On Tuesday, Citi reaffirmed its Buy rating and $8.00 stock price target for Coherus Biosciences (NASDAQ:CHRS), following the company's announcement of the sale of Udenyca. The stock, currently trading at $1.37, has shown strong momentum with a 7% gain over the past week, though it remains significantly below its 52-week high of $3.70.
According to InvestingPro data, analysts maintain a bullish consensus with price targets ranging from $1.50 to $12.00. The transaction, which could total up to $558 million, has surpassed the firm's initial expectations in terms of both valuation and timing.
Coherus Biosciences has completed the sale of Udenyca, which represents the third segment of its legacy biosimilar business. This deal comes after the company had previously divested other assets, including Cimerli and Yusimry.
The sale of Udenyca, which was projected to fetch around $400 million, or approximately twice its sales, has instead reached a potential value of $558 million, a figure that has positively surprised market observers.
The agreement to sell Udenyca also includes the elimination of Coherus Biosciences' convertible debt, which was due in 2026 and amounted to $230 million. The resolution of this debt is seen as a significant relief for the company, removing a previously contentious issue for shareholders and potentially attracting new investors who are focused on pure-play biotech companies without the looming concern of financing risks.
InvestingPro analysis reveals the company has been operating with a significant debt burden, with a debt-to-capital ratio of 0.63 and negative free cash flow of -$62.27 million in the last twelve months. Get access to over 30 key financial metrics and additional insights with InvestingPro's comprehensive research reports.
The influx of new capital from the Udenyca sale is expected to bolster Coherus Biosciences' financial flexibility. This will likely facilitate the acceleration of the company's combination studies, including those involving CCR8+Loqtorzi and IL-27+Loqtorzi. Moreover, the funds may provide the company with the opportunity to explore new business development initiatives in the immuno-oncology sector sooner than anticipated.
Overall, the sale of Udenyca is seen as a strategic move for Coherus Biosciences, allowing the company to progress with its research and development endeavors while also improving its financial standing. Despite current challenges, the company has demonstrated strong revenue growth of 44.19% in the last twelve months.
The transaction has been received positively by Citi, which maintains a favorable outlook on the company's stock. Discover more detailed analysis and insights about CHRS and 1,400+ other stocks with InvestingPro's exclusive research reports and real-time financial metrics.
In other recent news, Coherus BioSciences has entered into a significant agreement with Intas Pharmaceuticals, selling its Udencya franchise for up to $558.4 million. This includes an initial cash payment of $483.4 million and two additional milestone payments tied to net sales, each worth $75 million.
The proceeds from this transaction will be used by Coherus to clear its financial obligations, including the full repayment of its convertible notes due in April 2026, and to eliminate certain royalty obligations associated with Udencya.
In a recent earnings call, Coherus BioSciences discussed the resumption of UDENYCA packaging by its current manufacturing organization and plans to add another organization to increase production capacity. However, the company acknowledged substantial risks and uncertainties that may affect its projections.
These are recent developments for Coherus BioSciences, with the company preparing to update its financial projections for Q4 2024 sales and Q1 2025 cash in early January 2025. It has indicated that its current post-close cash projections are sufficient to maintain operations for over two years. This timeline extends beyond significant expected data readouts slated for 2026.
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