aibioCoherus BioSciences (now Coherus Oncology) seeks vote on $483.4 million UDENYCA sale
Tickers CHRS
Coherus could also earn two $37.5 million payments if UDENYCA sales hit set targets. The board unanimously recommends a vote for the sale.
Key facts
- Company
- Coherus Oncology, Inc. (NASDAQ: CHRS)
- News type
- Mergers
- Primary source
- Coherus Oncology, Inc. PREM14A (2025-01-14)
The terms
Coherus BioSciences, Inc., now Coherus Oncology, Inc., filed a preliminary proxy statement on January 14, 2025 asking stockholders to approve the sale of its UDENYCA (pegfilgrastim-cbqv) franchise. The asset purchase agreement was signed on December 2, 2024 with Intas Pharmaceuticals Ltd., which named its indirect subsidiary Accord BioPharma, Inc. to buy the physical assets, including product inventory.
The cash price is $483.4 million, which includes a $118.4 million inventory target. The price falls by the amount of inventory actually delivered at closing that comes in below that target. The company is also eligible for two earnout payments of $37.5 million each. The first is due if UDENYCA net sales reach $300 million or more over four consecutive fiscal quarters within the first five full fiscal quarters after closing. The second is due if net sales reach $350 million or more over four consecutive quarters within the first seven full fiscal quarters. The proxy statement does not show how far current sales are from those thresholds.
The definitive proxy statement is dated January 28, 2025 and was first mailed on or about that date. It sets a virtual special meeting for March 11, 2025 at 1:30 p.m. Pacific Time, with a record date of January 27, 2025.
The vote and the advisers
The board, relying on a recommendation from its Strategic Transaction Committee, unanimously determined that the transaction is fair and advisable and recommends a vote for it. The asset sale needs the affirmative vote of a majority of the voting power of all outstanding common stock entitled to vote. Stockholders who do not vote, by proxy or at the meeting, therefore count against the proposal in practice.
The company's financial advisor is J.P. Morgan. The proxy says Coherus has agreed to pay J.P. Morgan an estimated fee of about $12.6 million, of which $2.5 million became payable when J.P. Morgan delivered its written opinion and the rest depends on the deal closing. The proxy also discloses that J.P. Morgan and its affiliates are currently providing investment banking services to the purchaser, and that the fees from those services are expected to be smaller than the fee from this transaction. The proxy describes Smith Anderson and Latham as the firms that exchanged drafts of the agreement in late November and early December 2024. It does not state which firm represented which party.
What Coherus keeps and what remains at risk
The proxy says the company plans to use the proceeds to repay the $230 million of 1.5% Convertible Senior Subordinated Notes due April 2026. The assumed repurchase of those notes is $235.4 million, including $230.0 million of principal, $1.6 million of accrued interest and $3.8 million of transaction expenses. The company also plans to pay $49.1 million to buy out royalty obligations tied to UDENYCA. It intends to use what remains for working capital and general corporate purposes.
After closing, the company says it will focus on LOQTORZI (toripalimab-tpzi), a PD-1 inhibitor it commercializes in the United States, and on its immuno-oncology pipeline. The proxy gives the headcount as 229 full-time and part-time employees. It also says its management will have broad discretion over the proceeds and could spend them in ways that do not improve results.
The deal follows two earlier sales. The CIMERLI franchise was divested on March 1, 2024, and the YUSIMRY franchise was sold to Hong Kong King-Friend Industrial Company Ltd. on June 27, 2024. The proxy lists the closing conditions that remain, including clearance from the Committee on Foreign Investment in the United States, known as CFIUS, as defined in the agreement.
The proxy's risk list includes the possibility that the transaction is not completed in a timely manner or at all. It says that outcome could hurt the price of the company's securities and its ability to survive as an operating entity. A separate risk is that stockholders do not approve the asset sale.