Coherus shares surge on $558M Udenyca divestiture deal

On Tuesday, Coherus BioSciences, Inc. (NASDAQ:CHRS) saw its shares rise over 40% following the announcement of an asset purchase agreement with Intas Pharmaceuticals Ltd. for the divestiture of its UDENYCA franchise. The deal, valued at up to $558.4 million, includes an upfront payment of $483.4 million, with additional potential net sales milestone payments totaling $75 million.

The company plans to channel the proceeds from this transaction towards the full repayment of its $230 million convertible notes due in April 2026 and to buy out certain royalty obligations related to UDENYCA for $49.1 million. The divestiture aligns with Coherus' strategic decision to concentrate on its immuno-oncology programs, including the FDA-approved PD-1 inhibitor LOQTORZI® and other key combination programs such as casdozokitug and CHS-114.

Denny Lanfear, Coherus Chairman and CEO, expressed that the divestiture of UDENYCA allows the company to capitalize on the value created by the franchise and to focus resources on advancing their immuno-oncology pipeline. This move is also expected to significantly improve the company's capital structure and operational footprint.

A Citi analyst commented that the sale exceeded expectations in both valuation and timing, noting that it removes a financial overhang and enables Coherus to accelerate research and development in immuno-oncology.

The terms of the agreement, as filed in Coherus' Current Report on Form 8-K, detail that Intas will receive assets related to the UDENYCA franchise, and Coherus expects to offset almost all U.S. federal income taxes related to the divestiture using tax attributes. The transaction is subject to customary closing conditions and is expected to close by the end of Q1 2025.

Coherus is set to focus on maximizing the value of LOQTORZI and advancing its innovative portfolio, with several milestones for its immuno-oncology programs expected in the upcoming years. The company anticipates cost savings from the divestiture and projects a post-close cash runway extending beyond two years, past key data readouts anticipated in 2026. J.P. Morgan Securities LLC and Latham & Watkins LLP are acting as financial advisor and legal counsel, respectively, to Coherus in the transaction.

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Source: Investing.com