Overview

We are a commercial-stage biopharmaceutical company focused on the research, development, and commercialization of innovative immunotherapies to treat cancer. Our commercial portfolio includes our first product, UDENYCA, a biosimilar to Neulasta, and LOQTORZI, a novel PD-1 inhibitor. We are also developing an innovative immuno-oncology pipeline that we believe will be synergistic with our proven commercial capabilities in oncology.

UDENYCA was launched in the United States in 2019 and has since received FDA approval for additional presentations, including an autoinjector and an on-body injector. LOQTORZI was approved by the FDA in 2023 for the treatment of nasopharyngeal carcinoma (NPC) and was launched in the U.S. in January 2024.

Our pipeline includes several earlier-stage clinical and preclinical immuno-oncology programs, including casdozokitug, an investigational antibody targeting IL-27, and CHS-114, an antibody targeting CCR8. We also have an early-stage development candidate, CHS-1000, targeting ILT4.

In addition, we have a product candidate, GSK4381562, that is exclusively licensed to GlaxoSmithKline (GSK). We will pay 70% of all milestone and royalty payments received from GSK for this product to the holders of contingent value rights (CVRs).

We have an experienced oncology commercial team in the U.S. that has supported the successful launches of UDENYCA and LOQTORZI. We expect to leverage these capabilities as we continue to build and launch our immuno-oncology franchise.

Business Update

In September 2024, we announced a temporary supply interruption for UDENYCA due to production delays at our third-party contract manufacturing organization (CMO). The CMO has informed us that production will resume in early November 2024, and we expect to restock distribution channels as soon as the final product lots are completed. We have also made progress in diversifying our labeling and packaging resources, with an additional CMO expected to start manufacturing UDENYCA by the end of 2024, subject to FDA authorization.

Products and Product Candidates

Oncology:

• UDENYCA (pegfilgrastim biosimilar): Launched in the U.S. in 2019 with additional presentations approved in 2023 and 2024.
• LOQTORZI (anti-PD-1 antibody): Approved by the FDA in 2023 for the treatment of NPC and launched in the U.S. in January 2024. Planned for further evaluation in multiple clinical studies.
• Casdozokitug (anti-IL-27 antibody): In Phase ¹⁄₂ and Phase 2 studies for advanced solid tumors and hepatocellular carcinoma (HCC).
• CHS-114 (anti-CCR8 antibody): In a clinical trial evaluating safety and pharmacokinetics with and without LOQTORZI.
• CHS-1000 (anti-ILT4 antibody): Early-stage development candidate proceeding to first-in-human clinical study.
• GSK4381562 (anti-CD112R antibody): Exclusively licensed to GSK.

Immunology (Sold):

• YUSIMRY (adalimumab biosimilar): Sold to HKF in June 2024.

Ophthalmology (Sold):

• CIMERLI (ranibizumab biosimilar): Sold to Sandoz in March 2024.

License Agreement with Junshi Biosciences

In 2021, we entered into a collaboration agreement with Junshi Biosciences for the co-development and commercialization of LOQTORZI in the U.S. and Canada. We paid $150 million upfront for exclusive rights and will pay up to $380 million in milestone payments and royalties on net sales.

In 2024, we terminated the TIGIT program under the agreement but retained the right to collaborate on the development of LOQTORZI and other licensed compounds.

Financial Operations Overview

Revenue: Our net revenue was $70.8 million and $212.8 million for the three and nine months ended September 30, 2024, respectively. The increase was primarily driven by UDENYCA and the launch of LOQTORZI, partially offset by the divestitures of YUSIMRY and CIMERLI.

Cost of Goods Sold: Our gross margin was 71% and 61% for the three and nine months ended September 30, 2024, respectively. The improvement was primarily due to the divestitures of YUSIMRY and CIMERLI, partially offset by increased UDENYCA and LOQTORZI volumes.

Research and Development Expense: Our R&D expense decreased by $4.0 million and $11.0 million for the three and nine months ended September 30, 2024, respectively, primarily due to reduced costs for toripalimab, CHS-1000, and YUSIMRY, partially offset by increased spending on casdozokitug and CHS-114.

Selling, General and Administrative Expense: Our SG&A expense decreased by $13.5 million and $16.1 million for the three and nine months ended September 30, 2024, respectively, primarily due to reduced headcount, professional fees, and infrastructure costs.

Gain on Sale Transactions: We recognized a net gain of $176.6 million in the nine months ended September 30, 2024 from the divestitures of our CIMERLI and YUSIMRY franchises.

Liquidity and Capital Resources

As of September 30, 2024, we had $97.7 million in cash, cash equivalents, and marketable securities. We believe our available cash, cash from product sales, divestitures, and financing activities will be sufficient to fund our planned expenditures for at least the next 12 months.

In 2024, we completed several financing transactions, including:

• Repaying the $250 million 2027 Term Loans using proceeds from the CIMERLI divestiture, a new $38.7 million 2029 Term Loan, and a $37.5 million Revenue Purchase and Sale Agreement.
• Receiving $40 million in upfront cash from the sale of our YUSIMRY franchise to HKF.
• Receiving $170 million in upfront cash from the sale of our CIMERLI franchise to Sandoz.

We have various contingent milestone payments and royalties related to our partnerships and collaborations, as well as commitments for manufacturing and other operating expenses. We may need to raise additional funds in the future to support our ongoing operations and product development activities.

Critical Accounting Policies and Significant Judgments and Estimates

Our critical accounting estimates include revenue recognition, inventory valuation, accrued research and development expenses, stock-based compensation, and the valuation of the embedded derivative in the Revenue Purchase and Sale Agreement. There have been no significant changes to our critical accounting estimates during the nine months ended September 30, 2024, except for the accounting for the Revenue Purchase and Sale Agreement.

The Revenue Purchase and Sale Agreement contains an embedded derivative that is bifurcated and accounted for separately at fair value, which is determined using a “with-and-without” valuation methodology and Level 3 unobservable inputs.