Morning, everyone. Thanks for joining us, and thank you for joining the Coherus session. I'm very pleased to introduce Denny Lanfear, CEO of Coherus, and Theresa LaVallee, the Chief Development Officer of Coherus. Thanks to those joining us on the webcast. A lot to talk about. Maybe we could start with the fact that you have effected a very impressive transition over the last few years, several months, really, from a biosimilars company to an innovative oncology biotech. You have an approved branded drug in LOQTORZI. Can you just give us the rationale behind that transformation and where we stand today?
Sure, Michael. Thank you for having us today. Thank you once again to for Cowen for your sponsorship. From the 50,000 ft l evel, I think that one key message is when you strategically pivot a company, it just starts when you do the key transaction which brings a technology or a product into your company. This for us happened in 2021 when we in-licensed LOQTORZI from Junshi Biosciences. Of course, we were one of the very first teams at the front of that effort from China. You go ahead and do that transaction, and you have that product. After that, you have to transition your team. You have to transition your board of directors. You have to transition your strategy. You have to transition a number of things.
When you get all the way to the end, four years later, and you've got all that cooking, the very last thing is to transition your investor base. I think that we've done very well over the past four years with each of those things. There was first, of course, the transaction with Junshi, and we followed on with that with the acquisition of Surface Oncology in 2023, which gave us two very robust assets in our pipeline that Dr. LaVallee will be happy to talk to you about: casdozokitug, our anti-IL-27 agent, and then our CCR8 asset. With respect to the team, I think there has also been an internal transition with highly competent biotech drug developers, Theresa with her team, and others.
Also in the commercial team, one of the key things that the biosimilar business allowed us to do was build a very strong core competency in oncology, marketing, and buy and bill, establish those relationships, and really understand those markets. I think that Coherus has been very, very successful with UDENYCA in those markets. You also have to do things like the board and the SAB. With respect to the board, for example, we have been very busy there in the past couple of years as we have done the transition to innovative oncology. We recently added Rita Karachun to our board on the finance side. Rita comes to us from Merck, where she was a global controller. We also have Dr. Lee Newcomer on our board, who is the former Chief Medical Officer of UnitedHealthcare, Charlie Newton, a former banker, and a number of others.
We have really focused on building out a board of directors that has a robust set of skill sets focused at the greater innovative oncology base that we now pursue. As I said, now for 2025, what is clearly on our crosshairs is to focus on investors who understand the innovative oncology story. With respect to the transaction itself, though, I think that we have done pretty well with that. I have to say I am happy with the outcome.
When this is completed, and it should be completed near the end of this quarter or directly thereafter, we will have done some $800 million in divestitures, bringing that into the company, bringing that dilution-free cash in, and importantly, paying down some $480 million in debt because of a number of things, primarily COVID, which to get through COVID, I had to incur a $230 million convertible debt instrument in 2020, which hung over our heads for a while and I think put a cap on the stock. I think these divestitures allowed us to clean up the balance sheet. Now as we go forward, post-close, we'll have $250 million on the balance sheet, more than two years of cash, ample time to turn over all of our data cards, et cetera.
I think we've got probably around $38 million, $38.5 million of debt, some five years out, and so forth. I think we tidied up the balance sheet and really focused on that. I think that's representative of a very strong execution. With respect to the rationale for the company focusing in innovative oncology, I think that two observations I would make. First of all, with biotechnology, or I'm sorry, with biosimilars, you can be very, very good, but ultimately, it's a business that rewards large scale, many products, very broad portfolio on a global base. I think one of the reasons we were successful with our divestitures is because we divested the companies that had broader scale, broader product portfolio with which to pursue the investors and the markets and so on.
Whereas with innovative oncology, I think it's possible to have a smaller, very tightly focused company, like we shall have here with maybe 150, 165 folks post-close, and really build disproportionate investor value by focusing on key clinical trials and value creation with the pipeline. I think, though, the take-home message is these markets in the U.S., the healthcare markets, are very, very dynamic. You either adapt or you die with those markets. I think you have to take a very dispassionate look at your portfolio and your products. Any time an external third party or someone else will pay you some significant multiple over what your investors are rewarding you for that business, as a public CEO, you are obligated to take a very close look at that, and you have fiduciary responsibility to do so.
I think the sort of strategic arc of the company is now, I think, pretty much complete. We look forward to going forward here in 2025 and 2026. Dr. LaVallee would be happy to tell you about the pipeline and number of data cards we're going to turn over over the next four to six quarters and so on. It is a pretty exciting position to be in. I'm pretty happy with how we've addressed the balance sheet and the pipeline, the size of the company, and a number of other things to make us super competitive.
Great. Let's dig into your oncology portfolio. Maybe we could start with LOQTORZI. LOQTORZI was launched a little over a year ago in nasopharyngeal carcinoma. How has that been progressing?
Overall, I think we're very happy with LOQTORZI. It has very, very good positioning on the guidelines. And we're the only ones with both first line and second line. We're the only approved therapy in the United States. There was recently a modification of the NCCN guidelines effective in November, which was impressive because it was out of cycle. Normally, the guidelines committee meets twice a year in April. The data was sufficiently compelling such that the committee members felt that it was really essential to change the guidelines. If you take a look, we sit at the top of those guidelines there. That avoids any confusion with other PD-1s, which do not have an approval, or chemotherapy, which does not have an approval. This is, of course, in the interest of the patients who should get the most beneficial therapy.
The revision of the guidelines is important because what that allows us to do is go into key institutions, particularly NCCN institutions, and get on the pathways. When you have a rare disease where a physician does not see a patient for every two years or so, it's important to keep those patients front of mind and get on those pathways so they reach for the correct product with the data and so on. That's how we're educating them now. Overall, that's been very beneficial. I would say, though, that with respect to Q4, the supply interruption with UDENYCA caused a little tap dancing with the sales team, and they found themselves triaging that a bit, less focus on LOQTORZI.
I think that that sort of focus we will have going forward after this transaction, where those folks are just completely hyper-focused just on LOQTORZI and that clinical story. That being said, we look forward to putting that on the escalator, as I've put it. We feel very confident that product is probably a $150 million-$200 million product. It'll probably take us three or four years to get out there, depending on how steep that ascension is. I think through Q2, Q3 here this year, we'll get a good idea about the steepness of that adoption curve. Once those patients get treated and get on LOQTORZI, we expect them to stay for the duration of their therapy.
We actually had a head and neck cancer panel yesterday. It sounded like the transition to LOQTORZI for NPC was pretty seamless.
That was great feedback from the KOLs. It is differentiated mechanism. They are really seeing a difference and seeing the profound impact in their patients to really go with the data that was published. That is incredibly gratifying.
I think one of the key things about LOQTORZI is its differentiated mechanism of action and how it binds and what some of the data has been with respect to the low PD-1 state indications that we looked at. Maybe Dr. LaVallee wants to talk just a little bit about that for a moment.
Sure. Yeah, no. I mean, I think the way we look when you said the pipeline start with LOQTORZI, that's how we look at it, is we look at LOQTORZI as the anchor to our pipeline where we're adding pipeline assets or partnered programs on top of toripalimab for additional indications. And its potency with a unique epitope that really is the preferred epitope for inhibiting PD-1 at the FG loop, tenfold greater binding affinity with a really slow off rate, and seeing a difference in PD-1 status activity compared to other PD-1s. BeiGene finally got their approval today for first line esophageal squamous cell carcinoma. It's only in PD-1 high or expressors.
That also was seen in Europe, whereas toripalimab in Europe was approved for all irrespective of PD-1 because it has the same activity in PD-1 high versus PD-1 low in combination with chemotherapy, really translating that potency into less of inflamed tumors. That sets us up with combination strategies where you can imagine the comparators, other checkpoint inhibitors. LOQTORZI is equal footing or maybe a little better to then add on to look at higher probability of success for those phase III studies to get the hazard ratio and the P-value needed for approval.
You mentioned combinations. One of your lead candidates is casdozokitug. Few mechanistic peers. Maybe for those unfamiliar, you could provide an overview of that asset and the target, the indications you're going after, et cetera.
Sure. Thanks, Mike. IL-27 antagonist is casdozokitug, our phase II asset. IL-27 is like all cytokines. It depends upon the context. We often think, is it suppressive? Is it stimulatory? It really depends upon the environment of where we see it as an immune suppressive cytokine. What we appreciate with this program is the beautiful translation and the consistency of the data from the preclinical models to the human, where we know in inflammatory diseases, inhibiting cytokines can rebalance the immune system. Casdozokitug is the first antibody in oncology patients to show by inhibiting a single cytokine can activate the immune system. We saw the activation in humans that we saw in mice and that direct translation and dose dependency.
The other thing that is really attractive from a line of sight perspective is in mouse models, there was only activity with IL-27, whether it be an infectious disease model or a tumor model, if the tumor or the infection occurred in the lung and the liver. When we go into the clinic and saw monotherapy responses in lung cancer, we're really excited. Not only did the immune activation translate, but single agent responses in lung cancer patients. We presented in January the liver cancer data, which was in combination with the atezo bev, the frontline standard of care, where the overall response rate was 38% higher than the historical 30% for atezo bev, 30 patient study versus a 500-patient study. The PFS was better, 8.1 versus 6.8. The data set that really is exciting, I think, is the CR rate.
We reported in January a 17% complete response rate in first line liver cancer patients, which there is no other agent that's even approached 10%. That depth of response. Interestingly, when we first in-licensed the program from Surface, the overall response rate was 27%, zero CRs. Six months later, it was 38%, unconfirmed, three CRs. In January, we presented confirmed 38% ORR with five CRs. We still have five patients on study. Two of them are PRs. We'll continue to see if that continues a depth of response. That now has us doing the randomized study with toripalimab, bevacizumab, casdozokitug versus tori bev. That study will enroll this year, read out early next year, with seeing the repetition of the data I just described would enable us to have conversations and set up for pivotal.
Maybe we can move back to the lung cancer effort briefly. Where does casdozokitug stand in its lung cancer trials, and when should we expect the next update?
Yes. We saw in the initial study, the two PRs that we observed were both in squamous cell carcinoma in third and fourth line. We did see some stable disease control rate in adeno patients. The study we opened was in the broad population and its second line and greater adeno and squamous with toripalimab. We will see data reading out there, but we are continuing to see just squamous as a signal. We will continue to evolve those data to refine maybe a study focused on squamous.
Theresa, maybe it might be interesting just for you to recap the mechanism of action of IL-27 and why one would expect or postulate that squamous versus adeno might be a more efficacious set of patients to pursue.
The way that this was really found was initially in infectious disease models, where when in barrier tissues like lung and liver, where there's an insult, the idea is IL-27 turns off the immune response. Like in the absence of IL-27, if you infect the animals, they die from immune pathology, not from infection. It's an overactive immune system in the lung and the liver that goes after the normal tissues. Squamous lung cancer is more often caused by smoking versus adeno, which is more mutation-driven. Thinking about the biology of how IL-27 is really there to protect against insults. We also have done some work looking in the Tempus databases in these late line patients because I think, as we've seen in many trials, second, third line lung cancer patients are a harder patient to treat than the earlier lines.
When we look at patients who have progressed on PD-1 in the second, third line setting, they have only the squamous patients upregulate IL-27. It's high in both, but it is higher in the squamous population. Potentially being consistent with it being a resistance mechanism against PD-1.
Perhaps fair to say that there's more clinical unmet need in squamous.
Yeah. That is also gratifying.
I should have mentioned at the outset, if there are any questions in the room, feel free to raise your hand and we can call on you. Maybe we have about 10 minutes left. Maybe we can move to CHS-114. Can you describe this molecule? This is also pretty well along in clinical development. Its target, next steps.
Yeah. Our program targeting CCR8, this is a much easier mechanism of action. It's an afucosylated antibody, so it's bind and kill. Very akin to a cytotoxic approach to the target. CCR8 is preferentially expressed on tumor resident T regulatory cells. People have tried for decades to target and get rid of T regulatory cells in oncology patients. The limitations have been the broad expression, firstly, broadly depleting T reg cells messes up homeostasis, so you get autoimmune disease. Also, the T regulatory cells are a type of T cell, and the targets used to target them are also expressed on normal lymphocytes. You're also killing the cells you don't want to kill. Those have been the challenges with really getting efficacious molecules against T regulatory cells. CCR8 seems to answer those questions by being preferentially upregulated in the tumor.
We reported our phase I data from the dose escalation showing that it does exactly what it's supposed to do. It depletes preferentially the CCR8 positive T reg cells in the periphery, is what we've shown to date. Has a very nice safety profile. We look to report in the next couple of months data on tumor biopsy data, updated efficacy data, and safety data in head and neck cancer. When we look at tumor types that make sense to treat, when we characterize tumors for their density of CCR8 positive T regs, as well as what percentage of T regs in the tumor express CCR8, the three tumor types that have the highest density of CCR8 positive cells, plus more than 80% of the T regs are CCR8 positive, are head and neck, cervical, and gastric cancer.
Last year at ASCO, LaNova Medicines presented with their CCR8 molecule in combination with toripalimab, which is nice, a 36% response rate in gastric cancer in second line and greater. In just the second line, it was like a 63% response rate. That was hugely gratifying to see that that prevalence was really driving that immunosuppressive environment. We currently have two studies open looking at the recommended phase II dose in pharmacologically active doses to address Project Optimus with head and neck cancer, 40 patients in combination with toripalimab, as well as in gastric cancer. Both of those studies should enroll this year, and we'll have data for next year. I mean, like I said, we'll give an initial look at our head and neck cohorts in the next couple of months.
Then the meat of the powered studies will be there by the end of the year.
Okay. What should we think of as the bar in that initial readout?
Yeah. In second line head and neck, I mean, we've heard a lot, particularly with the progress that's been made with the EGFR bispecifics. They're focused as well on the frontline setting. I think the second line setting is still a pretty high unmet medical need. It's hard in these small studies, but I caution you to look at both response and duration. I think above 20% ORR, a duration of around six months would be very exciting.
CCR8 is a slightly more crowded mechanism than IL-27. Do you see anything in CHS-114 that differentiates it from competitors?
Yeah. An important question. There are 16 programs now in the clinic.
Globally.
Globally. Globally. A lot in China, but several that are multi-regional clinical studies. CCR8 is a G protein-coupled receptor. It is one of these proteins that comes in and out of the membrane without a lot of protein on the extracellular portion of the cell. Historically challenging to derive antibodies against. In the screen for CHS-114, the only drug candidate that came out that is selectively bound CCR8 was the drug candidate in the clinic. We tested three competitor programs. They all have off-target binding, including one of them binding [J18]. When I see somebody binding [J18], I worry about GI tox. We are waiting for that company to present their data. We did see a presentation at SITC this year from Qilu Pharmaceutical on their CCR8, where they did see a single agent PR in gastric cancer.
They also hit dose limiting toxicity at about half where we were able to escalate, as well as LaNova. They showed a lot of toxicity that has not been seen in the other programs, suggesting to me maybe off-target. I think that selectivity and really understanding pharmacokinetically what you are binding and not worrying about any off-target toxicity is something that stands alone. The other thing I would say that differentiates it is combination with Tori. I mean, it is a strong PD-1. If you could imagine going into some of these tumor types in PD-1 low, we are already at an advantage.
I think, Theresa, you might want to comment further, but isn't that particularly important insofar as removal of the Tregs or elimination of the Tregs in the tumor microenvironment represents sort of taking off the brakes. Still, you haven't pressed on the accelerator. You haven't reinvigorated the localized immune response, correct?
Yeah. I think it's hard because so many people now, we're thrilled to see monotherapy response with casdozokitug. For the Treg targeting agents, I do not expect a lot of single agent activity because just removing that immune suppressive cell isn't enough, as Denny was saying, to reinvigorate the T cells. While we've seen an occasional response, there's been two monotherapy responses in two different programs presented, one in lung cancer, one in gastric cancer. We think that the combination with toripalimab is going to be really important. That bore out in Innovent's program, where we saw a much higher response rate by taking away the suppression and then reinvigorating those antigen experienced exhausted T cells.
Before we move on to some broader topics, anything else in the pipeline that you'd like to highlight that we haven't touched on yet?
The only other thing I would say is we're focused on our programs. As I said, each approval in the future would be two drugs, not just one, for adding additional indications to toripalimab. We also look forward to this year announcing a few more partnerships for drug supply for toripalimab, where other people will be doing clinical development with some really exciting novel mechanisms, which will give us additional data sets with toripalimab and other combinations.
I would just add that when we licensed toripalimab, that was part and parcel of the overarching strategy, was to be the partner of choice in combination therapy. When we did it a few years ago, the PD-1s were already well established. Our strategy was not to just be a me-too PD-1, but to be a best-in-class differentiated PD-1 and then combine with all these other agents. Theresa and her team have been very effective at striking agreements with organizations that are earlier in the development phase, as well as organizations which later, like Inovio, not to mention our partner Junshi, has a combination study ongoing with Tori in their BTLA, small cell lung cancer, and a part of that. Overall, we have some $15 billion of market opportunity just with the indications that we have so far.
We continue to execute agreements in which Tori will be used in combination with very promising agents.
A lot more to come on that front. You alluded to this a little bit already, Denny, but I think Coherus is probably one of the first companies to identify the value of assets coming out of China. How do you think about China now as a source of innovation? It seems like that landscape has evolved quite substantially.
You know what they say, you can tell the pioneers by the arrows in their backs, right? Haven't even about a similar pioneer and a Chinese pioneer. I think there's a lot of very high-quality assets coming out of China. And we know a number of teams there. We have a very warm relationship with several of them. I chatted with Michael Yu, for example, at JP Morgan. I think China does very good science. There's a lot of good products. I think that the development in the United States is really, really key in the interactions with the FDA. That's really where Dr. LaVallee and her team come in. We've really developed, I think, very strong proficiency in getting interactions with the FDA, getting drugs approved and indications approved. I think that getting toripalimab was the first Chinese PD-1 that was approved.
Now we're broadening that. I think that's really the way to go is to bring in good science and then develop it globally focused on the United States. That's our strategy.
In our final moments, there's obviously a lot to talk about on the political and regulatory front. Is there anything that sticks out in your mind over the last few weeks as either a notable opportunity related to shifting politics or regulations or a notable risk?
I mean, I'll take it. Just because working with the FDA, I always say to everyone, there's not an FDA, there's a reviewer. The approach that we've taken is to engage and collaborate. I mean, the change in stance on Chinese data in the middle of our PD-1 wasn't what I would have planned for. We slugged through it and was the first. We worked collaboratively with the FDA. When they were able to do inspections, we were the second team. They had multi-year backlog, but we worked hard. That was a tough one. How do you convince the FDA to do that? I think it's through following the data, following the science, the unmet medical need. That can't change, right?
Anything to add?
Really, the only thing I would add is we look forward to the close of the divestiture transaction. At this point, we've had SEC review and approval. We've had Hart-Scott-Rodino review and approval. Last week, we had the CFIUS review and approval. I think we're very quickly bringing that forward. We should get that done sometime in the next little bit here. We have a filing that we're going to get done with respect to the new CMO. That should take care of it. We're confident in that's moving forward. Integration between the teams has gone well.
Great. On that positive note, please join me.