Patrick O’Brien - Senior Vice President of Investor Relations Denny Lanfear - Chairman President and Chief Executive Officer Jean Viret - Chief Financial Officer Michael Fleming - SVP, Commercial Strategy.

Mohit Bansal - Citigroup Elian - Credit Suisse Jason McCarthy - Maxim Group Douglas Tsao - Barclays.

Ladies and gentlemen, thank you for standing by, and welcome to the Coherus BioSciences Third Quarter Earnings Conference Call. My name is Donavan and I will your conference operator for the call today. At this time, all participants are in a listen-only mode. And as a reminder, this conference call is being recorded.

I would now like to turn the call over to Patrick O’Brien, Senior Vice President of Investor Relations. Please go ahead..

Thank you, Donavan, and good afternoon, everyone. After close of market today, we issued our third quarter financial results press releases. This press release can be found on the Coherus BioSciences website.

Joining me for today’s call will be Denny Lanfear, President, CEO and Chairman; Barbara Finck, our Chief Medical Officer who is dialed in remotely; Lisa Bell, EVP of Global Regulatory Affairs; Jean Viret, our CFO; Matt Hooper, our EVP and General Counsel and Michael Fleming, our SVP of Commercial Strategy..

Before, we being our formal remarks, I’d like to remind you that we will be making forward-looking statements with respect to product development plans all of which involve certain assumptions, risks and uncertainties that are beyond our control and could cause our actual results to differ from these statements.

A description of these risks can be found on our most recent Form 10-Q and filed with the SEC. In addition, Coherus BioSciences does not undertake any obligation to update any forward-looking statement made during this call. I'd now like to turn the call over to Denny..

Thank you, Patrick, and thank you for joining us today on our call.

We will review the company's first wave of products CHS-1420, our adalimumab biosimilar, CHS-0214, our etanercept Enbrel biosimilar, CHS-1701, the company's pegfilgrastim biosimilar; in that case also regarding 1701 we will also provide some color on the company's progress in terms of the commercialization of this product.

And then we will also provide you an update on licensing. In terms of CHS-1420 and in terms of Q3 event for our Humira biosimilar, we reported top line results from the ongoing Phase 3 clinical study CHS-1420-02 in psoriasis with 545 patients which are randomized for the study.

As you recall, all primary endpoints demonstrating similarity between 1420 and Humira with respect to percentage of subjects achieving 75% improvement in psoriasis area and severity index the PASI-75 score at week 12 were achieved. The 95%confidence intervals for the difference between the groups fell well within the prespecified margin.

And both CHS-1420 and Humira were similarly well tolerated with similar safety profiles in this study. Secondly, the company was awarded a fourth US patent, 9,382,317 on formulations excluding surfactant and polyol. And company's general counsel, Matt Hooper is available during the Q&A for additional questions regarding this particular patent.

In terms of subsequent events and in fact in the product, let me just discuss the 166 developments of earlier this week a bit more. First of all, as previously announced, the company received the decision denying institution for IPR pursuant to the AbbVie 166 formulation patent.

And while we are disappointed with this development, I'd like to make the following statements regarding our formulation efforts and our intellectual property position. First, we believe the key scientific arguments may not have been appreciated or may have been overlooked by the panel.

And the company will be filing a request for reconsideration to further point out subtleties of certain arguments.

Secondly, as you know, the company has developed a variety of options to address formulation IP with Humira biosimilar and we will be initiating a pharmacokinetic study in the first half of 2017 with formulation that is not impacted by the 166 patent.

Company will decline to comment further on its legal strategy concerning additional formulations and we will continue to assess the AbbVie IP state related risks and legal options which may be available to us.

Now in terms of other developments with 1420, there are some ongoing studies, two other minor studies the 1420-04 study and the 1420-05 study are underway to enable registration of the auto-injector configuration and we expect to complete both of these prior to the filing.

In terms of manufacturing, we continue with our process qualification lots in Q3 in support of the BLA and these are proceeding as planned. Let me talk a little bit about CHS-0214, the company's etanercept Enbrel biosimilar. Last month, we announced results of two pharmacokinetic studies involving 0214 our biosimilar candidate for etanercept.

Study CHS-0214-06 was a Phase 1 pharmacokinetic bioequivalent study i.e. PK/BE study comparing CHS-0214 versus European Union Enbrel. The study achieved the primary PK/BE endpoint as the 90% [gap interval] for the geometric mean ratio two groups or it is in the 80% to 125% for all PK parameters.

For the CHS-0214-07 study, this was an additional non pivotal Phase 1 bridging study intended to characterize differences between two process approaches. As anticipated, the study provides additional relative viability data for our CHS-0214.

As planned, Coherus is moving forward with the MAA pre-submission meeting which is expected in the first quarter of 2017. These will review the complete CHS-0214 program prior to its filing and the prior marketing authorization submission will occur directly thereafter.

During the quarter, we regained all development commercial rights previously licensed for Europe, Canada, Brazil, the Middle East and other territories from Shire plc as previously announced. And I'll discuss licensing implications of this subsequently. And now let me discuss the company's lead and most advanced product CHS-1701.

As reported last month, the US FDA has accepted the filing of 351 (k) Biologic License Application for CHS-1701, our pegfilgrastim biosimilar candidates. The biosimilar user fee act BSUFA action date for this is June 9, 2017.

And at this point we expect the FDA to host advisory committee for our product and look forward to any such announcement from the agency. Now I'd like to touch upon some of the commercial consideration for this product.

During the Q&A, we have Michael Fleming who is the company's Senior Vice President of Commercial Strategy; he can take questions on that. And let me start with the fly-by some of the commercial updates. First, let me say that the acceptance of the 1701 BLA triggers formal initiation of our commercial launch planning activities.

In recent news of delay in the Sandoz pegfilgrastim biosimilar leads us to believe that we will the first biosimilar pegfilgrastim candidate be approved and to compete with Neulasta.

We further believe this first in market position represents an excellent opportunity to bring significant value to oncology patients, physicians and peers while relieving cost pressures in oncology brought in by a variety things including high cost new therapies.

We've made significant progress in the recruitment of commercial leadership initiated the build out of our value chain and initiated development of marketing strategies campaigns and programs which I'll review shortly. We will provide little color there and let me first start with an update on recruitment.

We will be using the same team building strategy that we have applied to other functions of our platform. We are hiring industry veteran with strong track records, relevant and directly related domain experience who can bring expertise, relationships and insights to bear on our strategy for success.

For example, we've recently hired a vice president of marketing with deep oncology buy-and-bill experience, good relationships within the oncology support of care space including over a decade of Neulasta experience.

Earlier, we hired a vice president of sales who also came to us with decades of related experience in oncology supported care including Neulasta. Our organizational plan includes key function such as market access and reimbursement, pricing and contract in key account as well as marketing sales and commercial analytics.

Now in terms of marketing and sales, we expect to staff a small specialty oncology sales force focused on biosimilars of approximately 50 reps and perhaps a dozen key account specialists. And of course we are judiciously gaining our staffing based on key regulatory milestones as you would reasonably expect.

Let me talk a little bit about now the commercial strategy progress and some of the activities that are completed or underway. First of all, we've completed our segmentation of the market and further tested value proposition with our various stakeholders.

We are now making very good progress building on for value chain which includes activities like establishing state licenses, securing third party logistics providers and development of a trade strategy. We've also identified and built our commercial vendor base including communication agencies, hub service providers and third party data providers.

We've also developed our positioning and branding strategies to support next year's launch. Additionally, we have completed a number of physician surveys to understand price elasticity of demand, impact of the on-body system on our plans as well as overall enthusiasm for embracing pegfilgrastim biosimilar manufactures.

In anticipation of few questions you may have on your mind, let me make a few comments regarding market potential of the product, the on-body system and some additional considerations. Let me first address the issue of the product market potential and I'll start with the perceptions in the biosimilars.

One of the key things we've sought to understand is the pent-up demand for biosimilars and the sales potential of this product in this space. Now with the Zarxio launch, Amgen communicated on their call recently that biosimilar penetration in Neupogen is 40% and growing.

And we see this performance as encouraging for acceptance of biosimilars in the US oncology market place. Our research data suggest that there is a much greater pent-up demand for long acting biosimilar pegfilgrastim than for the short acting filgrastim like Zarxio.

It is difficult to handicap precisely how far biosimilars will penetrate in Neulasta market as the function of course is several variables including the number of competitors, the discount level, the originator competitive response as well as others.

However, based on the EU experience and our understanding of demand, we would expect to see biosimilar pegfilgrastim penetration in the US to approach 7% to 8% level. Let me turn now little bit to some of the considerations regarding the on- body system. From time to time we received questions and implications for the sales potential.

And let me say that our market research suggest that on- body has a convenience factor mainly for patients who have long travel distances of chemotherapy clinical hospital. We believe that this underlying convenience value proposition is relevant to a far smaller percentage of the patient population than current penetration estimate would reflect.

This is substantiated by our research which suggest that large driver for the on -body use is more economic than patient centric, primarily because it offer the lower price than the prefilled syringes and it is currently unopposed in the market.

We believe this is a very large market but more than enough room to accommodate both the biosimilar prefilled syringe product format and the on- body format for patients who truly needed.

In conclusion, let me say that we expected relatively well in the pegfilgrastim in market upon launch, particularly if we are the sole biosimilar market participants as envisioned for some period of time. We will be providing some additional color and how we see the market and their potential for shaping up for us on the next earnings call.

Now lastly before I turn things over to Jean Viret, let me touch on licensing. In terms of the anti-TNF products, the timing of regaining the CHS-0214 rights from Shire positions us to bundle our anti-TNF products together if desire for licensee given that we have complimentary and overlapping price offering in key major territories.

On CHS-1420, we continue discussion with our potential partners including the 166 consideration and our plans for continue program progress continue to guide our first step 2017 transaction guidance. In terms of ex-US oncology, we continue our effort there to license key parts of the portfolio ex -US particularly in Europe.

And we continue to guide into first half of 2017 transaction. And in terms of CHS-131, let me comment further on that. We have made some very good progress which is our oral small-molecule relapsing-remitting MS product. You may recall this completed successful Phase 2b in July.

The relapsing remaining MS market is approaching $20 billion and we believe is safe, well tolerated and convenient product will find opportunity in the treatment paradigm. You will hear more about this in next six months or so as we continue our licensing efforts for this product.

With that product summary all the way let me now turn to Jean Viret the company's Chief Financial Officer who will review the company's Q3 earnings results.

Jean?.

Thank you, Denny. Cash and cash equivalents totaled $159.7 million as of September 30, 2016, compared to $220.9 million as of June 30, 2016. Cash used in operations was $61.2 million in the third quarter of 2016, as compared to $76.3 million in the first quarter of 2016.

Cash used in operations was approximately 20% less in the third quarter, compared to the first quarter of 2016 as previously guided. . Total revenue for the third quarter of 2016 was $162.8 million, as compared to $7.2 million in the third quarter of 2016.

Total revenue for nine months ended September 30, 2016 was $189.3 million as compared to $19.8 million for the same period in 2015.

The increase over the same period in 2015 was due to increased recognition of collaboration revenue as a result of regaining the full development and commercial rights for CHS-0214 from Shire in Europe, Canada, Brazil, the Middle East and certain other territories.

Research and development expenses for the third quarter of 2016 were $64.6 million, compared to $68.2 million for the same period in 2015. R&D expenses for nine months ended September 30, 2016 were $195.4 million, as compared to $161.6 million over same period in 2015.

The decrease in R&D expenses in the third quarter over the same period in 2015 was mainly due to the completion of BLA-enabling studies for CHS-1701 and the completion of two Phase 3 studies for CHS-0214.

The increase in R&D expenses in the first nine months of 2016 over the same period of 2015 was mainly attributable to proceeding with the clinical activities associated with the Phase 3 clinical study in psoriasis for CHS-1420, advances in other product candidate and hiring additional personnel to support both late development and other stage activities, partially offset by a decrease in cost related to BLA enabling studies for CHS-1701 and a decrease in cost associated with the CHS-0214 Phase 3 trial that were completed at the end of 2015.

General and administrative expenses for the third quarter of 2016 were $13.6 million, compared to $10.2 million for the same period in 2015. G&A expenses for nine months ended September 30, 2016 was $36.3 million as compared to $25.1 million for same period in 2015.

Changes in G&A expenses were mainly attributable to hiring employees to support legal, pre-commercial and accounting activities, costs associated with stock options granted since the third quarter of 2015, and legal fees to support the intellectual property strategy.

Net income attributable to Coherus for the third quarter of 2016 was $83.9 million, or $1.67 per share, compared to net loss of $71.3 million, or $1.86 per share over same period in 2015. We will now turn the call to Q&A. Operator; you may open the call to questions. Thank you. .

[Operator Instructions] And I am showing our first question is from Mohit Bansal with Citigroup. Your line is now open..

Taking my question. So I have two questions if I may.

First one relates to Neulasta biosimilar and specifically now we have seen almost a year of launch of Neupogen biosimilar from Sandoz, so how do you characterize that particular launch given that Sandoz has reported more like $100 million or so revenue and how do you characterize that launch and what we have learned from that launch which could help you when you launch your own product.

And the other one is more broad question with the revenue precedent and then Republican victory, I mean chatter around the Affordable Care Act, what kind of risk do you see to 351(k) pathway and then given that you already filed for one, you are pretty close to for others, do you see you are protected or how do you see that happening? Thank you. .

Thank you, Mohit. This is Denny. Let me let the company's senior VP of Commercial Strategy, Michael Fleming who is with us today first comment on your question regarding the Sandoz of their launch and then I'll follow up with some color on the Affordable Care Act and the biosimilar act.

Michael?.

Yes, thanks for the question. So questions really about the Zarxio launch, launch and how do we view it. Amgen communicated on their call that biosimilar penetration into Neupogen business is now about 40% and growing.

And in fact if you look at the uptick of Zarxio, it is looking exceed the uptick trajectory of Granix they launch previously into the space. So we see this performance overall as very encouraging for the acceptance of biosimilar in the oncology space.

And in terms of the market research that we've done, the customers that we talked to, the basic supply in terms of really doing effective messaging on quality of the product, the reliability of the supply as well as the value proposition. Some of the softer and harder aspects of value.

Contracting pricing is important but also patient support services. So again we see this is very encouraging for the category. I would also say that Neulasta, we think there is going to be much, much greater pent-up demand for Neulasta than there would be -- for Neulasta about similar than they would be for a Neupogen biosimilar..

And let me secondarily address your question ACA and biosimilar act, it is true that the biosimilar act this part of Affordable Care Act, however biosimilar act is working quite well. As you know, number of products has been approved with full label extrapolation. These will be beneficial to the market place overall for pharmaceutics.

There has been no criticism of the biosimilar act that we have heard in this context. This is a legitimate pre-market approach to helping control pricing in the pharmaceutical market. That was a very pro competitive approach. We would expect administration to be somewhat sympathetic to it. So we don't foresee any issues or any changes.

In our view it is working well and it is something that would be welcome. .

And our next question is from Alethia Young with Credit Suisse. Your line is now open. .

Hi, guys, this is [Elian] filling for Alethia. Thanks so much for taking the question. Could you give us a little bit more color on the Humira biosimilar formulation you have specifically what preclinical and clinical work you have done already? And then also could you comment on how long you expect the PK study to take? Thanks. .

Hi, thank you. With all respect we will decline to discuss the particulars of the pre-clinical stat of any other formulation. However, we as just guided to a first half of 2017 start for a pharmacokinetic which is really the milestone.

I suggest that you be focus on and I believe that it is fair to say that such study would probably take around six months to execute and so forth as we discussed previously another call and forums, and lastly I'd say a number of formulation of course that we have developed over time as contingency for various legal development in the Humira space.

As you may recall, we've keep very strong track of the intellectual property development here. And you could expect that we would have corresponding formulation strategies dovetail scientific strategies matching certain legal development as we proceed with the product.

So we have in the past moved forward with a number of options in parallel and this is a case of us exercising one of those options. .

[Operator Instructions] And our next question is from Jason McCarthy with Maxim Group. Your line is now open..

Hi, guys. Thanks for taking the question. I have just a question about potential partnering opportunities for your TNF. I guess my knowledge you are the only group that has two TNF biosimilars, are you considering potentially partnering them as a pair almost like a TNF little franchise? Nobody else has I think it could be a tremendous opportunity.

I want to get your thoughts on that. Thanks for taking the question. .

Thanks Jason. Yes, thank you for that question. We point that out in our prepared remarks. We think there is of course a high complementarity in terms of the anti-TNF. As you know, patients regularly rotate from one of these products to the other and they are therapeutically interchangeable to some degree.

Some patients do better one and the other some patient stay long and one than the other. So we think there is a powerful value proposition they have both products in hand. Particularly in the case for example the European market where you are able to access both those product at the same time. And as well as other markets also.

So we thought it was actually fortuitous that the return of the asset from Shire occurred concurrently at the time when we had just initiated the 1420 biosimilar out licensing process. So we are encouraged and actually made that note. I appreciate your insights and I would agree with that. And so we'll give a little update as we go on.

And as you call, we've got into first half of 2017 for a deal on these assets. .

And we have time for one more question comes from Douglas Tsao of Barclays. Your line is now open..

Hi, good afternoon. Thanks for taking the questions.

Denny I know it is obviously been early with the decision from PTAB on 166 patent, I was just curious if in the interim you had any sort of conversations with any of those third party that you had partnership talks with on the -- for the anti-TNF and how is that sort of affected sort of interest in the product?.

Hi, Doug. Thanks for the question. I'd decline to provide additional comment on our partnering on such a frequent basis. And we'll be happy to update partnering on the call but as you know the company's long stand position is not to offer a blow by blow, stage by stage this sort of commentary on its partnering effort to the market.

We don't believe that's appropriate. And we won't do so now. That being said, with this product we believe that the attractiveness of 1420 and asset is broad because of its global reach. There are a number of markets beside the US where there is particular patent plays a significant role.

Particularly for example in Europe where we just pointed out that we have both the 0214 Enbrel asset and this asset available and in play as well as in other territories.

The second point that I would make also is that we have a parallel track opportunities in terms of the formulation and approaches, we approach this in a multi prong fashion as you recall from our earlier conversations.

So we will continue to go forward with those but I think it is clear and I talked about it on Monday and then again on Tuesday when I was at Credit Suisse, we don't believe this is last shot fired at all in terms of the formulation patent on 166 or IP overall. .

Okay, great. And then if have you ever given consideration to development of your own sort of on- body type of system, just given the fact that I hear your [Technical Difficulty].

I am sorry Doug I missed the second part of your question. .

I just curious if have you ever considered sort of development of your own sort of on-body type of device?.

Well, let me say that was -- that comprises a strategic question which I would probably decline to comment further on in this forum. But let me say that we have a number of folks on our team who are very, very familiar with the on- body system with Neulasta and very, very familiar with the value proposition.

So if we certainly thought that was something that we should do or wanted to you could predispose that we would, go ahead and look a little further end to that. And I think that we are very familiar as we point with the value proposition on that. So I certainly leave it there.

But we will be happy to provide update on you as time goes on that particular topic. .

And we have time for one question. [Operator Instructions] And with no additional question, I'd now turn the call back over to Mr. Lanfear for closing remarks. .

All right. Thank you very much. Thank you all for joining the call today to receive the update on our product. And we look forward to talking to you again on our next earnings call. Thank you. Bye, bye..