On Wednesday, H.C. Wainwright adjusted its financial outlook for Coherus Biosciences (NASDAQ:CHRS), reducing the price target to $7.00 from the previous $12.00, while continuing to endorse the stock with a Buy rating. According to InvestingPro data, the stock currently trades at $1.71, with analyst targets ranging from $1.50 to $12.00, reflecting diverse market opinions.
The company's market capitalization stands at $197 million, with recent trading showing significant momentum - up over 35% in the past week. The revision follows Coherus Biosciences' strategic move to divest its Udenyca franchise for approximately $483.4 million in an upfront cash payment. This transaction enables the biotechnology firm to substantially decrease its debt, which has been a significant concern for investors.
InvestingPro analysis highlights this concern, showing total debt of $269.88 million and a concerning debt-to-equity ratio. For deeper insights into Coherus's financial health and detailed debt analysis, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The sale of Udenyca, a biosimilar to Neulasta which is used to prevent infections in cancer patients, marks a shift in Coherus Biosciences' business strategy. Despite achieving a 28% market share in the third quarter and securing the second position in the pegfilgrastim market, the company has recognized the competitive advantage of larger entities that have scale and a more extensive portfolio of biosimilars. Consequently, Coherus has decided to concentrate its efforts on its immuno-oncology portfolio, particularly on its drug Loqtorzi.
The focus on Loqtorzi comes at a time when the drug has gained prominence in the National Comprehensive Cancer Network (NCCN) guidelines. Loqtorzi is now the preferred regimen in combination with chemotherapy for the first-line treatment of advanced nasopharyngeal carcinoma (NPC), relegating chemotherapy monotherapy and other off-label PD-1 inhibitors to non-preferred status. However, the company anticipates that the full impact of this update will not materialize until the latter half of the first half of 2025 due to the time required for hospitals to revise treatment protocols.
In addition to the strategic refocus, Coherus Biosciences plans to intensify its educational initiatives to hasten the adoption of Loqtorzi in the market. The company also aims to progress two drug candidates intended for combination with Loqtorzi for new indications. Further, Coherus is actively seeking to establish additional external partnerships to expand Loqtorzi's label and expects to announce new combination programs for Loqtorzi in 2025.
In light of the Udenyca deal, H.C. Wainwright has removed Udenyca from its financial model for Coherus Biosciences, leading to the adjustment of the price target. The sale of the Udenyca franchise is seen as a pivotal step in resolving the company's debt issues and refocusing its business strategy towards its immuno-oncology portfolio.
Despite challenging financials, including negative EBITDA of -$116.92 million in the last twelve months, the company has shown strong revenue growth of 44.19%. InvestingPro subscribers have access to 8 additional key insights about CHRS, including detailed analysis of its growth prospects and financial health metrics, which currently show an overall "GOOD" rating despite operational challenges.
In other recent news, Coherus BioSciences has entered into a significant agreement with Intas Pharmaceuticals, selling its UDENYCA 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 $37.5 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 UDENYCA.
The divestiture aligns with Coherus' strategic decision to concentrate on its immuno-oncology programs, including the FDA-approved PD-1 inhibitor LOQTORZI® and other key combination programs. A Citi analyst commented that the sale exceeded expectations in both valuation and timing, noting that it removes a financial overhang and enables Coherus to accelerate research and development in immuno-oncology.
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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