Coherus BioSciences Receives Good News, Bad News from FDA

Bottom-Up Insights
  • Good News: The FDA completed inspections for three clinical study sites in China that were used in the development of toripalimab. It issued a Form 483 with one observation to one clinical site. Toripalimab should earn its first U.S. regulatory approval before the end of 2023.
  • Bad News: Separately, the FDA issued a Complete Response Letter (CRL) for the Udenyca On-Body Injector (OBI) formulation. The CRL focused on a third-party completing filling and packaging, but delays a regulatory decision into at least 2024.
  • This is a negative development for sure, but it strangely doesn't impact our model. That's because Solt DB Invest forecasts Udenyca OBI's market launch in 2025 due to legal challenge from Amgen. As a result, the CRL doesn't impact our 2023 model, 2024 model, or corresponding modeled fair valuations. However, an extended delay could impact our expected revenue ramp in 2025.
  • As of market close on Friday, September 22 ($4.46 per share), shares of Coherus BioSciences needed to rise 198% to reach our modeled fair valuation (2023 model).
MVP Article Disclosure: Please note this article was from our MVP platform and was written prior to October 2023. We've made numerous refinements, which means article structure, image and data visualization formats, and how we communicate models or the Margin of Safety may have changed.

If you aren't receiving objections from the U.S. Food and Drug Administration (FDA), then how do you know you're really alive?

Coherus BioSciences announced two important regulatory updates before market open on September 25.

  1. The FDA issued a dreaded Complete Response Letter (CRL) for the Udenyca On-Body Injector (OBI) formulation over serious observations during inspections at a third-party filler.
  2. The FDA completed inspections of clinical sites in China required for an approval decision on toripalimab in nasopharyngeal carcinoma (NPC). One clinical site received a Form 483 with a single observation, which is not a showstopper like a CRL, especially for clinical study sites. The company said toripalimab is on track for regulatory approval before the end of 2023, which represents a delay of 0-3 months from prior communications.

This continues a long history of objections from the FDA, which have impacted Udenyca PFS, Cimerli, and toripalimab in the past. Almost all regulatory infractions have originated with partners and third parties, which serves as a reminder to the risks of a strategy that relies heavily on in-licensing assets or outsourcing key procedures.

Udenyca OBI Gets a CRL

As the name implies, this formulation contains the company's pegfilgrastim drug product tweaked for storage in and ejection from a device worn by a patient. A separate entity was responsible for filling the devices with pegfilgrastim (third parties often handle this task in the industry), but regulators saw at least one red flag that warranted a CRL.

The CRL announced today didn't find issues with the drug product, device, clinical trial design, labeling, or other elements of the drug product hopeful. As such, the FDA hasn't requested additional clinical trials to be conducted or chemistry, manufacturing, and controls (CMC) data to be submitted. Although that may suggest a quicker turnaround for addressing the issues in the CRL, Udeynca OBI will not receive a regulatory decision until 2024 at the earliest.

No timeline has been provided. Then again, Coherus BioSciences has been strategically stealthy in the development, regulatory, and commercial timelines for Udenyca OBI. There wasn't a timeline before the CRL was announced aside from expectations for a second-half launch. That's now off the table.

For now, the CRL has no impact on Solt DB Invest modeling or forecasts, which expect Udenyca OBI to start generating revenue in 2025.

Our forecast is based on the high probability of legal challenges from Amgen immediately following FDA approval and/or launch.

  • Amgen owns Neulasta Onpro, which is the only OBI formulation in the pegfilgrastim market.
  • The product ended June 2023 with a commanding 42% market share for the entire pegfilgrastim market.
  • Eight other pegfilgrastim products owned the remaining 58%.

Amgen has built a formidable patent thicket to protect Neulasta Onpro, including the OBI device. The primary patents protecting the device expire in 2028, 2031, and 2034. Coherus BioSciences says it navigated existing intellectual property when designing the device for Udenyca OBI. I do believe that, but this is the litigious world of pharma! Amgen's patent thicket will take time to navigate in courts or, more likely, be used to extract concessions and royalties from Coherus BioSciences on sales of Udenyca OBI.

To be clear, the CRL is a setback for Coherus BioSciences, but not our model or forecast. A lengthy delay in receiving FDA approval could negatively impact our model by delaying our expected revenue ramp in 2025.

Toripalimab is Finally Nearing Approval

Separately, Coherus BioSciences announced the FDA completed inspections of clinical study sites in China used during the development of toripalimab in NPC. Regulators issued a Form 483 with one observation to one of the three sites.

Form 483 is not as serious as a CRL. For example, the FDA in June 2023 issued a Form 483 with three observations for the manufacturing facility of toripalimab. That was considered an amazing outcome for an FDA inspection of a manufacturing facility.

Additionally, inspections of clinical study sites are different from inspections of manufacturing sites. Common observations for clinical study sites include failure to supervise clinical trials, failing to maintain accurate medical history for enrolled patients, and failing to properly obtain informed consent from enrolled patients.

The clinical trials for toripalimab in NPC were conducted in China, which has long struggled to standardize procedures and processes to conform with Western or American guidelines. Although that's one of the biggest challenges keeping Chinese-developed drug candidates from obtaining regulatory approvals in the United States, the FDA has given toripalimab regulatory flexibility in NPC, as the cancer primarily affects individuals of Asian descent. The asset has also been granted multiple FDA Breakthrough Therapy designations in NPC, for which there are no approved immunotherapy drugs.

Toripalimab is as close as it gets to a sure bet for regulatory approval. Due to the timing of an approval decision, the product might not launch until 2024. However, Coherus BioSciences is able to leverage existing commercial infrastructure and account overlap from the Udenyca franchise (also an oncology product), which could lead to a swift revenue ramp. We expect $25 million to $45 million in full-year 2024 revenue, which can be refined once pricing is established after approval.

Further Reading

  • September 2023 press release announcing FDA developments for Udenyca OBI and toripalimab
  • June 2023 research note discussing the Form 483 received from the inspection of the manufacturing facility for toripalimab
  • August 2022 research note discussing our forecast for Udenyca OBI being delayed due to legal challenges from Amgen