DEFM14A: Coherus BioSciences to Divest UDENYCA Franchise to Intas Pharmaceuticals for $483.4 Million Plus Earnouts

Coherus BioSciences is set to sell its UDENYCA business to Intas Pharmaceuticals for $483.4 million in cash, plus potential earnout payments, as part of a strategic shift towards immuno-oncology.

Summary

• Coherus BioSciences has entered into an agreement to sell its UDENYCA franchise to Intas Pharmaceuticals for $483.4 million in cash, which includes $118.4 million for UDENYCA product inventory.
• The agreement also includes potential earnout payments of $37.5 million each, contingent on UDENYCA achieving net sales milestones.
• The first earnout payment is triggered if UDENYCA net sales reach $300 million over four consecutive fiscal quarters within the first five full fiscal quarters post-transaction.
• The second earnout payment is triggered if UDENYCA net sales reach $350 million over four consecutive fiscal quarters within the first seven full fiscal quarters post-transaction.
• The transaction requires stockholder approval at a Special Meeting scheduled for March 11, 2025.
• Following the sale, Coherus will focus on its immuno-oncology portfolio and the commercialization of LOQTORZI.
• The company plans to use the proceeds to repay $230 million in convertible notes and $49.1 million to buy out royalty rights, with the remaining funds allocated to working capital and general corporate purposes.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The deal provides Coherus with capital and allows it to focus on its core business, but there are risks associated with the transaction and the future performance of the remaining business.

Positives

• The transaction provides Coherus with a significant cash infusion to repay debt and invest in its core immuno-oncology business.
• Potential earnout payments offer additional financial upside based on the future performance of UDENYCA under Intas' ownership.
• The divestiture allows Coherus to streamline its focus and resources on its innovative immuno-oncology pipeline and the commercialization of LOQTORZI.
• The deal is expected to close relatively quickly, providing Coherus with immediate access to capital.

Negatives

• The transaction is subject to stockholder approval and regulatory clearances, which could delay or prevent the deal from closing.
• Failure to achieve the net sales milestones would result in Coherus not receiving the full potential value from the sale of UDENYCA.
• Coherus will no longer benefit from the revenue generated by UDENYCA, which could impact future financial performance if LOQTORZI and other pipeline products do not generate sufficient revenue.
• There is a risk of disruption to the business and customer relationships during the transition period.

Risks

• The transaction may not be completed if stockholder approval is not obtained or regulatory clearances are not received.
• The closing of the transaction is subject to multiple conditions beyond the company's control.
• There is no guarantee that Coherus will receive either of the Earnout Payments under the Asset Purchase Agreement.
• The Asset Purchase Agreement limits the company's ability to pursue alternatives to the transaction.
• The company has discretion in the use of the proceeds from the transaction and may not use them effectively.

Future Outlook

Following the transaction, Coherus will focus on its immuno-oncology portfolio, including LOQTORZI, and advance its pipeline of immuno-oncology product candidates.

Industry Context

This announcement reflects a trend in the biopharmaceutical industry where companies are focusing on core therapeutic areas and divesting non-core assets to streamline operations and invest in strategic growth opportunities.

Comparison to Industry Standards

• The sale of UDENYCA is comparable to other recent biosimilar divestitures in the pharmaceutical industry.
• For example, Sandoz's acquisition of Coherus' CIMERLI franchise and Hong Kong King-Friend Industrial Co.'s acquisition of Coherus' YUSIMRY franchise.
• These transactions typically involve upfront payments plus potential milestone payments based on future sales performance.
• The valuation metrics, such as revenue multiples, are within the range of similar deals in the biosimilar space.

Stakeholder Impact

• Shareholders: Potential for increased value through strategic focus and investment in immuno-oncology.
• Employees: Some employees will be offered positions with Intas, while others will remain with Coherus.
• Customers: Transition of UDENYCA supply and support to Intas Pharmaceuticals.
• Creditors: Repayment of convertible notes and reduction of debt.

Next Steps

• Stockholder vote on the transaction at the Special Meeting on March 11, 2025.
• Satisfaction of regulatory approvals, including antitrust review and CFIUS clearance.
• Closing of the transaction and transfer of assets and liabilities to Intas Pharmaceuticals.
• Implementation of the Transition Services Agreement to support the transfer of the UDENYCA business.

Key Dates

Keywords

UDENYCA, Coherus BioSciences, Intas Pharmaceuticals, Asset Sale, Franchise, Immunotherapy, LOQTORZI, Biosimilar, Transaction, Divestiture