Jean Viret - CFO Denny Lanfear - President, CEO and Chairman Vince Anicetti - COO Jim Hassard - SVP, Marketing and Market Access Matt Hooper - EVP and General Counsel Barbara Finck - CMO.

Mohit Bansal - Citigroup Jason Kolbert - H.C. Wainwright Douglas Tsao - Barclays.

Ladies and gentlemen, thank you for standing by, and welcome to the Coherus BioSciences Second Quarter Earnings Conference Call. My name is Sonya, and I will be 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 Jean Viret, Chief Financial Officer. Please go ahead..

Thank you, Sonya and good afternoon, everyone. After close of market today, we issued a second quarter financial results press release. This release can be found on the Coherus BioSciences’ website.

Joining me for today’s call will be Denny Lanfear, President, CEO and Chairman; Vince Anicetti, Chief Operating Officer; Jim Hassard, Senior Vice President, Marketing and Market Access; Matt Hooper, Executive Vice President and General Counsel; and Dr. Barbara Finck, Chief Medical Officer.

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

A description of these risks can be found on our most recent Form 10-Q, which we filed this afternoon after market closed. In addition, we do not undertake any obligation to update any forward-looking statements made during this call. I will now turn the call over to Denny..

Thank you, Jean. We’ve had a very productive quarter here in Q2 of 2018, and we’re very happy to update you all on developments today. First, with respect to UDENYCA, formerly known as CHS1701 pegfilgrastim and biosimilar, today we will summarize developments for you in three key areas.

First, we’re going to sharply focus on our commercial launch preparation and Mr. Hassard, our Senior Vice President of Marketing and Market Access will summarize these activities for you in just a moment.

Following my own remarks with respect to regulatory progress in Europe, the positive CHMP opinion, as well as progress with the FDA, our Chief Operating Officer, Mr. Vince Anicetti will summarize the results of certain FDA inspections of facilities related to UDENYCA development as well as our manufacturing progress in anticipation of the launch.

Lastly, we will have a review of the financial by the company’s CFO, Dr. Jean Viret, before we go to the Q&A. with respect to UDENYCA approval progress in Europe. At the end of July, we announced that the CHMP adopted a positive opinion with respect to the marketing authorization of UDENYCA.

This decision provides the basis for the company’s first regulatory approval on a major developed market and validates both our UDENYCA biosimilarity package, as well as our biologics development platform and capabilities overall.

We now look forward to the formal European Commission approval decision around October 1, for the standard VMA regulatory process. With this UDENYCA has the opportunity to be one of the first pegfilgrastim biosimilars approved in Europe.

I would like to thank the Coherus team for their extraordinary dedication and efforts to achieving this transformational milestone for our company.

Now with respect to the commercialization in Europe, we are currently engaged in discussions with various parties and we continue to progress in selecting the best options to maximize the long term commercial value of UDENYCA in this region.

Now with respect to the progress on the US BLA, we have received certain information request from the FDA and we have responded to such request in a timely fashion in accordance with established processes and expectations.

At this point, we believe the application is tracking as expected and to the best of our understanding an advisory committee meeting will not be required prior to or to support approval. In terms of our manufacturing quality systems, as I indicated, our COO, Vince Anicetti will summarize certain FDA inspection and activities in just a moment.

We continue to look forward to UDENYCA BLA action data of November 1, I should say November 3, 2018. A few remarks are in order with respect to the biosimilar public policy, the FDA biosimilar action plan and pending the executive directives aimed at pricing and rebate policies.

We’d like to commend Commissioner Gottlieb for his leadership with respect to the FDA biosimilar action plan, in particular his emphasis in seeking a creative environment that fosters competition in the US biologics market place.

We look forward to the forthcoming executive directive from HHS aimed at pricing the rebate policies and to participate during a policy common period post issuance.

As the only US pureplay biosimilar company, we believe that we have a unique perspective and share the FDA and HHS goals of delivering healthcare system savings and improving patient access to biologics. With that now Mr. Anicetti would like a few remarks with respect to manufacturing, quality and operations. Vince. .

Thanks very much Denny. So I’d like to provide a brief update on the operations side of our BLA effort, some recent inspections performed by the FDA at our facilities as well as our overall manufacturing launch readiness. First, we recently completed an FDA pre-approval inspection at our analytical lab in Camarillo, California.

We are very happy to report that this inspection was completed successfully without the issuance of any 483s by the FDA. As you know that this follows our previous FDA inspection at our Redwood Shores headquarters in which there are also no 483s issued.

In addition, we also recently completed an FDA inspection of our contract laboratory that performs the immunogenicity assay which supported our clinical package at the BLA. This is a laboratory that validated and executed the revised immunogenicity assay with enhanced sensitivity as recommended by the FDA in a complete response letter.

Once again we are very pleased to report that this inspection was completed without the issuance of any 483s by FDA.

I should note that we have prioritized the development of our quality systems here at Coherus and we’ve made substantial investments in staff and infrastructure, and it’s very rewarding to see this effort reflected in such positive inspection outcomes. Now I’d like to add a few remarks on the manufacturing launch readiness side of our efforts.

And as we previously discussed the Ugenic has both drug substance Eugenics have both drug substance or active ingredient is made here in the US at KBI Biopharma and older Colorado. KBI is our strategic partner and we’ve developed a close and successful collaboration together that continues.

I should also note that all other manufacturing operations for Eugenics are performed in the US and we are quite proud that this is a Made in the USA product.

As you can imagine, our focus in 2018 is meant to be fully prepared for the launch in Eugenics both in the United States and in Europe to ensure certainty of supply and I can report that this is going well.

We are continuing to successfully build inventory to supply a vigorous launch after regulatory approval and our ramp up plans to support long term demands while advancing consistent with our long term objectives. I’ll be happy to take any further questions during the Q&A period. .

Thanks Vince, and congratulations to you and your team for a great job and excellent results in the quality and manufacturing side. Now I’d like to ask Jim Hassard, the company’s Senior Vice President of Marketing and Market Access to give you a review of our launch preparation activities and make a few more remarks in that direction. Jim. .

Thank you, Denny. I’m happy to provide an update on recent and projected activities on the commercial front. In terms of our commercial ramp up, we are pleased to announce that field leadership in sales, key account management and market access teams are now fully in place.

Our field leadership is comprised of regional sales directors or RSDs to whom the territory level sales team will report. We are pleased with the caliber of people that we had able to attract and their enthusiasm for bringing biosimilars to market.

In terms of scope, the team is size consistent with a traditional branded biologic launch and we are confident that we will be able to deliver sales and support to ensure our expected market penetration.

With respect to key account management, the teams are building strong relationships with the group purchasing organizations, as well as large account systems such as Integrated Delivery Networks or IDMs. This is important as the top seven group purchasing organizations represent over 80% of the market.

We are fortunate to have attracted individuals with deep relationships and experience in oncology to buy and build. Market access is responsible for relationships with the payers and making certain there are now impediments to UDENYCA reimbursement at the payer level, ensuring both providers and patients had access to UDENYCA.

As a reminder, the market structure is such that 50% of patients are covered by Medicare and the other 50% of patients are covered by commercial payers.

On the public side, we have already made application for reimbursement coating with the center for Medicare services and on the private side we have made significant headwinds with top commercial payers. In terms of the team, again, we have attracted highly experienced industry professionals tenured in Medicare, Medicaid and commercial payers.

We are continuing our outreach and educational efforts to build awareness about Coheres BioSciences amongst the oncology community. We are pleased about the anticipation and excitement for biosimilar pegfilgrastim UDENYCA. Finally let me make a few comments about the market characteristics, how we plan to compete and gain our expected share.

First, as we have said before, this is a very large market. Neulasta is one of the largest oncology biologics in the United States, representing approximately $4 billion in sales. Second, this an episodic market where most patients are new to treatment. We don’t anticipate encountering switching barriers to adoption.

Third, there is a large segment of the market if it is disadvantaged on pricing or we believe we have an opportunity to be attractive. And lastly, this will not be the first biosimilar launch in the United States and we have been students of lessons learnt from both biosimilar success in the short acting GCSF market as well less successful launches.

Our overall strategy is to provide a holistic value proposition to all stakeholders that goes beyond pricing and provides patient and provider services, high quality staff and reliable high quality supply.

While we have pursuing the regulatory approval of UDENYCA, we have been conducting market research and advisory meetings with key stakeholders to understand their needs and expectations. I am of course happy to take any questions you may have on the commercial side of the business during Q&A.

Denny?.

Thanks Jim. As you can now tell from both Vince and Jim’s remarks, we are very excited about the opportunity, incoming approvals and the subsequent launch and we look forward to giving you more color on the next call in November.

With respect to the payer and market access side, I’d like to comment on one additional development which is the appointment of Dr. Samuel Nussbaum to the Coherus Board of Directors. Sam brings a world of experience in the payer side to the Coherus Board including decades in public policy and extensive tenure as Chief Medical Officer in Anthem.

We are gratified to have his position, an industry veteran of Dr. Nussbaum caliber on our Board, and he has already provided highly valuable inputs on our plans and strategies. With respect to our pipeline, we have no changing guidance at this time, and we look forward to updating you with respect to it on our next call.

Before we get to Q&A, the company’s Chief Financial Officer, Dr. Jean Viret will review the financials.

Jean?.

Thank you Denny. I will walk you through the main aspects of this quarters’ financial performance. Research and development expense decreased this quarter over the same quarter last year by $8 million.

The decrease in R&D expenses period-over-period was mainly due to a reduction in manufacturing, stakehold, analytical costs, associated with our anti-TNF programs CHS-0214 and CHS-1420 and a focus of resources to manufacturing UDENYCA.

The second quarter, just like all the recent quarters are expensing all costs related to the production of UDENYCA until we receive approval from the FDA. General and administrative expense also decreased by $5.1 million this quarter over the same quarter last year.

This decrease was mainly attributable to decrease in personnel and in certain legal and consulting services as a result of cost control steps taken since June 2017.

Net loss attributable to Coherus for the second quarter of 2018 was $43.6 million or $0.68 per share, compared to a net loss of $55.3 million or $1.08 per share for the same period in 2017. Our cash, cash equivalents and marketable security totaled $159.8 million as of June 30, 2018 compared to $95.2 million as of March 31, 2018.

Our use of cash in operations, during the second quarter of 2018 was $35.5 million in line with our guidance of $32 million to $37 million for that quarter.

We anticipate use of cash in operations between $48 million and $53 million in the third quarter of 2018, led by approximately $15 million from our second quarter use of cash as we prepare for UDENYCA’s approval in Europe and in the US and commercial launch. We will now turn the call to Q&A. Operator you may open the call to questions. .

[Operator Instructions] Your first question comes from the line of Mohit Bansal from Citigroup. Your line is open. .

If I could drive deeper in to the commercial aspect of the business, so you did mention previously that 340B hospitals, you are in an advantageous position. I just wanted to look at 50% of the market which are the community clinics and some do get better pricing from Amgen.

If you could help me understand what strategy you think would be the right strategy to go in to those clinics and go to the last mile there?.

Thanks to your question Mohit with respect to the clinics and 340B hospitals. We’ll let Jim Hassard take that one.

Jim?.

Thanks Denny. Mohit to your point, clinics do represent about 50% of oncology on Neulasta sales. I think the real point that we have been and the real strategy here is we’ve been building relationships with the group purchasing organizations and with their help an guidance we will again go at this segment of the market.

Again the specifics in terms of targeting are still yet to be determined over the next few months. .

Mohit did you have a specific question with respect to the 340B and their economics that you want to clarify?.

If you could clarify, because a lot of people asked this question and how does that 340B hospital and defensive between ASP plus 6% minus or ASP minus 22.5, how does it work and also how could it impact the ASP itself or would it not?.

Jim can you run down the reimbursement on the 340B hospital for Mohit please?.

Sure. So Mohit first of all to answer to answer your last question, discounts in to the 340B segment do not impact the average selling price calculations, so that’s an important first point.

In terms of the reimbursement really again, biosimilars as any new market entrant in to the biologic space will be given the opportunity for two to three period of having a reimbursement calculation which is either black, the wholesaler acquisition cost or the average selling price plus 6%, and again that’s for the first two to three years.

Current Neulasta has a reimbursement formula of ASP minus 22.5%. So really that’s the reimbursement side, really in order to be attractive in that setting Mohit, what it really depends on is what our pricing will be within the 340B segment and that is yet to be determined. We will give you guidance on that closer to November. .

But to Jim’s point you’re clear that the 340B hospital pricing does not impact overall ASP reimbursement?.

This is very helpful and then if I can ask a little bit more about your manufacturing efforts and how soon can we cease a filing there and then obviously how do you plan to navigate the IP landscape there. Thank you. .

Do I understand your question with respect to manufacturing to be when we would see a filing?.

Yeah, you said that you are working on the manufacturing efforts to get to the filing point there because you’ve already run the studies there. So just trying to understand the next steps there and when can we get to the filing point..

With respect to the manufacturing we have previously disclosed that there have been inspections both by FDA and EMA. So there are no further activities with respect to filing manufacturing.

The manufacturing information and the facility information is contained in the BLA and in the corresponding documents for EMA, no further activity is anticipated there. Thank you for your question. Let’s move on..

Your next question comes from the line of [Bill Mohan] from Cowen. Your line is open. .

So my question is based on the recent approval of the first biosimilar Neulasta. It seems that we still haven’t seen that on the market yet, do you guys have any visibility as to when that launch might happen and as their first to market advantage seems to be dwindling at this point..

So just to be clear what we have had so far is a recommendation for approval not an actual approval. Jim why don’t take a follow-on to the question about the market and so on for the rest of the time issues. .

So your question with regards to the first biosimilar pegfilgrastim approved here in the United States correct. .

Yes..

So our understanding was that approval took place in early June and there actually is, they did announce product available within the channel July 9. So it’s really been a very short period of time between now today and that actual product in channel launch July 9..

And you have any comment on sort of the strength in that marketing effort to this point?.

Still we’re trying to be students and trying to understand what is going on in the market place from that launch, but it’s still early days. It’s too early to really assess what their performance is etcetera. .

Your next question comes from the line of Mike (inaudible) from Bears. Your line is open. .

Just with respect to the BLA Denny you mentioned the FDA request of some additional information that you’ve already provided. I’m just curious if you can maybe provide a little bit of additional color on the type of information that was requested.

And then secondly, was that information similar to some of the request you got from the EMEA during that process.

So I am just trying to get a sense of whether the FDA is sort of diverging in the process from sort of what types of questions you are getting from the EMEA?.

No the FDA is not diverging. These are routine questions typically regulators will ask you to just look at data a slightly different way. They’ sort of – can you slice it this way so we can look at it, that’s sort of a typical thing. It’s not – these are all routine questions, I wouldn’t characterize them any other way.

I would point out that the EMA has seen the same immunogenicity there that the FDA is looking at now and it found it worthy for recommendation for approval, so no divergence that we see whatsoever. .

[Operator Instructions] Your next question comes from the line of Chris (inaudible) from JP Morgan. Your line is open..

Just two here, first with regards to UDENYCA and in part B. I guess with some of the recently announced changes that allow more negotiations within Medicare Advantage for Part B drugs or some of the broader proposals to move more of Part B in to Part D.

Are you seeing anything in there that would impact your thinking or strategy around how you would approach the market etcetera that we should be keeping in mind.

And then my second question, as you enter in to the top seven GPOs representing about 80% of the market, how do you expect the GPOs to handle biosimilars? Will this be a situation where you’re going to see GPOs work with multiple players in the market or do you expect each of the organizations to look to partner with just one player?.

Thanks Chris.

Jim would be happy to give you a little clarity in our thinking around the Part B Jim?.

Yes, so on the two questions Chris, so first of all Part B this is a roughly a new piece of or a new announcement from CMS, I believe that came out yesterday.

So what CMS or what the trump administration I believe plan to do is empower the Medicare Advantage plans to essentially begin negotiations and maybe provide or put in place prior authorizations etcetera. And that would be effective January 1. So first of all, just to baseline us on what does that represent? So Medicare Advantage is not all Medicare.

Medicare Advantage is essentially organized and run by the commercial payers on behalf of Medicare and we estimate that that represents about 5% or 10% of total Neulasta sales.

In terms of how’s the strategy there, Medicare Advantage plans are actually incentivized to operate efficiently to try to reduce costs etcetera and we really feel that biosimilars will play an important role as a solution for Medicare Advantage plans in the years forward.

Does that answer your question Chris?.

Yes.

So I guess my question is, does that switch relevance to you guys or either way it was already incentives in place for these plans to already be focused on biosimilars?.

I think again they are incentivized to reduce cost, and some of these plans have been focused on the use of generics etcetera. So I think biosimilars just play a natural role with Medicare Advantage plans. .

Chris, this is Denny. I would just remark that the over-arching theme of the administration we view as very favorable to biosimilars, whether you look at Commissioner Gottlieb’s remarks, whether you look at (inaudible) remarks at HHS or CMS or other things.

So there’s a very consistent scene and set of actions coming through the administration which we believe are very positive for biosimilars this included. .

And Chris on your second question with regards to GPOs, I don’t want to speak on behalf of the Group Purchasing Organizations, they act on behalf of their membership. It’s their role to choose the best strategy and the best brands for their membership. But I will say this, the feedback that we’ve received is not over-priced.

Its price is just one of the components they really are looking for a value proposition that includes patient provider services certainty of supply, things that go way beyond price. So we’ll just have to wait to see what they’re choices are, but again don’t want to speak on their behalf. .

And I’ve also interacted with several of these things Chris. The other complimentary remark I would make in addition to Jim’s is there is a palpable enthusiasm among all of these groups for biosimilars. They relish the opportunity, they have a choice to be able to have competition in the market place and so on.

So I think it’s very healthy for the market place and I think it’s good for the healthcare system. .

Your next question comes from the line of Jason Kolbert from H.C. Wainwright. Your line is open. .

I just wanted to clarify one point, it kind of relates to pricing in the market place. I know it does get a little bit confusion, and the size of the market place.

The CEO Myland talked about double-digit discounts, but when I do the math and in our conversation it becomes clear that in reality it’s just a very moderate discount they are offering, a couple of percent off of the ASP.

So can you spend a few minutes just talking about the real price of Neulasta as it’s sold versus kind of the published numbers, so that we can understand some of the factors that explains why the Mylan launch is so anemic. .

That’s of course a very confusing topic is pricing the discounts and so on. I’ll let Jim take a shot at, giving a little color to that Jim. .

So just to address your question, the two prices that are publicly available as published by Compendia and also published by CMS. So the list price of Neulasta is about $6200 per pre-filled syringe. The average selling price for Neulasta as published by CMS is about $4200.

So to your point there’s about 33% gap between the list price and the average selling price, the net price for Neulasta. Now Mylan’s price, their list price that they came to market with in July of this year is to your point only about 6%. It’s about 41.75. So it’s just 6% below the average selling price that most of the market sees with Neulasta. .

And just to change gears a little bit, in advance of your launch and in anticipation of approval, can you talk a little bit about the structure of the sales force, who has been hired and who still is on your short list to be hired?.

Again going back to my remarks, from the call today, who have hired is we have hired the regional sales directors from the sales side. We have completely filled out the key account management team now and we have completely filled the market access team.

So right now still to be hired are we anticipated having approximately 70 sales representatives or territory account managers and again we’re building a short list at current and we’ll pull the trigger on hiring those territory account manager closer to approval. .

And just one last question, this has to do with the comment that Sean made about expensing some of the product that’s already been produced. Can you give us some idea of the magnitude of the magnitude of that number, because that sounds like upon launch you will be using already expensed products.

So your initial cost of good will essentially be zero at least at the time of launch..

JV would you like to hold that one for Jason. .

In this cost of goods will be pretty very small and they’ll have to do final package. So that’s pretty much what you’re going to see hitting the cars line plus the couple of the small shipping passes are. In terms of the amount of inventory that I have on hand will provide more guidance as we get close to launch.

But you could look particularly at changes in R&D expenses and focusing on 10-Q and you can get an idea of how much in dollar amount we’ve been providing reducing your daily count. .

Your next question comes from the line of Douglas Tsao from Barclays. Your line is open. .

Maybe starting point, sort of perspectives you referenced to part with the opportunity to partner, the 1701 or in Europe. What other regions do you think potentially represents sort of meaningful commercial opportunities for you outside of the sort of the major markets. .

Well as you know we have retained by and large global rights to all of our parts including UDENYCA. So there is of course Asian rights, Japanese rights, all those areas in addition to Europe and so on. Our current efforts are focused on the European market, that’s a second largest market after the US of course.

I think it’s approximately ab0ve the $700 million market. We believe that probably the most important market after the US to pay the exclusivity timing and Japan is few y ears off, I think its five or six years off. And so we think that Europe probably constitutes the second most attractive market for UDENYCA globally.

And on the other point that I would make for you, is if we do seek a deal or we were seeking more profit sharing backside loaded as opposed to upfront at this point in the company’s evolution. Having garnered the recommendation for approval. .

And then Denny with 14 final years we sort of approached market formation in Europe.

Any updates in terms of kind of monetize that opportunity?.

We are occupying ourselves at the current with certain pipeline developments including 1420 in the opthalmolgogy franchise and so on. So we prefer just to update the street at the next call on that. But that’s something of course that we have in cross hairs and have been focused on. .

With no digital questions, I will now turn the call back over to Mr. Lanfear for closing comments. .

Thank you all for joining us there in the Q2 Coherus 2018 call. As we indicated that we’ve made some very good progress so far this quarter. We are very excited about the launch and the potential approvals. I think the teams’ done just an extraordinary job moving the objective forward or this quarter. We’ll look forward to more progress.

There is a few conferences that we will be having in first week of September. We will be out on the East Coast in New York and Boston. So for something to look forward to seeing you there..

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and have a wonderful day. You may all disconnect..