Coherus BioSciences Inc

Comparison of Three Months Ended March 31, 2025 and 2024

Revenue

The increase in net revenue for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily due to higher volume of LOQTORZI, which launched in December 2023.

We expect net revenue from continuing operations in 2025 to be higher than in 2024 because of continued growth of LOQTORZI.

Cost of Goods Sold

The increase in cost of goods sold from continuing operations for the three months ended March 31, 2025 compared to the same period in the prior year was primarily due to higher demand of LOQTORZI, which launched in December 2023.

We expect cost of goods sold from continuing operations for 2025 to be higher than 2024 because of continued growth of LOQTORZI.

Research and Development Expense

The decrease in research and development expense from continuing operations in the three months ended March 31, 2025 compared to the prior period was primarily due to the following:

The decrease was partially offset by the following:

We expect our research and development expense in 2025 to be higher than 2024 due to continued investments in our immuno-oncology pipeline.

Selling, General and Administrative Expense

The decrease in selling, general and administrative expense from continuing operations in the three months ended March 31, 2025 was primarily due to the $6.8 million net impairment charge in the first quarter of 2024 relating to the write-off of the net carrying value of the out-license intangible asset of $10.6 million and the final remeasurement of the CVR liability of $3.8 million related to NZV930 to its fair value of zero, lower professional fees of $3.1 million, a lower average headcount which resulted in reductions of $2.2 million in employee-related costs and $1.2 million in stock-based compensation.

We expect our selling, general and administrative expense from continuing operations for the full year 2025 to be lower than the full year 2024 primarily as a result of decreased operating costs and headcount due to divestitures.

Interest Expense

The decrease in interest expense from continuing operations in the three months ended March 31, 2025 was primarily due to prepaying the remaining $75.0 million of the principal amount due under the 2027 Term Loans on May 8, 2024, partially offset by new interest on the $38.7 million 2029 Term Loan and the LOQTORZI portion of the Revenue Purchase and Sale Agreement, each commencing May 8, 2024.

Interest expense from discontinued operations was $3.0 million and $8.0 million in the three months ended March 31, 2025 and 2024, respectively, and related to the 2026 Convertible Notes, the UDENYCA portion of the Revenue Purchase and Sale Agreement, and $175.0 million of the $250.0 million principal amount due under the 2027 Term Loans.

We expect interest expense from continuing operations to be lower in 2025 than 2024, primarily as a result of repaying the remaining $75.0 million principal amount of the 2027 Term Loans during the second quarter of 2024.

Other Income (Expense), Net

Other income (expense), net from continuing operations in the three months ended March 31, 2025 changed unfavorably compared to the same period in the prior year primarily due to the decrease in foreign exchange gains of $1.0 million, the change in fair value of the LOQTORZI Royalty Fee Derivative Liability of $0.8 million, and the reduction in investment and interest income of $0.5 million.

Net Income (Loss) from Discontinued Operations, net of tax

Net income (loss) from discontinued operations, net of tax in the three months ended March 31, 2025 changed unfavorably compared to the same period in the prior year primarily due to the $153.6 million gain on sale of the CIMERLI ophthalmology franchise in March 2024, as well as $42.6 million lower net revenue driven by 2024 divestitures and wholesaler allocations related to the supply interruption in fourth quarter of 2024, which were not lifted until the end of February 2025.

Liquidity and Capital Resources

Certain relevant measures of our liquidity and capital resources are summarized as follows:

As of March 31, 2025, we had cash and cash equivalents of $82.4 million and an accumulated deficit of $1.6 billion. We have generated significant operating losses in all years since our inception with the exceptions of net income of $28.5 million in 2024, primarily due to the CIMERLI Sale in March 2024 and YUSIMRY Sale in June 2024, $132.2 million net income in 2020, and $89.8 million net income in 2019.

We have funded our operations primarily through sales of our common stock, issuance and incurrence of convertible and term debt, the Revenue Purchase and Sale Agreement, the Sale Transactions and sales of our products. The following is a summary of recent liquidity events and financing transactions:

We may utilize our ATM Offering from time to time in order to sell our common stock. As of March 31, 2025, we had approximately $64.9 million of our common stock remaining available for sales under the ATM Offering.

We believe that our available cash and cash equivalents, cash collected from divestitures, product sales, and ATM Offering proceeds received to date will be sufficient to fund our planned expenditures and meet our obligations for at least the twelve months following our financial statement issuance date.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development and commercialization sooner than planned. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates and the extent to which we may enter into additional agreements with third parties to participate in their development and commercialization, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated research and development activities, and on-going and future licensing and collaboration obligations. We may need to raise additional funds in the future; however, there can be no assurance that such efforts will be successful or that, if they are successful, the terms and conditions of such financing will be favorable. Our future funding requirements will depend on many factors, including the following:

For further discussion of risks related to our financial condition and capital requirements, please see “Risk Factors— Risks Related to Our Financial Condition and Capital Requirements.”

Contingent Milestones

We have obligations to make future payments to third parties that become due and payable upon the achievement of certain development, regulatory and commercial milestones (such as clinical trial achievements, the filing of a Biologics License Application (“BLA”), approval by the FDA or product launch). These milestone payments and other similar fees are contingent upon future events and therefore are only recorded when it becomes probable that a milestone will be achieved or other applicable criteria will be met. Because the achievement of these milestones had not reached the threshold for recognition as of March 31, 2025, such contingencies were not recorded in our financial statements.

The following presents a summary of our active partnerships and collaborations that have contingent regulatory and sales milestones as of March 31, 2025:

Contingent Value Rights

We have recorded a contingent consideration liability for the fair value of the potential payments under the CVR Agreement in connection with the Surface Acquisition. These potential payments during the 10-year period following September 8, 2023 are only due if wefirst receive milestone- or royalty-based payments under certain license agreements or upfront payments pursuant to ex-U.S. licensing agreements. Payments can be in the form of cash, stock or a combination of cash and stock. The CVR liability associated with GSK and contingent consideration are recorded in other liabilities, non-current on the condensed consolidated balance sheets at March 31, 2025.

Other Commitments

We enter into contracts in the normal course of business with CROs for preclinical research studies and clinical trials, research supplies and other services and products for operating purposes. We have also entered into agreements with several CMOs for the manufacture and clinical drug supply of our commercial and product candidates. Our non-cancelable purchase commitments as of March 31, 2025 were $59.0 million, as outlined in Note 9. Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, and subsequent to March 31, 2025, $49.1 million of these purchase commitments was transferred to Intas in conjunction with the UDENYCA Sale.

There have been no significant changes to our leases during the three months ended March 31, 2025, as compared to the discussion in our 2024 Form 10-K.

Summary Statement of Cash Flows

The following table summarizes our cash flows for discontinued and continuing operations on a combined basis as follows:** **

Net cash used in operating activities

Cash used in operating activities of $25.8 million for the three months ended March 31, 2025 was primarily due to net loss of $56.6 million adjusted for non-cash items including change in fair value of derivatives of $12.6 million, stock-based compensation expense of $5.4 million, other non-cash adjustments of $1.9 million, and changes in our operating assets and liabilities of $10.9 million.

Cash used in operating activities of $46.8 million for the three months ended March 31, 2024 was primarily due to the net income of $102.9 million adjusted for non-cash items including stock-based compensation expense of $7.3 million, impairment of out-license asset net of CVR liability remeasurement of $6.8 million, and other non-cash adjustments of $1.3 million, partially offset by the net gain on Sale Transactions of $153.6 million and the changes in our operating assets and liabilities of $11.4 million.

Net provided by (used in) investing activities

Cash used in investing activities of $17.5 million for the three months ended March 31, 2025 was primarily due to a $12.5 million milestone payment in connection with the 2 nd Amendment with Junshi Biosciences and $4.7 million in retention bonus payments in connection with the CIMERLI Sale.

Cash provided by investing activities of $202.8 million for the three months ended March 31, 2024 was primarily due tocash proceeds of $187.8 million from the CIMERLI Sale, proceeds from sale of investments in marketable securities of $8.7 million, and proceeds from maturities of investments in marketable securities of $6.2 million.

Net cash provided by (used in) financing activities

Cash used in financing activities of $0.3 million for the three months ended March 31, 2025 was due to tax payments related to net share settlement of RSUs.

Cash provided by financing activities of $0.9 million for the three months ended March 31, 2024 was primarily due to proceeds of $1.5 million proceeds from the ATM Offering, net of issuance costs, partially offset by $0.7 million in tax payments related to net share settlement of RSUs.

Discontinued operations

Cash flows from continuing operations and discontinued operations are presented together in the condensed consolidated statement of cash flows. During the three months ended March 31, 2025, changes in operating assets and liabilities of discontinued operations were primarily due to an increase in inventory of $22.9 million. During the three months ended March 31, 2024, changes in operating assets and liabilities of discontinued operations resulted in a net cash inflow primarily due to a decrease in prepaid manufacturing of $10.0 million and a decrease in inventory of $2.4 million.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of our condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenue generated and expense incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

There have been no significant changes to our critical accounting estimates during the three months ended March 31, 2025, as compared to the critical accounting estimates described in our 2024 Form 10-K. We believe that the critical accounting estimates discussed in the 2024 Form 10-K are meaningful to understanding our historical and future performance, as these estimates relate to the more significant areas involving management’s judgments and assumptions.

Recent Accounting Pronouncements

For a description of the impact of recent accounting pronouncements, see Note 1. Organization and Summary of Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.