erus BioSciences(CHRS) - 2024 Q4 - Annual Report

Sales and Revenue - UDENYCA Sale to Intas for $483.4 million, including$118.4 million in product inventory, with potential earnout payments of $75 million based on sales thresholds [491] - Total net revenues for the company were$267.0 million in 2024, compared to $257.2 million in 2023, reflecting a growth of approximately 3.1$266.96 million, an increase of $9.72 million compared to$257.24 million in 2023 [534] - UDENYCA net revenue increased by $78.89 million to$205.95 million, primarily due to increased market share from the launch of UDENYCA ONBODY [535] - CIMERLI revenue decreased by $98.31 million to$27.08 million due to its divestiture in March 2024 [534] - The company anticipates an increase in LOQTORZI's net product revenue in 2025 compared to 2024 [536] - The company reported a net income of $28.51 million in 2024, a significant recovery from a net loss of$237.89 million in 2023 [607] - Basic and diluted net income per share improved to $0.25 in 2024, compared to a loss of$2.53 per share in 2023 [604] - Comprehensive income for 2024 was $28.48 million, compared to a comprehensive loss of$237.89 million in 2023 [607] Clinical Developments - LOQTORZI approved by the FDA for first-line treatment of metastatic NPC, launched in the U.S. on January 2, 2024 [492] - Casdozokitug, targeting IL-27, is in three ongoing clinical studies, including a Phase 1/2 study in advanced solid tumors [493] - CHS-114, targeting CCR8, is enrolling patients in a clinical trial and plans to initiate additional studies in 2025 [494] - LOQTORZI is being evaluated in multiple clinical studies in collaboration with partners, including Junshi Biosciences [507] - The company plans to initiate a Phase 1b clinical study of CHS-114 in combination with toripalimab in advanced solid tumors in Q1 2025 [619] Financial Performance - Research and development expenses totaled $93.3 million in 2024, down from$109.4 million in 2023, indicating a reduction of approximately 14.7% [525] - Selling, general and administrative expenses decreased by $24.28 million to$167.74 million, primarily due to lower headcount and operating costs [541] - Interest expense decreased by $13.38 million to$27.16 million, mainly due to the payoff of $250 million in senior secured term loans [543] - Total costs and expenses decreased to$378.63 million in 2024 from $460.44 million in 2023, representing a 17.8$176.59 million in 2024, which was not present in 2023 [604] Asset Management - Cash used in operating activities was $20.4 million in 2024, a significant improvement compared to$174.9 million in 2023 [566][568] - Cash provided by investing activities in 2024 was $230.3 million, mainly from the CIMERLI Sale ($187.8 million) and YUSIMRY Sale ($40.0 million) [569] - The company’s cash, cash equivalents, and restricted cash at the end of 2024 totaled$126.3 million, up from $103.3 million at the end of 2023 [626] - The company recorded interest income of$4.5 million, $2.8 million, and$1.9 million for the years 2024, 2023, and 2022, respectively [630] Liabilities and Obligations - Total financial liabilities decreased to $293.67 million in 2024 from$473.37 million in 2023, primarily due to the repayment of the 2027 Term Loans [551] - The company has an obligation to pay up to $380.0 million in milestone payments to Junshi Biosciences for LOQTORZI, of which$25.0 million has already been paid [516] - The company has contingent milestone obligations totaling $355.0 million related to LOQTORZI, with no other milestones accrued as of December 31, 2024 [559] - Non-cancelable purchase commitments as of December 31, 2024, were$86.5 million, primarily expected to transfer to the Intas Parties upon closing of the UDENYCA Sale [564] Inventory and Production - UDENYCA experienced a temporary supply interruption due to production delays, with resumed production in November 2024 [503] - Inventory write-downs amounted to $14.1 million in 2024,$52.6 million in 2023, and $26.0 million in 2022, primarily due to slow-moving inventory and competitive pressures [639] - The company capitalized inventory costs associated with UDENYCA, CIMERLI, and LOQTORZI after receiving regulatory approvals in November 2018, August 2022, and October 2023, respectively [641] Regulatory and Compliance - NCCN updated guidelines to include LOQTORZI as the only preferred category 1 first-line treatment for NPC [506] - The company recognizes uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit [675] - The company has entered into license agreements that may be recorded as asset acquisitions if they do not meet the definition of a business [671] Market and Sales Dynamics - Total sales deductions to gross product sales were 83$27.6 million in pre-tax earnings [578] - The allowance for chargebacks is based on an estimate of sales through to Healthcare Providers from the Customer [657] - Revenue from product sales is recorded at the net sales price, which includes estimates of variable consideration such as chargebacks, rebates, and discounts [655]