What it's taken you to get here.
Thanks for the question, Michael, and thank you to the bank and our long-standing relationship for your invitation today. You know, it's been a lot of fun. I think we managed to move pretty quickly. It's only been a couple years since we initiated our transformation to an innovative oncology company. A couple metrics I think are important to keep in mind. You know, first of all, over the last couple years, we have reduced our indebtedness by 90%. You know, we had about $480 million worth of debt we had to deal with to convert some senior secured. Now we only have $3.7 million in senior secured debt at this point, which is very comfortable. I think that the transformation has gone pretty well.
I could tell you, I could write a book on transforming a company, though. It's not very straightforward. You know, you can go ahead and have a strategy and you can get a product and so forth, and, you know, you transform the products, then you have to transform the team, and you transform the board, and you transform the coverage. At the very end, you know, you have to transform all the investor base, which is where we find ourselves now. We're extremely excited though, about 2026 and all the data cards that we have to turn over this year. You know, it started really with our acquisition of Surface Oncology in September of 2023, and we initiated the biosimilar divestiture process thereafter.
I think that's fair to say that it exceeded our expectations in terms of the market value of those assets and allowed us not just to pay down so much debt, but also to put $250 million on the balance sheet to initiate very aggressive development of tagmokitug, our Treg depleter, as well as SRF388, our anti-IL-27. All while I think, though, the underlying strategy was to have our own commercial PD-1. When we looked at PD-1s broadly across, you know, the spectrum, you know, the year before that in 2021, you know, we saw that LOQTORZI consistently outperformed the other molecules that we were looking at. It has now, I think, shown very dramatic benefit to patients regarding overall survival, 65 months versus about 34 months on chemo alone.
We're moving that forward commercially. Very strong listing on the NCCN guidelines at the very top, the only preferred moiety first line. We're driving the sales up very consistently. I would say last year, 2024, we did about $19 million in sales. We doubled that in 2025. I don't think we'll quite double that again here in 2026, but I think we're on a very, very strong trajectory with the company as we look forward now into the launch and forward. I'm very fortunate to have a very good team around me to work on the vision. Theresa LaVallee's our Chief Scientific and Development Officer. He's been a key part of the overarching strategy, the clinical strategy. We're of course happy to take your questions on that.
Overall, I think we're very gratified and excited to be where the company is today. You know, sitting here with very strong balance sheet, cash in the bank, just completed a successful financing, then data cards, with two very nice assets this year next.
Great. That's a perfect overview. Allows us to dig into a few important areas. Maybe we could start with LOQTORZI. You talked about the launch and how that's progressing well. What are some of the factors that go into that launch? It's nasopharyngeal carcinoma. What are the tailwinds, what are the headwinds, and what are ultimately your ambitions there?
NPC is a great space, unmet need. There was nothing until we showed up, actually, which had a label for it. People were using chemo or maybe off-label IO, which it hadn't been demonstrated to be effective at all. About 2,000 patients per year. We launched that in 2024. One of the key things you have to do when you go after a rare disease is find the patients. So for example, in the most recent raise we just went after, you know, we allocated some of that funding to increase our data acquisition and then the display of our data to our sales team.
We now have very, very sophisticated dashboards for our sales team, our commercial team to view, which show which patients were diagnosed with the treatment code and so on. Then we go ahead and we pursue those healthcare providers and try to identify those patients and make sure they get on LOQTORZI. We also, I would say, increased the footprint of the commercial team here in 2026 to better address the opportunity. We increased to six sales folks, OAMs per region. We have an inside sales force of 4 people. We have a separate force with the VA. I think we're well-staffed now and well-positioned to maximize our penetration and to really get to these patients and make sure they get LOQTORZI.
Just a couple of things I would note, as you talk a little bit about, you know, things. We had $172 on the balance sheet, I think, at the end of Q4. Now a little more, of course, with this financing. As the commercial team ramps up, when they get to, say, $15 million-$16 million per quarter, then they will have paid for themselves, and they can then start to contribute to the overall SG&A of the company. We expect that to happen sometime, you know, this year in 2026. Secondarily, once they get to $30 million plus or so per quarter, the internal, you know, core, I would characterize it as the core burn of the company as a trust.
Core burn, which is, you know, just the folks in the company, the expenses, not including specifically clinical trial costs, which we sort of look as a different, as a different category in a different bucket, not including things like, for example, stock option expense. Our strategy really is to drive to that point, where we have the whole shop at cash flow breakeven as quick as possible. In a longer view, I think we should get to about $175 million per year with a run rate, with LOQTORZI. That's projected to be out in 2028-ish, or so.
It's about a $250 million market opportunity overall, getting to $175 million per year is about 70% penetration, and that's a fairly reasonable assumption to get to. That's the overarching dynamics of LOQTORZI. Dr. LaVallee put in a very elegant strategy in which we combine it with casdozokitug and tagmokitug, I think the benefit of that is we will get label expansion for LOQTORZI at the same time that we get the labels for these other indications, assuming they're successful for the two indications.
We additionally have a program where we put LOQTORZI in the hands of collaborators in early stage phase I, II, so forth, as they go forward, and the benefit of that is then they pay for the clinical trials, and as they get those labels for their product, they also again, we would get a label for LOQTORZI. I think it's probably important to note that there's quite a few companies who would like to cooperate with us on that. You know, there's the larger companies, you know, with their patent cliffs, coming to the next couple years, for example, KEYTRUDA and 2028 and so forth, really aren't investing so much in those sorts of things.
Those people come to us and ask us if we would like to work with them, and we're of course happy to do that, and we've done a couple of those, and you can expect a couple more of those this year. Overall, I think the strategy is working pretty well. We've got all the chess pieces in place. The clinical trials are up and running. The enrollment's going really well. I think that we have a very solid strategy with regard to understanding the mechanism of action, and where to look for each of our products and Theresa can talk a little bit more about that. I think it's shaping up to be a pretty good year for us.
Great. Well, why don't we dig into the pipeline a little more? Maybe we can start with tagmokitug, your anti-CCR8 antibody. Theresa, what are the forerunner indications that you're pursuing for that molecule? Maybe you can just remind us of the data that you've presented to date.
Yeah. No, thanks. CCR8 is a marker on T-regulatory cells that's preferentially highly expressed in tumors. For decades, people have tried to target Tregs in cancer and been really fraught with if you broadly deplete Tregs, you have autoimmunity, so too much toxicity. The other thing is finding a marker that isn't expressed on normal lymphocytes. You don't wanna take out CD4s and CD8s 'cause those are the cells you need to kill the tumor. CCR8 really seems to have addressed this as being preferentially highly upregulated in tumor Tregs. What we've shown in the clinic is that we have been able to selectively deplete CCR8 positive Tregs, not CD4s, not CD8s, and in fact, in the tumor with statistically significant, so 52%-97% depletion of CCR8 positive Tregs in tumors, we have a massive increase in T cells.
That really has rebalanced the immune system in the tumor. We did not find any dose-limiting toxicity in our phase I up to 1,200 milligrams, the highest dose level tested, dose level 7, and we're looking at dose level 5 and 6 for dose optimization. What tumor types are we excited? That tells you a little bit about the target and the data. It's a targeted therapy. It's a bind and kill. Where's the target expressed? We look and see a high prevalence across solid tumors, so high levels in head and neck cancer, a lot of GI tumors, gastric cancer, colorectal, esophageal, pancreatic, but also breast cancer, prostate cancer, lung cancer. Really a lot of opportunity to look at changing the immune profile across solid tumors with CCR8-targeted antibodies.
Great. mechanistic rationale makes tons of sense. When can we expect to see more data from your dose escalation?
Yeah. The studies we have going on, I think, are very intentional and thoughtful, and what we're trying to learn is what is the best context for CCR8. I've talked a little bit about when we can measure the target. Is it just that simple? Are high levels of target the answer? Not every Treg expresses CCR8. Is it the percent of Tregs? If it's 10%, is that enough? Is it 50%? Is it 70%? We've intentionally picked tumor types with a variety of characteristics that can really teach us the best context to treat.
Both a high density or a high prevalence, both immunotherapy responsive tumors like head and neck, gastric, esophageal squamous cell carcinoma, and then IO deserts like MSS CRC. Overall, like the head and neck study, what we've seen is what I've reported to you, those biopsy datas were done in head and neck, where we saw we do exactly what the drug is set out to do, depletes the Tregs, but, surprisingly, really brings in those CD8s. The next question is, okay, all those CD8s are there, why aren't we seeing huge amounts of monotherapy activity? We added toripalimab in a safety cohort and saw a response in a 4th-line head and neck cancer patient. What it tells you is the T cells are there. The next question is, how do you activate them?
PD-1 is one approach in reinvigorating antigen experienced exhausted T-cells. In the context where a T-cell has tried to attack the tumor and the tumor has suppressed it through upregulation of PD-1 and now it's exhausted, PD-1 reinvigorates it. If the T-cells haven't already had a prior immune response, you might need another mechanism to activate them, that's really what we're looking at this year.
Very cool. Okay. CCR8 is a mechanism that has a little bit of competition globally. Can you talk about your molecule specifically and how it might differentiate from the landscape?
Yeah. There's two ways to differentiate a program. One is pharmacologically, and second is clinical development. We're doing both. From a pharmacology perspective, we characterize tagmokitug as potentially being best in class. CCR8 is a chemokine. It's a G protein-coupled receptor. These are protein structures that are notoriously difficult to generate selective antibodies. This is the only known antibody with no off-target binding, and we've learned through CAR-Ts and ADCs that off-target binding can come with unwanted complexities, particularly with toxicity. Knowing that we only bind CCR8 lends itself to just really characterize the profile of the target. The next properties are potency and binding. It has picomolar binding affinity, as well as being effector function enhanced. I talk about it being a bind and kill. A wild type IgG1 will kill, but effector function enhanced through afucosylation is more potent.
Not all competitor programs are effector function enhanced. There's lots of nuances there. Then we put it in the clinic, we saw gorgeous PK. I mean, it exactly fit the model of an IgG1 and did exactly what we set out to do, showing very early in our clinical program the biopsy data. We think we have the right drug-like properties to really move this forward with urgency.
Right. You have a really compelling mechanism, some really interesting early data, potential differentiation from competitors. Denny, how do you think about potential partnering when you consider the broad clinical development program that you're hopefully anticipating?
I think that this molecule puts Coherus really in a very unique positioning in the partnering aspect. You know, of course, we're gonna take tagmokitug, and we're going to develop it, as Theresa indicated, in CRC, in esophageal, head and neck, in these other areas. Because of its selectivity, and I would just add that it was screened against 5,280 other cellular proteins during its evolution. Because of its high selectivity in the data we've shown so far, we have robust interest in other parties working with us, for example, the recent J&J collaboration, which Dr. LaVallee can talk about. What we're able to do as a company is we're very open-minded in terms of collaborating with others. We see the collaborations really as the key to patient benefit.
For example, tagmokitug as a Treg depleter might be very, very useful in a complementary fashion with ADCs or other T cell engagers or even radiation. Notably, radiation in head and neck, which is prevalent, and radiation, while it depletes cancer cells, Tregs are more robust, and they tend to survive, and so you can actually concentrate Treg cells. We think head and neck is a very interesting place with radiation for investigation. More broadly, I think we're able to do various licensing arrangements and partner arrangements globally. It's important to keep in mind that both of our portfolio pipeline assets, tagmokitug and casdozo, we have global rights to.
What you'll see as the data develops with these products, that deliver data, particularly with casdozo, but also with tagmo, with all these GI indications, you'll see us reaching out to other companies, emerging markets, you know, the Far East and Europe, and do deals where we can have partners come and join us with the pivotal trials and pay their share for those populations. What this will do ultimately, we hope, is reduce the overall cost of our clinical trial programs for our pivotal trials and make them affordable for us. I think that the overall partnering strategy and our ability to execute on deals is one of the key value creation competencies that Coherus brings to the table.
Theresa, I don't know if you wanna talk a little more about the J&J partnership, how that came about and how that's actually working?
Yeah. I guess this is another example of how you can differentiate clinically. I talked about the beautiful biopsy data that really showed that large increase in CD8s. Presenting those data at conferences really fostered conversations with other folks. An exciting class in the field are T cell engagers. A big limitation for T cell engagers is activation of Tregs. They activate CD3, so bind a tumor antigen on one end, CD3 on the other end. CD3 is expressed on Tregs as well as CD4s and CD8s. Another issue for T cell engagers is just proximity. If there's not a lot of T cells there, they can't tickle it on the other end. tagmokitug really addresses two of those limitations.
In our work in really characterizing CCRA target expression across solid tumors, we were one of the only ones that had available prostate data, showing that it's a very high prevalence in prostate cancer. We'll be first in disease, first in combination with talquetamab, J&J's phase II program, where they have multiple phase III studies and other early stage studies to really look at how to maximize the activity of immunotherapy in prostate cancer, which really has been one of the tumor types that's underserved. An exciting time in prostate cancer with all the new T cell engagers coming.
We see this as really opening that study and getting the safety in combination could open up conversations with lots of different players on looking at can we combine TEGMO with lots of T cell engagers in addition to the other mechanisms, and those are the types of things that we want to look at this year with other folks that have exciting new mechanisms, whether it be an ADC, whether it be an RLT, whether it be straight radiation, or potentially even a RAS inhibitor. Like all of these would make sense to think about in terms of exploring combination with a Treg depleter.
Is there evidence for Tregs being involved in either developed or primary resistance to radiation?
Absolutely. I think the thing that isn't appreciated is how big of an issue Tregs are for anticancer treatment. Radiation in particular is a combination that hasn't worked well with PD-1. That has been characterized as one of the things that radiation does is it causes a wound. Tregs are upregulated when wound healing, so chemotherapy, radiation. Tregs are also radioresistant, so they proliferate. A lot of the thinking is that PD-1s have failed with radiation because of the Treg cells. We see this as an opportunity. That's where chemotherapy would be another approach. I mean, the J&J folks, the Columbia group, just published a paper where they showed androgen deprivation therapy upregulates Tregs. That's hormonal therapies. Overall, that's where we're super excited about tagmokitug from having a broad opportunity with...
Focusing in and trying to ear-learn early what's the best combinations to really maximize efficacy for patients.
Do you envision a biomarker strategy, as part of your development path at some point, given what you described about CCRA presence in various tumors?
Yeah. When I say that we're looking in these studies to learn that, obviously, we have an analytically validated assay to characterize that. If what we learn is that there's a way to enrich a patient population based on one of those characteristics, we are poised to take that forward.
Great. Okay. Maybe we could turn to another pipeline agent, casdozokitug. For the uninitiated, perhaps you could tell us a little bit about the target, the data you've presented so far, and what to expect from where that's going.
Casdozo is actually my favorite product. this is brought forward by Chris. It is, you know, which of your children.
It's your children.
Which of your children do you love the most, right? Casdozokitug was brought forward by Chris Hunter at Penn, and what's really interesting about it, you know, is the way it positions the pipeline. Specifically, you know, Dr. Hunter discovered that IL-27 plays a key role in turning off immune response in barrier tissues subsequent to pathogen invasion. These are like liver, lung, kidney, right? Which is where we're looking. The issue here is after you get a pathogen, of course, you get immune response, but then you have to turn it off. The knockout animals show that if you don't turn it off, they die of autoimmune disease.
One of the very remarkable things, that I like most about, our anti-IL-27 casdozokitug is the very strong translational argument from the mechanism of action through the animals and now the clinic. I'll let Theresa describe the clinical data, but fundamentally what an IL-27 does is it first of all upregulates the checkpoints, the usual suspects, you know, LAG-3, TIGIT, PD-1. It downregulates all the inflammatory cytokines, and it turns off the natural killer cells. This is a very highly potent mechanism for turning off immune response. Once you do that, you know, what do you have? What's really interesting about IL-27 then what we've done is we've gone into liver and
With our anti-IL-27 casdozo. Why don't you describe some of the data that's come out of the liver study so far and what we're doing next?
Yeah. I think this is a critical component for immuno-oncology agents, is the immune system's everywhere, right? We've learned it's not just plug and play and cure everybody, that you really have to understand. Like, we've learned how PD-1s work. We understand a little bit better why certain indications are successful, certain indications aren't. Cytokines are known to be context specific. What we see is that IL-27 is expressed from tissue-resident macrophages, so things in liver like Kupffer cells, lung, alveolar macrophages. It's responsible for turning the immune system off on infection, so in the lung, in the liver. In those organs, in the knockout animals, you see that you have immune pathology. The immune system doesn't turn off in lung, liver, and brain. For tumor models, we only see anti-tumor activity if the tumor is placed in the lung or the liver.
If you take the same cell line, put it in the flank of the mouse, which is the workhorse of oncology, we don't see activity. There's something context specific. We go to the clinic, we see dose-dependent inhibition of IL-27. When we fully inhibit IL-27 signaling, T cells and NK cells are activated. Pharmacodynamically doing what it's said to do, see monotherapy responses in lung cancer, specifically squamous lung, which is known to have a high NK cell. In expansion phases, saw some activity in liver cancer. The phase II study, if I can just say that that translation, when we put it in combination with PD-L1 angiogenesis inhibitor standard of care Avastin, we saw an improvement in overall response rate, but importantly in depth of response. We saw a 17% CR rate, which is higher than has ever been reported.
The highest CR rate in liver cancer with any approved therapy is 8%, so it's more than doubled it. An improvement in ORR, PFS, all of that, and no added toxicity to standard of care. We all get so focused on ORR, ORR, but that's not an approvable endpoint. We forget, particularly in a first-line setting, safety matters. lenvatinib pembrolizumab had beautiful ORR and wasn't a successful phase III because of tolerability and didn't hit OS. What gives us confidence is depth of response, which really stands out in the field, a safety profile that lends itself to really go for that overall survival regulatory endpoint. We have the randomized phase II ongoing now to have an initial look later this year, where we're using toripalimab plus or minus casdozo.
That repeating the initial 30-patient study with that study would really set us up for conversations with health authorities and partners for looking at a pivotal design.
Great. That's a wonderful summary. When should we expect, data from that randomized trial?
Yeah. We're gonna give an initial readout mid-year.
Mid-year.
What we wanna say is that we have to remind people of what we saw with the initial dataset. When we acquired Surface Oncology, the overall response rate in the summer of 2023 was 27%. By ASCO GI, January, 6 months later, we saw a 38% overall response rate and 3 CRs. The initial one was just similar ORR, no CRs. That six-month improvement led to improvement in ORR and depth of response. A few months later, we got to the 17% 5 CRs. Overall, with the initial look, we're really looking to repeat the safety profile and see equivalent activity to toripalimab with patients on study to look for that depth over data maturation over the rest of the year.
Okay, great. An early look mid-year, but we'll wait for the more mature data before drawing a conclusion.
Yeah.
Wonderful. Okay, well, we only have about one minute left. I failed to mention that if there are folks in the room who have a question, they can participate too. Is there anyone who'd like to ask a question? Steve.
I guess the answer to the question could be CCRA or IL-27. A decade ago, we had PD-1s arrive. It seems that we are overdue for a major step function advance in oncology. Is it one of these assets? If it's not quite one of those assets, what could it be, and how is Coherus position to be a leader in that new area?
Yeah. I think the step change comes from understanding the mechanisms best. I think some of the failures were just throwing spaghetti at the wall and just running and not paying attention to dosing. You know, all the agonist antibodies, People dosed them like inhibitors. It's not time over target. J&J really had a beautiful presentation at ESMO showing that with an agonist, a T-cell engager, really spacing out the dosing, they got better efficacy. They didn't turn off the immune system by making it anergic. I mean, clearly, with all of the data around Tregs, it has the potential with multiple combinations, multiple solid tumors, to have a big splash. That's what we're trying to learn, is how many of these really have that risk-benefit profile moving forward.
IL-27 lends itself to being more focused, like liver and lung, then if we can learn more about the NK cell mechanism there, how can we take it to other tumor types? I think this is what immuno-oncology has to really pay attention to, is who to treat and how to treat, not just throw it in and then pray it works.
In closing, I would just note that we're pleased where the company is this year in 2026. We have key strategies across three dimensions, I think. First of all, a product strategy with a fundamental commercialized PD-1 that's got accelerating sales and two very nice assets, one potentially best in class and one first class. Secondarily, we have a very strong clinical strategy, which is elucidating the MOA of the Tregs, which is arguably, you know, one of the most exciting things coming around this year. Also casdozo, which is first in class, is really keenly focused. Lastly, though, I think we have a very strong financial and partnering strategy, which is accretive to investor value. We've shown that we can do deals. We watched the balance sheet.
We have a 90% reduction in the debt. I think that we are highly focused on the integration of all three of these at the same time with the company. Now we're just gonna watch the data and let you know how it turns out.
Great. Wonderful place to end. Please join me in thanking Coherus management for their time.
Thank you.