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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to

Commission File Number: 001-36721

Coherus BioSciences, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

 

27-3615821

(State or Other Jurisdiction of
Incorporation or Organization)

333 Twin Dolphin Drive, Suite 600

Redwood City, California

(Address of Principal Executive Office)

 

(I.R.S. Employer Identification No.)

94065

(Zip Code)

(650) 649-3530

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

CHRS

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

As of July 31, 2023, 94,468,493 shares of the registrant’s common stock were outstanding.

Table of Contents

COHERUS BIOSCIENCES, INC.

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2023

TABLE OF CONTENTS

    

Page

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

3

PART I

FINANCIAL INFORMATION

5

ITEM 1

Unaudited Condensed Consolidated Financial Statements

5

 

Condensed Consolidated Balance Sheets

5

Condensed Consolidated Statements of Operations

6

Condensed Consolidated Statements of Comprehensive Loss

7

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

8

Condensed Consolidated Statements of Cash Flows

9

Notes to Condensed Consolidated Financial Statements

10

ITEM 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

30

ITEM 3

Quantitative and Qualitative Disclosure About Market Risk

45

ITEM 4

Controls and Procedures

46

PART II

OTHER INFORMATION

47

ITEM 1.

Legal Proceedings

47

ITEM 1A.

Risk Factors

47

ITEM 2

Unregistered Sales of Equity Securities and Use of Proceeds

106

ITEM 3

Defaults Upon Senior Securities

106

ITEM 4

Mine Safety Disclosures

106

ITEM 5

Other Information

106

ITEM 6.

Exhibits

106

Exhibit Index

107

Signatures

109

UDENYCA®, YUSIMRY™ and CIMERLI®, whether or not appearing in large print or with the trademark symbol, are trademarks of Coherus, its affiliates, related companies or its licensors or joint venture partners, unless otherwise noted. Trademarks and trade names of other companies appearing in this Quarterly Report on Form 10-Q are, to the knowledge of Coherus, the property of their respective owners.

2

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements contained herein that are not statements of historical facts contained in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by words such as “aim,” “anticipate,” “assume,” “attempt,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “seek,” “should,” “strive,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

whether we will be able to continue to maintain or increase sales for our products;

our expectations regarding our ability to develop and commercialize toripalimab, CHS-006 and our other product candidates in the United States and Canada, including whether the trial results, data package or biologics license application (“BLA”) for toripalimab will be sufficient to support regulatory approval;

our ability to address comments raised in the complete response letter for the original BLA for toripalimab and timing of the review for the original BLA resubmission for toripalimab;

our ability to receive marketing authorization for the on-body injector presentation of UDENYCA®, including the timing of receiving such marketing authorization, if approved;

our ability to maintain regulatory approval for our products and our ability to obtain and maintain regulatory approval of our product candidates, if and when approved;

our expectations regarding government and third-party payer coverage and reimbursement;

our ability to achieve the closing of the acquisition of Surface Oncology, Inc. (“Surface”) in a timely manner or at all and realize the anticipated benefits from the transaction;

our ability to manufacture our product candidates in conformity with regulatory requirements and to scale up manufacturing capacity of these products for commercial supply;

our reliance on third-party contract manufacturers to supply our products and product candidates for us;

our expectations regarding the potential market size and the size of the patient populations for our products and product candidates, if approved for commercial use;

our expectations about making required future interest and principal payments as they become due in connection with our debt obligations;

our financial performance, including, but not limited to, projected future performance of our gross margins, research and development expenses and selling and general administrative expenses;

the implementation of strategic plans for our business, products and product candidates;

the initiation, timing, progress and results of future preclinical and clinical studies and our research and development programs;

3

Table of Contents

the scope of protection we are able to establish and maintain for intellectual property rights covering our products and product candidates;

our ability to finalize the Definitive Agreements or close on the transactions contemplated by them;

our expectations regarding the scope or enforceability of third-party intellectual property rights, or the applicability of such rights to our products and product candidates;

the cost, timing and outcomes of litigation involving our products and product candidates;

our reliance on third-party contract research organizations to conduct clinical trials of our product candidates;

the benefits of the use of our products and product candidates;

the rate and degree of market acceptance of our current or any future products and product candidates;

our ability to compete with companies currently producing competitor products, including Neulasta, Humira and Lucentis and other biosimilar products made by other companies;

developments and projections relating to our competitors, our market opportunity and our industry; and

the potential impact of COVID-19 and the continuation of the war in Ukraine on our business and prospects.

We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified in Part II, Item 1A Risk Factors and discussed elsewhere in this Quarterly Report on Form 10-Q. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission (“SEC”), we do not undertake, and specifically decline, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make or enter into, except for the acquisition of Surface to the extent described herein.

This Quarterly Report on Form 10-Q also contains estimates, projections, market opportunity estimates and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, publicly filed reports and similar sources.

4

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1.              Unaudited Condensed Consolidated Financial Statements

Coherus BioSciences, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

June 30, 

December 31, 

    

2023

    

2022

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

72,920

$

63,547

Investments in marketable securities

71,792

128,134

Trade receivables, net

 

141,308

 

109,964

Inventory

 

63,989

 

38,791

Prepaid manufacturing

 

17,578

 

17,880

Other prepaids and current assets

 

17,897

 

22,918

Total current assets

 

385,484

 

381,234

Property and equipment, net

 

6,929

 

8,754

Inventory, non-current

 

63,846

 

76,260

Goodwill and intangible assets

 

5,809

 

5,931

Other assets, non-current

 

7,523

 

8,668

Total assets

$

469,591

$

480,847

Liabilities and Stockholders’ Deficit

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

29,278

$

11,526

Accrued rebates, fees and reserves

 

84,210

 

54,461

Accrued compensation

 

14,138

 

22,610

Accrued and other current liabilities

 

41,814

 

50,097

Total current liabilities

 

169,440

 

138,694

Term loans

245,963

245,483

Convertible notes

226,228

225,575

Lease liabilities, non-current

 

2,622

 

5,046

Other liabilities, non-current

 

102

 

3,467

Total liabilities

 

644,355

 

618,265

Commitments and contingencies (Note 8)

 

  

 

  

Stockholders’ deficit:

 

  

 

  

Common stock ($0.0001 par value; shares authorized: 300,000,000; shares issued and outstanding: 94,442,014 and 78,851,516 at June 30, 2023 and December 31, 2022, respectively)

 

9

 

8

Additional paid-in capital

 

1,285,730

 

1,204,431

Accumulated other comprehensive loss

 

(297)

 

(249)

Accumulated deficit

 

(1,460,206)

 

(1,341,608)

Total stockholders' deficit

 

(174,764)

 

(137,418)

Total liabilities and stockholders’ deficit

$

469,591

$

480,847

See accompanying notes.

5

Table of Contents

Coherus BioSciences, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2023

    

2022

    

2023

    

2022

Net revenue

$

58,716

$

60,151

$

91,152

$

120,266

Costs and expenses:

 

 

 

 

Cost of goods sold

 

24,848

 

11,277

 

41,722

 

20,647

Research and development

 

23,267

 

41,611

 

57,421

 

124,528

Selling, general and administrative

 

45,144

 

51,276

 

94,297

 

100,029

Total costs and expenses

 

93,259

 

104,164

 

193,440

 

245,204

Loss from operations

 

(34,543)

 

(44,013)

 

(102,288)

(124,938)

Interest expense

 

(9,943)

 

(6,580)

 

(19,655)

 

(15,549)

Loss on debt extinguishment

(6,222)

Other income (expense), net

 

1,617

 

443

 

3,345

 

475

Loss before income taxes

 

(42,869)

 

(50,150)

 

(118,598)

 

(146,234)

Income tax provision

 

 

 

 

Net loss

$

(42,869)

$

(50,150)

$

(118,598)

$

(146,234)

 

  

 

  

 

  

 

  

Basic and diluted net loss per share

$

(0.49)

$

(0.65)

$

(1.42)

$

(1.89)

Weighted-average number of shares used in computing basic and diluted net loss per share

 

87,269,614

 

77,554,717

 

83,469,247

 

77,405,040

See accompanying notes.

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Coherus BioSciences, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2023

    

2022

    

2023

    

2022

Net loss

$

(42,869)

$

(50,150)

$

(118,598)

$

(146,234)

Other comprehensive loss:

 

 

 

 

Unrealized loss on available-for-sale securities, net of tax

(18)

(47)

Foreign currency translation adjustments, net of tax

 

(1)

 

2

 

(1)

 

Comprehensive loss

$

(42,888)

$

(50,148)

$

(118,646)

$

(146,234)

See accompanying notes.

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Coherus BioSciences, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share and per share data)

(unaudited)

Accumulated

Additional

Other

Total

Common Stock

Paid-In

Comprehensive

Accumulated

Stockholders'

    

Shares

    

Amount

    

Capital

    

Loss

    

Deficit

    

Deficit

Balances at December 31, 2022

 

78,851,516

$

8

$

1,204,431

$

(249)

$

(1,341,608)

$

(137,418)

Net loss

 

 

 

 

(75,729)

 

(75,729)

Issuance of common stock upon exercise of stock options

24,107

 

 

103

 

 

 

103

Issuance of common stock upon vesting of restricted stock units ("RSUs")

771,167

 

 

 

 

 

Issuance of common stock under ATM Offering, net of issuance costs

1,131,450

7,059

7,059

Taxes paid related to net share settlement of RSUs

(289,944)

(2,781)

(2,781)

Stock-based compensation expense

 

 

12,288

 

 

 

12,288

Other comprehensive loss, net of tax

 

 

 

 

(29)

 

 

(29)

Balances at March 31, 2023

 

80,488,296

8

1,221,100

(278)

(1,417,337)

(196,507)

Net loss

 

 

 

 

 

(42,869)

 

(42,869)

Issuance of common stock upon exercise of stock options

 

8,182

 

 

14

 

 

 

14

Issuance of common stock upon vesting of RSUs

142,982

 

 

 

 

 

Issuance of common stock under Public Offering, net of issuance costs

13,529,411

1

53,624

53,625

Offering costs associated with ATM offering

(74)

(74)

Taxes paid related to net share settlement of RSUs

(48,529)

(305)

(305)

Issuance of common stock under the employee stock purchase plan ("ESPP")

 

321,672

 

 

1,337

 

 

 

1,337

Stock-based compensation expense

 

 

 

10,034

 

 

 

10,034

Other comprehensive loss, net of tax

(19)

(19)

Balances at June 30, 2023

 

94,442,014

$

9

$

1,285,730

$

(297)

$

(1,460,206)

$

(174,764)

Accumulated

Additional

Other

Total

Common Stock

Paid-In

Comprehensive

Accumulated

Stockholders'

    

Shares

    

Amount

    

Capital

    

Loss

    

Deficit

    

Equity (Deficit)

Balances at December 31, 2021

 

76,930,096

$

7

$

1,147,843

$

(270)

$

(1,049,854)

$

97,726

Net loss

 

 

 

 

 

(96,084)

 

(96,084)

Issuance of common stock upon exercise of stock options

 

102,632

 

 

544

 

 

 

544

Issuance of common stock upon vesting of RSUs

 

491,087

 

 

 

 

 

Taxes paid related to net share settlement of RSUs

(185,644)

(2,658)

(2,658)

Stock-based compensation expense

 

 

 

13,037

 

 

 

13,037

Other comprehensive loss, net of tax

 

 

 

 

(2)

 

 

(2)

Balances at March 31, 2022

 

77,338,171

7

1,158,766

(272)

(1,145,938)

12,563

Net loss

 

 

 

 

 

(50,150)

 

(50,150)

Issuance of common stock upon exercise of stock options

 

4,499

 

 

8

 

 

 

8

Issuance of common stock upon vesting of RSUs

173,867

 

 

 

 

 

Taxes paid related to net share settlement of RSUs

(58,771)

(642)

(642)

Issuance of common stock under the ESPP

 

244,983

 

 

1,655

 

 

 

1,655

Stock-based compensation expense

 

 

 

13,935

 

 

 

13,935

Other comprehensive gain, net of tax

2

2

Balances at June 30, 2022

 

77,702,749

$

7

$

1,173,722

$

(270)

$

(1,196,088)

$

(22,629)

See accompanying notes.

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Coherus BioSciences, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Six Months Ended

June 30, 

    

2023

    

2022

Operating activities

 

 

  

Net loss

$

(118,598)

$

(146,234)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation and amortization

 

1,829

 

1,654

Stock-based compensation expense

 

22,359

 

26,729

Inventory write-offs, net

2,894

Non-cash accretion of discount on marketable securities

 

(2,234)

 

Non-cash interest expense from amortization of debt discount & issuance costs

 

1,229

 

4,677

Non-cash operating lease expense

1,278

1,221

Option payment to Shanghai Junshi Biosciences Ltd. ("Junshi Biosciences")

 

 

35,000

Loss on debt extinguishment

6,222

Other non-cash adjustments, net

(829)

(13)

Changes in operating assets and liabilities:

 

 

Trade receivables, net

 

(31,350)

 

7,327

Inventory

 

(15,715)

 

(14,203)

Prepaid manufacturing

 

302

 

6,490

Other prepaid, current and non-current assets

 

4,785

 

(6,223)

Accounts payable

 

17,786

 

1,423

Accrued rebates, fees and reserves

 

26,383

 

(14,480)

Accrued compensation

 

(8,472)

 

(5,086)

Accrued and other current and non-current liabilities

 

(9,294)

 

(8,586)

Net cash used in operating activities

 

(107,647)

 

(104,082)

Investing activities

 

  

 

  

Purchases of property and equipment

 

(252)

 

(1,495)

Proceeds from disposal of property and equipment

618

Purchases of investments in marketable securities

 

(19,507)

 

Proceeds from maturities of investments in marketable securities

 

64,750

 

Proceeds from sale of investments in marketable securities

13,282

Option payment to Junshi Biosciences

(35,000)

Net cash provided by (used in) investing activities

 

58,891

 

(36,495)

Financing activities

 

  

 

  

Proceeds from 2027 Term Loans, net of debt discount & issuance costs

191,190

Proceeds from issuance of common stock under ATM Offering, net of issuance costs

6,761

Proceeds from issuance of common stock under Public Offering, net of issuance costs

53,625

Proceeds from issuance of common stock upon exercise of stock options

 

117

552

Proceeds from purchase under the employee stock purchase plan

 

1,337

1,655

Taxes paid related to net share settlement of RSUs

 

(3,086)

(3,300)

Repayment of 2022 Convertible Notes and premiums

(109,000)

Repayment of 2025 Term Loan, premiums and exit fees

(81,750)

Other financing activities

(625)

(481)

Net cash provided by (used in) financing activities

 

58,129

 

(1,134)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

9,373

 

(141,711)

Cash, cash equivalents and restricted cash at beginning of period

 

63,987

 

417,635

Cash, cash equivalents and restricted cash at end of period

$

73,360

$

275,924

See accompanying notes.

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Coherus BioSciences, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1.       Organization and Summary of Significant Accounting Policies

Organization

Coherus BioSciences, Inc. (the “Company” or “Coherus”) is a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative immunotherapies to treat cancer. Coherus’ strategy is to build a leading immuno-oncology franchise funded with cash generated from net sales of its diversified portfolio of United States Food and Drug Administration (“FDA”)-approved therapeutics. The Company’s headquarters and laboratories are located in Redwood City, California and in Camarillo, California, respectively. The Company sells UDENYCA® (pegfilgrastim-cbqv), a biosimilar to Neulasta, a long-acting granulocyte-colony stimulating factor, in the United States. On August 2, 2022, the FDA approved CIMERLI® (ranibizumab-eqrn), a biosimilar to Lucentis, and commercial launch commenced in October 2022 in the United States. The Company launched YUSIMRY™ (adalimumab-aqvh), a biosimilar to Humira (adalimumab), in the United States in July 2023.

The Company’s product pipeline comprises the following three product candidates: toripalimab, an anti-PD-1 antibody being developed in collaboration with Shanghai Junshi Biosciences Co., Ltd. (“Junshi Biosciences”); CHS-006, an antibody targeting TIGIT being developed in collaboration with Junshi Biosciences; and one wholly-owned preclinical immuno-oncology program, CHS-1000, an antibody targeting ILT4. On January 9, 2023, the Company announced that it entered into a binding term sheet (the “Term Sheet”) with Klinge Biopharma GmbH (“Klinge Biopharma”) for the exclusive commercialization rights to FYB203, a biosimilar candidate to Eylea® (aflibercept), in the United States. The parties to the Term Sheet plan to execute the definitive agreements contemplated by the Term Sheet (the “Definitive Agreements”) and complete the transaction later in 2023 once the Company has finished its due diligence review. On June 15, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Crimson Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub I”), Crimson Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Merger Sub II” and together with Merger Sub I, the “Merger Subs”), and Surface Oncology, Inc., a Delaware corporation (“Surface”). Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, Merger Sub I will merge with and into Surface (the “First Merger”), with Surface surviving such First Merger as a wholly owned subsidiary of the Company, and, as part of the same overall transaction, promptly after the First Merger, the surviving corporation of the First Merger will merge with and into Merger Sub II (the “Second Merger” and together with the First Merger, the “Mergers”), with Merger Sub II surviving the Second Merger (the “Surviving Entity”). The acquisition is expected to close in the third quarter of 2023.

Basis of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Coherus and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring accruals, that the Company believes are necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period.

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Table of Contents

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) filed with the SEC.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities when these values are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current information. Accounting estimates and judgements are inherently uncertain and therefore actual results could differ from these estimates.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets, which, in aggregate, represent the amount reported in the condensed consolidated statements of cash flows:

(in thousands)

January 1,

At beginning of period:

    

2023

    

2022

Cash and cash equivalents

$

63,547

$

417,195

Restricted cash

440

440

Total cash, cash equivalents and restricted cash

$

63,987

$

417,635

June 30, 

At end of period:

2023

    

2022

Cash and cash equivalents

$

72,920

$

275,484

Restricted cash

 

440

 

440

Total cash, cash equivalents and restricted cash

$

73,360

$

275,924

Restricted cash consists of deposits for letters of credit that the Company has provided to secure its obligations under certain leases and is included in other assets, non-current on the condensed consolidated balance sheets.

Trade Receivables

Trade receivables are recorded net of allowances for chargebacks, cash discounts for prompt payment and credit losses. The Company estimates an allowance for expected credit losses by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The corresponding expense for the credit loss allowance is reflected in selling, general and administrative expenses. The credit loss allowance was immaterial as of June 30, 2023 and December 31, 2022.

Derivative Instruments

In January 2023, the Company commenced using derivative contracts (foreign exchange option contracts) for the purpose of economically hedging exposure to changes in currency fluctuations between the U.S. Dollar and the Euro. The Company recognizes all derivatives at fair value in the condensed consolidated balance sheets, and corresponding gains and losses are recognized in other income (expense), net in the condensed consolidated statements of operations. The estimated fair value of derivative financial instruments represents the amount required to enter into similar

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contracts with similar remaining maturities based on quoted market prices. During the periods presented, the Company did not apply hedge accounting to these instruments (see Note 9).

Recent Accounting Pronouncements

The Company has reviewed recent accounting pronouncements and concluded they are either not applicable to the business or that no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

2.        Revenue

The Company initiated sales of CIMERLI in October 2022. All net product revenue was in the United States, and the Company’s net revenue was as follows:

Three Months Ended

Six Months Ended

June 30, 

June 30, 

(in thousands)

    

2023

2022

2023

    

2022

Products

UDENYCA

$

31,729

$

60,118

$

57,908

$

120,187

CIMERLI

26,728

32,902

Total net product revenue

58,457

60,118

90,810

120,187

Other

 

259

 

33

 

342

 

79

Total net revenue

$

58,716

$

60,151

$

91,152

$

120,266

Gross product revenues by significant customer as a percentage of total gross product revenues were as follows:

    

Three Months Ended

Six Months Ended

 

June 30, 

June 30, 

2023

 

2022

2023

 

2022

 

McKesson Corporation

 

34

%

36

%

34

%

37

%

AmeriSource-Bergen Corporation

 

50

%

46

%

47

%

45

%

Cardinal Health, Inc.

 

14

%

17

%

17

%

17

%

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Table of Contents

Product Sales Discounts and Allowances

The activities and ending reserve balances for each significant category of discounts and allowances, which constitute variable consideration, were as follows:

Six Months Ended June 30, 2023

    

Chargebacks

    

    

Other Fees,

    

and Discounts

Co-pay

for Prompt

Assistance

(in thousands)

Payment

Rebates

and Returns

Total

Balances at December 31, 2022

$

42,677

$

38,713

$

19,113

$

100,503

Provision related to sales made in:

 

Current period

226,074

45,009

37,936

309,019

Prior period - increase (decrease)

(1,380)

1,059

3,830

3,509

Payments and customer credits issued

 

(217,014)

(27,332)

(34,118)

(278,464)

Balances at June 30, 2023

$

50,357

$

57,449

$

26,761

$

134,567

Six Months Ended June 30, 2022

    

Chargebacks

    

    

Other Fees,

    

and Discounts

Co-pay

for Prompt

Assistance

(in thousands)

Payment

Rebates

and Returns

Total

Balances at December 31, 2021

$

29,665

$

54,004

$

26,054

$

109,723

Provision related to sales made in:

Current period

 

220,178

38,075

39,353

297,606

Prior period - increase (decrease)

(2,147)

(3,165)

(556)

(5,868)

Payments and customer credits issued

 

(216,130)

 

(44,816)

 

(44,402)

 

(305,348)

Balances at June 30, 2022

$

31,566

$

44,098

$

20,449

$

96,113

Chargebacks and discounts for prompt payment are recorded as a reduction in trade receivables, and the remaining reserve balances are classified as current liabilities in the accompanying unaudited condensed consolidated balance sheets.

3.       Fair Value Measurements

The fair values of financial instruments are classified into one of the following categories based upon the lowest level of input that is significant to the fair value measurement:

Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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