuations in the exchange rate between the U.S.
Dollar and the Euro because we made purchases of CIMERLI inventory from and paid royalties to our partner Bioeq that were denominated in Euros, and we were therefore subject to fluctuations due to changes in foreign currency exchange rates. Accordingly, fluctuations in the exchange rate between the U.S. Dollar and the Euro may have impacted our consolidated statements of operations.
We currently do not hedge our variable interest rate debt. The interest rate for our variable rate debt during the quarter ended December 31, 2022 was 12.00%, and the interest rate during the first quarter of 2023 will be 13.03% based on the 3-month LIBOR on January 1, 2023.
We currently do not hedge our variable interest rate debt. The interest rate for our variable rate debt during the quarter ended December 31, 2023 was 13.91%, and the interest rate during the first quarter of 2024 will be 13.84%.
However, because our cash equivalents are primarily short-term in duration, we believe that our exposure to interest rate risk on these investments is not significant and a 1% movement in market interest rates would not have a material impact to our financial results. We do not enter into investments for trading or speculative purposes.
Due to the short-term duration of our investment portfolio and the low risk profile of our investments, we believe that our exposure to interest rate risk on these investments is not significant and a 1% movement in market interest rates would not have a material impact to our financial results.
A portion of our cash equivalents and investments in marketable securities may be subject to interest rate risk and could fall in value if market interest rates increase.
Our primary exposure to market risk is interest rate sensitivity. Our marketable securities are subject to interest rate risk and could fall in value if market interest rates increase.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk As of December 31, 2022, we had cash and cash equivalents and marketable securities of $191.7 million, consisting of cash, investments in money market funds and investments in marketable securities.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risk related to changes in interest rates. As of December 31, 2023, we had cash and cash equivalents and marketable securities of $117.7 million, primarily invested in U.S. treasuries and government agency securities, commercial paper, corporate bonds and money market funds.
Removed
We are exposed to interest rate risk with respect to variable rate debt.
Added
In the first quarter of 2023, we started utilizing euro currency contracts to manage euro currency risk in purchasing inventory and future settlement of euro denominated assets and liabilities. The volume of our foreign currency contract activity is limited by the amount of transaction exposure in each foreign currency and our election whether to hedge the transactions.
Removed
Dollar and the Euro may impact our consolidated statements of operations. ​ ​ 86 Table of Contents
Added
There are no derivative instruments entered into for speculative or trading purposes. Since our derivatives all matured and settled by December 31, 2023, there were no derivative assets or derivative liabilities as of December 31, 2023. ​ ​ 90 Table of Contents

Other CHRS 10-K year-over-year comparisons