Bay Area's Coherus Dealt Another Blow as Daiichi Sankyo Discontinues Work on RA Drug

Bay Area's Coherus Dealt Another Blow as Daiichi Sankyo Discontinues Work on RA Drug July 5, 2017
By Mark Terry, Breaking News Staff

Redwood City, Calif. – Coherus Biosciences is having a tough time of it lately. On June 12, the U.S. Food and Drug Administration (FDA) issued a complete response letter (CRL) for Coherus’ biologics license application (BLA) for CHS-1701, a biosimilar to Amgen (AMGN)’s Neulasta (pegfilgrastim). In response, the company indicated it planned to restructure and lay off 51 staffers.

Today, Tokyo, Japan-based Daiichi Sankyo Company announced that it was ending its development deal of CHS-0214 with Coherus. CHS-0214 is a biosimilar for Amgen’s Enbrel. Daiichi Sankyo stated, “The primary endpoint, evaluating the disease activity of rheumatoid arthritis after the administration of CHS-0214, met the criteria of equivalence as defined in advance in CHS-0214 and reference product groups, achieving the intended purpose. However, due to the fact that a commercial manufacturing process to enable the feasible supply of CHS-0214 in Japan cannot be established at this time, Daiichi Sankyo has decided to discontinue the development of CHS-0214 in Japan.”

A biosimilar is essentially a generic version of an already approved biological drug. Coherus focuses on developing biosimilars.

John Carroll, writing for Endpoints News, says, “Shire punted back rights to the same knockoff program last fall, handing the program to Coherus after determining that the therapy—bagged in the Baxalta buyout—didn’t fit into their plans for the future. Daiichi Sankyo signed up to partner with Coherus five years ago and had been in the hunt for a 2017 approval.”

According to Coherus’ first-quarter financial statements on May 8, the company had total revenue for the quarter of $161,000 compared to $12.4 million in the first quarter of 2016. The drop is related to the termination of the CHS-0214 deal with Shire. Research-and-development expenses for the quarter were $53.8 million compared to $65.3 million in the same period in 2016. Cash and cash equivalents and investments at the end of the quarter, dated March 31, totaled $174.8 million compared to $124.9 million as of Dec. 31, 2016.

Coherus estimates that the staff cuts will decrease annual operating costs by about $10 million. There will be an aggregate restructuring charge of about $3.7 million, which it will include in the second quarter of 2017. This is related to one-time severance payments and other employee-related expenses, including $1.6 million of stock-based compensation expenses associated with the acceleration of stock options. Most of those will be paid out in the third quarter, with the rest in the fourth quarter.

Those figures were announced prior to today’s announcement. There is no word yet on how Daiichi Sankyo’s abandonment will affect Coherus, although it seems unlikely to be positive.

Coherus is getting hammered this morning, however. Shares traded on May 18 for $24.50, dropped on May 31 to $19.75, recovered slightly to $22.70 on June 8, then fell to $15.73 on June 12. They are currently trading at a yearly low of $14.48.

Currently, Novartis has a biosimilar for Enbrel. Carroll writes, “But Amgen has been fighting back in court, delaying any marketing move. And Samsung Bioepis scored an EU approval for an Enbrel biosimilar in early 2016. Ironically, Daiichi Sankyo also struck a deal to market Amgen’

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