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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2025-03-17 compared with 2024-03-15 · 493 added, 426 removed, 965 unchanged (49% of the section changed)

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We are exposed to market risk related to changes in interest rates.

As of December 31, 2023, we had cash and cash equivalents and marketable securities of $117.7 million, primarily invested in U.S.

treasuries and government agency securities, commercial paper, corporate bonds and money market funds.

As of December 31, 2024, we had cash and cash equivalents of $126.0 million.

Our primary exposure to market risk is interest rate sensitivity.

Our marketable securities are subject to interest rate risk and could fall in value if market interest rates increase.

Due to the short-term duration of our investment portfolio and the low risk profile of our investments, we believe that our exposure to interest rate risk on these investments is not significant and a 1% movement in market interest rates would not have a material impact to our financial results.

Due to the short-term duration of our cash and cash equivalents, we believe that our exposure to interest rate risk is not significant and a 1% movement in market interest rates would not have a material impact to our financial results.

We do not enter into investments for trading or speculative purposes.

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The investment portfolio is maintained in accordance with our investment policy, which defines allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer.

There were no material losses from credit risks on such accounts during any of the periods presented.

There were no material losses

from credit risks on such accounts during any of the periods presented.

We are not exposed to any significant concentrations of credit risk from these financial instruments.

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We are exposed to interest rate risk with respect to variable rate debt.

As of December 31, 2023, we had $250.0 million principal outstanding on our 2027 Term Loans that starting April 1, 2023, accrue interest at 8.25% plus the Adjusted Term SOFR, with a floor on Adjusted Term SOFR of 1.0%.

As of December 31, 2024, we had $38.7 million principal outstanding on our 2029 Term Loan that accrues interest at 8.0% per annum, plus the three-month SOFR, with a floor of 1.0%.

We currently do not hedge our variable interest rate debt.

The interest rate for our variable rate debt during the quarter ended December 31, 2023 was 13.91%, and the interest rate during the first quarter of 2024 will be 13.84%.

A hypothetical 100 basis point increase in the interest rate on our variable rate debt could result in up to a $2.5 million increase in the annual interest expense as of December 31, 2023.

The interest rate during the first quarter of 2025 will be 12.33%.

A hypothetical 100 basis point increase in the interest rate on our variable rate debt could result in up to a $0.4 million increase in the annual interest expense that we pay.

In April 2020, we issued $230.0 million aggregate principal amount of 2026 Convertible Notes with a fixed interest rate of 1.5%.

Since the notes have a fixed annual interest rate, we have no financial or economic interest exposure associated with changes in interest rates.

Since the notes have a fixed annual interest rate, we have no financial or economic interest exposure associated with changes in interest rates for these notes.

However, the fair value of fixed rate debt fluctuates when interest rates change.

Additionally, the fair value of the 2026 Convertible Notes can be impacted when the market price of our common stock fluctuates.

We carry the 2026 Convertible Notes on our balance sheet at face value less the unamortized discount and issuance costs, and we present the fair value for required disclosure purposes only.

We carry the 2026 Convertible Notes on our balance sheets at face value less the unamortized discount and issuance costs, and we present the fair value for required disclosure purposes only.

We plan to use a portion of the proceeds of the UDENYCA Sale to fully repay the entirety of the 2026 Convertible Notes.

Substantially all of our sales are denominated in U.S.

We had exposure to the exchange rate between the U.S.

Dollar and the Euro because we made purchases of CIMERLI inventory from and paid royalties to our partner Bioeq that were denominated in Euros, and we were therefore subject to fluctuations due to changes in foreign currency exchange rates.

Accordingly, fluctuations in the exchange rate between the U.S.

Dollar and the Euro may have impacted our consolidated statements of operations.

In the first quarter of 2023, we started utilizing euro currency contracts to manage euro currency risk in purchasing inventory and future settlement of euro denominated assets and liabilities.

The volume of our foreign currency contract activity is limited by the amount of transaction exposure in each foreign currency and our election whether to hedge the transactions.

There are no derivative instruments entered into for speculative or trading purposes.

Since our derivatives all matured and settled by December 31, 2023, there were no derivative assets or derivative liabilities as of December 31, 2023.

dollars, and since the CIMERLI Sale, we do not have any material exposure to the exchange rate between the U.S.

Dollar and the Euro.

Consolidated Financial Statements and Supplementary Data

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ Deficit

Consolidated Statements of Cash Flows

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Coherus BioSciences, Inc., (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Coherus BioSciences, Inc.

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders' deficit and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 15, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 17, 2025 expressed an adverse opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Estimate of Reserves for Chargebacks and Rebates

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Estimated chargebacks are recorded as a reduction of trade receivables on the consolidated balance sheet and totaled $110.8 million at December 31, 2024.

Estimated rebates are presented within accrued rebates, fees and reserves and other liabilities, non-current on the consolidated balance sheet and totaled $121.1 million at December 31, 2023.

Estimated rebates are presented within accrued rebates, fees and reserves on the consolidated balance sheet and totaled $123.7 million at December 31, 2024.

Auditing the estimates for chargebacks and rebates was complex due to the judgmental nature of the assumptions used.

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We also assessed the completeness and accuracy of current and historical channel and payer mix and discount rate data used in management’s estimates and performed sensitivity analyses to determine the effect of changes in assumptions, where appropriate.

Excess and Obsolete Inventory Reserve

Description of the Matter

As of December 31, 2023, the Company had $130.1 million of inventory which included $13.0 million of raw materials, $82.6 million of work in progress and $34.5 million of finished goods.

As disclosed in Note 1 to the Company’s consolidated financial statements, inventories are stated at the lower of cost or estimated net realizable value.

The Company assesses its inventory levels along with its purchase commitments each reporting period and writes down inventory that is either expected to be at risk of expiration prior to sale or has a cost basis in excess of its expected net realizable value.

Auditing management's estimates for excess inventory involved subjective auditor judgment because the estimates rely on a number of factors that are affected by market and economic conditions outside the Company's control.

In particular, the excess inventory calculations are sensitive to significant assumptions, including the expected demand for the Company’s products, the effect on demand of competitive products and the Company's purchase commitments.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's excess and obsolete inventory reserve process including management’s review of the significant assumptions described above and controls over the completeness and accuracy of the information used to develop the estimate.

Our substantive audit procedures included, among others, evaluating methodologies used and data utilized in the analysis for inventory expected to be at risk for expiration or excess, or has a cost basis in excess of its expected net realizable value.

We evaluated purchase commitments or alternative uses, compared forecasted demand and expected net realizable value to historical trends, compared actual inventory levels to forecasted demand requirements and expected net realizable value, and evaluated the sensitivity of sales forecast assumptions on the amount of inventory reserves recorded.

Business Combination

Description of the Matter

During the year ended December 31, 2023, the Company completed its acquisition of Surface Oncology, Inc.

(“Surface”) for consideration of $64.6 million in net assets, as disclosed in Note 6 to the consolidated financial statements.

The transaction was accounted for as a business combination.

Auditing the Company’s accounting for its acquisition of Surface was complex due to the significant estimation required by management to determine the fair value of certain identified finite and indefinite-lived intangible assets, principally consisting of out-license intangible assets of $13.5 million and in-process research and development intangible assets of $26.2 million, respectively.

The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business.

The significant assumptions used to estimate the fair value of these intangible assets included certain assumptions including estimated future cash flows from revenues of acquired assets, the timing and projection of costs and expenses and the related profit margins, and discount rates.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for the acquisition.

This included testing controls over the estimation process supporting the recognition and measurement of the out-license assets and in-process research and development, including the valuation models and underlying assumptions used to develop such estimates.

To test the estimated fair value of the in-process research and development and out-license assets, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

For example, we compared the significant assumptions to current industry, market and economic trends and to the Company's forecasts.

We involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates.

Our valuation specialists’ procedures included, among others, developing a range of independent estimates for the discount rates used in the valuation models and comparing those to the discount rates selected by management.

/s/ Ernst & Young LLP

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Trade receivables, net

TSA receivables, net (Note 6)

Prepaid manufacturing

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Accrued rebates, fees and reserves

TSA payables and other accrued liabilities (Note 6)

Accrued compensation

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Total current liabilities

Term loans, non-current

Convertible notes

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Interest expense

Gain on Sale Transactions, net (Note 6)

Loss on debt extinguishment

Other income (expense), net

Loss before income taxes

Income (loss) before income taxes

Income tax provision (benefit)

Basic and diluted net loss per share

Weighted-average number of shares used in computing basic and diluted net loss per share

Net income (loss)

Net income (loss) per share:

Weighted-average number of shares used in computing net income (loss) per share:

See accompanying notes.

Coherus BioSciences, Inc.

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss )

(in thousands)

Year Ended December 31,

Net income (loss)

Other comprehensive income (loss):

Unrealized gain on available-for-sale securities, net of tax

Unrealized gain (loss) on available-for-sale securities, net of tax

Foreign currency translation adjustments, net of tax

Comprehensive loss

Comprehensive income (loss)

See accompanying notes.

Coherus BioSciences, Inc.

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Deficit

(in thousands, except share and per share data)

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Balances at December 31, 2021

( 1,049,854 )

Issuance of common stock upon exercise of stock options

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Stock-based compensation expense

Other comprehensive gain, net of tax

Balances at December 31, 2022

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Issuance of common stock under the ESPP

Issuance of common stock in connection with Surface Acquisition:

Issuance to Surface shareholders for acquisition

Accelerated vesting of equity awards

Taxes paid related to net share settlement of equity awards

Issuance of common stock under ATM Offering, net of issuance costs

Issuance of common stock under Public Offering, net of issuance costs

Issuance of common stock under Optional Stock Purchase Agreement

Taxes paid related to net share settlement of RSUs

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Issuance of common stock under the ESPP

Issuance of common stock in connection with Surface Acquisition:

Issuance to Surface shareholders for acquisition

Accelerated vesting of equity awards

Taxes paid related to net share settlement of equity awards

Issuance of common stock - partial payout of 2023 bonus in RSUs

Issuance of common stock under ATM Offering, net of issuance costs

Issuance of common stock under Public Offering, net of issuance costs

Issuance of common stock under Optional Stock Purchase Agreement

Taxes paid related to net share settlement of RSUs

( 1,071,216 )

Stock-based compensation expense

Other comprehensive gain, net of tax

Other comprehensive loss, net of tax

Balances at December 31, 2024

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Operating activities

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

Stock-based compensation expense

Write-off of prepaid manufacturing services related to the termination of CHS-2020

Impairment of out-license asset and remeasurement of CVR liability, net

Loss on debt extinguishment

Gain on Sale Transactions, net (Note 6)

Inventory write-downs, net

Non-cash amortization of premium (accretion of discount) on marketable securities, net

Non-cash interest expense from amortization of debt discount and issuance costs

Non-cash interest expense from amortization of debt and other financial liabilities discount and issuance costs

Non-cash operating lease expense

Upfront and option payments to Junshi Biosciences

Loss on debt extinguishment

Option payment to Junshi Biosciences

Change in fair value of derivatives

Other non-cash adjustments, net

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Investing activities

Purchases of property and equipment

Proceeds from disposal of property and equipment

Purchases of investments in marketable securities

Proceeds from maturities of investments in marketable securities

Proceeds from sale of investments in marketable securities

Cash and cash equivalents acquired from Surface Acquisition

Upfront and option payments to Junshi Biosciences

Milestone based license fee payments

Cash received from CIMERLI Sale (Note 6)

Cash received from YUSIMRY Sale (Note 6)

Cash and cash equivalents acquired as part of the Surface Acquisition

Milestone and option payments to Junshi Biosciences

Purchases of investments in marketable securities

Other investing activities, net

Net cash provided by (used in) investing activities

Financing activities

Proceeds from 2027 Term Loans, net of debt discount & issuance costs

Proceeds from issuance of common stock to Junshi Biosciences, net of issuance costs

Proceeds from 2029 Term Loan, net of debt discount and issuance costs

Proceeds from Revenue Purchase and Sale Agreement, net of issuance costs

Proceeds from issuance of common stock under ATM Offering, net of issuance costs

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Taxes paid related to net share settlement

Proceeds from 2027 Term Loans, net of debt discount and issuance costs

Repayment of 2022 Convertible Notes and premiums

Repayment of 2025 Term Loan, premiums and exit fees

Repayment of 2027 Term Loans, premiums and make-whole

Other financing activities

Net cash provided by financing activities

Net cash (used in) provided by financing activities

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

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Income taxes paid (refunded), net

Supplemental disclosures of non-cash activities

Capitalized and accrued milestone payment during the period to Junshi Biosciences

Stock issued under Optional Stock Purchase Agreement

Non-cash employee bonuses settled in common stock

See accompanying notes.

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Coherus BioSciences, Inc.

(the “Company” or “Coherus”) is a commercial-stage biopharmaceutical company focused on the research, development and commercialization of its portfolio of FDA-approved oncology products, including LOQTORZI.

The Company’s strategy is to build a leading immuno-oncology business funded with cash generated from its diversified portfolio of FDA-approved therapeutics.

The Company’s headquarters and laboratories are located in Redwood City, California and in Camarillo, California, respectively.

The Company sells UDENYCA (pegfilgrastim-cbqv) , a biosimilar to Neulasta, a long-acting granulocyte-colony stimulating factor, in the United States.

On August 2, 2022, the FDA approved CIMERLI® (ranibizumab-eqrn) , a biosimilar to Lucentis, and commercial launch commenced in October 2022 in the United States.

The Company launched YUSIMRY® (adalimumab-aqvh), a biosimilar to Humira (adalimumab), in the United States in July 2023.

On October 27, 2023, the Company announced that LOQTORZI™ (toripalimab-tpzi) 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 a novel PD-1 inhibitor that the Company developed in collaboration with Junshi Biosciences.

(the “Company” or “Coherus”) is a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative immunotherapies to treat cancer.

The Company’s commercial portfolio includes its first product, UDENYCA, a biosimilar to Neulasta, a long-acting G-CSF, and LOQTORZI, a novel next-generation PD-1 inhibitor.

The Company is 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, the Company and Intas entered into the UDENYCA Purchase Agreement, pursuant to which, and upon the terms and subject to the conditions thereof, the Company has agreed to divest the UDENYCA Business to Intas.

As consideration for the UDENYCA Sale, Intas has agreed to pay the Company $ 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.

The Company anticipates the transactions contemplated by the UDENYCA Purchase Agreement to close late in the first quarter or early in the second quarter of 2025.

On October 27, 2023, the Company 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 the Company developed in collaboration with Junshi Biosciences that is currently the only immune checkpoint inhibitor approved by the FDA for the treatment of these indications.

The Company announced the launch of LOQTORZI in the U.S.

on January 2, 2024.

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

Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, on March 1, 2024, the Company completed the Sale Transaction for its CIMERLI ophthalmology franchise through the sale of its 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.

The Company’s product pipeline comprises the following three product candidates:

CHS-1000, an antibody targeting ILT4;

casdozokitug (CHS-388, formerly SRF388), an antibody targeting IL-27;

and CHS-114 (formerly SRF114), a highly specific afucosylated IgG1 antibody targeting CCR8.

In addition to the Company’s internally developed portfolio of product candidates, the Company has two product candidates, NZV930 and GSK4381562, which are exclusively licensed to Novartis Institutes and GSK, respectively.

Further evaluation of LOQTORZI is expected through multiple current and planned clinical studies by the Company, Junshi Biosciences and the Company’s biopharma partners.

The Company’s pipeline is comprised of earlier stage clinical and preclinical immuno-oncology programs that it plans to develop in combination with LOQTORZI as well as in partnership with other companies with immune activating or cancer agents.

The Company’s 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 combination with toripalimab in non-small cell lung cancer (clinicaltrials.gov identifier# NCT04374877), and a Phase 2 study in HCC (clinicaltrials.gov identifier# NCT05359861).

The Company 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).

The Company’s 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.

The Company is 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).

The Company plans to initiate a Phase 1b clinical study of CHS-114 in combination with toripalimab in second-line HNSCC 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.

The Company also has 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.

The Company’s 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 the Company’s portfolio prioritization process.

In addition, the Company has a product candidate, GSK4381562, which is exclusively licensed to GSK.

The Company has an obligation to pay 70 % of all milestone- and royalty-based payments that it or its affiliates receive from GSK4381562 to the holders of CVRs that expire in September 2033.

Basis of Consolidation

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The preparation of financial statements in conformity with U.S.

GAAP requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures.

GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures.

Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

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

Estimates are assessed each period and updated to reflect current information.

Accounting estimates and judgements are inherently uncertain, and the actual results could differ from these estimates.

Segment Reporting and Revenue by Geographic Region

Segment Reporting and Geographic Disclosures

The Company operates and manages its business as one reportable and operating segment, which is the business of developing and commercializing human pharmaceutical products.

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Managing and allocating resources on an entity-wide basis enables the CODM to assess the overall level of resources available and how to best deploy these resources across functions.

The CODM assesses operating performance and makes operating decisions primarily based on net income (loss), cash on-hand and cash flows.

All expense categories on the consolidated statements of operations are significant, and there are no other significant segment expenses that would require disclosure.

Primarily, all revenue is generated and all long-lived assets are maintained in the United States.

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Restricted cash consists of deposits for letters of credit that the Company has provided to secure its obligations under certain leases and is included in other assets, non-current in the consolidated balance sheets.

The Company classifies the up-front and milestone payments related to licensing arrangements as cash flows used in investing activities in its consolidated statements of cash flows.

The Company classifies milestone and option payments related to licensing arrangements as cash flows used in investing activities in its consolidated statements of cash flows.

Trade Receivables

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Treasury securities, government agency securities, commercial paper, corporate bonds and market money funds.

Management determines the appropriate classification of investments in marketable securities at the time of purchase based upon management’s intent with regards to such investment and reevaluates such designation as of each balance sheet date.

Management determines the appropriate classification of investments in marketable securities at the time of purchase based upon management’s intent with regards to such investment and re-evaluates such designation as of each balance sheet date.

The Company’s investment policy requires that it only invests in highly rated securities and limits its exposure to any single issuer, except for securities issued by the U.S.

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There were no impairments related to credit losses during any of the periods presented.

Realized gains and losses, if any, on available-for-sale securities

are included in other income (expense), net, in the consolidated statements of operations based on the specific identification method.

During 2023, 2022 and 2021, interest income from marketable securities was $ 2.8 million, $ 1.9 million and $ 1.4 million, respectively, and is included in other income (expense), net, in the consolidated statements of operations.

Realized gains and losses, if any, on available-for-sale securities are included in other income (expense), net, in the consolidated statements of operations based on the specific identification method.

During 2024, 2023 and 2022, interest income was $ 4.5 million, $ 2.8 million and $ 1.9 million, respectively, and is included in other income (expense), net, in the consolidated statements of operations.

Concentrations of Risk

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Substantially all of the Company’s revenues are in the United States to three wholesalers.

During 2023, the products sold by the Company were UDENYCA, CIMERLI, YUSIMRY and LOQTORZI.

During 2022, UDENYCA and CIMERLI were the only products sold by the Company, and in 2021 UDENYCA accounted for all of the Company’s revenues.

The Company enters into a strategic commercial supply agreement for each of its products.

The Company currently has not engaged back-up suppliers or vendors.

If any of the Company’s current vendors are not able to manufacture the supply needed in the quantities and timeframe required, the Company may not be able to supply the product in a timely manner.

Derivative Instruments

In January 2023, the Company commenced using derivative contracts (foreign exchange option contracts) for the purpose of economically hedging exposure to changes in currency fluctuations between the U.S.

Dollar and the Euro.

The Company recognizes all derivatives at fair value on the consolidated balance sheets, and corresponding gains and losses are recognized in other income (expense), net in the consolidated statements of operations.

The estimated fair value of derivative financial instruments represents the amount required to enter into similar contracts with similar remaining maturities based on quoted market prices.

During the periods presented, the Company did not apply hedge accounting to these instruments.

There are no derivative instruments entered into for speculative or trading purposes.

Since the Company's foreign exchange derivatives all matured and settled by December 31, 2023, there were no derivative assets or derivative liabilities as of December 31, 2023.

During 2024 and 2023, the products sold by the Company were UDENYCA, CIMERLI, YUSIMRY and LOQTORZI.

Net revenue for product sales of YUSIMRY and CIMERLI effectively ceased following the disposition of these two product lines on June 26, 2024 and March 1, 2024, respectively (see Note 6.

Acquisition and Dispositions).

During 2022, UDENYCA and CIMERLI were the only products sold by the Company.

Business Combination Accounting & Valuation of Acquired Assets

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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 based on non-observable inputs that are included in valuation models.

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.

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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 (See Note 6.

Surface Acquisition).

Acquisition and Dispositions).

Foreign Currency

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Non-monetary assets and liabilities denominated in foreign currencies are remeasured at historical rates.

Translation gains and losses are included in

accumulated other comprehensive loss in stockholders’ equity (deficit).

Translation gains and losses are included in accumulated other comprehensive loss in stockholders’ deficit.

Revenue and expense accounts are translated to U.S.

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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.

During 2023 and 2022, the Company recorded $ 52.6 million and $ 26.0 million in inventory write-downs, respectively, within cost of goods sold in the consolidated statements of operations.

During 2024, 2023 and 2022, the Company recorded $ 14.1 million, $ 52.6 million and $ 26.0 million in inventory write-downs, respectively, within cost of goods sold in the consolidated statements of operations.

The 2024 charge was primarily for the write-down of UDENYCA inventory that did not meet acceptance criteria.

The 2023 charge was primarily for the write-down of slow moving YUSIMRY inventory and the related partial recognition of certain firm purchase commitments.

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A number of factors are considered, including the current status in the regulatory approval process, potential impediments to the approval process such as safety or efficacy, viability of commercialization and marketplace trends.

Inventory in the consolidated balance sheets as of December 31, 2023 was related to UDENYCA, YUSIMRY, CIMERLI and LOQTORZI.

Inventory in the consolidated balance sheets as of December 31, 2024 relates to UDENYCA and LOQTORZI.

The Company began to capitalize inventory costs associated with UDENYCA, CIMERLI and LOQTORZI after receiving final regulatory approval in November 2018, August 2022, and October 2023, respectively, and capitalization of YUSIMRY inventory costs began in the second quarter of 2022 when sales were deemed probable.

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Interest costs incurred during the construction of major capital projects are capitalized until the underlying asset is ready for its intended use, at which point the capitalized interest costs are amortized as depreciation or amortization expense over the life of the underlying asset.

When the Company disposes of property and equipment, it removes the associated cost and accumulated depreciation from the related accounts in the consolidated balance sheets and include any resulting gain or loss in the consolidated statements of operations.

When the Company disposes of property and equipment, it removes the associated cost and accumulated

depreciation from the related accounts in the consolidated balance sheets and include any resulting gain or loss in the consolidated statements of operations.

Eligible costs of internal use software and implementation costs of certain hosting arrangements are capitalized and amortized over the estimated useful life of the software or associated hosting arrangement, as applicable.

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The Company determines the actual costs through monitoring patient enrollment, discussions with internal personnel and external service providers regarding the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.

Revenue Purchase and Sale Agreement

The Revenue Purchase and Sale Agreement (see Note 8.

Financial Liabilities) contains the Royalty Fee Derivative Liability that meets the criteria to be bifurcated and accounted for separately from the Revenue Purchase and Sale Agreement.

The Royalty Fee Derivative Liability was recorded at fair value upon entering into the Revenue Purchase and Sale Agreement and is subsequently remeasured to fair value at each reporting period with the corresponding change in fair value recognized in other income (expense), net in the consolidated statements of operations.

The Revenue Purchase and Sale Agreement was initially valued and is remeasured using Monte Carlo simulation models to perform the “with-and-without” method, which involves valuing the Revenue Purchase and Sale Agreement with the embedded derivative and then valuing it without the embedded derivative.

The difference between values is determined to be the estimated fair value of the Royalty Fee Derivative Liability.

Refer to Note 3.

Fair Value Measurements for details regarding the fair value.

The Revenue Purchase and Sale Agreement is accounted for as a liability net of a discount comprising issuance costs and the fair value of the embedded derivative requiring bifurcation.

The Company imputes interest expense associated with this liability using the effective interest rate method on a prospective basis.

The effective interest rate is calculated based on the rate that would enable the liability to be repaid in full over the anticipated life of the arrangement.

Interest expense is recognized over the estimated term on the consolidated statement of operations.

The interest rate on this revenue participation liability may vary during the term of the agreement depending on a number of factors, including the level of actual and forecasted net sales.

Increases or decreases in forecasted net sales could have a significant impact on the revenue participation liability, interest expense, and the time period for repayment.

If the UDENYCA Sale is consummated, the Company plans to use a portion of the proceeds to pay off the 2026 Convertible Notes and buy out certain royalty obligations related to UDENYCA pursuant to the Revenue Purchase and Sale Agreement.

Contingent Consideration

Contingent consideration relates to the potential payments to holders of the CVRs that are contingent upon the achievement of the Company and certain third-parties meeting product development or financial performance milestones.

Contingent consideration primarily relates to the potential payments to holders of the CVRs that are contingent upon the achievement of the Company and certain third-parties meeting product development or financial performance milestones.

For transactions accounted for as business combinations, the Company records contingent consideration at fair value at the date of the acquisition based on the consideration expected to be transferred.

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Product Sales Discounts and Allowances

returns and other allowances that are offered within contracts between the Company and its Customers, Healthcare Providers, payers and GPOs.

Revenue from product sales is recorded at the net sales price (“transaction price”), which includes estimates of variable consideration for which reserves are established and that result from chargebacks, rebates, co-pay assistance, prompt-payment discounts, returns and other allowances that are offered within contracts between the Company and its Customers, Healthcare Providers, payers and GPOs.

These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions in trade receivables (if the amounts are payable to a Customer) or current and non-current liabilities (if the amounts are payable to a party other than a Customer).

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

Through March 31, 2021, a portion of the costs of producing UDENYCA sold was expensed as research and development before the FDA approval of UDENYCA and therefore is not reflected in cost of goods sold.

All the inventory expensed prior to approval of UDENYCA was fully utilized by March 31, 2021;

thus, the costs of producing UDENYCA are fully reflected in cost of goods sold beginning April 1, 2021.

On May 2, 2019, the Company and Amgen 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 on July 1, 2019.

The royalty cost will continue for five years pursuant to the settlement.

Additionally, the Company shares 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.

The Company incurs royalties on net sales of LOQTORZI in the low- to mid- twenty percent range and on net sales of YUSIMRY in the mid-single digit range.

Pursuant to the Genentech Agreement, the Company incurred a royalty that was a low single-digit percentage of net sales of CIMERLI through the end of 2023.

As a result, cost of goods sold reflected a mid-single digit royalty on UDENYCA net product revenue from July 1, 2019 to July 1, 2024.

Additionally, prior to the CIMERLI Sale, the Company shared a percentage of gross profits on sales of the Company’s biosimilar version of ranibizumab (Lucentis) in certain dosage forms in both a vial and pre-filled syringe presentation (the “Bioeq Licensed Products”) in the United States with Bioeq in the low- to mid- fifty percent range.

The Company incurs royalties on net sales of LOQTORZI in the low twenty percent range and, prior to the YUSIMRY Sales Transaction, incurred royalties on net sales of YUSIMRY in the mid-single digit range.

Pursuant to the license agreement with Genentech and Bioeq dated June 22, 2022, the Company incurred a royalty that was a low single-digit percentage of net sales of CIMERLI through the end of 2023.

In 2024, 2023 and 2022, cost of goods sold included inventory write-downs, net of $ 14.1 million, $ 52.6 million and $ 26.0 million, respectively.

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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 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 the Company’s research and development organization and generally benefit multiple programs.

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Stock-Based Compensation

The Company’s compensation programs include stock-based awards, and the related grants under these programs are accounted for at fair value.

The fair values are recognized as compensation expense on a straight-line basis over the vesting period with the related costs recorded in cost of goods sold, research and development, and selling, general and administrative expense, as appropriate.

The Company’s compensation programs include stock-based awards.

For awards other than condition-based performance stock options, the fair values are recognized as compensation expense on a straight-line basis over the vesting period.

For condition-based performance stock options, expense is recognized only when performance conditions are considered probable of being achieved and is recognized over the period from the grant date through the time the milestone is expected to be achieved.

The related costs are recorded in cost of goods sold, research and development, and selling, general and administrative expense, as appropriate.

The Company accounts for forfeitures as they occur.

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The Company recognizes operating lease expense for these leases on a straight-line basis over the lease term.

The terms of vehicles leased under the Company’s fleet agreement (“Vehicle Lease Agreement”) are 36 months .

The terms of vehicles leased under the Company’s fleet agreement (“Vehicle Lease Agreement”) were 36 months .

The vehicles leased under this arrangement were classified as finance leases.

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Assets under finance leases are depreciated to operating expenses on a straight-line basis over the lease term.

The operating and finance lease right-of-use assets and the lease liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement date.

As of December 31, 2024, the Company has fully satisfied its finance lease obligations and no longer has any related right-of-use assets or lease liabilities on its consolidated balance sheets.

The operating lease right-of-use assets and the lease liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement date.

The Company uses its incremental borrowing rate based on the information available at the commencement date or the lease modification date, as applicable, in determining the lease liabilities as the Company's leases generally do not provide an implicit rate.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive common shares.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive common shares.

Diluted net income per share is computed by dividing the net income by the weighted average number of common shares outstanding for the period plus any diluted potential common shares outstanding for the period determined using the treasury stock method for options, PSOs, restricted stock units (“RSUs”) and ESPP and using the if-converted method for the convertible notes.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period, without consideration for any potential dilutive common share equivalents as their effect would be antidilutive (see Note 14.

Net Loss Per Share).

Comprehensive Loss

Comprehensive loss includes the following two components:

net loss and other comprehensive income (loss).

Other comprehensive income (loss) refers to gains and losses that are recorded as an element of stockholders’ equity (deficit), but are excluded from net loss.

The Company’s other comprehensive income (loss) includes unrealized gains on available-for-sale securities and foreign currency translation adjustments in 2023, 2022 and 2021.

Net Income (Loss) Per Share).

Comprehensive Income (Loss)

Comprehensive income (loss) includes the following two components:

net income (loss) and other comprehensive income (loss).

Other comprehensive income (loss) refers to gains and losses that are recorded as an element of stockholders’ equity (deficit), but are excluded from net income (loss).

The Company’s other comprehensive income (loss) includes the unrealized gain (loss) on available-for-sale securities and foreign currency translation adjustments in 2024, 2023 and 2022.

Restructuring Charges

On March 3, 2023, the Company committed to a plan to reduce its workforce to focus resources on strategic priorities including the commercialization of its diversified product portfolio and development of innovative immuno-oncology product candidates.

The reduction in force impacted approximately 50 full-time and part-time employees, effective March 10, 2023 for most of these employees.

In the first quarter of 2023, non-recurring restructuring charges associated with the reduction in force consisted of $ 3.9 million in cash expenses related to personnel expenses such as salaries, severance payments and other benefits;

and $ 1.5 million in non-cash stock-based compensation related to acceleration of vesting and extension of the stock option exercise windows for two impacted executives;

partially offset by $ 0.5 million in non-cash stock-based compensation forfeiture credits.

The reduction in force was completed during the second quarter of 2023.

For the year ended December 31, 2023, the consolidated statements of operations included $ 3.6 million in research and development expense and $ 1.3 million in selling, general and administrative expense related to the reduction in force.

Reclassifications

Certain amounts in prior years’ financial statements have been reclassified to conform with the current year presentation in 2024, including amounts in the consolidated statements of cash flows.

There were no changes to net cash used in operating activities in the consolidated statements of cash flows for the prior years as a result.

There were no changes to net cash used in operating activities and net cash provided by (used in) investing activities in the consolidated statements of cash flows for the prior years as a result.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures , which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses .

ASU 2023-07 was adopted on a retrospective basis as of December 31, 2024, and it did not change the way that the Company identifies its reportable segments.

The adoption did not have a material impact on the Company’s segment-related disclosures.

The following are recent accounting pronouncements that the Company has not yet adopted:

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures , which enhances the disclosures required for operating segments by requiring disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, among other expanded.

All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment.

The new standard is effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted and the amendments in this update should be applied retrospectively to all periods presented.

The Company is currently evaluating the impact this ASU may have on its financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The Company is currently evaluating the impact this ASU may have on its financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires public entities to disclose certain disaggregated costs and expenses on an annual and interim basis in the notes to the financial statements.

It also requires disclosure of the total amount of selling expenses, and the Company’s definition of selling expenses.

The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted and is effective on either a prospective or retrospective basis.

The Company is currently evaluating the impact this ASU may have on its financial statement disclosures.

In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion or extinguishments of convertible debt.

The new standard is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods.

The Company is currently evaluating the impact this ASU may have on its financial statement disclosures.

The Company has reviewed other recent accounting pronouncements and concluded they are either not applicable to the business or that no material effect is expected on the consolidated financial statements as a result of future adoption.

The Company launched LOQTORZI and YUSIMRY in the United States in December and July 2023, respectively, and initiated sales of CIMERLI on October 3, 2022.

The Company launched LOQTORZI in December 2023, YUSIMRY in July 2023 and CIMERLI in October 2022.

Net revenue for sales of YUSIMRY and CIMERLI effectively ceased following the disposition of these two product lines on June 26, 2024 and March 1, 2024, respectively (see Note 6.

Acquisition and Dispositions).

All net product revenue was generated in the United States, and the Company’s net revenue was as follows:

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Total net product revenue

Other revenue

Total net revenue

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Product Sales Discounts and Allowances

Provisions that reduce net revenue include chargebacks and discounts for prompt payment, which are recorded as a reduction in trade receivables, and rebates, other fees, co-pay assistance and returns, which are recorded as current liabilities and other liabilities, non-current in the accompanying consolidated balance sheets.

Chargebacks and discounts for prompt payment are recorded as a reduction in trade receivables, and the remaining reserve balances are classified as current liabilities and other liabilities, non-current on the accompanying consolidated balance sheets .

In connection with the Sale Transactions, the Company retained and will continue to be responsible for sales discounts and allowance liabilities incurred related to shipments prior to March 1, 2024 for CIMERLI and June 26, 2024 for YUSIMRY.

Sales discounts and allowances incurred on behalf of the respective counterparties following the close of the Sale Transactions in accordance with the Company’s Transition Services Agreement with Sandoz (the “CIMERLI TSA”) in March 2024 for CIMERLI and the Company’s Transition Services Agreement with HKF (the “YUSIMRY TSA” and, together with the CIMERLI TSA, collectively the “TSA”) in June 2024 for YUSIMRY are reflected within TSA receivables, net and TSA payables and other accrued liabilities in the consolidated balance sheets and are excluded from the below table (see Note 6.

Acquisition and Dispositions).

The activities and ending reserve balances for each significant category of sales discounts and allowances, which constitute variable consideration, are as follows:

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Payments and customer credits issued

( 1,219,991 )

Balances at December 31, 2024

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In connection with the Surface Acquisition on September 8, 2023 (see Note 6.

Surface Acquisition), the Company acquired money market funds and marketable securities and recorded a contingent consideration liability related to the CVRs.

At the end of each reporting period, the fair value of the CVR liability is determined using a financial model representing a Level 3 measurement within the fair value hierarchy.

Acquisition and Dispositions), the Company recorded contingent consideration liabilities related to CVRs.

The fair value of the CVR liabilities were determined using a Monte Carlo simulation-based model discounted to present value and represents a Level 3 measurement within the fair value hierarchy.

Assumptions used in this calculation include estimated revenue, discount rate and various probability factors.

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For example, increases in discount rates and the time to payment may result in lower fair value measurements.

There is no assurance that any of the conditions for payment of the CVR liability will be met.

As of December 31, 2023, the CVR liability was reduced by a fair value adjustment of $ 0.9 million which was recorded within selling, general and administrative expense in the

consolidated statements of operations.

The CVR liabilities were recorded in accrued and other current liabilities and other liabilities, non-current on the consolidated balance sheets.

There is no assurance that any of the conditions for payment of the CVR liabilities will be met.

During the three months ended March 31, 2024, the Company impaired its historical out-licensed partnership program with Novartis Institutes for Biomedical Research, Inc.

(“Novartis Institutes”) (NZV930), which resulted in a net impairment charge of $ 6.8 million in selling, general and administrative expenses in the consolidated statements of operations relating to the write-off of the net carrying value of the Novartis Institutes out-license intangible asset of $ 10.6 million and the final remeasurement of the CVR liability related to NZV930 of $ 3.8 million to its fair value of zero .

The remaining CVR liability associated with GSK of $ 0.5 million and other contingent consideration are recorded in other liabilities, non-current on the consolidated balance sheets at December 31, 2024.

As of December 31, 2023, the CVR liability was reduced by a fair value adjustment of $ 0.9 million which was recorded within selling, general and administrative expense in the consolidated statements of operations.

On May 8, 2024, the Company recognized the Royalty Fee Derivative Liability which was estimated to be $ 9.2 million in connection with the Revenue Purchase and Sale Agreement (see Note 8.

Financial Liabilities), which is recorded in accrued and other current liabilities on the consolidated balance sheets.

To estimate the fair value, the Company uses Monte Carlo simulation models that require the use of Level 3 unobservable inputs, primarily the amount and timing of our expected future revenue, the probability of certain events, the discount rate corresponding to the risk of revenue, and to a much lesser extent the estimated volatility of these revenues.

As of December 31, 2024, the estimated fair value of the Royalty Fee Derivative Liability increased to $ 13.6 million, resulting in a $ 4.4 million charge recorded in other income (expense), net on the consolidated statements of operations.

Financial liabilities related to long-term debt obligations are summarized in Note 8.

Debt Obligations.

Financial Liabilities.

Other financial liabilities and financial assets measured at fair value on a recurring basis are summarized as follows:

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Cash equivalents

Marketable debt securities:

government agency securities

treasury securities

Commercial paper and corporate notes

Prepaid financial instrument in Prepaid manufacturing (2)

Financial Liabilities:

Royalty Fee Derivative Liability

Contingent consideration

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Commercial paper and corporate notes

Prepaid financial instrument in Prepaid manufacturing (2)

Financial Liabilities:

Contingent consideration

(1) Cash equivalents consist of money market funds, U.S treasury securities, and commercial paper and corporate notes with original maturities of 90 days or less.

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Money market funds

government agency securities

treasury securities

Commercial paper and corporate notes

December 31, 2023

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Commercial paper and corporate notes

The Company held 9 and 13 positions that were in unrealized loss positions as of December 31, 2023 and 2022, respectively.

No impairment was recognized in 2023 or 2022.

As of December 31, 2023 and 2022, the remaining contractual maturities of available-for-sale securities were less than one year , and the average maturity of investments upon acquisition was approximately 9 and 7 months , respectively.

The accrued interest receivable on available-for-sale marketable securities was immaterial at December 31, 2023 and 2022.

The Company held 9 positions that were in unrealized loss positions as of December 31, 2023.

No impairment was recognized in 2024 and 2023.

As of December 31, 2023, the remaining contractual maturities of available-for-sale securities were less than one year , and the average maturity of investments upon acquisition was approximately 9 months.

The accrued interest receivable on available-for-sale marketable securities was immaterial at December 31, 2023.

Inventory consisted of the following:

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Finished goods

During 2023, the Company recorded a $ 47.0 million charge for the write-down of slow moving YUSIMRY inventory, inclusive of the related partial recognition of $ 20.5 million in certain firm purchase commitments in cost of goods sold in the consolidated statements of operations.

The Company has presented the partial recognition of these certain firm purchase commitments in the amounts of $ 11.5 million and $ 9.0 million in accrued and other current liabilities and other liabilities, non-current, respectively, in the consolidated balance sheets as of December 31, 2023.

During 2024, the Company recorded $ 14.1 million in charges for the write-down of UDENYCA inventory that did not meet acceptance criteria.

Inventory as of December 31, 2023 included $ 16.4 million related to the CIMERLI ophthalmology franchise and $ 17.0 million related to the YUSIMRY immunology franchise (see Note 6.

Acquisition and Dispositions).

During the year ended December 31, 2023, the Company recorded a $ 47.0 million charge for the write-down of slow moving YUSIMRY inventory, which included the recognition of $ 20.5 million in certain firm purchase commitments in cost of goods sold in the consolidated statements of operations.

Of this charge, $ 11.5 million was reflected in accrued and other current liabilities and $ 9.0 million in other liabilities, non-current in the consolidated balance sheets as of December 31, 2023.

Liabilities for firm inventory purchase commitments related to YUSIMRY were derecognized upon the YUSIMRY sale.

Inventory expected to be sold more than twelve months from the balance sheet date is classified as inventory, non-current in the consolidated balance sheets.

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Inventory, non-current

Prepaid manufacturing of $ 23.7 million as of December 31, 2023 includes prepayments of $ 12.6 million to CMOs for manufacturing services of the Company’s products, which the Company expects to be converted into inventory during 2024, and prepayments of $ 11.1 million to various CMOs for research and development pipeline programs .

Prepaid manufacturing of $ 17.9 million

as of December 31, 2022 included prepayments of $ 13.0 million to CMOs for manufacturing services of the Company’s products and prepayments of $ 4.9 million to various CMOs for research and development pipeline programs.

In February 2021, the Company announced the discontinuation of the development of CHS-2020, a biosimilar of Eylea as part of a realignment of research and development resources toward other development programs.

As a result, the Company recognized $ 11.2 million within research and development expense in the consolidated statements of operations in 2021, which included an impairment charge of $ 3.2 million for the write-off of prepaid manufacturing services no longer deemed to have future benefits.

No material expense relating to the discontinuation of CHS-2020 was recognized after March 31, 2021.

Prepaid manufacturing of $ 11.6 million as of December 31, 2024 included prepayments of $ 5.3 million to CMOs for manufacturing services of the Company’s products and prepayments of $ 6.4 million to various CMOs for research and development pipeline programs.

Prepaid manufacturing of $ 23.7 million as of December 31, 2023 includes prepayments of $ 12.6 million to CMOs for manufacturing services, of which $ 6.4 million related to the CIMERLI ophthalmology franchise and $ 0.5 million related to the YUSIMRY immunology franchise (see Note 6.

Acquisition and Dispositions), and prepayments of $ 11.1 million to various CMOs for research and development pipeline programs .

Balance Sheet Components

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Finance lease right of use assets

Construction in progress

Total property and equipment

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Intangible Assets, Net

Goodwill and intangible assets, net consisted of the following:

Intangible assets, net consisted of the following:

(in thousands)

Finite-lived assets, net of accumulated amortization of $ 639 and $ 61 , respectively

Indefinite-lived assets - IPR&D

Finite-lived assets, net of accumulated amortization of $ 2,719 and $ 639 , as of December 31, 2024 and 2023, respectively

Indefinite-lived assets - in-process research and development

Total Intangible assets, net

Amortization expense related to finite-lived intangible assets was immaterial in all periods presented.

As of December 31, 2023, amortization expense related to finite-lived assets for each of the five succeeding fiscal years will be approximately $ 3.8 million.

Amortization expense related to finite-lived intangible assets was $ 3.4 million during the year ended December 31, 2024 and immaterial for the years ended December 31, 2023 and 2022.

As of December 31, 2024, amortization expense related to finite-lived assets for each of the five succeeding fiscal years is expected to be approximately $ 2.7 million.

The weighted average remaining life of the finite-lived assets is 9.4 years on December 31, 2024.

In connection with the CIMERLI Sale on March 1, 2024, a finite-lived asset, net of $ 2.1 million and goodwill of $ 0.9 million were derecognized.

In connection with the YUSIMRY Sale on June 26, 2024, a finite-lived asset with a net value of $ 0.9 million was derecognized.

The exclusive license of NZV930 to Novartis Institutes, acquired as part of the Surface Acquisition, was terminated by Novartis Institutes with an effective date of October 2, 2024.

As a result, the Company recognized an impairment charge of $ 10.6 million for the carrying value of the Novartis Institutes out-license during the three months ended March 31, 2024, which was classified within selling, general and administrative expense in the consolidated statements of operations.

No impairment charges were recognized for goodwill or intangible assets during 2023 or 2022.

During 2023, the Company’s intangible assets increased due to assets acquired in the Surface Acquisition (see Note 6.

Surface Acquisition) and capitalized milestone payments, including $ 25.0 million to Junshi Biosciences (see Note 7.

Collaborations and Other Arrangements).

Accrued and Other Current Liabilities

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Accrued royalties

Royalty fee derivative liability (Notes 3 and 8)

Revenue participation liability, current (Note 8)

Accrued other

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Contingent consideration, non-current

Deferred tax liability

Deferred tax liability (Note 13)

Revenue participation liability, non-current (Note 8)

Total Other liabilities, non-current

Acquisition and Dispositions

2024 Dispositions

UDENYCA Sale (subject to closing)

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

In addition, upon the achievement of certain contingent events by Intas, the Company is 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.

Closing of the UDENYCA Sale is not subject to a financing condition, but is subject to closing conditions, including (i) approval of the Company’s 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 the Company’s packaging and labeling CMOs for UDENYCA and FDA authorization of commercial supply from the Company’s additional packaging and labeling CMO for UDENYCA.

The Company anticipates the transactions contemplated by the UDENYCA Purchase Agreement to close late in the first quarter or early in the second quarter of 2025.

C osts of $ 6.7 million related to the UDENYCA Sale were recorded in selling, general and administrative expense in the consolidated statements of operations during the year ended December 31, 2024.

On June 26, 2024, the Company completed the sale of its YUSIMRY immunology franchise which comprised certain assets, including certain YUSIMRY intellectual property, contracts, YUSIMRY inventory, and all activities related to research and development of YUSIMRY.

In exchange, HKF paid upfront cash consideration of $ 40.0 million and assumed certain liabilities, including $ 17.0 million of inventory purchase commitments.

During 2024, the Company recognized a net gain on the YUSIMRY Sale of $ 22.8 million, which included the cash receipts of $ 40.0 million less net assets transferred to HKF or otherwise derecognized and transaction costs of $ 1.0 million.

At December 31, 2024, unpaid transaction costs totaled $ 0.9 million.

The pretax profit (loss) related to the YUSIMRY immunology franchise, which excludes any corporate overhead allocations, was $( 3.1 ) million, $( 59.7 ) million and $( 34.4 ) million during the years ended December 31, 2024, 2023 and 2022, respectively.

In connection with the YUSIMRY Sale, the Company and HKF entered into the YUSIMRY TSA, pursuant to which the Company is providing certain business support services on behalf of HKF including billings, collections, and the remittance of rebates, to ensure business continuity for patients and customers and were substantially completed by December 31, 2024.

Under the YUSIMRY TSA, the Company is entitled to be reimbursed for its costs and has recorded income of $ 0.8 million for the year ended December 31, 2024 in other income (expense), net in the consolidated statements of operations .

As of December 31, 2024, assets of $ 2.3 million and liabilities of $ 4.3 million related to transactions entered into on behalf of HKF in accordance with the YUSIMRY TSA were presented in TSA receivables, net and TSA payables and other accrued liabilities, respectively, in the consolidated balance sheets.

On March 1, 2024, the Company completed the sale of its CIMERLI ophthalmology franchise through the sale of its 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.

During 2024, the Company recognized a net gain on the CIMERLI Sale of $ 153.8 million, which included the cash receipts of $ 187.8 million less assets transferred to Sandoz, assets derecognized, transaction costs of $ 7.2 million, and other related employee transition expenses .

As of December 31, 2024, unpaid commitments for retention bonuses totaled $ 4.7 million.

The pretax profit (loss) related to the CIMERLI ophthalmology franchise, which excludes any corporate

overhead allocations, was $ 2.4 million, $ 16.6 million and $( 16.7 ) million during the years ended December 31, 2024, 2023 and 2022, respectively.

In connection with the CIMERLI Sale, the Company and Sandoz entered into the CIMERLI TSA, pursuant to which the Company is providing certain business support services on behalf of Sandoz including billings, collections, and the remittance of rebates, to ensure business continuity for patients and customers for a period not expected to extend beyond July 15, 2025.

Under the CIMERLI TSA, the Company is entitled to be reimbursed for its costs and has recorded i ncome of $ 1.7 million for the year ended December 31, 2024 in other income (expense) , net in the consolidated statements of operations .

As of December 31, 2024, assets related to transactions entered into on behalf of Sandoz in accordance with the CIMERLI TSA of $ 8.7 million were presented in TSA receivables, net and liabilities related to transactions entered into on behalf of Sandoz in accordance with the CIMERLI TSA of $ 6.8 million were presented in TSA payables and other accrued liabilities in the consolidated balance sheets.

2023 Acquisition

Surface Acquisition

On September 8, 2023, in accordance with Merger Agreement by the Merger Subs, and Surface, the Company completed the Surface Acquisition.

Surface is a clinical-stage immuno-oncology 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 the Company’s immune-oncology 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 the Acquisition Date, and in accordance with the Merger Agreement, the Company issued to the holders of all outstanding Surface common stock (other than treasury shares, any shares of Surface common stock held directly by the Company 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 Coherus common stock in exchange for each share of outstanding Surface common stock and certain outstanding Surface employee equity awards.

On September 8, 2023 (the “Acquisition Date”), in accordance with an Agreement and Plan of Merger dated June 15, 2023 (the “Merger Agreement”) by and among the Company, Crimson Merger Sub I, Inc.

(“Merger Sub I”), Crimson Merger Sub II, LLC (“Merger Sub II,” and together with Merger Sub I, the “Merger Subs”) and Surface, the Company completed the Surface Acquisition.

The Surface Acquisition expanded the Company’s immuno-oncology pipeline by adding important new assets, including:

casdozokitug (CHS-388, formerly SRF388), an investigational, novel IL-27-targeted antibody, and CHS-114 (formerly SRF114), an investigational, CCR8-targeted antibody.

On the Acquisition Date, and in accordance with the Merger Agreement, the Company issued to the holders of all outstanding Surface common stock (subject to certain exceptions) 0.1960 shares of Coherus 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 Coherus common stock and a nominal total amount of cash in lieu of fractional shares.

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Each CVR entitles the holder to receive quarterly contingent payments in the form of cash, stock or a combination of cash and stock at the Company’s 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 the Company or its affiliates under the GSK Agreement related to the existing program (GSK4381562);

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

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

● 70 % of all milestone- and royalty-based payments received by the Company or its affiliates under the GSK Agreement related to the program GSK4381562;

● 25 % of any upfront payment received by the Company or its affiliates pursuant to potential ex-U.S.

licensing agreements for CHS-114;

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

● 50 % of any upfront payment received by the Company or its affiliates pursuant to potential ex-U.S.

licensing agreements for casdozokitug.

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(1) Represents 161,100 shares of Coherus common stock, net of shares withheld for taxes, issued to Surface’s former employees on the Acquisition Date.

The Company has accounted for the Surface Acquisition as a business combination which requires, among other things, that the assets acquired and liabilities assumed generally be recognized at their fair value on the Acquisition Date.

Fair value estimates are based on management’s 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.

The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations.

The purchase price allocation for the Surface Acquisition is preliminary and subject to revisions as additional information about fair value of assets and liabilities becomes available.

This is primarily related to the Company’s deferred tax liabilities assumed in connection with the Surface Acquisition, as the 2023 short period tax returns have not yet been filed.

The following table below sets forth the purchase price allocation to the estimated fair value of the net assets acquired:

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The Company believes that, even after reassessing its identification of all assets acquired and liabilities assumed, it was able to acquire Surface for a price that was completely allocable to identifiable assets acquired and liabilities assumed with no residual attributable to goodwill primarily due to Surface’s need to raise additional capital to finance its operations, the challenging biotech funding environment at the time the transaction was initially announced, and the value of the acquired net assets.

The amount allocated to identifiable intangible assets has been attributed to the following assets:

The amounts allocated to identifiable intangible assets was as follows:

(in thousands)

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Total identifiable intangible assets

Surface had two out-licensed partnership programs, with Novartis Institutes (NZV930) and GSK (GSK4381562), to advance certain next-generation cancer therapies.

The out-license intangible assets represent potential milestone and royalty-based payments to be received in the future.

Surface shareholders received CVRs for certain percentages of these milestone and royalty-based payments on existing programs with Novartis Institutes (NZV930) and GSK (GSK4381562), as further explained above.

Following the Acquisition Date, the operating results of Surface have been included in the consolidated financial statements.

For the period September 8, 2023 through December 31, 2023, there was no revenue attributable to Surface and operating losses attributable to Surface for such period were $ 5.9 million, excluding acquisition-related costs.

The out-license intangible assets represent potential milestone and royalty-based payments to be received under two out-licensed partnership programs to advance certain next-generation cancer therapies, Novartis Institutes (NZV930) and GSK (GSK4381562).

Surface shareholders received CVRs for certain percentages of these milestone and royalty-based payments, as further explained above.

The exclusive license of NZV930 to Novartis Institutes was terminated by Novartis Institutes with an effective date of October 2, 2024.

As a result, during the first quarter of 2024, the Company recognized a net impairment charge of $ 6.8 million in selling, general and administrative expenses in the consolidated statements of operations relating to the write-off of the net carrying value of the Novartis Institutes out-license intangible asset of $ 10.6 million and the final remeasurement of the CVR liability related to NZV930 of $ 3.8 million to its fair value of zero .

Unaudited Pro Forma Summary of Operations

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Under the terms of the Collaboration Agreement, the Company 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.

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

Company will be 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.

The Company became 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.

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

Junshi Biosciences and the Company were jointly developing CHS-006 with each party responsible for the associated development costs as set forth in the Collaboration Agreement, however on January 10, 2024, the Company announced that it had delivered a notice of termination of the TIGIT Program (as defined in the Collaboration Agreement) to Junshi Biosciences pursuant to the Collaboration Agreement.

Thereafter, Junshi Biosciences and the Company jointly developed CHS-006 with each party responsible for the associated development costs as set forth in the Collaboration Agreement.

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

The Company plans to continue to wind down work with Junshi Biosciences on the TIGIT Program pursuant to the termination.

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Additionally, the Company is responsible for certain associated regulatory and technology transfer costs for LOQTORZI and other licensed compounds and will reimburse Junshi Biosciences for such costs.

The licensing transaction and the exercise of the option were accounted for as asset acquisitions under the relevant accounting rules.

Research and development expenses recognized for obligations to Junshi Biosciences were $ 8.0 million, $ 68.5 million (inclusive of the $ 35.0 million option fee) and $ 175.4 million (inclusive of the upfront fee) in 2023, 2022, and 2021 respectively.

In the consolidated balance sheets as of December 31, 2023 and 2022, the Company classified $ 26.3 million and $ 8.4 million, respectively, in accrued and other current liabilities and $ 6.3 million and $ 0 in accounts payable, respectively, related to the co-development, regulatory and technology transfer costs related to these programs.

On October 27, 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 as monotherapy for the treatment of adults with recurrent, unresectable, or metastatic NPC with disease progression on or after platinum-containing chemotherapy.

As of December 31, 2023, the Company has accrued a $ 25.0 million milestone payment to Junshi Biosciences, of which it expects to pay $ 12.5 million in the second quarter of 2024 and $ 12.5 million in the first quarter of 2025.

This amount is a non-cash transaction which the Company has recognized in intangible assets, net and accrued and other current liabilities as of December 31, 2023 .

The accrued royalty obligation to Junshi Biosciences is immaterial as of December 31, 2023.

As a result, a $ 25.0 million milestone payment became due to Junshi Biosciences in the first quarter of 2024 pursuant to the Collaboration Agreement.

In March 2024, the Company entered into an Amendment No.

2 to the Collaboration Agreement (the “ 2 nd Amendment”) with Junshi Biosciences to revise

the timing of the $ 25.0 million milestone payment.

Under the terms of the 2 nd Amendment, the $ 25.0 million milestone payment was split into two installments of $ 12.5 million each, with one paid in the second quarter of 2024 and one paid in January of 2025.

The licensing transaction and the exercise of the option were accounted for as asset acquisitions under the relevant accounting rules.

During the year ended December 31, 2024, the Company recognized a reduction in research and development expenses for the release of certain liabilities of $ 4.8 million pursuant to the 2 nd Amendment with Junshi Biosciences.

Research and development expenses recognized for obligations to Junshi Biosciences were $ 8.0 million and $ 68.5 million (inclusive of the $ 35.0 million option fee) in 2023 and 2022, respectively.

In the consolidated balance sheets as of December 31, 2024 and 2023, the Company classified $ 12.5 million and $ 25.0 million, respectively, in accrued and other current liabilities and $ 0.4 million and $ 6.3 million in accounts payable, respectively, related to the co-development, regulatory and technology transfer costs related to these programs.

The accrued royalty obligation to Junshi Biosciences was $ 1.5 million as of December 31, 2024 and immaterial at December 31, 2023.

The additional milestone payments, option fee for the IL-2 cytokine 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.

In connection with the Collaboration Agreement, the Company entered into a stock purchase agreement dated February 1, 2021 (the “Stock Purchase Agreement”) with Junshi Biosciences agreeing, subject to customary conditions, to acquire certain equity interests in the Company.

Pursuant to the Stock Purchase Agreement, on April 16, 2021, the Company issued 2,491,988 unregistered shares of its common stock to Junshi Biosciences, at a price per share of $ 20.06 , for an aggregate amount of approximately $ 50.0 million in cash.

Under the terms of the Stock Purchase Agreement, Junshi Biosciences was not permitted to sell, transfer, make any short sale of, or grant any option for the sale of the common stock for the two-year period following its effective date.

The Collaboration Agreement and the Stock Purchase Agreement were negotiated concurrently and were therefore evaluated as a single agreement.

The Company used the “Finnerty” and “Asian put” valuation models and determined the fair value for the discount for lack of marketability (“DLOM”) was $ 9.0 million at the date the shares were issued.

The fair value of the DLOM was attributable to the Collaboration Agreement and was included as an offset against the research and development expense in the consolidated statements of operations for the year ended December 31, 2021.

On November 4, 2019, the Company entered into the Bioeq Agreement with Bioeq for the commercialization of a biosimilar version of ranibizumab (Lucentis) in certain dosage forms in both a vial and pre-filled syringe presentation.

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

Pursuant to the Canada License Agreement, Apotex paid the Company an upfront payment of $ 6.3 million United States Dollars which has been classified as net revenue in the consolidated statements of operations for the year ended December 31, 2024.

In addition, Apotex agreed to pay the Company up to an aggregate of $ 51.5 million Canadian Dollars in milestone payments in connection with the achievement of certain regulatory and sales milestones with respect to toripalimab in Canada.

Lastly, Apotex agreed to pay the Company a low double-digit percentage of any future net sales of toripalimab in Canada that the Company will subsequently pay to Junshi Biosciences pursuant to the Collaboration Agreement.

The Canada License Agreement term continues until the tenth year after the first commercial sales of toripalimab in Canada, subject to an extension for a subsequent ten-year term at the option of Apotex.

Apotex may terminate the Canada License Agreement for any reason after a specified notice period.

The Canada License Agreement will terminate automatically if the rights granted to the Company by the Collaboration Agreement are terminated, if there is material breach that is not cured, if there are certain challenges to licensed patents by Apotex and in the case of certain insolvency events.

On November 4, 2019, the Company entered into a license agreement with Bioeq (the “Bioeq License Agreement”) for the commercialization of the Bioeq Licensed Products.

Under this agreement, Bioeq granted to the Company an exclusive, royalty-bearing license to commercialize the Bioeq Licensed Products in the field of ophthalmology (and any other approved labelled indication) in the United States.

Bioeq will supply to the Company the Bioeq Licensed Products in accordance with terms and conditions specified in the agreement and a manufacturing and supply agreement to be executed by the parties in accordance therewith.

The agreement’s initial term continues in effect for ten years after the first commercial sale of a Bioeq Licensed Product in the United States, and thereafter renews for an unlimited period of time unless otherwise terminated in accordance with its terms.

Bioeq will manufacture and supply the Bioeq Licensed Products to the Company in accordance with terms and conditions specified in the Bioeq Agreement and the Bioeq Manufacturing Agreement and will remain in force until the first to occur of the following:

termination of the Bioeq Agreement;

(2) the exercise of a right to termination by the Company or Bioeq for a material breach of the other party that is not cured in accordance with the Bioeq Manufacturing Agreement;

and (3) the exercise of a right to termination by Bioeq if invoices are not paid in full in accordance with the Bioeq Manufacturing Agreement.

Under the agreement, Bioeq was required to use commercially reasonable efforts to develop and obtain regulatory approval of the Bioeq Licensed Products in the United States in accordance with a development and manufacturing plan, and the Company was required to use commercially reasonable efforts to commercialize the Bioeq Licensed Products in accordance with a commercialization plan.

Additionally, the Company was required to commit certain pre-launch and post-launch resources to the commercialization of the Bioeq Licensed Products for a limited time as specified in the agreement.

The Company accounted for the licensing transaction as an asset acquisition under the relevant accounting rules.

The Company paid Bioeq an upfront and a milestone payment aggregating to € 10 million ($ 11.1 million), which was recorded as research and development expense in the Company’s consolidated statements of operations in 2019.

The terms of the Bioeq Agreement include an aggregate of up to € 12.5 million in additional milestone payments in connection with the achievement of certain development and regulatory milestones with respect to the Bioeq Licensed Products in the United States including a € 2.5 million milestone related to the FDA approval of the CIMERLI Section 351(k) BLA that was paid in 2022.

The Company shares 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.

Royalties due to Bioeq were $ 38.4 million and $ 2.9 million as of December 31, 2023 and 2022, respectively.

The remaining milestone payments are contingent upon future events and, therefore, will be recorded when it becomes probable that a milestone will be achieved.

The terms of the Bioeq Agreement included milestone payments in connection with the achievement of certain development and regulatory milestones with respect to the Bioeq Licensed Products in the United States, including a €2.5 million milestone related to the FDA approval of the CIMERLI Section 351(k) BLA that was paid in 2022.

The Company shared 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.

Royalties due to Bioeq were $ 38.4 million as of December 31, 2023.

On January 19, 2024 the Company entered into the CIMERLI Purchase Agreement with Sandoz.

Pursuant to the CIMERLI Purchase Agreement, on March 1, 2024, the Company completed the divestiture of its CIMERLI ophthalmology franchise through the sale of its subsidiary, Coherus Ophthalmology.

Refer to Note 6.

Acquisition and Dispositions for additional information.

Upon closing of the CIMERLI Sale, the Bioeq License Agreement was assumed by Sandoz.

Adimab Development and Option Agreement

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Under the A&R Adimab Agreement, the Company will select biological targets against which Adimab will use its proprietary platform technology to research and develop antibody proteins using a mutually agreed upon research plan.

The A&R Adimab Agreement, among other things, extended the discovery term of the Original Adimab Agreement, provided access to additional antibodies, and expanded the Company’s right to evaluate and use antibodies that were modified or derived using Adimab technology for diagnostic purposes.

Upon the Company’s selection of a target, the Company and Adimab will initiate a research plan and the discovery term begins.

During the discovery term, Adimab will grant the Company a non-exclusive, non-sublicensable license under its technology with respect to the target, to research, design and preclinically develop and use antibodies that were modified or derived using Adimab technology, solely to evaluate such antibodies, perform the Company’s responsibilities under the research plan, and use such antibodies for certain diagnostic purposes.

The Company also will grant to Adimab a non-exclusive, nontransferable license with respect to the target under the Company’s technology that covers or relates to such target, solely to perform its responsibilities under the research plan during the discovery period.

The Company is required to pay Adimab at an agreed upon rate for its full-time employees during the discovery period while Adimab performs research on each target under the applicable research plan.

The A&R Adimab Agreement, among other things,

provided access to additional antibodies and expanded the Company’s right to evaluate and use antibodies that were modified or derived using Adimab technology for diagnostic purposes.

Adimab granted the Company the Research Option.

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Under the A&R Adimab Agreement, the Company is obligated to make milestone payments and to pay specified fees upon the exercise of the Research Option or Commercialization Option.

During the discovery term, the Company may be obligated to pay Adimab up to $ 0.3 million for technical milestones achieved against each biological target.

Upon exercise of a Research Option, the Company is obligated to pay a nominal research maintenance fee on each of the next four anniversaries of the exercise.

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The Company may also partially exercise a Commercialization Option with respect to ten antibodies against a biological target by paying 65 % of the option fee and later either (i) paying the balance and choosing additional antibodies for commercialization, up to the maximum number under the Commercialization Option, or (ii) foregoing the Commercialization Option entirely.

For any Adimab diagnostic product that is used with or in connection with any compound or product other than a licensed antibody or licensed product, the Company is obligated to pay Adimab up to a low seven digits in regulatory milestone payments and low

single-digit royalties on net sales.

No additional payment is due with respect to any companion diagnostic or any diagnostic product that does not contain any licensed antibody.

Any payments payable to Adimab as a result of any product candidates being developed pursuant to the GSK Agreement, will be payable to Adimab directly by GSK.

The A&R Adimab Agreement will remain in effect until (a) the earlier of (i) the expiration of the Research and Commercialization Options (if they expire without exercise) and (ii) 12 months from the effective date without the Company providing materials that pass Adimab’s quality control;

or (b) if a Research Option is exercised but the Commercialization Option is not, then upon the expiration of the last to expire research license term;

or (c) upon commercialization of a product, until the end of the royalty term, which will vary on a product-by-product and country-by-country basis, ending on the later of (y) the expiration of the last valid claim covering the licensed product in such country as the product is manufactured or sold, or (z) ten years after the first commercial sale of the licensed product in such country.

Either party may terminate the A&R Adimab Agreement for material breach if such breach remains uncured for a specified period of time, however, if a Research Option or Commercialization Option has been exercised and the breach only applies to the applicable target of such Research Option or Commercialization Option, then the termination right will only apply to such target.

The Company may also terminate the A&R Adimab Agreement for any reason with prior notice to Adimab.

If Adimab is bankrupt, the Company will be entitled to a complete duplicate of, or complete access to, all rights and licenses granted under or pursuant to the A&R Adimab Agreement.

Vaccinex License Agreement

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Vaccinex is eligible to receive up to an aggregate of $ 3.5 million based on achievement of certain clinical milestones, up to an aggregate of $ 11.5 million based on achievement of certain regulatory milestones per Vaccinex Licensed Product, and low single-digit royalties on global net sales of any approved licensed products.

The Company may terminate the Vaccinex License Agreement for convenience upon the notice period specified in the Vaccinex License Agreement.

Either party may terminate the agreement for an uncured material breach by the other party.

Vaccinex may terminate the Vaccinex License Agreement if we default on any payments owed to Vaccinex under the agreement, if the Company is in material breach of, and fails to cure, its development obligations, or institute certain actions related to the licensed patents.

In the event of termination, all rights in the licensed intellectual property would revert to Vaccinex.

Out-Licensing Agreements Acquired as part of the Surface Acquisition

Out-Licensing Agreement Acquired as part of the Surface Acquisition

On September 8, 2023, at the closing of the Surface Acquisition, all the assets, liabilities, rights and obligations of Surface were assumed by the Company’s direct, wholly-owned subsidiary, Surface Oncology, LLC.

See further details in Note 6.

Surface Acquisition above.

Novartis Institutes

In January 2016, Surface entered into the Novartis Agreement.

Pursuant to the Novartis Agreement, Surface granted Novartis Institutes a worldwide exclusive license to research, develop, manufacture and commercialize antibodies that target cluster of differentiation 73 (“CD73”).

Under the Novartis Agreement, the Company is currently entitled to potential development milestones of $ 325.0 million and sales milestones of $ 200.0 million, as well as tiered royalties on annual net sales by Novartis Institutes ranging from high single-digit to mid-teens percentages upon the successful commercialization of NZV930.

Due to the uncertainty of pharmaceutical development and the historical failure rates generally associated with drug development, the Company may not receive any milestone payments or any royalty payments under the Novartis Agreement.

The Company did not recognize any revenue relating to the Novartis Agreement from September 8, 2023 through December 31, 2023.

Unless terminated earlier, the Novartis Agreement will continue in effect until neither the Company nor Novartis Institutes is researching, developing, manufacturing or commercializing NZV930.

Novartis Institutes may terminate the Novartis Agreement for any or

no reason upon prior notice to the Company within a specified time period.

Either party may terminate the Novartis Agreement in full if an undisputed material breach is not cured within a certain period of time or upon notice of insolvency of the other party.

To the extent Novartis Institutes terminates for convenience, or the Company terminates for Novartis Institutes’ uncured material breach, Novartis Institutes will grant the Company, on mutually agreeable financial terms, an exclusive, worldwide, irrevocable, perpetual and royalty-bearing license with respect to intellectual property controlled by Novartis Institutes that is reasonably necessary to research, develop, manufacture or commercialize NZV930.

Acquisition and Dispositions above.

GSK Agreement

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The Company is also eligible to receive royalties on global net sales of any approved products based on the Licensed Antibodies, ranging in percentages from high single digits to mid-teens.

The Company did not recognize license-related revenue under the GSK Agreement from September 8, 2023 through December 31, 2023.

Due to the uncertainty of pharmaceutical development and the historical failure rates

generally associated with drug development, the Company may not receive any milestone payments or any royalty payments under the GSK Agreement.

The Company has not recognized license-related revenue under the GSK Agreement to date.

Unless terminated earlier, the GSK Agreement expires on a licensed product-by-licensed product and country-by-country basis on the later of ten years from the date of first commercial sale or when there is no longer a valid patent claim or regulatory exclusivity covering such licensed product in such country.

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In the event of termination, the Company would regain worldwide rights to the terminated program.

Debt Obligations

Financial Liabilities

A summary of the Company’s debt obligations, including level within the fair value hierarchy (see Note 3.

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(in thousands)

Principal Amount

Unamortized Debt Discount and Debt Issuance Costs

Carrying Value

Net Carrying Value

Estimated Fair Value

Financial Liabilities:

2027 Term Loans

2029 Term Loan

2026 Convertible Notes

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(in thousands)

Principal Amount

Unamortized Debt Discount and Debt Issuance Costs

Carrying Value

Net Carrying Value

Estimated Fair Value

Financial Liabilities:

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2026 Convertible Notes

The principal amounts outstanding are subject to variable interest rates, which are based on three-month SOFR starting April 1, 2023 plus fixed percentages.

Through March 31, 2023, the variable component was based on the three-month LIBOR.

The principal amounts outstanding are subject to variable interest rates, which are based on three-month SOFR plus fixed percentages.

Therefore, the Company believes the carrying amount of these obligations approximates fair value.

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Since the market for trading of the 2026 Convertible Notes is not considered to be an active market, the estimated fair value is based on Level 2 inputs.

2027 Term Loans

The Company entered into the Loan Agreement with BioPharma Credit, PLC, BPCR Limited Partnership, and Biopharma Credit Investments V (Master) LP, acting by its general partner, BioPharma Credit Investments V GP LLC that provides for a senior secured term loan facility of up to $ 300.0 million to be funded in four committed tranches:

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

(ii) the Tranche B Loan in an aggregate principal amount of $ 100.0 million that was funded on March 31, 2022;

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

and (iv) the Tranche D Loan in an aggregate principal amount of $ 50.0 million that was funded on September 14, 2022.

The Company has 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) the fifth anniversary of the Tranche A Closing Date;

or (ii) October 15, 2025, if the outstanding aggregate principal amount of the Company’s 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 which is the sum of three-month SOFR and 0.26161 % per annum, with a floor on Adjusted Term SOFR of 1.0 %.

The interest rate for the fourth quarter of 2023 was 13.91 %.

Interest is payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year.

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

2029 Term Loan

On May 8, 2024, the Company entered into a senior secured term loan facility of $ 38.7 million that was fully funded on the 2029 Term Loan Effective Date with the Agent and the 2029 Lenders.

The net proceeds of $ 37.5 million, net of the original issuance discount, were used by the Company to help repay in full the existing outstanding indebtedness owed by the Company to BioPharma Credit, PLC (“BioPharma”), BPCR Limited Partnership (a “2027 Lender”), and Biopharma Credit Investments V (Master) LP (a “2027 Lender”) pursuant to the 2027 Term Loans.

The 2029 Term Loan is governed by the 2029 Loan Agreement.

The 2029 Term Loan will mature on May 8, 2029.

The amounts borrowed under the 2029 Term Loan accrue interest equal to 8.0 % per annum, plus a three-month SOFR rate.

The 2029 Term Loan provides for interest-only payments on a quarterly basis until maturity.

The Company may prepay the 2029 Term Loan in full or in part provided the Company (i) provides at least three (3) business days’ prior written notice to the Agent, (ii) pays on the date of such prepayment (A) all outstanding principal to be prepaid plus accrued and unpaid interest, (B) a prepayment fee of (x) 10.0 % of the 2029 Term Loans so prepaid if paid on or after the first anniversary of the 2029 Term Loan Effective Date and before the second anniversary of the 2029 Term Loan Effective Date;

(y) 5.0 % of the 2029 Term Loan so prepaid if paid after the second anniversary of the 2029 Term Loan Effective Date and on or before the third anniversary of the 2029 Term Loan Effective Date;

and (z) 0 % of the 2029 Term Loan so prepaid if paid after the third anniversary of the 2029 Term Loan Effective Date, (C) if paid before the first anniversary of the 2029 Term Loan Effective Date, a make-whole amount equal to the interest that would have accrued from the date of prepayment through the first anniversary of the 2029 Term Loan Effective Date, and (D) all other sums, if any, that shall become due and payable under the 2029 Loan Agreement, including

interest at the default rate with respect to any past due amounts.

Amounts outstanding during an event of default shall accrue interest at an additional rate of 4.0 % per annum, which interest shall be payable on demand in cash.

The 2029 Term Loan is secured by a lien on substantially all of the assets of the Company, including intellectual property, subject to customary exclusions and exceptions.

The 2029 Loan Agreement contains customary representations and warranties, covenants and events of default, including a financial covenant that commenced on the 2029 Term Loan Effective Date, which requires the Company to maintain certain levels of cash and cash equivalents.

As of December 31, 2024, the Company was in compliance with these covenants other than to the extent that the disclosures set forth in Item 9A of this Annual Report on Form 10-K do not comply with the requirements of subclause (ii) of Section 5.2(a)(i) of the 2029 Loan Agreement for which the Company is in possession of a valid waiver, and there were no events of default under the 2029 Term Loan.

The Company incurred $ 2.2 million of debt discount and issuance costs relating to the issuance of the 2029 Term Loan, which were recorded as a reduction to the carrying value of the 2029 Term Loan on the consolidated balance sheets.

The debt issuance costs are being amortized and recognized as additional interest expense over the five-year contractual term of the 2029 Term Loan using the effective interest rate method.

The Company adopted the prospective method to account for future cash payments.

Under the prospective method, the effective interest rate is not constant, and any change in the expected cash flows is recognized prospectively as an adjustment to the effective yield.

The obligations under the Loan Agreement are secured pursuant to customary security documentation, including a guaranty and security agreement among the Credit Parties and the Collateral Agent which provides for a lien on substantially all of the Company’s tangible and intangible assets and property, including intellectual property.

Pursuant to the Loan Agreement, and subject to certain restrictions, proceeds of the 2027 Term Loans were used to fund the Company’s general corporate and working capital requirements except for the following:

in January 2022, proceeds of the Tranche A Loan were used to repay in full all amounts outstanding under the 2025 Term Loan, as well as all associated costs and expenses pursuant to which a payoff amount of $ 81.9 million was outstanding;

in March 2022, proceeds of the Tranche B Loan were drawn in connection with the full repayment of all amounts outstanding under the 2022 Convertible Notes, as well as all associated costs and expenses pursuant to which a payoff amount of $ 111.1 million was outstanding.

The Loan Agreement contains certain customary representations and warranties.

In addition, the Loan Agreement includes covenants, such as the requirement to maintain minimum trailing twelve-month net sales in an amount that began at $ 200.0 million for the quarter ending March 31, 2022 and increases to $ 210.0 million for the quarter ended March 31, 2024.

As a result of the Consent and Amendment entered into on February 5, 2024, beginning in the second quarter of 2024 and continuing through the quarter ended December 31, 2026, the requirement is to maintain minimum trailing twelve-month net sales of $ 125.0 million.

In addition, there is a requirement to maintain a minimum trailing twelve-month net sales for LOQTORZI tested quarterly at the end of each quarter commencing with the quarter ended December 31, 2024.

Further, the Loan Agreement includes certain other affirmative covenants and negative covenants, including, covenants and restrictions that among other things, restrict the Company’s ability to incur liens, incur additional indebtedness, make investments, engage in certain mergers and acquisitions or asset sales, and declare dividends or redeem or repurchase capital stock.

The Loan Agreement also contains customary events of default, including among other things, the Company’s failure to make any principal or interest payments when due, the occurrence of certain bankruptcy or insolvency events or its breach of the covenants under the Loan Agreement.

Upon the occurrence of an event of default, the Lenders may, among other things, accelerate the Company’s obligations under the Loan Agreement.

A change of control of the Company triggers a mandatory prepayment of the 2027 Term Loans within ten business days.

Subsequent Events for further information regarding the Consent and Amendment to the 2027 Term Loans.

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

In connection with the closing of Tranche A, the Company incurred $ 7.8 million in debt discounts and issuance costs of which $ 6.8 million related to all the tranches of the 2027 Term Loans and was thus allocated pro rata between the tranches.

The unamortized debt

discount and issuance costs allocated to funded tranches are presented as deductions to the 2027 Term Loan balance and are amortized into interest expense using the effective interest method.

The $ 2.3 million allocated to Tranche B was fully amortized over the commitment period prior to funding and recognized as interest expense in the first quarter of 2022.

The associated debt discounts and issuance costs of unfunded tranches were deferred as assets and amortized into interest expense using the straight-line method over the commitment period of the respective tranches.

At the closing dates of Tranche B on March 31, 2022 and Tranche D on September 14, 2022, the Company incurred an additional $ 1.0 million and $ 0.5 million, respectively, in debt issuance costs.

As of December 31, 2023, the total remaining unamortized debt discount and debt offering costs related to Tranches A, B and D of $ 3.5 million will be amortized using the effective interest rate over the remaining term of 3.0 years.

The following table presents the components of interest expense related to the 2027 Term Loans:

Year Ended December 31,

The following table presents the components of interest expense related to the 2029 Term Loan:

(in thousands)

Year Ended December 31, 2024

Contractual interest

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Total interest expense

Assuming the fourth quarter of 2023 interest rate of 13.91 %, future payments on the 2027 Term Loans as of December 31, 2023, are as follows:

As of December 31, 2024, the total remaining unamortized debt discount and debt offering costs of $ 2.0 million will be amortized using the effective interest rate over the remaining term of 4.4 years.

Assuming the fourth quarter of 2024 interest rate of 12.6 % , future payments on the 2029 Term Loan are as follows:

Year ending December 31, (in thousands)

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2026 - interest only

2026 - principal and interest

2027 - principal and interest

2027 - interest only

2028 - interest only

2029 and thereafter - principal and interest

Total minimum payments

Less amount representing interest

2027 Term Loans, gross

2029 Term Loan, gross

Less unamortized debt discount and debt issuance costs

Net carrying amount of 2027 Term Loans

The table above does not reflect any adjustment for transactions contemplated by the Consent and Amendment entered into on February 5, 2024, including any prepayments to the 2027 Term Loans.

1.5 % Convertible Senior Subordinated Notes due 2026

Net carrying amount of 2029 Term Loan

Revenue Purchase and Sale Agreement

On May 8, 2024, concurrent with the 2029 Term Loan, the Company entered into the Revenue Purchase and Sale Agreement with Coduet Royalty Holdings, LLC, as administrative agent, and the Purchaser Group.

Under the terms of the Revenue Purchase and Sale Agreement, the Purchaser Group paid the Company $ 37.5 million, subject to certain conditions at closing (the “Revenue Purchase Price”).

In exchange, the Company sold to the Purchaser Group a right to receive 5.0 % of U.S.

net sales of UDENYCA and LOQTORZI with respect to a specified threshold applicable to UDENYCA net sales and a specified threshold applicable to LOQTORZI net sales during an applicable year and 0.5 % of U.S.

net sales of UDENYCA and LOQTORZI that exceeded the specified threshold during that year (the “Revenue Payment”) for each calendar quarter commencing May 8, 2024.

The Purchaser Group’s right to receive the Revenue Payment terminates and the Company no longer has the obligation to pay Revenue Payments once the Purchaser Group receives the amount equal to 2.25 times the Revenue Purchase Price allocated to each product.

The Company may also buy out the Purchaser Group’s rights to receive the Revenue Payments by triggering certain conditions and paying the Purchaser Group the unpaid portion of the 2.25 multiple on the

Revenue Purchase Price.

The proceeds from the Revenue Purchase Price were used by the Company as part of the full repayment of the 2027 Term Loans.

The Company has announced that it plans to use a portion of the proceeds of the contemplated UDENYCA Sale to buy out the right to receive royalties on net sales of UDENYCA which is expected to be $ 47.7 million assuming a close late in the first quarter or early in the second quarter of 2025 in accordance with the Revenue Purchase and Sale Agreement.

The Revenue Purchase and Sale Agreement contains various representations and warranties, including with respect to organization, authorization, and certain other matters, certain covenants with respect to payment, reporting, intellectual property, in-licenses, out-licenses, and certain other actions, indemnification obligations and other provisions customary for transactions of this nature.

The Revenue Purchase and Sale Agreement contains an embedded derivative that meets the criteria to be bifurcated and accounted for as a freestanding derivative instrument subject to derivative accounting.

The allocation of the Revenue Purchase Price to the embedded derivative resulted in a $ 9.2 million discount on the revenue participation liability.

Additionally, there was $ 1.4 million in issuance costs.

The Company is amortizing the discount and issuance costs to interest expense over the estimated term of the Revenue Purchase and Sale Agreement using the effective interest method.

For the year ended December 31, 2024, interest expense was $ 7.2 million, inclusive of the amortization of discount and issuance costs of $ 1.3 million.

For details on the Royalty Fee Derivative Liability, see Note 3.

Fair Value Measurements.

A summary of the revenue participation liability is as follows:

(in thousands)

December 31, 2024

Revenue participation liability

Less unamortized discount and issuance costs

Net carrying value

Classification on the consolidated balance sheets is as follows:

(in thousands)

Balance Sheet Classification

December 31, 2024

Revenue participation liability, current

Accrued and other current liabilities

Revenue participation liability, non-current

Other liabilities, non-current

Net carrying value

2027 Term Loan

The Company entered into the Loan Agreement with BioPharma and the 2027 Lenders for a senior secured term loan facility of up to $ 300.0 million, of which $ 250.0 million was funded.

Starting April 1, 2023, the 2027 Term Loans accrued interest at 8.25 % plus the sum (the “Adjusted Term SOFR”) of three-month SOFR and 0.26161 % per annum, with a floor on Adjusted Term SOFR of 1.0 %.

On February 5, 2024, the Company entered into the Consent and Amendment with the Collateral Agent and the 2027 Lenders.

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

(1) the 2027 Lenders and the Collateral Agent provided consent to consummation of the transactions contemplated by the CIMERLI Purchase Agreement between the Company and Sandoz, and released a subsidiary of the Company from its obligations and certain assets subject to the transactions contemplated thereby, (2) the 2027 Lenders and the Collateral Agent required the Company to make a partial prepayment of the principal of the loans outstanding under the 2027 Loan Agreement in the amount of $ 175.0 million upon consummation of the CIMERLI Sale, subject to certain conditions and (3) the parties thereto agreed to adjust the minimum net trailing twelve month net sales covenant level to be $ 125.0 million under the 2027 Loan Agreement.

As a result of the closing of the CIMERLI Sale, the Company made a partial prepayment of $ 175.0 million of the total principal balance of $ 250.0 million of the 2027 Term Loans on April 1, 2024, and including the prepayment premium fee, make-whole and accrued interest, the Company paid $ 181.9 million.

On May 8, 2024, in connection with entering into the 2029 Term Loan and the Revenue Purchase and Sale Agreement, the Company repaid in full all outstanding indebtedness and terminated all commitments under the 2027 Term Loans.

The May 8, 2024 payoff amount of $ 79.6 million included repayment in full of all outstanding principal, accrued interest, a 3.0 % prepayment premium fee of the principal amount, a make-whole interest payment and lender fees.

During the year ended December 31, 2024, the Company recorded a $ 12.6 million loss on debt extinguishment in the consolidated statements of operations for the payoff of the 2027 Term Loans, which included the write-off of the remaining debt discount and debt issuance costs, the prepayment premium fee, the make-whole interest payment, and lender fees.

The following table presents the components of interest expense related to the 2027 Term Loans:

Year Ended December 31,

(in thousands)

Contractual interest

Amortization of debt discount and debt issuance costs

Total interest expense

1.5 % Convertible Senior Subordinated Notes due April 2026

In April 2020, the Company issued and sold $ 230.0 million aggregate principal amount of its 2026 Convertible Notes in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

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The 2026 Convertible Notes are not redeemable at the Company’s election before maturity.

If a “fundamental change” (as defined in the indenture for the 2026 Convertible Notes) occurs, then, subject to a limited exception,

noteholders may require the Company to repurchase their 2026 Convertible Notes for cash.

If a “fundamental change” (as defined in the indenture for the 2026 Convertible Notes) occurs, then, subject to a limited exception, noteholders may require the Company to repurchase their 2026 Convertible Notes for cash.

The repurchase price will be equal to the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

The Company has announced that it plans to use part of the proceeds that it receives at the closing of the UDENYCA Sale to fully repay the outstanding 2026 Convertible Notes.

The 2026 Convertible Notes have customary provisions relating to the occurrence of “events of default” (as defined in the Indenture for the 2026 Convertible Notes).

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As of December 31, 2024, the Company was in full compliance with these covenants, and there were no events of default under the 2026 Convertible Notes.

The Company evaluated the features embedded in the 2026 Convertible Notes under the relevant accounting rules and concluded that the embedded features do not meet the requirements for bifurcation, and therefore do not need to be separately accounted for as an equity component.

The proceeds received from the issuance of the convertible debt were recorded as a liability in the consolidated balance sheets.

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The capped call transactions are generally expected to reduce the potential dilution upon conversion of the 2026 Convertible Notes in the event that the market price per share of the Company’s common stock, as measured under the terms of the capped call transactions, is greater than the strike price of the capped call transactions, which initially corresponds to the conversion price of the 2026 Convertible Notes, and is subject to anti-dilution adjustments generally similar to those applicable to the conversion rate of the 2026 Convertible Notes.

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 the Company’s 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.

terms of the capped call transactions.

The capped call transactions are accounted for as separate transactions from the 2026 Convertible Notes and classified as equity instruments.

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The capped calls will not be subsequently re-measured as long as the conditions for equity classification continue to be met.

The Company incurred $ 0.9 million of debt issuance costs relating to the issuance of the 2026 Convertible Notes, which were recorded as a reduction to the notes in the consolidated balance sheet.

The Company incurred $ 0.9 million of debt issuance costs relating to the issuance of the 2026 Convertible Notes, which were recorded as a reduction to the notes in the consolidated balance sheets.

The debt issuance costs are being amortized and recognized as additional interest expense over the six-year contractual term of the notes using the effective interest rate method.

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2025 - interest only

2026 - principal and interest

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The following table presents the components of interest expense of the 2022 Convertible Notes:

Year Ended December 31,

(in thousands)

Year Ended December 31, 2022

Stated coupon interest

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The prepayment premium fee and unamortized exit fee, debt discount and debt issuance costs, net from the 2025 Term Loan totaled $ 6.2 million and was recorded in loss on debt extinguishment in the consolidated statements of operations for 2022.

The following table presents the components of interest expense of the 2025 Term Loan:

Year Ended December 31,

(in thousands)

Stated coupon interest

Amortization of debt discount and debt issuance costs

Total interest expense

Interest expense for the year ended December 31, 2022 was immaterial.

Commitments and Contingencies

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Total obligations

As of December 31, 2023, total obligations excludes certain purchase commitments that were assumed by Sandoz upon their acquisition of the Company’s CIMERLI ophthalmology franchise (see Note 17.

Subsequent Events).

The Company enters into contracts in the normal course of business with contract research organizations for preclinical studies and clinical trials and CMOs for the manufacture of clinical trial materials.

The contracts are cancellable, with varying provisions regarding termination.

The contracts are generally cancellable, with varying provisions regarding termination.

If a contract with a specific vendor were to be terminated, the Company would generally only be obligated for products or services that the Company had received as of the effective date of the termination and any applicable cancellation fees.

In connection with the YUSIMRY Sale, HKF assumed $ 17.0 million in YUSIMRY inventory purchase commitments, of which $ 17.0 million remained as of December 31, 2024.

If HKF were to default on its obligations under the YUSIMRY Purchase Agreement, the Company could become liable to pay any unpaid portion of these purchase commitments.

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

Guarantees and Indemnifications

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However, the Company may record charges in the future as a result of these indemnification obligations.

The Company assesses the likelihood of any adverse judgments or related claims, as well as ranges of probable losses.

The Company assesses the likelihood of any adverse judgments or related claims, as well

as ranges of probable losses.

In the cases where the Company believes that a reasonably possible or probable loss exists, it will disclose the facts and circumstances of the claims, including an estimate range, if possible.

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Sometimes it is not possible to determine the outcome of these matters or, unless otherwise noted, the outcome (including in excess of any accrual) is not expected to be material, and the maximum potential exposure or the range of possible loss cannot be reasonably estimated.

As of December 31, 2023 and 2022, the Company had an accrual of $ 6.4 million and $ 4.7 million, respectively, related to such matters that was included in accrued rebates, fees and reserves in the consolidated balance sheets.

As of December 31, 2024 and 2023, the Company had an accrual of $ 6.4 million related to such matters that was included in accrued rebates, fees and reserves in the consolidated balance sheets.

In late April of 2022, the Company received a demand letter from Zinc Health Services, LLC (“Zinc”) asserting that Zinc was entitled to approximately $ 14.0 million from the Company for claims related to certain sales of UDENYCA from October 2020 through December 2021.

The Company is continuing to evaluate the claims in the letter.

No legal proceeding has been filed in connection with the claims in the letter and based on currently available information the final resolution of the matter is uncertain.

The Company intends to defend any legal proceeding that may be filed.

The Company established an accrual as of December 31, 2023 that represented its estimated liability to resolve the matter.

If the Company has any liability related to Zinc, it does not expect that it will transfer to Intas as part of the UDENYCA Sale.

The Company has an accrual established as of December 31 that represented its estimated liability to resolve the matter.

Loss contingencies are inherently unpredictable, the assessment is highly subjective and requires judgments about future events and unfavorable developments or resolutions can occur.

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In 2019, the Company entered into the Vehicle Lease Agreement, pursuant to which the Company leased approximately 50 vehicles as of December 31, 2023.

The term of each leased vehicle is 36 months and commences upon the delivery of the vehicle.

The vehicles leased under this arrangement were classified as finance leases.

Beginning in February 2023, the Company no longer enters into these leasing arrangements and began transitioning to a reimbursement program with employees.

Beginning in February 2023, the Company no longer enters into these leasing arrangements and began transitioning to a reimbursement program with its employees.

As of December 31, 2024, the Company has no remaining obligation under the vehicle leasing arrangement.

Supplemental information related to the Company’s leases is as follows:

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Operating leases

Finance leases

Total lease payments

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Public Offering

On May 16, 2023, the Company entered into the Underwriting Agreement with the Underwriters, pursuant to which the Company issued and sold the Firm Shares to the Underwriters.

On May 16, 2023, the Company 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 (the “Underwriters”), pursuant to which the Company issued and sold the 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, the Company 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 the Company pursuant to the Underwriting Agreement at a price of $ 3.995 per share.

The Offering was made pursuant to a prospectus supplement and related prospectus filed with the SEC pursuant to the Company’s Registration Statement under which the Company may offer and sell up to $ 150.0 million in the aggregate of its common stock, preferred stock, debt securities, warrants and units from time to time in one or more offerings.

The Offering was made pursuant to a prospectus supplement and related prospectus filed with the SEC pursuant to the Company’s Registration Statement under which the Company may offer and sell up to $ 150.0 million in the aggregate of its common stock, including the common stock already sold, preferred stock, debt securities, warrants and units from time to time in one or more offerings.

On May 18, 2023, the Company 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.

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On November 8, 2022, the Company filed a Registration Statement.

Also on November 8, 2022, the Company entered into a Sales Agreement with Cowen, pursuant to which the Company may issue and sell from time to time up to $ 150.0 million of its common stock through or to Cowen as the Company’s sales agent or principal in the ATM Offering.

Also on November 8, 2022, the Company entered into a Sales Agreement with Cowen, pursuant to which the Company may issue and sell from time to time up to $ 150.0 million of its common stock, including the common stock already sold, through or to Cowen as the Company’s sales agent or principal in the ATM Offering.

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

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As of December 31, 2024, the Company had approximately $ 64.9 million of its common stock remaining available for sales under the ATM Offering.

On October 9, 2023, in accordance with the terms of the Optional Stock Purchase Agreement, the Company issued 2,225,513 shares of its common stock to the CMO for a price of $ 3.675 per share, with a total value of $ 8.2 million in this non-cash transaction.

The Optional Stock Purchase Agreement gave the Company the option, in its sole discretion, to elect to pay for certain manufacturing services provided by the CMO by either paying cash or a Stock Service Fee Payment.

On October 9, 2023, in accordance with the terms of an optional stock purchase agreement entered into with one of its CMOs on September 28, 2023 (the “Optional Stock Purchase Agreement”), the Company issued 2,225,513 shares of its common stock to one of its CMOs for a price of $ 3.675 per share, with a total value of $ 8.2 million in this non-cash transaction.

On October 4, 2023, the Company notified the CMO of its election of the Stock Service Fee Payment.

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Equity Incentive Plans

In October 2014, the Company’s board of directors and its stockholders adopted the 2014 Equity Incentive Plan, which became effective upon the closing of the Company’s IPO on November 6, 2014.

The 2014 Plan is subject to automatic annual increases in the number of shares available for issuance on the first business day of each fiscal year equal to four percent ( 4 %) of the number of shares of the Company’s common stock outstanding as of such date or a lesser number of shares as determined by the Company’s board of directors with 2024 being the last calendar year with an automatic annual increase under the 2014 Plan.

All remaining shares under the Company’s 2010 Stock Plan (the “2010 Plan”) were transferred to the 2014 Plan upon adoption and any additional shares that would otherwise return to the 2010 Plan as a result of forfeiture, termination or expiration of the awards will return to the 2014 Plan.

The 2014 Plan provided for the Company to grant shares and/or options to purchase shares of common stock to employees, directors, consultants and other service providers.

In October 2014, the Company’s board of directors and its stockholders adopted the 2014 Equity Incentive Award Plan (the “Original 2014 Plan”), which became effective upon the closing of the Company’s IPO on November 6, 2014.

The Original 2014 Plan was subject to automatic annual increases in the number of shares available for issuance on the first business day of each fiscal year equal to four percent ( 4 %) of the number of shares of the Company’s common stock outstanding as of such date or a lesser number of shares as determined by the Company’s board of directors with 2024 being the last calendar year with an automatic annual increase under the Original 2014 Plan.

The Original 2014 Plan was amended and restated effective May 29, 2024 as the 2014 Plan with amendments that included an additional 7,000,000 shares reserved for issuance over the existing share reserve and certain other changes to the Original 2014 Plan.

Additionally, the evergreen provision has been removed from the 2014 Plan such that any increase in the total number of shares of common stock that may be issued must be approved by stockholders.

There were 6,010,528 shares of common stock available for future issuance as of December 31, 2024 under the 2014 Plan.

All remaining shares under the Company’s 2010 Equity Incentive Stock Plan (the “2010 Plan”) were transferred to the Original 2014 Plan upon adoption and any additional shares that would otherwise return to the 2010 Plan as a result of forfeiture, termination or expiration of the awards will return to the 2014 Plan.

The 2014 Plan enables the Company to grant shares and/or options to purchase shares of common stock to employees, directors, consultants and other service providers.

While the 2014 Plan allows for non-qualified or incentive stock options, primarily all option grants made since June 2016 have been for non-qualified stock options.

Under the 2010 Plan, no awards have been issued since 2014, and there were no shares of common stock available for future issuance as of December 31, 2024.

There were 881,231 shares of common stock available for future issuance as of December 31, 2023 under the 2014 Plan.

In June 2016, the Company adopted the 2016 Employment Commencement Incentive Plan.

The 2016 Plan is designed to comply with the inducement exemption contained in Nasdaq’s Rule 5635(c)(4), which provides for the grant of non-qualified stock options, restricted stock units, restricted stock awards, performance awards, dividend equivalents, deferred stock awards, deferred stock units, stock payment and stock appreciation rights to a person not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the Company.

As of December 31, 2023, the Company had 1,773,921 shares of common stock available for future issuance for new employees.

The 2016 Plan does not provide for any annual increases in the number of shares available.

In June 2016, the Company adopted the 2016 Plan.

The 2016 Plan was designed to comply with the inducement exemption contained in Nasdaq’s Rule 5635(c)(4), which provides for the grant of non-qualified stock options, restricted stock units, restricted stock awards, performance awards, dividend equivalents, deferred stock awards, deferred stock units, stock payment and stock appreciation rights to a person not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the Company.

In connection with the approval of the amendment and restatement of the Original 2014 Plan as the 2014 Plan in 2024, the Company agreed to not make any new awards under the 2016 Plan after May 29, 2024, such that all remaining shares under the 2016 Plan will remain unissued.

Stock option exercises are settled with common stock from the plans’ previously authorized and available pool of shares.

If any shares subject to an award granted under the 2014 Plan or the 2016 Plan expire or become forfeited or canceled without the issuance of shares, the shares subject to such awards are added back into the authorized pool on the same basis that they were removed.

In addition, shares withheld to pay for minimum statutory tax obligations with respect to full-value awards are added back into the authorized pool.

If any shares subject to an award granted under the 2014 Plan or 2016 Plan expire, are forfeited or canceled without the issuance of shares, the

shares subject to such awards return to the 2014 Plan.

In addition, shares withheld to pay for minimum statutory tax obligations with respect to full-value awards are added back to the 2014 Plan.

The annual grant to eligible employees can vary depending on the type of award, and the award size is determined by the employee’s grade level.

Stock Options

Incentive stock options and non-statutory stock options may be granted with exercise prices of not less than the fair value of the common stock on the date of grant.

Incentive stock options and non-statutory stock options may be granted with exercise prices of not less than the fair market value of the common stock on the date of grant.

These stock options generally vest over four years , expire in ten years from the date of grant and are generally exercisable after vesting.

The following table sets forth the summary of option activities under the 2016 Plan and the 2014 Plan:

In 2024, the Company granted an aggregate of 2,622,500 performance-based stock options (“PSOs”) under the Original 2014 Plan and under the 2014 Plan to its Chief Executive Officer and certain other senior officers, which have a term of ten years.

The PSOs granted under the Original 2014 Plan are comprised of 1,982,500 PSOs with performance-based vesting conditions tied to commercial, clinical and strategic milestones (the “Performance Condition PSOs”).

The fair value of each Performance Condition PSO was estimated on the grant date, using the Black-Scholes model for PSOs tied to commercial, clinical and strategic milestones.

Expense for the Performance Condition PSOs is recognized over the requisite service period only when the performance condition is considered probable of being achieved and is recognized over the period from the grant date through the time the milestone is expected to be achieved.

The PSOs granted under the 2014 Plan comprised 640,000 PSOs with total shareholder return vesting tied to performance milestones during specified periods (the “Market Condition PSOs”).

The fair value of each Market Condition PSO was estimated on the grant date using a Monte Carlo simulation model.

The following table summarizes option activity from December 31, 2023 through December 31, 2024:

Contractual Terms

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Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the year in excess of the exercise price multiplied by the number of options outstanding or exercisable.

Information on options outstanding and exercisable as of December 31, 2023 is summarized as follows:

Information on the options outstanding and exercisable as of December 31, 2024 is summarized by range of exercise prices as follows:

Options Outstanding

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Restricted Stock Units

The Company grants RSUs primarily to its employees.

The Company grants RSUs from time to time primarily to its employees.

RSUs are share awards that entitle the holder to receive freely tradable shares of the Company’s common stock upon vesting.

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The Company’s RSUs generally vest over one to three years from the applicable grant date, provided the employee remains continuously employed with the Company.

However, the RSUs granted in 2024 were issued and vested immediately to settle a portion of the 2023 annual employee performance bonuses.

The estimated fair value of RSUs is based on the closing price of the Company’s common stock on the grant date.

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In October 2014, the Company’s board of directors and its stockholders approved the establishment of the ESPP.

The ESPP provides for annual increases in the number of shares available for issuance on the first business day of each fiscal year equal to the lesser of one percent ( 1 %) of the number of shares of the Company’s common stock outstanding as of such date or a number of shares as determined by the Company’s board of directors.

The ESPP provided for annual increases in the number of shares available for issuance on January 1 of each year until January 1, 2024, equal to the lesser of one percent ( 1 %) of the number of shares of the Company’s common stock outstanding as of such date or a number of shares as determined by the Company’s board of directors.

The ESPP had 1,689,547 shares of common stock available for future issuance as of December 31, 2024.

Eligible employees may purchase common stock at 85 % of the lesser of the fair market value of the Company’s common stock on the first or last day of the offering period.

The offering periods of the ESPP are on May 16 and November 16 .

As of December 31, 2023, there was $ 0.4 million of unrecognized compensation expense associated with the ESPP, which is expected to be recognized over an estimated weighted-average period of 4.5 months.

The offering periods of the ESPP are six-month periods commencing on each May 16 and November 16 .

As of December 31, 2024, the unrecognized compensation expense associated with the ESPP was immaterial, which is expected to be recognized over a weighted-average period of 4.5 months.

Stock-Based Compensation

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Selling, general and administrative

Stock-based compensation expense

Stock-based compensation expense capitalized into inventory

Total stock-based compensation expense

Total stock-based compensation expense capitalized into inventory

(1) Stock-based compensation capitalized into inventory is recognized as cost of goods sold when the related product is sold.

The stock-based compensation for the year ended December 31, 2023 includes restructuring charges described in Note 15 of $ 1.1 million in research and development expense and a net forfeiture credit of $ 0.1 million in selling, general and administrative expense.

The stock-based compensation expense recorded in connection with the Surface Acquisition that was not included in the consideration transferred was immaterial.

Valuation Assumptions of Awards Granted to Employees

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401(k) Retirement Plan

In 2019, the Company’s Compensation Committee approved the Company’s matching of the employees 401(k) Plan whereby eligible employees may elect to contribute up to the lesser of 90 % of their annual compensation or the statutorily prescribed annual limit allowable under Internal Revenue Service regulations.

Beginning January 1, 2021, the Company made matching contributions of 100 % of the first 4 % of eligible compensation, up to a maximum of $ 7,500 .

In 2019, the Compensation Committee of the Board approved the Company’s matching of employee contributions towards their individual 401(k) Plans whereby eligible employees may elect to contribute up to the lesser of 90 % of their annual compensation or the statutorily prescribed annual limit allowable under Internal Revenue Service regulations.

The Company makes matching contributions of 100 % of the first 4 % of eligible compensation that an employee contributes to his or her 401(k) plan, up to a maximum of $ 7,500 each

The Company recorded compensation expense related to the match of $ 1.5 million, $ 1.8 million and $ 2.1 million in 2024, 2023 and 2022, respectively.

The components of loss before income taxes are as follows:

The components of income (loss) before income taxes are as follows:

Year Ended December 31,

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Income tax provision (benefit)

There was no income tax provision in 2022 and 2021 due to the Company’s history of losses and valuation of allowances against the deferred tax assets.

For the periods presented above, the income tax provision (benefit) reflects the Company’s history of losses and valuation of allowances against the deferred tax assets.

A reconciliation of the statutory United States federal rate to the Company’s effective tax rate is as follows:

3 unchanged sentences

State taxes, net of federal benefit

Foreign rate differences

Permanent items

1 unchanged sentence

Stock-based compensation costs

Sale Transactions

Change in valuation allowance

Effective income tax rate

The components of the Company’s net deferred tax assets as of December 31, 2023 and 2022 consist of the following:

The components of the Company’s net deferred tax assets (liabilities) as of December 31, 2024 and 2023 consist of the following:

(in thousands)

Deferred tax assets:

Net operating loss carryforwards

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Capitalized research and development

Gross deferred tax assets

Total gross deferred tax assets

Valuation allowance

Total net deferred tax assets

Deferred tax liabilities:

Right-of-use asset

In-process research and development

Gross deferred tax liabilities

Total net deferred tax asset

Less valuation allowance

Net deferred tax assets (liabilities)

Total deferred tax liabilities

Net deferred tax liabilities

The tax benefit of net operating losses, temporary differences and credit carry forwards is recorded as an asset to the extent that management assesses that realization is “more likely than not.” The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences representing net future deductible amounts become deductible.

Due to the Company’s history of losses, and lack of other positive evidence, the Company has determined that it is more likely than not that its federal net deferred tax assets and certain state net deferred tax assets will not be realized, and therefore, the Company has offset the federal and certain state net deferred tax assets by a valuation allowance as of December 31, 2023 and 2022.

The valuation allowance increased by $ 85.6 million, $ 64.4 million and $ 72.4 million during the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2024 and 2023, the Company recorded net a deferred tax liability of $ 1.1 million.

The net deferred tax liability relates to in-process research and development that cannot be offset against the deferred tax assets.

For remaining deferred tax assets, the Company has determined that it is more likely than not that its federal and state net deferred tax assets will not be realized due to the Company's history of losses and lack of other positive evidence.

As a result, the Company has recorded a valuation allowance against the remaining federal and certain state net deferred tax assets as of December 31, 2024 and 2023.

The valuation allowance decreased by $ 10.6 million during the year ended December 31, 2024 and increased by $ 85.6 million and $ 64.4 million during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2024, the Company had net operating loss carryforwards for federal income of $ 718.7 million, which will start to expire in the year 2036 , and various states net operating loss carryforwards of $ 124.8 million, which have various expiration dates beginning in 2031 .

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The annual limitation may result in the expiration of certain net operating loss and tax credit carryforwards before their utilization.

Under the new enacted tax law, the carry forward period of net operating losses generated from 2018 forward is indefinite.

Under the current tax law, the carry forward period of net operating losses generated from 2018 forward is indefinite.

However, the carryforward period for net operating losses generated prior to 2018 remains the same.

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Balance at end of year

As of December 31, 2023, 2022 and 2021, the Company had $ 17.4 million, $ 16.8 million and $ 15.5 million, respectively, of unrecognized benefits, none of which would currently affect the Company’s effective tax rate if recognized due to the Company’s deferred tax assets being fully offset by a valuation allowance.

As of December 31, 2024, 2023 and 2022, the Company had $ 19.2 million, $ 17.4 million and $ 16.8 million, respectively, of unrecognized benefits, none of which would currently affect the Company’s effective tax rate if recognized due to the Company’s deferred tax assets being offset by a valuation allowance.

During 2024, 2023 and 2022, the Company did no t recognize accrued interest and penalties related to unrecognized tax benefits.

The Company does not anticipate a material adjustment of unrecognized tax benefits during the next twelve months from the balance sheet date as reductions for tax positions of prior years.

Net Loss Per Share

The following outstanding dilutive potential shares were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

Net Income (Loss) Per Share

The following table sets forth the computation of the basic and diluted net income (loss) per share:

Year Ended December 31,

(in thousands, except share and per share data)

Basic net income (loss) per share

Net income (loss)

Weighted-average common shares outstanding

Basic net income (loss) per share

Diluted net income (loss) per share

Net income (loss)

Denominator for basic net income (loss) per share

Add effect of potential dilutive securities:

Stock options, including shares subject to ESPP

Restricted stock units

Denominator for diluted net income (loss) per share

Diluted net income (loss) per share

The following outstanding dilutive potential shares were excluded from the calculation of diluted net income (loss) per share due to their anti-dilutive effect:

Year Ended December 31,

Stock options, PSOs, including shares subject to ESPP

Restricted stock units

Shares issuable upon conversion of 2022 Convertible Notes

Shares issuable upon conversion of 2026 Convertible Notes

Restructuring Charges

The reduction in force impacted approximately 50 full-time and part-time employees, effective March 10, 2023 for most of these employees.

and $ 1.5 million in non-cash stock-based compensation related to acceleration of vesting and extension of the stock option exercise windows for two impacted executives;

partially offset by $ 0.5 million in non-cash stock-based compensation forfeiture credits.

The reduction in force was completed during the second quarter of 2023.

For the year ended December 31, 2023, the consolidated statements of operations include $ 3.6 million in research and development expense and $ 1.3 million in selling, general and administrative expense related to the reduction in force.

Related Party Transactions

Consulting services

In October 2020, the Company entered into a consulting agreement with Lanfear Advisors owned by Mr.

Jonathan Lanfear who is the brother of Dennis Lanfear, the Company’s President, Chief Executive Officer and Chairman of the Board of Directors.

Jonathan Lanfear provided consulting services with respect to the Collaboration Agreement executed with Junshi Biosciences in February 2021 and the Letter Agreement with Junshi Biosciences related to the Collaboration Agreement dated January 9, 2022 (See Note 7.

Collaborations and Other Arrangements).

In addition to the hourly consulting fee paid to Lanfear Advisors under the consulting agreement, the Company granted fully vested stock options to purchase 65,000 shares of common stock with an exercise price of $ 17.60 per share to Mr.

Jonathan Lanfear in February 2021 upon the execution of the Collaboration Agreement with Junshi Biosciences and recognized stock-based compensation expense of $ 0.8 million.

The Company recorded cash consulting expense of $ 0.2 million in 2021 with respect to these consulting services.

There have been no subsequent material related party expenses.

Total liabilities recognized in the consolidated balance sheets with respect to these services were immaterial as of December 31, 2023 and 2022.

Subsequent Events

CIMERLI Sale Transaction

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

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

Partial Release and Third Amendment to 2027 Term Loan

On February 5, 2024, the Company, 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 2027 Term Loans and the other loan documents in connection therewith, and the parties thereto agreed to amend the 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 the Company from its obligation and certain assets subject to the transactions contemplated thereby, (2) the Lenders and the Collateral Agent permitted the Company to make a partial prepayment of the principal of the loans outstanding under the 2027 Term Loans in the amount of $ 175.0 million upon consummation of the transactions contemplated by the Purchase Agreement, subject to certain conditions including a prepayment premium and makewhole amount calculated pursuant to the Consent and Amendment and (3) the parties thereto agreed to adjust the minimum net sales covenant level under the 2027 Term Loans.

Upon the closing of the Sale Transaction the Company 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 the Company plans 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.

Other terms of the 2027 Term Loans, as amended by the Consent and Amendment, remain generally identical to those under the 2027 Term Loans.

The amounts in the table above exclude any shares contingently issuable pursuant to the CVR Agreement because the conditions that could result in a payment becoming due were not met.

Subsequent Event

In connection with the December 2, 2024 UDENYCA Purchase Agreement and related UDENYCA Sale, the Company held a Special Meeting of Stockholders (the “Special Meeting”) on March 11, 2025 virtually via the Internet.

At the Special Meeting, our stockholders approved the UDENYCA Sale, the UDENYCA Purchase Agreement and the other transactions and ancillary documents contemplated by the UDENYCA Purchase Agreement.

The Company expects to receive $ 483.4 million in cash at closing, 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, the Company is 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.

Closing of the UDENYCA Sale is subject to closing conditions, including FDA authorization of commercial supply from our additional packaging and labeling CMO for UDENYCA.

The Company anticipates the closing to occur late in the first quarter or early in the second quarter of 2025.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 7A. Quantitative and Qualitative Disclosures About Market Risk