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Item 7. Management’s Discussion and Analysis

2025-03-17 compared with 2024-03-15 · 225 added, 285 removed, 187 unchanged (73% of the section changed)

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Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 15, 2024.

We are a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative cancer treatments and the commercialization of our portfolio of FDA-approved oncology products, including LOQTORZI.

Our strategy is to build a leading immuno-oncology business funded with cash generated from our diversified portfolio of FDA-approved therapeutics.

As of March 15, 2024, our commercial portfolio includes two FDA-approved biosimilar products.

Our first product, UDENYCA, a biosimilar to Neulasta, a long-acting G-CSF, was launched commercially in the United States in January 2019.

The FDA approved the PAS for an AI presentation of UDENYCA on March 3, 2023, and on May 22, 2023 we announced the availability of UDENYCA AI for commercial sale.

On December 26, 2023 we announced that the FDA approved the PAS for our third pegfilgrastim presentation, UDENYCA ONBODY.

UDENYCA ONBODY became commercially available in the first quarter of 2024.

Our second product, YUSIMRY (adalimumab-aqvh), a biosimilar to Humira (adalimumab), was launched in the United States in July 2023.

Another product, CIMERLI (ranibizumab-eqrn), was approved by the FDA in August 2022 as a biosimilar product interchangeable with Lucentis (ranibizumab injection) for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization.

We launched CIMERLI commercially in the United States in October 2022.

On January 19, 2024, we entered into the Purchase Agreement by and between us and Sandoz.

Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, on March 1, 2024, we completed the divestiture of our CIMERLI ophthalmology franchise through the sale of our subsidiary, Coherus Ophthalmology LLC, to Sandoz for upfront, all-cash consideration of $170.0 million plus an additional $17.8 million for CIMERLI product inventory and prepaid manufacturing assets.

Such consideration is subject to certain adjustments that will be finalized following the closing pursuant to the Purchase Agreement.

O ur commercial portfolio includes LOQTORZI, a novel PD-1 inhibitor .

We are a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative immunotherapies to treat cancer.

Our commercial portfolio includes our first product, UDENYCA (pegfilgrastim-cbqv), a biosimilar to Neulasta, a long-acting G-CSF, and LOQTORZI, a novel next-generation PD-1 inhibitor.

We are developing an innovative immuno-oncology pipeline that is expected to bring forward new potential indications for LOQTORZI in the U.S.

and the development of new product candidates.

UDENYCA was launched commercially in a pre-filled syringe presentation in the United States in January 2019, followed by the launch of UDENYCA in an autoinjector presentation in May 2023 and the launch of UDENYCA ONBODY in February 2024.

On December 2, 2024, we and Intas entered into the UDENYCA Purchase Agreement, pursuant to which, and upon the terms and subject to the conditions thereof, we have agreed to divest the UDENYCA Business to Intas.

As consideration for the UDENYCA Sale, Intas has agreed to pay us $483.4 million in cash, inclusive of $118.4 million of UDENYCA product inventory, subject to downward adjustment by the amount of inventory delivered at the closing of the UDENYCA Sale less than the Inventory Target.

Intas has designated Accord to purchase the physical assets, including product inventory.

In addition, the Company is also eligible to receive two Earnout Payments of $37.5 million each, provided that certain minimum UDENYCA Net Sales thresholds are met during specified periods after the closing of the UDENYCA Sale.

We anticipate the transactions contemplated by the UDENYCA Purchase Agreement to close late in the first quarter or early in the second quarter of 2025.

We expect to use proceeds from the UDENYCA Sale (a) to fully repay our outstanding $230.0 million in aggregate principal amount of 2026 Convertible Notes and (b) to pay $47.7 million to buy out the right to receive royalties on net sales of UDENYCA in accordance with our Revenue Purchase and Sale Agreement.

In addition, we will use the proceeds for working capital and general corporate purposes, in connection with our continued business.

On October 27, 2023, we announced that LOQTORZI was approved by the FDA in combination with cisplatin and gemcitabine for the first-line treatment of adults with metastatic or recurrent locally advanced NPC, and as monotherapy for the treatment of adults with recurrent unresectable, or metastatic NPC with disease progression on or after platinum-containing chemotherapy.

LOQTORZI is an anti-PD-1 antibody that we developed in collaboration with Junshi Biosciences.

LOQTORZI is an anti-PD-1 antibody that we developed in collaboration with Junshi Biosciences that is currently the only immune checkpoint inhibitor approved by the FDA for the treatment of these indications.

We announced the launch of LOQTORZI in the U.S.

on January 2, 2024.

We also have a pipeline of earlier stage clinical and preclinical immuno-oncology programs.

On September 8, 2023, we acquired Surface and took ownership of its assets, including its portfolio of product candidates.

The lead clinical stage product candidate from the Surface Acquisition is casdozokitug (CHS-388, formerly SRF388), an investigational antibody targeting IL-27, an immune regulatory cytokine, or protein that is overexpressed in certain cancers, including hepatocellular, lung and renal cell carcinoma.

IL-27 is a cytokine

secreted by macrophages and antigen presenting cells that plays an important physiologic role in suppressing the immune system, as evidenced by its ability to resolve tissue inflammation.

In addition, one of the subunits of IL-27, EBI3, is highly expressed during pregnancy and its expression is correlated with maternal-fetal tolerance.

Due to its immunosuppressive nature, there is a rationale for inhibiting IL-27 to treat cancer, as this approach will influence the activity of multiple types of immune cells that are necessary to recognize and attack a tumor.

Casdozokitug received orphan drug designation and fast track designation from the FDA for the treatment of HCC in November 2020.

Casdozokitug is currently in two on-going clinical studies, a Phase 1/2 study in patients with advanced solid tumors (clinicaltrials.gov identifier# NCT04374877) and a Phase 2 study in HCC (clinicaltrials.gov identifier# NCT05359861).

Our second clinical-stage product candidate from the Surface Acquisition, CHS-114 (formerly SRF114), is an investigational IgG1 antibody targeting CCR8, a chemokine receptor highly expressed on Treg cells in the TME.

CHS-114 is designed to cause depletion of intra-tumoral Treg cells, important regulators of immune suppression and tolerance, through ADCC, or ADCP, or both, that has shown anti-tumor activity in preclinical models.

We are enrolling patients with advanced solid tumors in North America in a clinical trial evaluating safety and pharmacokinetics of CHS-114 (clinicaltrials.gov identifier# NCT05635643).

We are also pursuing an early-stage development candidate that is in investigational new drug application-enabling studies, CHS-1000, an antibody targeting human ILT4, designed to improve anti-PD-1 clinical benefit by transforming an unfavorable TME to a more favorable TME.

In addition to our internally developed portfolio of product candidates that we obtained in the Surface Acquisition, we have two product candidates, NZV930 and GSK4381562, which are exclusively licensed to Novartis Institutes and GSK, respectively.

We will pay 70% of all milestone- and royalty-based payments that we or our affiliates actually receive from the product candidates licensed to Novartis Institutes and GSK during the ten-year period following the entry into the CVR Agreement to the holders of the CVRs.

We have built an experienced and robust oncology market access, key account management and medical affairs capability in the United States, which have supported the successful commercialization of UDENYCA across its three FDA-approved presentations.

We expect to leverage these capabilities as we build and launch our immuno-oncology franchise.

Further evaluation of LOQTORZI is expected through multiple current and planned clinical studies by us, Junshi Biosciences and our biopharma partners.

Our pipeline is comprised of earlier stage clinical and preclinical immuno-oncology programs that we plan to develop in combination with LOQTORZI as well as in partnership with other companies with immune activating or cancer agents.

Our lead clinical stage product candidate is casdozokitug (CHS-388, formerly SRF388), an investigational antagonist antibody targeting IL-27, an immune regulatory cytokine, that is overexpressed in certain cancers, including hepatocellular, lung and renal cell carcinoma.

Casdozokitug received orphan drug designation from the FDA for the treatment of HCC in October 2020 and fast track designation from the FDA for the treatment of patients with HCC previously treated with standard therapies in November 2020.

Casdozokitug is currently in three on-going clinical studies, including a Phase 1/2 study in patients with advanced solid tumors, including in combination with toripalimab in non-small cell lung cancer (clinicaltrials.gov identifier# NCT04374877), and a Phase 2 study in HCC (clinicaltrials.gov identifier# NCT05359861).

We initiated a randomized Phase 2 study in HCC evaluating casdozokitug in combination with toripalimab and bevacizumab in the fourth quarter of 2024 (clinicaltrials.gov identifier# NCT06679985).

Our second clinical-stage product candidate, CHS-114 (formerly SRF114), is an investigational IgG1 antibody targeting CCR8, a chemokine receptor highly expressed on Treg cells in the TME.

We are enrolling patients with advanced solid tumors and HNSCC in the U.S.

in a clinical trial evaluating safety and pharmacokinetics of CHS-114 with and without LOQTORZI (clinicaltrials.gov identifier# NCT05635643).

We plan to initiate a Phase 1b clinical study of CHS-114 in combination with toripalimab in second-line HNSCC (clinicaltrials.gov identifier# NCT05635643) and initiate a Phase 1b clinical study of CHS-114 in combination with toripalimab and/or other treatments in participants with advanced solid tumors with the first cohort evaluating gastric cancer (clinicaltrials.gov identifier# NCT06657144), each in the first quarter of 2025.

We also have an early-stage development candidate, CHS-1000, an investigational antibody targeting human ILT4, designed to improve anti-PD-1 clinical benefit by transforming an unfavorable TME to a more favorable TME.

Our IND for CHS-1000 was allowed to proceed by the FDA in the second quarter of 2024 and initiating the first-in-human clinical study remains subject to further evaluation in our portfolio prioritization process.

In addition, we have a product candidate, GSK4381562, which is exclusively licensed to GSK.

Through September 2033, we have an obligation to pay 70% of all milestone- and royalty-based payments that we or our affiliates receive from GSK4381562 to the holders of CVRs.

We have a depth of scientific expertise, an experienced and robust manufacturing know-how and oncology clinical, regulatory, market access, sales, key account management and medical affairs capabilities in the United States, which has supported the commercialization of LOQTORZI.

We expect to further leverage these capabilities as we continue to advance our immuno-oncology franchise.

We primarily operate in the United States and partner with companies that operate in other countries.

Business Update

Surface Acquisition

On September 8, 2023 (the “Acquisition Date”), in accordance with the Agreement and Plan of Merger dated June 15, 2023 (the “Merger Agreement”) by and among us, Crimson Merger Sub I, Inc., a direct, wholly owned subsidiary of the Company (“Merger Sub I”), Crimson Merger Sub II, LLC, a direct, wholly owned subsidiary of the Company (“Merger Sub II,” and together with Merger Sub I, the “Merger Subs”), and Surface, we completed the acquisition of Surface, a clinical-stage I-O company focused on using its specialized knowledge of the biological pathways critical to the immunosuppressive tumor microenvironment for the development of next-generation cancer therapies.

The Surface Acquisition expanded our I-O pipeline with the following:

casdozokitug (CHS-388, formerly SRF388), an investigational, novel IL-27-targeted antibody currently being evaluated in a Phase 2 clinical trial in HCC, and CHS-114 (formerly SRF114), an investigational, CCR8-targeted antibody currently in a Phase 1/2 study as a monotherapy in patients with advanced solid tumors.

On September 8, 2023, we issued to the holders of all outstanding Surface common stock (other than treasury shares, any shares of Surface common stock held directly by us or the Merger Subs immediately prior to the Acquisition Date and shares of Surface common stock issued and outstanding immediately prior to the Acquisition Date and held by any holder properly demanding appraisal for such shares in accordance with Section 262 of the Delaware General Corporation Law) 0.1960 shares of our common stock in exchange for each share of outstanding Surface common stock and certain outstanding Surface employee equity awards.

The exchange ratio was calculated pursuant to the terms of the Merger Agreement and was based on a $5.2831 per share price of our common stock and a nominal total amount of cash in lieu of fractional shares.

Surface shareholders also received one CVR for each share of Surface common stock and employee equity award converted.

Each CVR entitles the holder to receive quarterly contingent payments in the form of cash, stock or a combination of cash and stock at our discretion during the ten-year period following September 8, 2023, for the sum of the following, less any permitted deductions (in accordance with the CVR Agreement):

● 70% of all milestone- and royalty-based payments actually received by us or our affiliates under the GSK Agreement related to the existing program (GSK4381562);

● 70% of all milestone- and royalty-based payments actually received by us or our affiliates under the Novartis Agreement related to the existing program (NZV930);

● 25% of any upfront payment actually received by us or our affiliates pursuant to potential ex-U.S.

licensing agreements for CHS-114;

● 50% of any upfront payment actually received by us or our affiliates pursuant to potential ex-U.S.

licensing agreements for casdozokitug.

We expensed $5.1 million of acquisition-related costs during 2023.

CIMERLI Divestment Transaction

On January 19, 2024, we entered into the Purchase Agreement by and between us and Sandoz.

Such consideration is subject to certain adjustments that will be finalized following the closing pursuant to the Purchase Agreement.

Other Updates

On October 27, 2023, we announced that LOQTORZI was approved by the FDA in combination with cisplatin and gemcitabine for the first-line treatment of adults with metastatic or recurrent locally advanced NPC, and as monotherapy for the treatment of adults with recurrent, unresectable, or metastatic NPC with disease progression on or after platinum-containing chemotherapy.

LOQTORZI is an anti-PD-1 antibody that we developed in collaboration with Junshi Biosciences.

We announced the launch of LOQTORZI in the U.S.

on January 2, 2024.

During the year ended December 31, 2023, we donated approximately 36,000 units of UDENYCA in the PFS presentation to the nonprofit organization Direct Relief to benefit cancer patients in low- and middle-income countries requiring increased access for vulnerable patients.

The carrying value of this inventory was written down to zero in the third quarter of 2022, thus there was no charge associated with the donation.

On October 9, 2023, in accordance with the terms of an Optional Stock Purchase Agreement entered with a CMO on September 28, 2023 (the “Optional Stock Purchase Agreement”), we issued 2,225,513 shares of our common stock to the CMO for a price of $3.675 per share, representing an aggregate value of $8.2 million.

The Optional Stock Purchase Agreement gave us the option, in our sole discretion to elect to pay for certain manufacturing services provided by the CMO by either paying cash or issuing shares of our common stock in a private placement offering (the “Stock Service Fee Payment”).

On October 4, 2023, we notified the CMO of our election of the Stock Service Fee Payment.

The price per share of common stock was equal to the volume-weighted average closing trading price per share of common stock on the Nasdaq Global Market over the ten-trading day period ending on and including October 6, 2023.

On November 8, 2022, we filed a registration statement on Form S-3, which was declared effective on November 17, 2022 (the “Registration Statement”) .

Under the Registration Statement, we could offer and sell up to $150.0 million in the aggregate of our common stock, preferred stock, debt securities, warrants and units from time to time in one or more offerings.

Also on November 8, 2022, we entered into the Sales Agreement with TD Cowen pursuant to which we may issue and sell from time to time up to $150.0 million of our common stock in the ATM Offering .

On May 15, 2023, pursuant to an Amendment No.

1 to Sales Agreement, we reduced the number of shares that could be issued and sold pursuant to the ATM Offering by $86.25 million, lowering the aggregate offering price under the Sales Agreement from $150.0 million to $63.75 million.

On September 11, 2023, pursuant to Amendment No.

2 to Sales Agreement, we increased the number of shares that could be issued and sold pursuant to its ATM Offering with TD Cowen by $28.75 million, increasing the aggregate offering price under the Sales Agreement from $63.75 million to $92.5 million.

For the ATM Offering program to date as of December 31, 2023, we sold 4,476,645 shares of common stock at a weighted-average price per share of $5.81 for gross proceeds of $26.0 million pursuant to the ATM Offering and received net proceeds of $25.4 million, net of $0.6 million of commissions and fees.

On January 10, 2024, we announced that we had delivered a notice of termination for the TIGIT Program (as defined in the Collaboration Agreement) to Junshi Biosciences pursuant to the Collaboration Agreement.

We had previously notified Junshi Biosciences on January 9, 2022 of our election to exercise the license option for the TIGIT program CHS-006 described in the Collaboration Agreement (the “TIGIT Program”).

After our acquisition of Surface Oncology, Inc.

in September 2023, we disclosed that we would conduct a portfolio prioritization process to allocate resources towards the most promising and competitively positioned product candidates in our pipeline.

We believed it would be in our best interests to terminate future work with Junshi Biosciences on the TIGIT Program.

We plan to continue to wind down work with Junshi Biosciences on the TIGIT Program pursuant to the termination.

Despite the termination of the work with Junshi BioSciences on the TIGIT Program, we will continue to support patients in its current studies involving CHS-006 (clinicaltrials.gov identifier# NCT05061628 and clinicaltrials.gov identifier# NCT05757492).

The Collaboration Agreement remains effective and active for all other purposes as we continue to work together with Junshi Biosciences on the development of LOQTORZI.

On February 5, 2024, we entered into the Consent and Amendment with the Collateral Agent and the Lenders, pursuant to which the Lenders and the Collateral Agent provided certain consents, and released certain assets and subsidiaries of the Company from their obligations under the Loan Agreement and the other loan documents in connection therewith, and the parties thereto agreed to amend the previously disclosed Loan Agreement.

Pursuant to and subject to terms and conditions in the Consent and Amendment, among other things:

(1) the Lenders and the Collateral Agent provided consent to consummation of the transactions contemplated by the Purchase Agreement, and released certain subsidiary of us from our obligation and certain assets subject to the transactions contemplated thereby, (2) the Lenders and the Collateral Agent required us to make a partial prepayment of the principal of the loans outstanding under the Loan Agreement in the amount of $175.0 million upon consummation of the transactions contemplated by the Purchase Agreement, subject to certain conditions and (3) the parties thereto agreed to adjust the minimum net sales covenant level under the Loan Agreement.

Other terms of the Loan Agreement, as amended by the Consent and Amendment, remain generally identical to those under the Loan Agreement.

Upon the closing of the Sale Transaction we became liable to repay $175.0 million of the existing principal balance of $250.0 million of the loans outstanding under the Loan Agreement on April 1, 2024 and we plan to repay $175.0 million and the prepayment premium and makewhole amount of $6.8 million to the Lenders on or before April 1, 2024 pursuant to the Consent and Amendment.

On December 2, 2024, we entered into the UDENYCA Purchase Agreement by and between us and Intas.

Pursuant to the terms and subject to the conditions set forth in the UDENYCA Purchase Agreement, we have agreed to divest the UDENYCA Business to Intas for $483.4 million in cash, inclusive of $118.4 million of UDENYCA product inventory, subject to downward adjustment by the amount of inventory delivered at the closing of the UDENYCA Sale less than the Inventory Target.

In addition, we are also eligible to receive two additional Earnout Payments of $37.5 million each, provided that certain minimum UDENYCA Net Sales thresholds are met during specified periods after the closing of the UDENYCA Sale.

The first such payment is payable by Intas to us if net sales of UDENYCA for four consecutive fiscal quarters within the first five full fiscal quarters following the consummation of the UDENYCA Sale are equal to or greater than $300 million, and the second such payment is payable by Intas to us if net sales of UDENYCA for four consecutive fiscal quarters within the first seven full fiscal quarters following the consummation of the UDENYCA Sale are equal to or greater than $350 million.

Our board of directors unanimously approved and declared the UDENYCA Purchase Agreement and the transactions contemplated thereby, including the UDENYCA Sale, to be in the best interest of the Company and its stockholders, and resolved to recommend that the our stockholders adopt the UDENYCA Purchase Agreement.

There was a vote of our stockholders at a special stockholder meeting on March 11, 2025 where our stockholders approved the UDENYCA Sale, the UDENYCA Purchase Agreement and the other transactions and ancillary documents contemplated by the Asset Purchase Agreement.

Closing of the UDENYCA Sale is not subject to a financing condition, but is subject to closing conditions, including (i) approval of our stockholders, which has occurred, (ii) the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which has occurred, (iii) clearance from Committee on Foreign Investment in the United States or any member agency thereof acting in its capacity as a member agency, which has occurred, and (iv) certain additional closing conditions related to packaging by our packaging and labeling CMOs for UDENYCA and FDA authorization of commercial supply from our additional packaging and labeling CMO for UDENYCA.

Assuming the satisfaction of the conditions set forth in the UDENYCA Purchase Agreement, we anticipate the transactions contemplated thereby to close late in the first quarter or early in the second quarter of 2025.

UDENYCA Supply Interruption

On September 13, 2024, we announced that our third-party labeling and packaging CMO for UDENYCA delayed production of UDENYCA due to over-commitments and capacity constraints.

These delays caused a temporary UDENYCA supply interruption that quickly took away our ability to sell our product UDENYCA, that makes up a large percentage of our total revenue, for a significant period of time.

Production resumed in November 2024.

The Company announced in January 2025 that due to strong demand in Q4 2024 and into Q1 2025, all three presentations of UDENYCA were being temporarily allocated.

Based on individual distributor historical purchasing patterns, supply allocations to wholesalers for all three presentations of UDENYCA were removed between the end of January 2025 and the end of February 2025.

We have made significant progress in our efforts to diversify our labeling and packaging resources.

An additional labeling and packaging CMO started production testing and manufacturing saleable product.

Commercial supply from that CMO is expected to commence late in the first quarter or early in the second quarter of 2025, subject to FDA authorization.

For a discussion of risks related to manufacturing our products and our reliance on third parties, please see “Risk Factors— Risks Related to Manufacturing and Supply Chain” and “Risk Factors—Risks Related to Reliance on Third Parties.”

Products and Product Candidates

Our portfolio includes the following products and product candidates:

● UDENYCA, a biosimilar to Neulasta, a long-acting G-CSF, was launched commercially in the United States in January 2019.

The FDA approved the PAS for an AI presentation of UDENYCA on March 3, 2023, and on May 22, 2023 we announced the availability of UDENYCA AI for commercial sale.

On December 26, 2023 we announced that the FDA approved the PAS for our third pegfilgrastim presentation, UDENYCA ONBODY.

UDENYCA ONBODY became commercially available in the first quarter of 2024.

● UDENYCA was launched commercially in a pre-filled syringe presentation in the United States in January 2019, followed by the launch of UDENYCA in an autoinjector presentation in May 2023 and the launch of UDENYCA ONBODY in February 2024.

We anticipate the transactions contemplated by the UDENYCA Purchase Agreement to close late in the first quarter or early in the second quarter of 2025.

● LOQTORZI was developed for its ability to block PD-1 interactions with its ligands, PD-L1 and PD-L2, by binding to the FG loop on the PD-1 receptor.

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on January 2, 2024.

On December 11, 2023 we announced that NCCN updated the clinical practice guidelines for NPC to include LOQTORZI as a preferred, category 1 first-line treatment option for adults with metastatic or recurrent locally advanced NPC when used in combination with cisplatin and gemcitabine.

On November 26, 2024, NCCN made a further update to the clinical practice guidelines for NPC to specify that LOQTORZI is the only preferred category 1 first-line treatment option for adults with metastatic or recurrent locally advanced NPC when used in combination with cisplatin and gemcitabine.

The guidelines also recommend LOQTORZI monotherapy as the only preferred treatment in subsequent lines of therapy if disease progression on or after a platinum-containing therapy.

Further evaluation of LOQTORZI is expected through multiple current and planned clinical studies by us and our partners.

We have a postmarketing commitment study active and enrolling patients in locations in the U.S.

and Canada in order to further evaluate the efficacy of toripalimab in combination with chemotherapy (cisplatin and gemcitabine) in patients with advanced NPC (clinicaltrials.gov identifier NCT06457503).

Junshi Biosciences is currently enrolling in a multiregional Phase 3 clinical study evaluating the treatment of LOQTORZI with its investigational anti-BTLA antibody in LS-SCLC (clinicaltrials.gov identifier NCT06095583).

INOVIO Pharmaceuticals, Inc.

plans a randomized Phase 3 study of INO-3112 and toripalimab in locally advanced, high risk HPV16/18+ oropharyngeal squamous cell carcinoma.

CRI plans to evaluate toripalimab in combination with ENB Therapeutics’ investigational agent ENB-003 in its Phase 2 trial titled, “Immunotherapy Platform Study in Platinum Resistant High Grade Serous Ovarian Cancer (IPROC)” (clinicaltrials.gov identifier NCT04918186) that is being performed in collaboration with CCTG.

On June 27, 2024, we entered into the Canada License Agreement with Apotex, pursuant to which, we granted to Apotex an exclusive license under our rights to toripalimab to commercialize toripalimab within Canada.

● Casdozokitug (CHS-388, formerly SRF388), is an investigational recombinant human IgG1 monoclonal antibody targeting IL-27, an immune regulatory cytokine, or protein that is overexpressed in certain cancers, including hepatocellular, lung and renal cell carcinoma.

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Due to its immune regulatory nature, there is a rationale for inhibiting IL-27 to treat cancer, as this approach will influence the activity of multiple types of immune cells that are necessary to recognize and attack a tumor.

Casdozokitug received orphan drug designation and fast track designation from the FDA for the treatment of HCC in November 2020.

Casdozokitug is currently in two on-going clinical studies a Phase 1/2 study in advanced solid tumors (clinicaltrials.gov identifier# NCT04374877) and a Phase 2 study in HCC (clinicaltrials.gov identifier# NCT05359861).

Casdozokitug received orphan drug designation from the FDA for the treatment of HCC in October 2020 and fast track designation from the FDA for the treatment of HCC in November 2020.

Casdozokitug is currently in three on-going clinical studies, including a Phase 1/2 study in advanced solid tumors (clinicaltrials.gov identifier# NCT04374877), a Phase 2 study in HCC (clinicaltrials.gov identifier# NCT05359861) and a randomized Phase 2 study in HCC evaluating casdozokitug in combination with toripalimab and bevacizumab (clinicaltrials.gov identifier# NCT06679985).

● CHS-114 (formerly SRF114), is an investigational highly specific human afucosylated IgG1 monoclonal antibody selectively targeting CCR8, a chemokine receptor highly expressed on Treg cells in the TME.

CHS-114 is designed as a cytolytic antibody

to cause depletion of intra-tumoral Treg cells, important regulators of immune suppression and tolerance, through ADCC, and/or ADCP.

CHS-114 is designed as a cytolytic antibody to cause depletion of intra-tumoral Treg cells, important regulators of immune suppression and tolerance, through ADCC, or ADCP or both.

CHS-114 has shown anti-tumor activity as monotherapy or in combination with anti-PD-1 antibodies in preclinical models.

We are enrolling patients with advanced solid tumors in North America in a clinical trial evaluating safety and pharmacokinetics of CHS-114 (clinicaltrials.gov identifier# NCT05635643).

● We are pursuing an early-stage development candidate, CHS-1000, an antibody targeting human ILT4, designed to improve anti-PD-1 clinical benefit by transforming an unfavorable TME to a more favorable TME.

We plan to submit an IND to the FDA in the second quarter of 2024 for CHS-1000.

● In addition to our internally developed portfolio of product candidates that we obtained in the Surface Acquisition, we also own NZV930 and GSK4381562, which are exclusively licensed to Novartis Institutes and GSK, respectively.

NZV930 is an antibody designed to inhibit CD73, which is a critical enzyme involved in the production of extracellular adenosine, a key metabolite with strong immunosuppressive properties within the TME.

NZV930 aims to reduce the production of immunosuppressive adenosine within the TME.

GSK4381562 is an antibody targeting CD112R, also known as PVRIG, an inhibitory protein expressed on NK and T cells.

GSK4381562 blocks the interaction of CD112R with CD112, its binding partner that is expressed on tumor cells.

GSK4381562 can promote the activation of both NK and T cells, with potential to elicit a strong anti-tumor response and promote immunological memory.

● YUSIMRY, a biosimilar of Humira (adalimumab), is a monoclonal antibody that can bind to TNF.

We are enrolling patients with advanced solid tumors and HNSCC in the U.S.

in a clinical trial evaluating safety and pharmacokinetics of CHS-114 with and without LOQTORZI (clinicaltrials.gov identifier# NCT05635643).

We plan to initiate a Phase 1b clinical study of CHS-114 in combination with toripalimab in second-line HNSCC (clinicaltrials.gov identifier# NCT05635643) and to initiate a Phase 1b clinical study of CHS-114 in combination with toripalimab and/or other treatments in participants with advanced solid tumors with the first cohort evaluating gastric cancer (clinicaltrials.gov identifier# NCT06657144), each in the first quarter of 2025.

● CHS-1000 is an investigational antibody targeting human ILT4, designed to improve anti-PD-1 clinical benefit by transforming an unfavorable TME to a more favorable TME.

● GSK4381562 is exclusively licensed to GSK.

GSK4381562 is an investigational antibody targeting PVRIG, an inhibitory protein expressed on NK and T cells.

GSK4381562 is designed to block the interaction of PVRIG with CD112, its binding partner that is expressed on tumor cells.

GSK4381562 is designed to promote the activation of both NK and T cells, with potential to elicit a strong anti-tumor response and promote immunological memory.

Through September 2033, we have an obligation to pay 70% of all milestone- and royalty-based payments that we or our affiliates receive from GSK4381562 to the holders of CVRs.

Immunology – Sold to HKF pursuant to the YUSIMRY Sale

● YUSIMRY (adalimumab-aqvh), a biosimilar of Humira (adalimumab), is a monoclonal antibody that can bind to TNF.

YUSIMRY provides certain therapeutic benefits for treatment of patients with certain inflammatory diseases characterized by increased production of TNF in the body, including rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn’s disease, psoriasis and ulcerative colitis.

In December 2021, the FDA approved YUSIMRY, which we launched in the United States in July 2023.

The list price of YUSIMRY at launch represented an approximately 85% discount to the list price of Humira.

YUSIMRY is now available for sale nationwide through select retail, mail order, and specialty pharmacy channels.

Ophthalmology franchise – sold to Sandoz pursuant to the Sale Transaction

● CIMERLI is a Lucentis biosimilar.

In November 2019, we entered into a license agreement with Bioeq for the commercialization of CIMERLI in certain dosage forms in both a vial and pre-filled syringe (“PFS”) presentation.

Under the Bioeq Agreement, Bioeq granted to us an exclusive royalty-bearing license to commercialize CIMERLI in the field of ophthalmology (and any other approved labelled indication) in the United States.

On August 2, 2022, the FDA approved CIMERLI as a biosimilar product interchangeable with Lucentis for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization.

The FDA also granted CIMERLI 12 months of first interchangeable exclusivity.

On October 3, 2022, we launched CIMERLI commercially in the United States in both 0.3 mg and 0.5 mg dosage forms.

On January 19, 2024, we entered into the Purchase Agreement by and between us and Sandoz.

Such consideration is subject to certain adjustments that will be finalized following the closing pursuant to the Purchase Agreement.

On June 26, 2024, we entered into the YUSIMRY Purchase Agreement with HKF and we completed the sale of our YUSIMRY franchise for upfront, cash consideration of $40.0 million and the assumption of $17.0 million of inventory purchase commitments by HKF.

We retained the rights to certain patents that were licensed to Pfizer under the Pfizer License Agreement.

Ophthalmology – Sold to Sandoz pursuant to the CIMERLI Sale

● CIMERLI (ranibizumab-eqrn), a Lucentis biosimilar, was approved by the FDA on August 2, 2022 for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema, diabetic retinopathy, and myopic choroidal neovascularization and we launched CIMERLI commercially in the United States on October 3, 2022.

On January 19, 2024, we entered into the CIMERLI Purchase Agreement by and between us and Sandoz.

Pursuant to the terms and subject to the conditions set forth in the CIMERLI Purchase Agreement, on March 1, 2024, we completed the divestiture of our CIMERLI ophthalmology franchise through the sale of our subsidiary, Coherus Ophthalmology, to Sandoz for upfront, all-cash consideration of $170.0 million plus an additional $17.8 million for CIMERLI product inventory and prepaid manufacturing assets.

License Agreement with Junshi Biosciences

On February 1, 2021, we entered into the Collaboration Agreement with Junshi Biosciences for the co-development and commercialization of LOQTORZI, Junshi Biosciences’ anti-PD-1 antibody in the United States and Canada.

Under the terms of the Collaboration Agreement, we paid $150.0 million upfront for exclusive rights to LOQTORZI in the United States and Canada, an option in these territories to Junshi Biosciences’ anti-TIGIT antibody CHS-006, an option in these territories to a next-generation engineered IL-2 cytokine, and certain negotiation rights to two undisclosed preclinical immuno-oncology drug candidates.

We will have the right to conduct all commercial activities of LOQTORZI in the United States and Canada.

We are obligated to pay Junshi Biosciences up to a 20% royalty on net sales of LOQTORZI and up to an aggregate $380.0 million in one-time payments for the achievement of various regulatory and sales milestones.

next-generation engineered IL-2 cytokine, and certain negotiation rights to two undisclosed preclinical immuno-oncology drug candidates.

We obtained the right to conduct all commercial activities of LOQTORZI in the United States and Canada.

We are obligated to pay Junshi Biosciences up to an aggregate $380.0 million in one-time payments for the achievement of various regulatory and sales milestones, of which we have already paid $25.0 million, and a royalty in the low twenty percent range on net sales of LOQTORZI.

On June 27, 2024, we entered into the Canada License Agreement pursuant to which, we granted to Apotex an exclusive license under our rights to toripalimab to commercialize toripalimab within Canada.

In March 2022, we paid $35.0 million for the exercise of our option to license CHS-006.

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The $35.0 million payment for the option to license CHS-006 was reflected in our first quarter of 2022 financial statements.

As of December 31, 2023, we have accrued a $25.0 million milestone payment to Junshi Biosciences, of which we expect to pay $12.5 million in the second quarter of 2024 and $12.5 million in the first quarter of 2025, as well as an immaterial royalty obligation.

As of December 31, 2024, we had an accrued expense of $12.5 million for a milestone payable to Junshi Biosciences, which was paid in January 2025, as well as $1.5 million for our royalty obligation.

The additional milestone payments and royalties are contingent upon future events and, therefore, will be recorded if and when it becomes probable that a milestone will be achieved, or when an option fee or royalties are incurred.

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On August 2, 2022, the FDA approved CIMERLI, which we launched in the United States in October 2022.

On October 27, 2023, we announced that LOQTORZI was approved by the FDA, and we subsequently launched LOQTORZI in the United States in January 2024.

Total net revenues were $257.2 million and $211.0 million in 2023 and 2022, respectively.

On January 19, 2024, we entered into the Purchase Agreement by and between us and Sandoz.

Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, on March 1, 2024, we completed the Sale Transaction of our CIMERLI ophthalmology franchise through the sale of our subsidiary, Coherus Ophthalmology LLC, to Sandoz for upfront, all-cash consideration of $170.0 million plus an additional $17.8 million for CIMERLI product inventory and prepaid manufacturing assets.

Such consideration is subject to certain adjustments that will be finalized following the closing pursuant to the Purchase Agreement.

LOQTORZI was approved in October 2023, and we launched LOQTORZI in the United States in January 2024.

We stopped receiving revenue from CIMERLI sales on March 1, 2024 as a result of the CIMERLI Sale.

We stopped receiving revenue from YUSIMRY sales on June 26, 2024 as a result of the YUSIMRY Sale.

On June 27, 2024, Apotex paid us an upfront payment of $6.3 million which has been classified as net revenue in the consolidated statements of operations for the year ended December 31, 2024 pursuant to the terms of the Canada License Agreement.

Our total net revenues were $267.0 million and $257.2 million in 2024 and 2023, respectively.

On December 2, 2024, we entered into the UDENYCA Purchase Agreement by and between us and Intas.

Cost of Goods Sold

Cost of goods sold consists primarily of third-party manufacturing, distribution, certain overhead costs, and royalties on certain products.

In the fourth quarter of 2023, we recorded a $47.0 million charge for the write-down of slow moving YUSIMRY inventory and the related partial recognition of certain firm purchase commitments in cost of goods sold in the consolidated statements of operations.

On May 2, 2019, we settled a trade secret action brought by Amgen.

As a result, cost of goods sold reflects a mid-single digit royalty on UDENYCA net product revenue, which began July 1, 2019 and continues for five years from then.

Additionally, w e share a percentage of gross profits on sales of Bioeq Licensed Products in the United States with Bioeq in the low- to mid-fifty percent range, and pursuant to the Genentech Agreement we incur a royalty that is a low single-digit percentage of net sales of CIMERLI that was incurred through the end of 2023 but that is no longer owed.

As a result, cost of goods sold for the five-year period ending on July 1, 2024 reflects a mid-single digit royalty on UDENYCA net product revenue.

Additionally, until the CIMERLI Sale on March 1, 2024, w e shared a percentage of gross profits on sales of CIMERLI in the United States with Bioeq AG (“Bioeq”) in the low- to mid-fifty percent range.

Cost of goods sold includes a royalty in the low twenty percent range on net sales of LOQTORZI.

Research and Development Expense

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We recognize all research and development costs as they are incurred.

We currently track research and development costs incurred on a product candidate basis only for external research and development expenses.

We currently track research and

development costs incurred on a product candidate basis only for external research and development expenses.

Our external research and development expense consists primarily of:

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● costs associated with manufacturing process development activities, analytical activities and pre-launch inventory manufactured prior to regulatory approval being obtained or deemed to be probable ;

● upfront and certain milestone payments related to licensing and collaboration agreements.

● option and certain milestone payments related to licensing and collaboration agreements.

Internal costs are associated with activities performed by our research and development organization and generally benefit multiple programs.

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● facilities and other allocated expense, which include direct and allocated expense for rent and maintenance of facilities, depreciation and amortization of leasehold improvements and equipment, laboratory and other supplies.

The largest component of our total operating expense has historically been our investment in research and development activities, including the licensing and collaboration costs, clinical development and manufacturing process development of our product candidates.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming.

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External costs incurred by product candidate:

CHS-006 (option terminated)

Clinical trials (1)

Development (5)

Clinical trials (1)

Other discontinued projects

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Total research and development expenses

(1) Expenses related primarily to development efforts to obtain PAS for additional presentations of UDENYCA.

(2) YUSIMRY, formerly CHS-1420, was approved by the FDA in December 2021.

Expenses in 2023 and 2022 primarily related to manufacturing efforts for new formulations and clinical studies.

(1) We acquired casdozokitug and CHS-114 in connection with the acquisition of Surface (the “Surface Acquisition”) in September 2023.

(2) In October 2023, LOQTORZI was approved by the FDA in combination with cisplatin and gemcitabine for the first-line treatment of adults with metastatic or recurrent locally advanced NPC, and for LOQTORZI as monotherapy for the treatment of adults with recurrent, unresectable, or metastatic NPC with disease progression on or after platinum-containing chemotherapy.

(4) In March 2022, we paid $35.0 million to exercise our option to license CHS-006, a TIGIT-targeted antibody, in the United States and Canada from Junshi Biosciences.

Expenses in 2023 and 2022 included our reimbursement for certain costs related to an ongoing CHS-006 clinical trial being conducted by Junshi Biosciences.

On January 10, 2024, we announced that we delivered a notice of termination of the TIGIT Program (as defined in the Collaboration Agreement) to Junshi Biosciences pursuant to the Collaboration Agreement.

(5) We acquired casdozokitug and CHS-114 in connection with the Surface Acquisition in September 2023.

(6) The $1.0 million of expense in 2022 relates to CHS-3318 and CHS-305 which were both discontinued during 2022.

(7) Amount consists of expenses for other pipeline candidates and CIMERLI, which was approved by the FDA in August 2022.

(3) Expenses related primarily to development efforts and manufacturing process approval to obtain the prior approval supplement for additional presentations of UDENYCA.

We anticipate the transactions contemplated by the UDENYCA Purchase Agreement to close late in the first quarter or early in the second quarter of 2025.

(4) YUSIMRY 2024 and 2023 expenses were primarily related to manufacturing efforts for new formulations and clinical studies.

On June 26, 2024, we entered into the YUSIMRY Purchase Agreement with HKF and completed the sale of our YUSIMRY franchise.

(5) On March 1, 2024, we completed the sale of our CIMERLI franchise pursuant to the CIMERLI Purchase Agreement with Sandoz.

(6) These expenses primarily relate to our remaining obligations under the TIGIT Program (as defined in the Collaboration Agreement), which we terminated in January 2024.

Selling, General and Administrative Expense

Selling, general and administrative expense consists primarily of personnel costs, allocated facilities costs and other expense for outside professional services, including legal, insurance, human resources, outside marketing, advertising, audit and accounting services, acquisition-related costs, as well as costs associated with establishing commercial capabilities in support of the commercialization of UDENYCA, CIMERLI, YUSIMRY and LOQTORZI.

Selling, general and administrative expense consists primarily of personnel costs, allocated facilities costs and other expense for outside professional services, including legal, insurance, human resources, outside marketing, advertising, audit and accounting services, certain transaction costs, and costs associated with establishing commercial capabilities in support of the commercialization of UDENYCA and LOQTORZI and the commercialization of CIMERLI and YUSIMRY up until the CIMERLI Sale and the YUSIMRY Sale, respectively.

Personnel costs consist of salaries, benefits and stock-based compensation.

Interest Expense

Interest expense consists primarily of interest incurred on our outstanding indebtedness and non-cash interest related to the amortization of debt discount and debt issuance costs associated with our outstanding debt agreements.

Interest expense consists primarily of interest incurred on our outstanding indebtedness, our Revenue Purchase and Sale Agreement, and non-cash interest related to the amortization of debt discount and debt issuance costs associated with our outstanding debt agreements.

Gain on Sale Transactions, net

Gain on Sale Transactions, net consists of cash proceeds received from the CIMERLI Sale, net of assets sold (primarily CIMERLI product inventory and prepaid manufacturing assets), other assets derecognized (goodwill and intangible assets), net of related transaction costs, retention bonuses and stock-based compensation expense incurred, and the YUSIMRY Sale, net of assets sold (primarily YUSIMRY product inventory and prepaid manufacturing assets), other assets and liabilities derecognized (primarily purchase commitments and an intangible asset), and related transaction costs.

Loss on Debt Extinguishment

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Other Income (Expense), Net

Other income (expense), net consists primarily of interest earned on our cash and cash equivalents, non-cash accretion of discount on our investments in marketable securities, foreign exchange gains (losses) resulting from currency fluctuations, gains (losses) from financial instruments including the change in fair value of the embedded derivative contained in the Revenue Purchase and Sale Agreement that meets the criteria to be bifurcated and accounted for separately from the Revenue Purchase and Sale Agreement (the "Royalty Fee Derivative Liability"), gains (losses) from disposal of long-lived assets, and income related to services provided under transition service agreements.

Results of Operations

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(in thousands)

The increase in net revenue was primarily due to our three new products:

CIMERLI launched in October 2022 and contributed $118.4 million more in 2023 as compared to 2022, YUSIMRY launched in July 2023 contributing $3.6 million, and LOQTORZI sales to distributors began in December ahead of the January 2024 launch, contributing $0.6 million of net revenue.

This was partially offset by a $76.8 million decline in UDENYCA net revenue as compared to 2022, primarily related to the decline in the average net selling price per unit.

Our net revenue and market penetration may continue to be adversely impacted by pricing trends and competitive dynamics in the overall pegfilgrastim market.

In addition, the COVID-19 pandemic has negatively impacted the pre-filled syringe pegfilgrastim market due to preferences to administer medication at home.

We expect our net revenue to decrease during 2024, as a result of the CIMERLI Sale Transaction that closed on March 1, 2024.

However, we believe this will be partially offset by the continued market share growth of UDENYCA, considering its multiple presentations, as well as the launch of LOQTORZI in the U.S.

as announced on January 2, 2024, and a full year of sales of YUSIMRY.

CIMERLI - divested March 1, 2024

YUSIMRY - divested June 26, 2024

Total net product revenue

Other revenue

Total net revenue

(1) We anticipate the transactions contemplated by the UDENYCA Purchase Agreement to close late in the first quarter or early in the second quarter of 2025.

UDENYCA net revenue increased $78.9 million primarily due to increased market share driven by sales of UDENYCA ONBODY, launched in February 2024, offset by a change in UDENYCA segment mix and the impact of the fourth quarter temporary UDENYCA supply interruption.

The $98.3 million decrease in net revenues of CIMERLI was primarily the result of the CIMERLI Sale.

LOQTORZI net revenue reflects initial sales beginning in December 2023 following FDA approval.

Other revenue in 2024 included $6.3 million for the sale to Apotex of rights to commercialize toripalimab within Canada on June 27, 2024.

Following the stockholder approval obtained in March 2025, the contemplated UDENYCA Sale was determined to represent a strategic shift.

Thus, beginning with the Quarterly Report on Form 10-Q for the first quarter of 2025, net revenues for the UDENYCA franchise and the previously divested CIMERLI and YUSIMRY franchises will be presented as discontinued operations, including comparative prior periods which will be recast.

Our remaining product, LOQTORZI, will continue to be reflected in net product revenue, and we anticipate LOQTORZI’s net product revenue will increase in 2025 compared to 2024.

Cost of Goods Sold

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Cost of goods sold

The increase in cost of goods sold in 2023 compared to 2022 was due to a $47.0 million charge in the fourth quarter of 2023 for the write-down of slow moving YUSIMRY inventory and the related partial recognition of certain firm purchase commitments, a $47.5 million increase in royalty costs and $25.0 million increase in product costs, both driven primarily by CIMERLI sales, $3.0 million in contract modification fees with one of our manufacturers for reducing the number of UDENYCA batches to be produced, and $2.3 million in write-downs, net of recoveries for inventory that was damaged during processing.

These unfavorable factors were offset by the $26.0 million write-down in the third quarter of 2022 of inventory at risk of expiration and due to the sale in the second half of 2023 of certain of those UDENYCA units having no carrying value following the write-down and a total original cost of $9.9 million.

We expect our gross margin to increase during 2024 primarily because 2023 results included a $47.0 million charge for the write-down of slow moving YUSIMRY inventory and the related partial recognition of certain firm purchase commitments, as well as 2023 had a full year of sales of CIMERLI, which was divested March 1, 2024 and had a gross profit share in the low- to mid-fifty percent range reflected in COGS.

Sales generated from our other products after the closing of the Sale Transaction will have a higher average gross margin.

In addition, the mid-single digit royalty on UDENYCA net product revenue expires on June 30, 2024.

The decrease in cost of goods sold in 2024 compared to 2023 was primarily due to a decrease of $56.9 million in costs from CIMERLI, which was divested during the first quarter of 2024, and a $47.0 million charge in the fourth quarter of 2023 related to slow moving YUSIMRY inventory.

These decreases were partially offset by a $34.3 million increase due to higher volumes of UDENYCA and LOQTORZI in 2024, $14.1 million in charges in 2024 for the write-down of UDENYCA inventory that did not meet acceptance criteria, the $7.3 million impact of the sales in 2023 of certain UDENYCA units having no carrying value following a prior period write-down, and $4.4 million in connection with a CMO contract change in 2024.

Following the stockholder approval obtained in March 2025, the contemplated UDENYCA Sale was determined to represent a strategic shift.

Thus, beginning with the Quarterly Report on Form 10-Q for the first quarter of 2025, cost of goods sold for the entire biosimilar business, inclusive of the UDENYCA, CIMERLI and YUSIMRY franchises, will be presented as discontinued operations, including comparative prior periods which will be recast, and cost of goods sold will only reflect costs for our remaining product, LOQTORZI.

Research and Development Expense

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The decrease in research and development expense was primarily due to:

● the first quarter of 2022 including an upfront payment of $35.0 million to exercise our option to license CHS-006, a TIGIT-targeted antibody, in the United States and Canada;

● a decrease of $19.0 million in YUSIMRY costs primarily due to certain manufacturing costs for YUSIMRY being capitalized since mid-2022, as well as completion of key studies in the second half of 2022;

● a decrease of $18.5 million in co-development costs for LOQTORZI and CHS-006 resulting from reducing the scope of the development plan for LOQTORZI in the United States beginning in 2023;

● a decrease of $12.9 million in costs to develop additional presentations of UDENYCA;

● a decrease of $10.0 million in personnel and stock-based compensation expense primarily due to fewer employees;

● a decrease of $4.5 million in facilities, supplies and materials and other infrastructure related expenses to support our research and development programs.

The decrease was partially offset by increases of $4.4 million for development of CHS-1000 and $4.1 million for development of casdozokitug.

We expect our research and development expense in 2024 to be lower than in 2023, as CHS-006 co-development with Junshi Biosciences has been terminated and we continue our focus on cost containment across multiple functions.

● a net decrease of $14.5 million in personnel costs including stock-based compensation expense, primarily due to a decrease in headcount and restructuring charges of $3.6 from our reduction in force in the first quarter of 2023;

● a decrease of $7.4 million in co-development costs for toripalimab and CHS-006 resulting from reducing the scope of the development plan for toripalimab in the United States beginning in 2023 and the termination of the TIGIT Program announced in January 2024;

● a decrease of $6.7 million in external costs related to YUSIMRY;

● a decrease of $4.3 million for fewer expenditures during the period for the development of CHS-1000.

The decrease was partially offset by the following:

● an increase of $12.5 million for the development of casdozokitug;

● an increase of $6.4 million for the development of CHS-114.

Following the stockholder approval obtained in March 2025, the contemplated UDENYCA Sale was determined to represent a strategic shift.

Thus, beginning with the Quarterly Report on Form 10-Q for the first quarter of 2025, research and development for the entire biosimilar business, inclusive of the UDENYCA, CIMERLI and YUSIMRY franchises, will be presented as discontinued operations, including comparative prior periods which will be recast.

Notwithstanding the retrospective reporting for discontinued operations, we expect our research and development expense in 2025 to increase as compared to 2024 due to continued investments in our immuno-oncology pipeline.

Selling, General and Administrative Expense

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Selling, general and administrative

The decrease in selling, general and administrative expense was primarily due to lower average headcount, including reductions of $9.9 million in employee and consultant costs and $3.1 million in stock-based compensation.

These decreases were partially offset by increases of $5.9 million in professional services driven by the Surface Acquisition and third-party processing fees.

Excluding the potential impact of any acquisitions or business development transactions that have not been consummated, we expect our selling, general and administrative expense for the full year 2024 to be lower than the full year 2023 primarily as a result of the CIMERLI Sale Transaction, reduced headcount and decreased commercial costs.

The decrease in selling, general and administrative expense was driven primarily by lower headcount, including reductions of $21.3 million in employee, consultant and travel costs, $9.8 million in stock-based compensation, and decreased operating costs following divestitures.

These decreases were partially offset by the $6.8 million net impairment charge in 2024 relating to the full write-off of the out-license intangible asset of $10.6 million and the final remeasurement of the CVR liability of $3.8 million related to NZV930 to its fair value of zero.

Following the stockholder approval obtained in March 2025, the contemplated UDENYCA Sale was determined to represent a strategic shift.

Thus, beginning with the Quarterly Report on Form 10-Q for the first quarter of 2025, selling, general and administrative expense for the entire biosimilar business, inclusive of the UDENYCA, CIMERLI and YUSIMRY franchises, will be presented as discontinued operations, including comparative prior periods which will be recast.

Notwithstanding the retrospective reporting for discontinued operations, we expect our selling, general and administrative expense for the full year 2025 to be lower than the full year 2024 primarily as a result of decreased operating costs and headcount due to the divestitures .

Interest Expense

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Interest expense

The increase in interest expense in 2023 was primarily due to a higher average outstanding debt balance and a higher average interest rate for the 2027 Term Loans.

This was partially offset by $3.9 million of interest expense in 2022 related to the 2027 Term Loans discount and debt issuance costs that were allocated to unfunded tranches and subsequently amortized over the respective commitment periods for tranches, including $2.3 million allocated to Tranche B that was fully amortized in the first quarter of 2022.

Our 2027 Term Loans have a variable interest rate component that resets at the beginning of every quarter, and the total interest rate ranged from 9.25% to 12.00% during 2022 and from 13.03% in the first quarter of 2023 to 13.91% in the fourth quarter of 2023.

The interest rate on the 2027 Term Loans decreased to 13.84% for the first quarter of 2024.

Due to the expected partial prepayment of $175.0 million of principal under the 2027 Term Loans as a result of the CIMERLI Sale Transaction, we expect interest expense to decrease in 2024 compared to 2023.

The decrease in interest expense in 2024 was primarily due to fully paying off the $250.0 million principal amount due under our senior secured term loan facility that was entered into on January 5, 2022 (as amended on April 7, 2022, February 6, 2023, and February 5, 2024, the “2027 Term Loans”) in the second quarter of 2024, partially offset by interest on the 2029 Term Loan and the Revenue Purchase and Sale Agreement, both commencing May 8, 2024.

Following the stockholder approval obtained in March 2025, the contemplated UDENYCA Sale was determined to represent a strategic shift.

Thus, beginning with the Quarterly Report on Form 10-Q for the first quarter of 2025, revenue and expenses for the entire biosimilar business, inclusive of the UDENYCA, CIMERLI and YUSIMRY franchises, will be presented as discontinued operations, including comparative prior periods which will be recast.

As a result, interest on the 2026 Convertible Notes and a portion of the Revenue Purchase and Sale Agreement will be reported as discontinued operations.

Notwithstanding the retrospective presentation of discontinued operations, we expect our interest expense for the full year 2025 to be lower than the full year 2024 primarily as a result of fully repaying the $250.0 million principal amount of the 2027 Term Loans during the second quarter of 2024 and our plan to use a portion of the proceeds of the UDENYCA Sale, which we anticipate to close late in the first quarter or early in the second quarter of 2025, to pay off the 2026 Convertible Notes and to buy out the right to receive royalties on net sales of UDENYCA.

Gain on Sale Transactions, net

Year Ended December 31,

(in thousands)

Gain on Sale Transactions, net

The Gain on Sale Transactions, net for 2024 includes net gains for the first quarter CIMERLI Sale and second quarter YUSIMRY Sale.

The net gain of $153.8 million on the CIMERLI Sale includes the cash receipts of $187.8 million less assets transferred to Sandoz, other assets derecognized, transaction costs of $7.2 million, and other related employee transition expenses.

The net gain of $22.8 million on

the YUSIMRY Sale to HKF includes the cash receipts of $40.0 million less assets transferred to HKF, other assets and liabilities derecognized, and transaction costs of $1.0 million.

Loss on Debt Extinguishment

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Loss on debt extinguishment

The $6.2 million loss on debt extinguishment recorded in 2022 resulted from voluntarily prepaying all amounts outstanding under the loan agreement between us and affiliates of Healthcare Royalty Partners dated as of January 7, 2019 (the “2025 Term Loan”) in January 2022.

The $12.6 million loss on debt extinguishment in 2024 resulted from the payoff of the 2027 Term Loans in May 2024, and included the write-off of the unamortized portion of debt discount and debt issuance costs, and the prepayment premium fee, the make-whole interest payment and lender fees.

Other Income (Expense), Net

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Other income (expense), net

In 2023, other income (expense), net changed favorably compared to 2022 primarily due to higher income from investments in marketable securities.

Other income (expense), net in 2024 changed unfavorably compared to 2023 primarily due to the change in fair value of the Royalty Fee Derivative Liability of $4.4 million and a reduction of $1.4 million in investment and interest income, partially offset by an increase in income from transition service agreements of $2.5 million and an increase in foreign exchange gains of $1.9 million.

Income Tax Provision (Benefit)

Income tax provision (benefit) consists of the change in deferred tax balances resulting from the recognition of a deferred tax liability related to the Surface Acquisition.

We recognized $0.4 million of income tax benefit for the year ended December 31, 2023.

No income tax provision or benefit was recognized for the year ended December 31, 2024.

In 2023, income tax provision (benefit) consists of the change in deferred tax balances resulting from the recognition of a deferred tax liability related to the Surface Acquisition, and we recognized $0.4 million of income tax benefit for the year ended December 31, 2023.

Liquidity and Capital Resources

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Total Cash, cash equivalents and marketable securities

Debt obligations:

Financial liabilities (1) :

2029 Term Loan

Revenue Purchase and Sale Agreement

2027 Term Loans

2026 Convertible Notes

Total debt obligations

Although we were profitable in 2020 and 2019, due to our research and development expenditures and decline in revenue beginning in 2021, we have generated significant operating losses in all other years since our inception, including in 2023 and 2022.

We have funded our operations primarily through sales of our common stock, issuance and incurrence of convertible and term debt and sales of our products.

On January 19, 2024, we entered into the Purchase Agreement by and between us and Sandoz.

Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, on March 1, 2024, we completed the Sale Transaction for our CIMERLI ophthalmology franchise through the sale of our subsidiary, Coherus Ophthalmology LLC, to Sandoz for upfront, all-cash consideration of $170.0 million plus an additional $17.8 million for CIMERLI product inventory and prepaid manufacturing assets.

Such consideration is subject to certain adjustments that will be finalized following the closing pursuant to the Purchase Agreement.

On February 5, 2024, we entered into a Consent, Partial Release and Third Amendment to the 2027 Term Loans (the “Consent and Amendment”), that among other things:

(1) provided consent to consummation of the transactions contemplated by the Purchase Agreement, and released certain of our subsidiary from our obligation and certain assets subject to the transactions contemplated thereby, (2) required us to make a partial prepayment of $175.0 million of the principal of the 2027 Term Loans outstanding upon consummation of the transactions contemplated by the Purchase Agreement, subject to certain conditions and (3) adjusted the minimum net sales covenant level under the 2027 Term Loans.

Total Financial liabilities

(1) See “Note 8.

Financial Liabilities” in the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K.

(2) We plan to use a portion of the proceeds of the Udenyca Sale, which we anticipate to close late in the first quarter or early in the second quarter of 2025, to pay off the $230.0 million in aggregate principal amount of the 2026 Convertible Notes and to buy out certain royalty obligations related to UDENYCA comprising the majority of the balance of the Revenue Purchase and Sale Agreement.

As of December 31, 2024, we had cash and cash equivalents of $126.0 million and an accumulated deficit of $1.6 billion.

We have generated significant operating losses in all years since our inception with the exceptions of net income of $28.5 million in 2024, primarily due to the Sale Transactions in March 2024 and June 2024, $132.2 million net income in 2020, and $89.8 million net income in 2019.

On December 2, 2024, we announced the UDENYCA Sale for $483.4 million in cash, inclusive of $118.4 million of UDENYCA product inventory, subject to other requirements.

We have funded our operations primarily through sales of our common stock, issuance and incurrence of convertible and term debt, the Revenue Purchase and Sale Agreement, the Sale Transactions and sales of our products.

The following is a summary of recent liquidity events and financing transactions:

● We currently have an ATM Offering which offers the sale of our common stock up to $92.5 million.

As of December 31, 2024, we had approximately $64.9 million of our common stock remaining available for sales under the ATM Offering, providing continued financial flexibility.

● On May 18, 2023, we completed a public offering and received net proceeds of approximately $53.6 million, after deducting the underwriters’ discounts and commissions and offering expenses.

● On September 8, 2023, we obtained $28.8 million of cash, cash equivalents and marketable securities as part of the Surface Acquisition.

On May 16, 2023, we entered into an underwriting agreement (the “Underwriting Agreement”) with J.P.

Morgan Securities LLC and Citigroup Global Markets Inc., as representatives of the several underwriters named therein (collectively, the “Underwriters”), pursuant to which we issued and sold an aggregate of 11,764,706 shares (the “Firm Shares”) of our common stock, par value $0.0001 per share, to the Underwriters (the “Public Offering”).

Additionally, under the terms of the Underwriting Agreement, we granted the Underwriters an option, for 30 days from the date of the Underwriting Agreement, to purchase up to an additional 1,764,705 shares of common stock (the “Option Shares,” and together with the Firm Shares, the “Shares”), which the Underwriters elected to exercise in full.

The price to the public in the Public Offering was $4.25 per share.

The Underwriters agreed to purchase the Shares from us pursuant to the Underwriting Agreement at a price of $3.995 per share.

On May 18, 2023, we completed the sale and issuance of an aggregate of 13,529,411 Shares, including the exercise in full of the Underwriters’ option to purchase the Option Shares.

We received net proceeds of approximately $53.6 million, after deducting the Underwriters’ discounts and commissions and offering expenses payable by us.

On November 8, 2022, we entered into the Sales Agreement related to the ATM Offering pursuant to which we may issue and sell from time to time up to $150.0 million of our common stock.

On May 15, 2023, pursuant to an Amendment No.

1 to Sales Agreement and in connection with the Public Offering, we reduced the number of shares that could be issued and sold pursuant to its ATM Offering with TD Cowen by $86.25 million, lowering the aggregate offering price under the Agreement from $150.0 million to $63.75 million.

On September 11, 2023, pursuant to an Amendment No.

During the year ended December 31, 2023, 3,559,761 shares were sold pursuant to the ATM Offering.

For the ATM Offering program to date as of December 31, 2023, we sold 4,476,645 shares of common stock at a weighted-average price per share of $5.81 for gross proceeds of $26.0 million and received net proceeds of $25.4 million, net of $0.6 million of commissions and fees.

As of December 31, 2023, we had approximately $66.5 million of our common stock remaining available for sales under the ATM Offering.

The ability to elect to sell shares of our common stock in the ATM Offering from time to time adds to our financial flexibility.

As of December 31, 2023, we had an accumulated deficit of $1.6 billion and cash, cash equivalents, and marketable securities of $117.7 million.

We believe that our available cash, cash equivalents, marketable securities, cash collected from product sales and ATM Offering and Public Offering proceeds received to date will be sufficient to fund our planned expenditures and meet our obligations for at least the twelve months following our financial statement issuance date.

● On March 1, 2024, we sold our CIMERLI ophthalmology franchise to Sandoz for $170.0 million in cash plus an additional $17.8 million for CIMERLI product inventory and prepaid manufacturing assets.

● On April 1, 2024, $175.0 million of the cash from the CIMERLI Sale was used to repay $175.0 million of the total principal balance of $250.0 million of the 2027 Term Loans.

● On May 8, 2024, we entered into the 2029 Term Loan for the principal amount of $38.7 million, with proceeds of $37.5 million, net of original issuance discount, which was used as part of the full repayment of the 2027 Term Loans.

For a summary of the material terms of our 2029 Term Loan, please refer to “Note 8.

Financial Liabilities” in the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K.

● On May 8, 2024, we entered into the Revenue Purchase and Sale Agreement, receiving $37.5 million by selling rights to receive future payments based on a percentage of U.S.

net sales of UDENYCA and LOQTORZI.

The proceeds were used as part of the full repayment of the 2027 Term Loans.

● On June 26, 2024, we sold our YUSIMRY immunology franchise to HKF for $40.0 million in cash and the assumption of $17.0 million of inventory purchase commitments by HKF.

● On June 27, 2024, we sold to Apotex an exclusive license under our rights to toripalimab to commercialize toripalimab within Canada for $6.3 million.

● On September 13, 2024, we announced that our third-party labeling and packaging CMO for UDENYCA delayed production of UDENYCA due to over-commitments and capacity constraints, causing a prolonged supply interruption that quickly took away our ability to sell our product UDENYCA in the fourth quarter of 2024.

Production resumed in November 2024 and due to strong demand in the fourth quarter of 2024 and into the first quarter of 2025, all three presentations of UDENYCA were being temporarily allocated.

Irrespective of whether the UDENYCA Sale is consummated, we believe that our available cash, cash equivalents, and cash collected from product sales and services provided under transition service agreements will be sufficient to fund our planned expenditures and meet our obligations for at least the twelve months following the date of this Annual Report on Form 10-K.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

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● cash proceeds from product sales;

● the payment of interest, principal and royalties related to our financial liabilities;

● the costs of manufacturing, distributing and marketing our products;

● the cost of manufacturing clinical supplies and any products that we may develop;

● the cost of manufacturing clinical drug supplies and establishing commercial supplies of our product candidates and products;

● the timing for our packaging and labeling CMOs to make UDENYCA products available in a sufficient quantity to meet the demand from our customers;

● the percentage of customers that continue to purchase our products and that do not switch to products made by our competitors;

● the terms and timing of any other collaborative, licensing and other arrangements that we have established or may establish;

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● the cost, timing and outcomes of regulatory approvals;

● the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

● the extent to which we acquire or invest in businesses, products or technologies.

● the impact of general economic conditions on our business, including but not limited to increased interest rates and high inflation;

● the costs of the impact from the COVID-19 pandemic and future outbreaks.

For further discussion of risks related to our financial condition and capital requirements, please see “Risk Factors—Risks Related to Our Financial Condition and Capital Requirements.”

Financing arrangements

2027 Term Loans

In January 2022, we entered into the 2027 Term Loans which provide for a senior secured term loan facility of up to $300.0 million to be funded in four committed tranches:

(i) a Tranche A Loan in an aggregate principal amount of $100.0 million that was funded on January 5, 2022;

(ii) a Tranche B Loan in an aggregate principal amount of $100.0 million that was funded on March 31, 2022, in connection with the full repayment of our $100.0 million aggregate principal amount 8.2% Convertible Senior Notes due in March 2022 (“2022 Convertible Notes”);

(iii) a Tranche C Loan in an aggregate principal amount of $50.0 million that was not funded;

and (iv) a Tranche D Loan

in an aggregate principal amount of $50.0 million that was funded on September 14, 2022.

We have the right to request an uncommitted additional facility amount of up to $100.0 million that is subject to new terms and conditions.

The 2027 Term Loans mature on either (i) January 5, 2027;

or (ii) October 15, 2025, if the outstanding aggregate principal amount of our 2026 Convertible Notes is greater than $50.0 million on October 1, 2025.

The 2027 Term Loans accrued interest from inception through March 31, 2023 at 8.25% plus three-month LIBOR per annum with a LIBOR floor of 1.0%;

and, starting April 1, 2023, accrue interest at 8.25% plus the Adjusted Term SOFR, with a floor on Adjusted Term SOFR of 1.0%.

Interest is payable quarterly in arrears.

Repayment of outstanding principal of the 2027 Term Loans will be made in five equal quarterly payments of principal commencing March 31, 2026.

In January 2022, we paid to the Lenders of the 2027 Term Loans $6.0 million for a funding fee equal to 2.00% of the Lenders’ total committed amount to fund all four tranches.

Pursuant to the Loan agreement, and subject to certain restrictions, proceeds of the 2027 Term Loans were and will be used to fund our general corporate and working capital requirements except for the following:

in January 2022, proceeds of the Tranche A Loan were used to voluntarily repay in full all amounts outstanding under the 2025 Term Loan, as well as all associated costs and expenses;

and proceeds of the Tranche B Loan were drawn in connection with the full repayment of our 2022 Convertible Notes due in March 2022.

As of December 31, 2023, we were in full compliance with these covenants, and there were no events of default under the 2027 Term Loans.

On February 5, 2024, we entered into the Consent and Amendment, that among other things:

2026 Convertible Notes

As of December 31, 2023, the carrying amount of our $230.0 million aggregate principal amount convertible senior subordinated notes due 2026 was $226.9 million.

The 2026 Convertible Notes accrue interest at a rate of 1.5% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, and will mature on April 15, 2026, unless earlier repurchased or converted at the option of holders.

Since inception, the conversion price has been 51.9224 shares of common stock per $1,000 principal amount of the 2026 Convertible Notes, which represents a conversion price of approximately $19.26 per share of common stock.

The initial conversion price represents a premium of approximately 30.0% over the last reported sale of $14.82 per share of our common stock on the Nasdaq Global Market on April 14, 2020, the date the 2026 Convertible Notes were issued.

The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events.

The 2026 Convertible Notes are not redeemable at our election before maturity.

If the 2026 Convertible Notes were converted on December 31, 2023, the holders of the 2026 Convertible Notes would have received common shares with an aggregate value of $39.8 million based on our closing stock price of $3.33 as of December 29, 2023.

In connection with the pricing of the 2026 Convertible Notes, we entered into privately negotiated capped call transactions with certain of the initial purchasers of the 2026 Convertible Notes and other financial institutions.

Since inception, the cap price has been $25.93 per share, which represents a premium of approximately 75.0% over the last reported sale price of our common stock of $14.82 per share on April 14, 2020, and is subject to certain adjustments under the terms of the capped call transactions.

Contingent Milestones

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These milestone payments and other similar fees are contingent upon future events and therefore are only recorded when it becomes probable that a milestone will be achieved, or other applicable criteria will be met.

With the exception of $25.0 million for a milestone payment to Junshi Biosciences, of which we expect to pay $12.5 million in the second quarter of 2024 and $12.5 million in the first quarter of 2025, as of December 31, 2023, no other milestones were accrued because their probability of achievement had not reached the threshold for recognition.

The following table presents a summary of our active partnerships and collaborations that have contingent regulatory and sales milestones as of December 31, 2023:

Potential Aggregate Milestone Amount

With the exception of $12.5 million for the second half of a milestone payment to Junshi Biosciences that was paid in January of 2025, as of December 31, 2024, no other milestones were accrued because their probability of achievement had not reached the threshold for recognition.

The following presents a summary of our active partnerships and collaborations that have contingent regulatory and sales milestones as of December 31, 2024:

Remaining Potential Aggregate Milestone Amount

Junshi Biosciences

$355.0 million (1)

CHS-006 anti-TIGIT antibody

$13.0 million

$15.0 million

(1) $290.0 million relates to sales milestones and $65.0 million relates to regulatory milestones, excluding the $25.0 million milestone payment to Junshi Biosciences, of which we expect to pay $12.5 million in the second quarter of 2024 and $12.5 million in the first quarter of 2025.

(2) On January 10, 2024, we announced we delivered a notice of termination of the TIGIT Program so the Potential Aggregate Milestone Amount for CHS-006 anti-TIGIT antibody became $0 as of that date.

(1) $290.0 million relates to sales milestones and $65.0 million relates to regulatory milestones for indications that are not currently the subject of our clinical trials.

These amounts exclude the $25.0 million milestone that Junshi Biosciences became entitled to upon the approval by the FDA of LOQTORZI for NPC, of which we paid $12.5 million in the second quarter of 2024 and $12.5 million in January of 2025.

Contingent Value Rights

We have recorded a contingent consideration liability for the fair value of the potential payments under the CVR Agreement in connection with the Surface Acquisition.

These potential payments during the ten-year period following September 8, 2023 are only due if we first receive milestone- or royalty-based payments under certain license agreements or upfront payments pursuant to ex-U.S.

We have recorded a contingent consideration liability for the fair value of the potential payments under the Contingent Value Rights Agreement, dated September 8, 2023, by and among the Company and Computershare Inc.

and its affiliate Computershare Trust Company, N.A., together, as the rights agent thereunder (the “CVR Agreement”) in connection with the Surface Acquisition.

These potential payments during the 10-year period following September 8, 2023 are only due if we first receive milestone- or royalty-based payments under certain license agreements or upfront payments pursuant to ex-U.S.

licensing agreements.

Payments to CVR holders can be in the form of cash, stock or a combination of cash and stock.

As of December 31, 2023, no payments are due to CVR holders.

Payments to holders of CVRs can be in the form of cash, stock or a combination of cash and stock.

The CVR liability associated with GSK and contingent consideration are recorded in other

liabilities, non-current on the consolidated balance sheets at December 31, 2024.

For further details, see “Note 6.

Surface Acquisition” in the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K.

Acquisition and Dispositions” in the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K.

Other Commitments

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Commitments and Contingencies” in the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K.

We lease office and laboratory facilities through arrangements treated as operating leases, and we lease vehicles through finance leases.

The substantial majority of these purchase commitments are expected to transfer to the Intas Parties in conjunction with the UDENYCA Sale, if the transaction closes as anticipated.

We lease office and laboratory facilities through arrangements treated as operating leases.

Refer to “Note 10.

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The following table summarizes our cash flows for the periods presented:

Year Ended December 31,

(in thousands)

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net cash provided by investing activities

Net cash (used in) provided by financing activities

Net increase in cash, cash equivalents and restricted cash

Net cash used in operating activities

Cash used in operating activities of $174.9 million for the year ended December 31, 2023 was primarily due to the net loss of $237.9 million adjusted for non-cash items including net inventory write-downs of $52.6 million, stock-based compensation expense of $43.1 million and other non-cash adjustments of $4.1 million, partially offset by the changes in our operating assets and liabilities of $36.8 million.

Cash used in operating activities of $241.1 million in 2022 was primarily due to the net loss of $291.8 million adjusted for the classification of the cash option payment to Junshi Biosciences of $35.0 million to investing activities, non-cash items including stock-based compensation expense of $50.7 million, net inventory write-downs of $26.0 million and other non-cash adjustments of $18.2 million, partially offset by the changes in our operating assets and liabilities of $79.3 million.

Net cash provided by (used in) investing activities

Cash provided by investing activities of $144.6 million in 2023 was primarily due to proceeds from maturities of investments in marketable securities of $144.4 million, proceeds from sale of investments in marketable securities of $13.3 million, and $7.0 million of cash acquired from the Surface Acquisition, partially offset by purchases of investments in marketable securities of $19.5 million and a $1.1 million upfront milestone payment due to the first commercial sale of YUSIMRY.

Cash used in investing activities of $166.9 million in 2022 was primarily due to purchases of investments in marketable securities of $127.4 million, the option fee payment of $35.0 million to license CHS-006 from Junshi Biosciences, a $2.4 million milestone payment to Bioeq related to the launch of CIMERLI, and purchases of property and equipment of $2.0 million.

Net cash provided by financing activities

Cash used in operating activities of $20.4 million in 2024 was primarily the result of net adjustments of $104.8 million against our net income of $28.5 million plus changes in our operating assets and liabilities of $55.9 million.

Cash used in operating activities of $174.9 million in 2023 was primarily due to the net loss of $237.9 million adjusted for non-cash items including net inventory write-downs of $52.6 million, stock-based compensation expense of $43.1 million and other non-cash adjustments of $4.1 million, partially offset by the changes in our operating assets and liabilities of $36.8 million.

Net cash provided by investing activities

Cash provided by investing activities of $230.3 million in 2024 was primarily due to $187.8 million of cash acquired from the CIMERLI Sale, $40.0 million of cash received from the YUSIMRY Sale, proceeds from the sale of investments in marketable securities of $8.7 million and proceeds from maturities of investments in marketable securities of $6.2 million, partially offset by the milestone payment to Junshi Biosciences of $12.5 million.

Cash provided by investing activities of $144.6 million in 2023 was primarily due to proceeds from maturities of investments in marketable securities of $144.4 million, proceeds from sale of investments in marketable securities of $13.3 million, and $7.0 million of cash acquired as part of the Surface Acquisition, partially offset by purchases of investments in marketable securities of $19.5 million.

Net cash (used in) provided by financing activities

Cash used in financing activities of $187.0 million in 2024 was primarily due to $260.4 million in payments to fully repay the 2027 Term Loans (excluding interest which is presented as an operating activity) and $2.5 million in tax payments related to net share settlement of RSUs.

These payments were partially offset by $37.0 million of proceeds on the 2029 Term Loan, net of debt discount and issuance

costs, $36.5 million of proceeds from the Revenue Purchase and Sale Agreement, net of issuance costs, and $1.5 million in proceeds from the ATM Offering, net of issuance costs.

Cash provided by financing activities of $69.6 million in 2023 was primarily due to proceeds of $53.6 million from the Public Offering, net of issuance costs, $18.1 million proceeds from the ATM Offering, net of issuance costs, and $1.8 million proceeds from purchase under the ESPP.

These were partially offset by $3.6 million in tax payments related to net share settlement.

Cash provided by financing activities of $54.3 million in 2022 was primarily due to proceeds of $240.7 million under the 2027 Term Loans, net of debt discount and issuance costs, proceeds of $6.4 million from the ATM Offering, net of issuance costs, and $2.3 million proceeds from purchase under the ESPP.

These were partially offset by fully repaying $109.0 million on the 2022 Convertible Notes and $81.8 million on the 2025 Term Loan (excluding interest which is presented as an operating activity), and $3.7 million in tax payments related to net share settlement of RSUs.

Critical Accounting Estimates

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These estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Business Combination Accounting and Valuation of Acquired Assets

We completed the Surface Acquisition on September 8, 2023, which was accounted for as a business combination.

We account for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations.

Judgment was required in assessing whether the acquired processes or activities, along with their inputs, met the criteria to constitute a business, as defined by U.S.

The acquisition method of accounting requires the recognition of assets acquired and liabilities assumed at their acquisition date fair values.

The excess of the fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill, or when there is an excess of the fair values of these identifiable assets and liabilities over the fair value of purchase consideration,

a bargain purchase gain is recorded in the consolidated statements of operations.

The estimations of fair values are based on non-observable inputs that are included in valuation models.

An income approach, which generally relies upon projected cash flow models, is used in estimating the fair value of the acquired intangible assets.

These cash flow projections are based on management's estimates of economic and market conditions including the estimated future cash flows from revenues of acquired assets, the timing and projection of costs and expenses and the related profit margins, tax rates, and discount rate.

During the measurement period, which occurs before finalization of the purchase price allocation, changes in assumptions and estimates that result in adjustments to the fair values of assets acquired and liabilities assumed, if based on facts and circumstances existing at the acquisition date, are recorded on a retroactive basis as of the acquisition date, with the corresponding offset to goodwill or bargain purchase gain.

Product Sales Discounts and Allowances

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If actual results in the future vary from our estimates, the estimates will be adjusted, which will affect net product revenue in the period that such variances become known.

The most significant and judgmental gross to net revenue adjustments are for chargebacks and rebates we provide to customers, hospitals, clinics, and payers under commercial and government programs.

The most judgmental gross to net revenue adjustments are for chargebacks and rebates we provide to customers, hospitals, clinics, and payers under commercial and government programs.

Amounts payable are provided for under various programs and vary by payer and individual payer plans.

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Revenue” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Inventory Valuation

Our inventory is stated at the lower of cost or estimated net realizable value with cost determined under the first-in first-out method.

The determination of excess or obsolete inventory requires judgment including consideration of many factors, such as estimates of future product demand, current and future market conditions, product expiration information and potential product obsolescence, among others.

Although we believe that the assumptions we use in estimating potential inventory write-downs are reasonable, if actual market conditions are less favorable than projected by us, write-downs of inventory, charges related to firm purchase commitments, or both may be required which would be recorded as cost of goods sold in our consolidated statements of operations.

Adverse developments affecting our assumptions of the level and timing of demand for our products include those that are outside of our control such as the actions taken by competitors and customers, the direct or indirect effects of the COVID-19 pandemic, and other factors.

In 2023, 2022 and 2021, cost of goods sold included inventory write-downs, net of $52.6 million, $26.0 million and $5.1 million, respectively.

As of December 31, 2023, a 10% reduction in the carrying value of inventory we expect to sell in 2024 would be approximately $6.3 million.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis