Coherus Biosciences agrees to divest UDENYCA franchise for up to $558M

Coherus BioSciences (CHRS) has entered into an asset purchase agreement dated December 2, 2024, with Intas Pharmaceuticals for the divestiture of the UDENYCA franchise for up to $558.4 million. This includes an upfront payment of $483.4 million, to be adjusted for inventory at close, and $75.0 million in potential net sales milestone payments. Coherus plans to use a portion of the transaction proceeds to fully repay the entirety of the Company’s $230.0 million in existing convertible notes due April 2026 and $49.1 million to buy-out certain royalty obligations related to UDENYCA. Under the terms of the Agreement filed as an exhibit to Coherus’ Current Report on Form 8-K today, Coherus will receive an upfront cash payment of $483.4 million, subject to closing adjustments for final inventory valuation, plus two net sales milestone payments totaling $75.0 million. In exchange, Intas will receive identified assets related to the UDENYCA franchise, including the UDENYCA pre-filled syringe, the UDENYCA autoinjector, and UDENYCA ONBODY and will assume identified liabilities. Accord BioPharma, Inc., the U.S. specialty division of Intas Pharmaceuticals, Ltd., focused on the development of oncology, immunology, and critical care therapies, plans to assume full responsibility for the UDENYCA franchise in the U.S. following the Agreement closing. The Coherus Board of Directors unanimously recommends that Coherus shareholders vote in favor of the proposed UDENYCA divestiture described by the Agreement. A Coherus proxy statement relating to the proposed transaction will be filed with the Securities and Exchange Commission and mailed to Coherus shareholders when available. The closing of the proposed transactions contemplated by the Agreement is subject to customary closing conditions, including approval by Coherus shareholders, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, any required approval by the Committee on Foreign Investment in the United States as well as certain other conditions. The proposed transaction is expected to close by the end of Q1 2025. Importantly, upon close of the proposed transaction, the Company expects to use tax attributes, which were previously not deemed realizable, to offset substantially all of the U.S. federal income taxes related to the divestiture. Following close of the proposed transaction, Coherus plans to initiate a process to fully repay the Company’s outstanding $230.0 million in aggregate principal amount of 1.5% Convertible Senior Subordinated Notes due 2026. At closing Coherus will pay $49.1 million to buy out the right to receive royalties on net sales of UDENYCA in accordance with the Revenue Participation Right and Sale Agreement with Coduet Royalty Holdings, LLC that commenced May 8, 2024. The Company expects to realize substantial cost savings on a going forward basis by: Paying off certain financial liabilities resulting in expected annual financing cash savings exceeding $10.0 million, with the remaining $38.7 million in secured debt costing approximately $5 million to service annually; Transferring certain full-time employees to Intas to support UDENYCA; and Eliminating UDENYCA-related overhead and commercial expenses. The Company plans to provide an updated Q4 2024 sales projection and Q1 2025 cash projection in early January 2025. However, current post-close cash runway projections exceed two years, past key data readouts expected in 2026.