Tuesday, March 2, 2021

A Small Cap Equity holding: Coherus BioSciences, Inc (CHRS, $18.16): “Evolving Products, Changing Model” by: Mitch Kamm, AIM Student at Marquette University

 Coherus BioSciences, Inc (CHRS, $18.16): “Evolving Products, Changing Model”

By: Mitch Kamm, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


Coherus BioSciences, Inc. (NASDAQ: CHRS) is a commercial-stage clinical biologics platform company, engaging in the development and commercialization of biosimilar therapeutics and immune-oncology medicines. The company has a market cap of 1.31 billion and is headquartered in RedWood City, CA. 

• In 2019, CHRS launched its first biosimilar product, Udenyca and has already achieved roughly 20% of the pegfilgrastim market, used to fight off infection caused from chemotherapy. Since inception, Udenyca has generated $720 million in revenues for the firm.

• CHRS is currently working on biosimilar versions of ranibizumab and aflibercept, treatments for macular degeneration. CHRS management expects each product to have an addressable market of ~3 billion.  

• The firm’s pipeline also includes a biosimilar to adalimumab (December 2023 rollout) which will treat rheumatologic and gastrointestinal disorders. CHRS is also working on a bevacizumab biosimilar candidate (late 2021 rollout) which will treat lung and kidney cancer.  

• Coherus’ recent $150 million immune-oncology collaboration with Junshi Biosciences’ experimental cancer treatment will drive immense value for the firm. 

Key points: 

Coherus BioSciences, Inc. remains in play due to their robust product pipeline and their recent move into the immune-oncology space. The firm’s focus on cutting-edge analytics, clinical and regulatory expertise and the upmost process and manufacturing quality, sets them apart from their peers. 

Udenyca’s success has given management the confidence and plan to execute into different segments, continuing their market disruption. Many of the drugs in their pipeline will compete directly with products already grossing billions of dollars per year. The firm’s commitment to coupling new biosimilar offerings with their new Coherus COMPLETE platform allows them to stick out. The COMPLETE platform is unique in that it provides reimbursement and patient support servicing to support users of Coherus products.

Last month, Coherus inked a deal with Chinese drug maker Junshi Biosciences Co. Ltd. This deal gives Coherus the exclusive rights to Junshi’s anti-PD-1 antibody toripalimab, in the United States and Canada. Monoclonal antibodies that target PD-1 can boost the immune response against cancer cells and better patient outcomes. Coherus also maintains option rights to several earlier-stage cancer drugs as part of the Junshi deal. 

This partnership with Junshi is a clear signal to investors that Coherus is looking to diversify away from biosimilars and into the development of cancer treatments. By entering the lucrative cancer treatment market, management expects to be a disruptor as little competition has led to high treatment costs for patients. Management is confident in their ability to drive value for payers who can ultimately influence which drugs saturate the market. 

What has the stock done lately?

Coherus’ stock performance in the last-month has been rather flat, at 0.94% growth, with price fluctuating between $17.27 and $21.39. Over the last 6 months, CHRS has primarily traded between $16.50 and $21 with decent amounts of volatility. 

Past Year Performance: CHRS stock has returned -16.47% in the last year, with a 52-week range of $10.86 – 23.03, compared to the Russell 2000 posting a 35.66% return. 

My Takeaway

Coherus BioSciences, Inc. is definitely in a unique position as they continue to perform late-stage trials for drugs in their pipeline, while expanding into the immune-oncology space. It will take time to prove if this shift and agreement with Junshi Biosciences allows the firm to become a major disruptor in the cancer treatment space. While growth is definitely possible for Coherus it will be interesting to see how they position themselves against their competition. Due to the relatively flat share price and shifting nature of the business, I recommend a hold of Coherus BioSciences, Inc. (CHRS).