IPO Report: Coherus BioSciences (CHRS)

Coherus BioSciences (CHRS) is a late-stage clinical biologics platform company focused on the global biosimilar market. It is based in Redwood City, CA.

Ten other companies are scheduled for the week of Nov. 3, 2014.  The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint-managers: J.P. Morgan, Credit Suisse

Co-managers: Cowen and Company

End of lockup (180 days): Wednesday, April 15, 2015

End of 25-day quiet period: Monday, December 1, 2014

CHRS scheduled an $85 million IPO with a market capitalization of $433 million at a price range midpoint of $13.50 for Thursday, Nov. 6, 2014 on Nasdaq.

Summary

CHRS is a late-stage clinical biologics platform company focused on the global biosimilar market.

CHRS is currently enrolling two Phase 3 clinical trials with CHS-0214 in rheumatoid arthritis and psoriasis which, if positive, should support the planned filing of a marketing

application in Europe in 2016.

CHRS has partnered with Baxter International, Inc., Baxter Healthcare Corporation and Baxter Healthcare SA, or together, Baxter, and Daiichi Sankyo Company, Limited,

or Daiichi Sankyo, in key markets outside of the United States

Valuation

Glossary

Conclusion

Neutral plus      

Partnered with Baxter and Daiichi Sankyo, in key markets outside of the United States                

Currently enrolling two Phase 3 clinical trials                  

4,7 price to book                      

Accumulated deficit of -$148mm                       

Six month reported loss was -$50mm, Operating loss of -$32mm                       

Business

CHRS is a late-stage clinical biologics platform company focused on the global biosimilar market.

Biosimilars are an emerging class of protein-based therapeutics with high similarity to approved originator products on the basis of various physicochemical and structural properties, as well as in terms of safety, purity and potency.

CHRS’s goal is to become a global leader in the biosimilar market by leveraging its team’s collective expertise in key areas such as process science, analytical characterization, protein production and clinical-regulatory development.

Since its founding in 2010, CHRS has advanced one product candidate into Phase 3 clinical development, two others into or through Phase 1 clinical development and entered into partnerships with two global pharmaceutical companies.

CHRS’s clinical-stage pipeline consists of two anti-inflammatory agents targeting tumor necrosis factor, or TNF, and a long-acting form of granulocyte colony-stimulating factor, or G-CSF. TNF is a substance in the body that is involved in the inflammatory response. G-CSF is a beneficial substance in the body that stimulates production of granulocytes (a type of white blood cell) in order to promote the body’s ability to fight infections.

CHRS’s most clinically advanced anti-TNF product candidate, CHS-0214, is an etanercept (Enbrel) biosimilar candidate that CHRS has partnered with Baxter International, Inc., Baxter Healthcare Corporation and Baxter Healthcare SA, or together, Baxter, and Daiichi Sankyo Company, Limited, or Daiichi Sankyo, in key markets outside of the United States.

Phase 3 clinical trials

CHRS is currently enrolling two Phase 3 clinical trials with CHS-0214 in rheumatoid arthritis and psoriasis which, if positive, should support the planned filing of a marketing application in Europe in 2016.

CHRS’s second anti-TNF product candidate, CHS-1420, is an adalimumab (Humira) biosimilar candidate, and completed Phase 1 studies in August 2014.

CHRS’s long-acting G-CSF product candidate, CHS-1701, is a pegfilgrastim (Neulasta) biosimilar. CHRS initially planned to pursue a 351(a) (novel biologic) regulatory approval pathway for CHS-1701 and successfully completed a Phase 1 study supporting that pathway. However, on October 9, 2014 CHRS met with the FDA to discuss its development plan for CHS-1701.

CHRS informed the agency of its decision to transition from a 351(a) (novel biologic) approval pathway to a 351(k) (biosimilar) pathway. CHRS believes the 351(k) (biosimilar) approval pathway may enable us to file for U.S. regulatory approval for CHS-1701 in the 4th quarter of 2015 or 1st quarter of 2016, approximately 6 to 12 months earlier than CHRS projects under a 351(a) (novel biologic) approval pathway. CHRS expects the FDA to provide it formal written feedback in November 2014 regarding this change in its development plan for CHS-1701, and CHRS expects to finalize its development plan for CHS-1701 based on this feedback by the end of 2014.

Depending on the formal written guidance CHRS receives from the FDA, CHRS believes it may be possible to advance CHS-1701 to a 351(k) (biosimilar) approval application without a collaboration or licensing partner.

Intellectual property

CHRS is the sole owners of a portfolio of pending patent applications, none of which have yet issued, and all of which pertain to its lead product candidates CHS-0214 and CHS-1420. CHRS has 104 pending patent applications the United States and in other countries covering formulations and manufacture of CHS-0214, which if granted are expected to expire in 2032 and 2033. CHRS has eight pending patent applications in the United States and in other countries covering formulations of CHS-1420, which if granted are expected to expire in 2033.

Competition

While CHRS believes that its biologics platform, knowledge, experience and scientific resources provides it with competitive advantages, CHRS faces potential competition from many different sources.

Such pharmaceutical and biotechnology companies, as well as innovator companies and any other firms developing the biosimilars that would compete with the product candidates in its pipeline and other novel products with similar indications.

For example, CHS-0214 may compete with products developed by Pfizer (which holds ex-North America rights to Enbrel, the reference product of CHS-0214), Sandoz (as a biosimilar company), Bioepis and Merck & Co., Inc., or Merck, (through their collaboration to develop and commercialize etanercept (Enbrel) biosimilar candidates) and Hanwha. Similarly, CHS-1420 may face competition from AbbVie (the holder of rights to Humira, the reference product of CHS-1420), Sandoz (as a biosimilar company), Amgen, Actavis, Plc, or Actavis, Pfizer and Boehringer Ingelheim (as biosimilar companies and as developers of novel products). CHS-1701 may face competition from Amgen (which holds rights to Neulasta, the reference product of CHS-1701), Sandoz (as a biosimilar company) and Hospira and Teva (as developers of novel products).

5% shareholders pre-IPO

Daiichi Sankyo Company, Limited          11.13%

Lilly Ventures Fund I, LLC 11.17 %

Entities affiliated with MX II Associates, LLC       9.67%

KKR Biosimilar L.P.       9.70%

Sofinnova Venture Partners VII, L.P.       8.28%

Entities affiliated with Venrock Associates VI, L.P.          7.65%

James I. Healy, M.D., Ph.D.       8.30%

Dennis M. Lanfear         7.95%

Ali J. Satvat      9.70%

S. Edward Torres          11.27%                          

August J. Troendle, M.D.           9.77%

Dividends

No dividends are planned.

Use of proceeds

CHRS expects to receive $75 million from its IPO and use it for the following:

$7.0 million to fund clinical development for CHS-0214 (its etanercept (Enbrel) biosimilar candidate);

$34.0 million to fund clinical development for CHS-1420 (its adalimumab (Humira) biosimilar candidate);

$10.0 million to fund clinical development for CHS-1701 (its pegfilgrastim (Neulasta) biosimilar candidate);

$3.0 million to pursue its development pipeline; and

the remainder for working capital and other general corporate purposes, which may include the licensing of other products or technologies.