Okay, good morning, everybody. I am Doug Tsao, Senior Analyst at H.C. Wainwright. We are happy to have with us Coherus. It is not Coherus BioSciences anymore, is it?
Coherus Oncology.
Oncology now. I have had a lot of history with the company, so it is going to probably take me some time to make the change. We are joined by Arvind Sood and Rosh Dias. Maybe as a start, going back to the history of the company. Farhan, I first met Coherus over a decade ago. You were a biosimilars company, a pure-play biosimilars company. You have made the strategic pivot away from biosimilars. There was a time when we were doing both, you eventually sold the biosimilar assets and are now a pure play in IO. Just walk through that strategic pivot.
Yeah. Thanks, Doug. First of all, thanks for the opportunity to have us at your conference. If you will allow me, what I will do is I will frame the fundamentals of the company, the investment appeal factors, if you will, in a very brief manner, just for the benefit of those who might not know the company as well as you do and those who are on the line. I think the question you raise is an important one because, even up until last year, I think the company was largely viewed as a biosimilars company, despite the fact that we had made the strategic pivot to innovative oncology. That pivot is now complete. We are very much focused on developing innovative oncology molecules, first-in-class and potentially best-in-class molecules.
If you scroll down and look at the strategic makeup of the company, it is unique for a small-cap biotech company from the standpoint that we are a commercial stage company, and we are also a clinical stage company. From a commercial stage perspective, we have a product. It is a product called LOQTORZI or toripalimab. It is a PD-1 inhibitor. We believe it is a next-generation PD-1 inhibitor. We think of this product as a revenue generator. We are generating revenues on this product. Last year, we did about $40 million. This year, the guidance that we have provided is that we expect something in the range of $57 million-$62 million for this product. On a sequential quarterly basis, that correlates with about a 10%-15% growth on average.
It is a revenue generator, but it is also a revenue multiplier because we have a couple of compounds in the pipeline that I will come back to in a couple of minutes here, and it allows us to run combination trials with our own PD-1 inhibitor. We do not have to go out and hunt for a PD-1 inhibitor outside. It has also become a funding vehicle. Because of the fact that we are generating revenues with this product, we are able to offset some of our operating expenses. We anticipate that in 2028, we are going to reach peak market share with LOQTORZI, and that should correspond or correlate with a revenue range of $150 million-$200 million on a full-year basis.
Once we get to that level, we are going to be able to largely offset our so-called core burn, which includes cost of goods, it includes SG&A, and it also includes royalty expense. So everything outside of clinical trial and expenses. That is the reason we feel that this is, again, a very unique aspect for us strategically in that we actually have a product that we can use as a funding vehicle. We have an innovative pipeline. We have a product called tagmokitug, which is a product that is an antibody that actually targets CCR8-positive Tregs. CCR8 is a protein that is expressed predominantly on T regulatory cells, and obviously it contributes to immune resistance. We are running a broad program, and we will delve into some additional detail here in terms of the different trials that we are running.
Ranging from head and neck cancer to gastric cancer to colorectal cancer, and recently, we struck a collaboration with Johnson & Johnson, in which we are looking at a collaboration of tagmokitug, in combination with their T-cell engager, a product called pasritamig, for castration-resistant prostate cancer. We expect to dose the first patient this fall with that particular combination. The second product in the pipeline that I would highlight is a product called casdozokitug. This is an antibody that is directed towards IL-27. IL-27 is an immunomodulatory cytokine, and it basically impairs or undermines the functionality of T cells and natural killer cells or NK cells. Again, staying consistent with the theme of addressing immune resistance. With this product, casdozokitug, we are running a trial in first-line HCC or hepatocellular carcinoma. This is a randomized trial of about 72 patients.
This study is fully enrolled, and we expect to get the initial data from this particular study towards the end of this year. Again, just to summarize, with tagmokitug, we have the potential to be potentially best in class, and with casdozokitug, certainly this is a first-in-class molecule. The last comment that I make before I turn it back to you, Doug, for any other questions that you have, is that we had about $105 million in cash on our balance sheet at the end of the second quarter, and that should be sufficient to see us through the data readouts in 2026 and early 2027. With that, let me turn it back to you.
I guess maybe a question for both of you is that in talking with Denny, the company CEO, he sort of has always emphasized that Coherus is an IO company, focused on IO. We obviously have seen other sort of modalities in terms of oncology emerge. What is it about IO that has led you to, or has driven the focus on IO versus some of the other emerging areas that have emerged in the space?
Do you want to address that?
Yeah. So, I think, Doug, of the company as really focusing in on resistance mechanisms and overcoming resistance, specifically in the tumor microenvironment. That's our focus. It's a complementary mechanism of action to toripalimab. Given that we have toripalimab, that's where I think these additional compounds, the pipeline compounds, tagmo, as well as casdozokitug, can really be of benefit. We're starting to see, and again, we can talk about the program in a little bit more detail, but we're starting to see emerging evidence that supports that.
And, maybe we will start with tagmokitug, which was an asset that you brought in with the acquisition of Surface Oncology, which really, arguably was a sort of accelerating point in the company's transformation. What gives you the confidence in the underlying CCR8 biology, and how has that sort of informed the tumor types that you have selected for the early clinical work?
Yes, I will make a few points. So if you think about Tregs specifically, we know that Tregs are a predominant resistance mechanism for tumors to avoid cytotoxicity, essentially. What has been missing in the field has been the ability to preferentially target those Tregs within the tumor microenvironment. So CCR8 has a very interesting mechanism. It preferentially tags those Tregs that are present within the tumor microenvironment preferentially, and therefore minimizing some of the extra-tumoral effects that other Treg targeting agents may have. So that is the mechanism. The tumor types that we are looking at specifically do, we know, have high expression levels of CCR8, and we are focused in on those different tumor types. If you look at the specific tumors we are looking at, we are running two protocols, and we have a 1/3 one about to start.
Protocol 1 is an extension of the initial phase I program that we had, and we are focusing in on second line head and neck squamous cell. Area of a high unmet medical need, complementary to, of course, toripalimab, which is approved in nasopharyngeal carcinoma, which is an anatomical subtype of head and neck cancer. Our second protocol is a GI protocol that includes multiple different cohorts. Cohort A, upper GI adenocarcinoma, including EAC, GEJ, as well as second-line gastric as well, all adenos. Cohorts B and C are esophageal, and second line and first line respectively. This takes advantage of the benefit that toripalimab has, irrespective of PD-L1 status in esophageal specifically, and these combinations are of course, in combination with toripalimab. And then our fourth cohort of the GI protocol is a fourth line plus colorectal carcinoma cohort, high unmet medical need.
We know that this is a cold tumor, and we are testing the ability to. We are prosecuting the question, essentially, can we turn a cold tumor hot? So, that is the second protocol, and then the third protocol that we are about to start that Arvind alluded to is the combination with pomalidomide Johnson & Johnson's, and we are again, exploring the question there, of can we combine safely with a T-cell engager? One thing I will say before I hand it back to you, we are looking at several different second-line studies, head and neck, upper GI adeno, esophageal squamous cell. We are asking the question specifically there, can we reverse PD-L1 resistance, and can we reinvigorate those T-cells within the tumor microenvironment? Because of course, most, if not all of these patients will have had a PD-1 in first line.
I think it is important to bear in the context of the biology, it is important to prosecute the question that we are actually asking.
Doug, I would just add to what Rosh has said, that the role of Tregs, CCR8 positive Tregs in the tumor microenvironment, I think is well recognized. As a matter of fact, there was a Nobel Committee for Physiology or Medicine that recognized this particular role that I alluded to. The second point that I would note is I think we have also established that in addition to a significant depletion of these CCR8 positive Tregs, we also see a significant proliferation of CD8+ T cells. Now, the real question is, are these antigen-exhausted T cells or are these naive T cells? That is something that we are still going to ascertain.
Doug, I might just jump onto that point, and expand on it a little bit further. In our early phase trial, we did show this nice tumor remodeling, to your question about the biology. Showed this really nice tumor remodeling on immunofluorescence. Whereas monotherapy, tagmokitug monotherapy, did show depletion of intratumoral CCR8 positive Tregs, and then also a very nice infiltration of CD8+. I think that was really the tumor remodeling we want to see to a more cytotoxic state, supportive of the mechanism. Then when we added in toripalimab, we saw a very nice deep partial response out of seven subjects. This is in a fourth-line subject who had previously received and failed a TKI, taxane, a TKI, and then responded to this combination.
We think mechanistically, there are three things you need in order to really exploit this mechanism most effectively, right? One is depletion of intratumoral Tregs. Second is infiltration of those CD8+, and third is activation of those infiltrated T cells with a complementary agent such as toripalimab, such as pasritamig.
And can you talk about, Rosh, some of the metrics that you're looking for in the TAGRISSO studies beyond just obviously PFS and OS, that sort of help you understand that the drug is doing what you think it should do?
Yeah. So that's a very important question because I think there's historically been a lot of focus on ORR, which is of course important, but where we really anticipate the benefit to be is in terms of duration, right? So some of the metrics we'll be looking at will be, of course ORR, but we'll be looking at metrics such as clinical benefit rate, which includes CR PR as well as stable disease six months or greater. And that durability is really important because that, of course, is what gives you the approvable endpoint of overall survival. Right? Correlates best at this stage of trial with that approvable endpoint. So I would really focus in on some of those durability metrics.
Of course, we'll get PFS, OS, those metrics will be coming later, but the initial data sets, we anticipate those as really some of the key things we're looking at. Of course, safety as well. We're also looking at the biomarkers as well. So baseline CCR8 levels, for example. We've already communicated some of the early reads that we're seeing in terms of our head and neck study at least. We'll air more data out in October, so in the coming month or so. What we've seen so far to your question is, we've seen in the head and neck second-line study, we have seen an acceptable manageable safety profile. We have seen and shown activity in terms of both response as well as in terms of duration. We've also seen enrichment as well in terms of greater activity in HPV-positive patients.
Also greater activity in what we've called a higher TIRI score, Tumor Immune Regulatory Index score, which is essentially a measure of the intratumoral CCR8 levels, in some ways. We haven't disclosed exactly what those metrics are, but that's I would think of it as a composite measure of the CCR8 levels within the tumor.
Rosh, maybe if you could help us understand, because I think you said that you were focused on seeing the durability of response. At the same time, with the upcoming readouts, the data's going to be relatively immature. I'm just curious, when we look at this, is there anything that would start to give us confidence around the durability of the data?
Yeah, I think that's what I was mentioning in terms of clinical benefit rate, right? Clinical benefit rate does include stable disease six months plus PR CR. I think that's the durability metric that we're anticipating showing, at least in the initial phase, and then PFS, overall survival, et cetera, to follow.
Can you just let us, sort of help us understand what we're going to get in October?
Yeah. It'll be further clarification of some of the initial indications that we mentioned at the last earnings call. We'll talk more about safety in the full patient population. We'll also talk about, obviously, response rate, but CVR, and also some of that benefit in terms of the enrichment, right? We'll have more biomarkers in, et cetera. We'll have a larger data set on which to report early safety, efficacy, including that early durability, as well as some of the enrichment factors, which we should be able to give a bit more precision to.
Maybe just turning to casdozokitug, the IL-27 program. Maybe talk about why you chose to start in HCC, and what makes this particular setting appropriate for IL-27.
Yeah. IL-27 is an interesting. We are testing plus, it's a very interesting target. IL-27 is a cytokine that is essentially immunosuppressive. Arvind outlined the ways it does this. Basically, it's highly prevalent in barrier tissues such as lung, such as liver, such as kidneys, for example, as well. Our early data and our early focus has been in liver, and we've shown actual clinical data that has shown benefit in first-line HCC. What we've already demonstrated, and we showed this data at ASCO GI last year, was the addition of casdozokitug to the current standard of care, atezo and bevacizumab. We showed that that addition showed an overall response rate of 38%. Atezolizumab-bevacizumab in IMbrave150 has given 30%. We also showed what has been considered to be by the PI as a very impressive complete response rate of 17%.
IMbrave150, again, 7.7%. Bear in mind that these are cross-trial comparisons, so that's an important consideration. Nevertheless, very encouraging. Strong safety as well, and we saw very nice durability. In terms of the durability that we were talking about, a couple of patients out past two years in complete response, we saw a PFS of 8.1 months, which compares to, again, IMbrave150, different study, different population, slightly different baseline characteristics, but a 6.9 month PFS there. That's really what the biology has supported in terms of barrier tissues.
The early data has supported it, and now we're progressing now with our ongoing study, which has completed accrual, and we're looking at swapping out atezo for toripalimab. We now have an ongoing 72-subject study. Two doses of casdozokitug in combination with toripalimab-bevacizumab versus toripalimab-bevacizumab alone, that should enable us to do three things. Number one, further characterize safety and efficacy with a larger patient number.
Number two, with two doses of casdozokitug to give us data to help address Project Optimus. Number three, with the toripalimab-bevacizumab alone arm to give contribution of components. Again, right now we're waiting for this data to mature, sufficient number of patients having had the sufficient number of scans, and we anticipate probably airing out the data around December or thereabout. One thing I will say is our expectation is that we are likely, we think mechanistically, to see the VEGF benefit early, and that durability then to be the benefit with casdozokitug, hence the reason for waiting for a sufficient number of scans.
Doug, I would just add that there's also a concurrent biomarker strategy. In the initial study, we collected just a handful of tumor samples, and we were able to identify a higher level of response in patients with high IL-27 levels. In this particular study that Rosh just described, we are collecting tumor samples on essentially all the patients, and we are looking at IL-27 levels, and we are also conducting a ctDNA analysis, which has been, I would say that that's akin to this type of analysis that is done for hematologic malignancies in identifying MRD or minimal residual disease.
When you think about a biomarker strategy or think about biomarkers or helping identify patients who will be responsive to IL-27, does that shape future development for you and how important does it become?
Yeah, I think there are two parts. We need to see the data, but there are two paths, pathways here. Either a full population benefit, which directs development in one way, or an enriched population benefit in terms of high IL-27 levels, which again progresses development in a forward direction as well, but in a different way. I will say that as you talk to HCC physicians, there is certainly a real need for an enrichment strategy that guides additional benefit. Certainly we're excited about seeing what the data shows as it emerges.
Can you just help us understand or help us set expectations for the data that we should get by the end of the year?
Yeah. So it is the same kind of metrics that we will be looking at. We will be looking at certainly overall response rate, both by RECIST but also mRECIST, which as you know, I think is more HCC specific. And we will also be looking for, again, the same measures that I talked about earlier, clinical benefit rate et cetera. Again, the PFS and some of those longer-term metrics will take a bit more time to come. Safety will be important because what we have seen so far is that we have not added additional toxicity to atezolizumab-bevacizumab, standard of care. And the other thing we will be looking at as alluded to earlier, will be ctDNA as an early marker of both disease burden initially as well as activity.
And maybe we have time for one more question, but just talk about your cash position, because Arvind, you talked about the company's ability to help use toripalimab as a funding mechanism. Just think about where you are and priorities for capital allocation.
Let me address that in a couple of different pieces. So our operating expenses, we are estimating that they should be in the range of about $170 million- $175 million for this year, so we have given fairly explicit guidance as far as operating expenses are concerned. As I have mentioned before today, where we are in terms of revenues with LOQTORZI, we are not able to fully cover the core burn of the company. But by the time we get to the peak market share, which is expected in 2028, again, a range of $150 million-$ 200 million. Once we get to that level, then we can cover the cost of goods, the SG&A, the royalty expense, everything outside of clinical trial expense. So that is our anticipation, getting to that level of peak revenues on LOQTORZI.
As far as the cash position of the company is concerned, as I had mentioned before, we have about $105 million on the balance sheet as of the end of the second quarter. We have largely resolved our TSA, the transition services agreement liabilities. So essentially the cash burn is going to correspond to the company's ability to develop our pipeline. And we think we have sufficient cash at this stage to get us through, again, the data readouts that we are expecting this year and early 2027.
Okay. Well, I think we are out of time, so unfortunately, we have to wrap it there.
Thank you.
Thanks again for having us at your conference.
Thank you for joining us.