Coherus Deal Signals Pivot to New and Crowded Market

Company leaving biosimilars business to pursue cancer drugs

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Feb 08, 2021
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Shares of Redwood City, California-based Coherus BioSciences Inc. (

CHRS, Financial) are up about 13% just a week after announcing it has cut a $150 million deal with Chinese drugmaker Junshi Biosciences Co. Ltd. (HKSE:01877). Under terms of the agreement, Coherus will receive U.S. and Canadian rights to Junshi's anti-PD-1 antibody toripalimab. Monoclonal antibodies that target either PD-1 or PD-L1 can boost the immune response against cancer cells.

Toripalimab was first approved in China for previously treated melanoma in late 2018. Junshi could receive $380 million more from Coherus if the drug succeeds and other milestones are met, according to an BioPharma Dive. The deal also gives Coherus option rights to several earlier-stage cancer drugs for a fee of $35 million each.

The pact signals Coherus' strategy to exit the biosimilars business (copycat drugs) and use the profits generated by it to develop cancer treatments. The company began marketing the biosimilar Udenyca, a less-expensive version of an Amgen Inc. (

AMGN, Financial) medication, in 2019. Through the first nine months of 2020, Udenyca brought in sales of $365 million. Coherus currently has drugs in its pipeline that mimic Roche (RHHBY, Financial) cancer drug Avastin and eye medicine Lucentis as well as AbbVie Inc.'s (ABBV, Financial) top-selling anti-inflammatory treatment Humira, each of which has annual sales measuring in the billions of dollars.

Some industry observers question Coherus' move away from biosimilars and to PD-1 drugs since the latter is already jam-packed with some of the biggest players in pharma. In the U.S., products are marketed by Merck & Co. Inc. (

MRK, Financial), Bristol-Myers Squibb Co. (BMY, Financial), Roche, AstraZeneca (AZN, Financial), Pfizer Inc. (PFE, Financial), Regeneron Pharmaceuticals Inc. (REGN), Merck KGaA (XTER:MRK) and Sanofi (SNY).


The fact the field is crowded with heavy hitters doesn't seem to faze Coherus CEO Denny Lanfear. His point is that it's not how many PD-1 drugs are vying for market share, but whether a new product could bring value to patients and the health care system.

"Is the system satisfied paying $14,000 a patient a month for a PD-1-based therapy?" he said in an interview with FiercePharma. "Without competition, I don't see these prices coming down."

"Our market research indicated to us that there was room in this market," he said. "And just because there's one large competitor does not mean others are excluded—we see opportunity."

In the quarter ended Sept. 30, 2020, Coherus missed the Zacks consensus estimate of 35 cents per share by 2 cents.

Coherus was founded in 2010. The company was formerly known as BioGenerics Inc. and changed its name to Coherus BioSciences Inc. in April 2012. Its 52-week range is $10.86 to $23.03. It has a market value of $1.4 billion

The 10 analysts offering 12-month price forecasts for the company have a median target of $30, with a high estimate of $35 and a low of $19, reported CNN Money. The stock is rated a buy.

Disclosure: The author has positions in Amgen, Bristol-Myers, Sanofi and AbbVie.

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