0001558370-23-017779 | 10-Q | XBRL Viewer

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

3. Fair Value Measurements

The fair values of financial instruments are classified into one of the following categories based upon the lowest level of input that is significant to the fair value measurement:

●

Level 1 — Quoted prices in active markets for identical assets or liabilities.

●

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

●

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair values of cash equivalents approximate their carrying values due to the short-term nature of such financial instruments.

Unrealized gains and losses on available-for-sale debt securities are reported as a component of accumulated comprehensive income (loss), with the exception of unrealized losses believed to be related to credit losses, if any, which are recognized in earnings in the period the impairment occurs. Impairment assessments are made at the individual security level each reporting period. When the fair value of an available-for-sale debt investment is less than its cost at the balance sheet date, a determination is made as to whether the impairment is related to a credit loss and, if it is, the portion of the impairment relating to credit loss is recorded as an allowance through net income. Realized gains and losses, if any, on available-for-sale securities are included in other income (expense), net, in the condensed consolidated statements of operations based on the specific identification method.

In connection with the Surface Acquisition on September 8, 2023 (see Note 6), the Company acquired money market funds and marketable securities and recorded a contingent consideration liability related to the CVRs issued in connection with the acquisition. The fair value of the CVR liability was determined using a Monte Carlo simulation-based model discounted to present value and represents a Level 3 measurement within the fair value hierarchy. Assumptions used in this calculation include estimated revenue, discount rate and various probability factors. If different assumptions were used for the various inputs, the estimated fair value could be significantly higher or lower than the fair value the Company determined. For example, increases in discount rates and the time to payment may result in lower fair value measurements. There is no assurance that any of the conditions for payment of the CVR liability will be met. There was no change in the CVR liability from September 8, 2023 to September 30, 2023. The CVR liabilities were recorded in accrued and other current liabilities and other liabilities, non-current on the condensed consolidated balance sheets.

Financial assets and liabilities measured at fair value on a recurring basis are summarized as follows:


	Fair Value Measurements
	September 30, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Financial Assets:
Money market funds	$	62,389	$	—	$	—	$	62,389
Marketable debt securities:
U.S. government agency securities		18,111		—		—		18,111
U.S. treasury securities		24,986		—		—		24,986
Commercial paper and corporate notes		—		7,721		—		7,721
Total	$	105,486	$	7,721	$	—	$	113,207
Financial Liabilities:
Contingent consideration	$	—	$	—	$	5,392	$	5,392


	Fair Value Measurements
	December 31, 2022
(in thousands)	Level 1		Level 2		Level 3		Total
Financial Assets:
Money market funds	$	55,060	$	—	$	—	$	55,060
Marketable debt securities:
U.S. government agency securities		19,964		—		—		19,964
U.S. treasury securities		68,418		—		—		68,418
Commercial paper and corporate notes		—		48,203		—		48,203
Total	$	143,442	$	48,203	$	—	$	191,645

The cost, unrealized gains or losses, and fair value by investment type are summarized as follows:


	September 30, 2023
(in thousands)	Cost		Unrealized Gain		Unrealized (Loss)		Fair Value
Money market funds	$	62,389	$	—	$	—	$	62,389
U.S. government agency securities		18,134		—		(23)		18,111
U.S. treasury securities		24,988		1		(3)		24,986
Commercial paper and corporate notes		7,742		—		(21)		7,721
Total	$	113,253	$	1	$	(47)	$	113,207


	December 31, 2022
(in thousands)	Cost		Unrealized Gain		Unrealized (Loss)		Fair Value
Money market funds	$	55,060	$	—	$	—	$	55,060
U.S. government agency securities		19,929		35		—		19,964
U.S. treasury securities		68,431		8		(21)		68,418
Commercial paper and corporate notes		48,203		—		—		48,203
Total	$	191,623	$	43	$	(21)	$	191,645

The Company held 14 positions that were in unrealized loss positions as of September 30, 2023, and aggregated gross unrealized losses on available-for-sale debt securities were not material. No impairment was recognized in the three and nine months ended September 30, 2023. As of September 30, 2023, the remaining contractual maturities of available-for-sale securities were less than one year, and the average maturity of investments upon acquisition was approximately ten months. The accrued interest receivable on available-for-sale marketable securities was immaterial at September 30, 2023 and December 31, 2022.

There were no investments in marketable securities during the nine months ended September 30, 2022; thus, no unrealized gain (loss) was recognized during such period.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Debt Obligations - Summary of Debt Obligations (Details) - Level 2 - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
2027 Term Loans
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Principal amount	$ 250,000	$ 250,000
Unamortized Debt Discount and Debt Issuance Costs	(3,783)	(4,517)
Net Carrying Value	246,217	245,483
Estimated Fair Value	246,217	245,483
1.5% Convertible Senior Subordinated Notes due 2026
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Principal amount	230,000	230,000
Unamortized Debt Discount and Debt Issuance Costs	(3,443)	(4,425)
Net Carrying Value	226,557	225,575
Estimated Fair Value	$ 139,007	$ 157,205

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property and Equipment, Net
Total property and equipment	$ 26,935	$ 28,911
Accumulated depreciation and amortization	(20,866)	(20,157)
Property and equipment, net	6,069	8,754
Machinery and equipment
Property and Equipment, Net
Total property and equipment	13,141	12,944
Computer equipment and software
Property and Equipment, Net
Total property and equipment	3,232	3,183
Furniture and fixtures
Property and Equipment, Net
Total property and equipment	1,258	1,258
Leasehold improvements
Property and Equipment, Net
Total property and equipment	6,234	6,198
Finance lease right of use assets
Property and Equipment, Net
Total property and equipment	2,663	4,632
Construction in progress
Property and Equipment, Net
Total property and equipment	$ 407	$ 696

Organization and Summary of Significant Accounting Policies - Intangible Assets (Details)	Sep. 30, 2023
Indefinite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	10 years
Licensing Agreements \| Minimum
Indefinite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	10 years
Licensing Agreements \| Maximum
Indefinite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	15 years

Balance Sheet Components

9 Months Ended

Sep. 30, 2023

Balance Sheet Components

Balance Sheet Components

5. Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consisted of the following:


	September 30,		December 31,
(in thousands)	2023		2022
Machinery and equipment	$	13,141	$	12,944
Computer equipment and software		3,232		3,183
Furniture and fixtures		1,258		1,258
Leasehold improvements		6,234		6,198
Finance lease right of use assets		2,663		4,632
Construction in progress		407		696
Total property and equipment		26,935		28,911
Accumulated depreciation and amortization		(20,866)		(20,157)
Property and equipment, net	$	6,069	$	8,754

Depreciation and amortization expense related to property and equipment, net was $0.8 million and $2.5 million for the three and nine months ended September 30, 2023, respectively, and $0.9 million and $2.6 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023 and December 31, 2022, the net book value of software implementation costs related to hosting arrangements was $3.2 million and $3.5 million, respectively, and the amortization expense was immaterial for all periods presented.

Goodwill and Intangible Assets, Net

Goodwill and intangible assets, net consisted of the following:


	September 30,		December 31,
(in thousands)	2023		2022
Goodwill	$	943	$	943
Indefinite-lived assets - IPR&D		28,859		2,620
Finite-lived assets, net		16,722		2,368
Total Goodwill and intangible assets, net	$	46,524	$	5,931

Amortization expense and accumulated amortization related to finite-lived intangible assets was immaterial in all periods presented. Amortization expense for each of the five succeeding fiscal years will be approximately $1.3 million.

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following:


	September 30,		December 31,
(in thousands)	2023		2022
Accrued commercial and research and development manufacturing	$	17,057	$	21,774
Accrued co-development costs payable to Junshi Biosciences		1,293		8,356
Accrued royalties		30,557		5,015
Accrued other		9,698		10,634
Lease liabilities, current		4,469		4,318
Contingent consideration, current		4,040		—
Total Accrued and other current liabilities	$	67,114	$	50,097

Other Liabilities, Non-current

Other liabilities, non-current consisted of the following:


	September 30,		December 31,
(in thousands)	2023		2022
Contingent consideration, non-current	$	1,352	$	102
Deferred tax liability		1,102		—
Other		1,059		3,365
Total Other liabilities, non-current	$	3,513	$	3,467

Surface Acquisition - Unaudited Pro Forma Summary of Operations (Details) - Surface Oncology, Inc. - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Surface Acquisition
Total revenues	$ 74,568	$ 45,424	$ 165,720	$ 195,690
Net loss	$ (49,984)	$ (108,472)	$ (204,922)	$ (291,341)

Revenue

9 Months Ended

Sep. 30, 2023

Revenue

Revenue

2. Revenue

The Company launched YUSIMRY in the United States in July 2023 and initiated sales of CIMERLI in October 2022. All net product revenue was generated in the United States, and the Company’s net revenue was as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Products
UDENYCA	$	32,967	$	45,325	$	90,875	$	165,512
CIMERLI		40,037		—		72,939		—
YUSIMRY		1,360		—		1,360		—
Total net product revenue		74,364		45,325		165,174		165,512
Other		204		99		546		178
Total net revenue	$	74,568	$	45,424	$	165,720	$	165,690

Gross product revenues by significant customer as a percentage of total gross product revenues were as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
McKesson Corporation	44	%	37	%	38	%	37	%
AmeriSource-Bergen Corporation	41	%	45	%	45	%	45	%
Cardinal Health, Inc.	13	%	17	%	15	%	17	%

Product Sales Discounts and Allowances

The activities and ending reserve balances for each significant category of discounts and allowances, which constitute variable consideration, were as follows:


	Nine Months Ended September 30, 2023
	Chargebacks				Other Fees,
	and Discounts				Co-pay
	for Prompt				Assistance
(in thousands)	Payment		Rebates		and Returns		Total
Balances at December 31, 2022	$	42,677	$	38,713	$	19,113	$	100,503
Provision related to sales made in:
Current period		387,238		83,009		69,362		539,609
Prior period - increase (decrease)		(1,375)		1,540		4,469		4,634
Payments and customer credits issued		(379,076)		(42,097)		(55,681)		(476,854)
Balances at September 30, 2023	$	49,464	$	81,165	$	37,263	$	167,892


	Nine Months Ended September 30, 2022
	Chargebacks				Other Fees,
	and Discounts				Co-pay
	for Prompt				Assistance
(in thousands)	Payment		Rebates		and Returns		Total
Balances at December 31, 2021	$	29,665	$	54,004	$	26,054	$	109,723
Provision related to sales made in:
Current period		321,056		50,939		54,967		426,962
Prior period - increase (decrease)		(2,055)		(5,064)		(181)		(7,300)
Payments and customer credits issued		(320,022)		(64,869)		(61,829)		(446,720)
Balances at September 30, 2022	$	28,644	$	35,010	$	19,011	$	82,665

The total provision related to sales made in the prior period was $1.1 million and $(1.4) million for the three months ended September 30, 2023 and 2022, respectively. Chargebacks and discounts for prompt payment are recorded as a reduction in trade receivables, and the remaining reserve balances are classified as current liabilities and other liabilities, non-current on the accompanying unaudited condensed consolidated balance sheets.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-13

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
-Publisher FASB
-URI https://asc.fasb.org//606/tableOfContent

+ Details

Revenue - Gross Revenues by Significant Customer as a Percentage of Total Gross Revenues (Details) - Net Product Revenue - Customer Concentration Risk	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
McKesson
Concentration Risk
Percentage of total gross revenue	44.00%	37.00%	38.00%	37.00%
AmeriSource-Bergen Corp
Concentration Risk
Percentage of total gross revenue	41.00%	45.00%	45.00%	45.00%
Cardinal
Concentration Risk
Percentage of total gross revenue	13.00%	17.00%	15.00%	17.00%

Condensed Consolidated Statements of Stockholders' Equity (Deficit) (unaudited) - USD ($) $ in Thousands	Common Stock At The Market Offering.	Common Stock Public Offering	Common Stock	Additional Paid-In Capital At The Market Offering.	Additional Paid-In Capital Public Offering	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	At The Market Offering.	Public Offering	Total
Beginning Balances at Dec. 31, 2021			$ 7			$ 1,147,843	$ (270)	$ (1,049,854)			$ 97,726
Beginning Balances (in shares) at Dec. 31, 2021			76,930,096
Net loss								(96,084)			(96,084)
Issuance of common stock upon exercise of stock options						544					544
Issuance of common stock upon exercise of stock options (in shares)			102,632
Issuance of common stock upon vesting of restricted stock units ("RSUs") (in shares)			491,087
Issuance of common stock in connection with Surface Acquisition:(1)
Stock-based compensation expense						13,037					13,037
Taxes paid related to net share settlement of RSUs						(2,658)					(2,658)
Taxes paid related to net share settlement of RSUs (in shares)			(185,644)
Other comprehensive gain (loss), net of tax							(2)				(2)
Ending Balances at Mar. 31, 2022			$ 7			1,158,766	(272)	(1,145,938)			12,563
Ending Balances (in shares) at Mar. 31, 2022			77,338,171
Beginning Balances at Dec. 31, 2021			$ 7			1,147,843	(270)	(1,049,854)			97,726
Beginning Balances (in shares) at Dec. 31, 2021			76,930,096
Net loss											(232,884)
Ending Balances at Sep. 30, 2022			$ 7			1,185,868	(270)	(1,282,738)			(97,133)
Ending Balances (in shares) at Sep. 30, 2022			77,770,593
Beginning Balances at Mar. 31, 2022			$ 7			1,158,766	(272)	(1,145,938)			12,563
Beginning Balances (in shares) at Mar. 31, 2022			77,338,171
Net loss								(50,150)			(50,150)
Issuance of common stock upon exercise of stock options						8					8
Issuance of common stock upon exercise of stock options (in shares)			4,499
Issuance of common stock upon vesting of restricted stock units ("RSUs") (in shares)			173,867
Issuance of common stock in connection with Surface Acquisition:(1)
Stock-based compensation expense						13,935					13,935
Issuance of common stock under the employee stock purchase plan ("ESPP")						1,655					1,655
Issuance of common stock under the employee stock purchase plan ("ESPP") (in shares)			244,983
Taxes paid related to net share settlement of RSUs						(642)					(642)
Taxes paid related to net share settlement of RSUs (in shares)			(58,771)
Other comprehensive gain (loss), net of tax							2				2
Ending Balances at Jun. 30, 2022			$ 7			1,173,722	(270)	(1,196,088)			(22,629)
Ending Balances (in shares) at Jun. 30, 2022			77,702,749
Net loss								(86,650)			(86,650)
Issuance of common stock upon exercise of stock options						79					79
Issuance of common stock upon exercise of stock options (in shares)			6,557
Issuance of common stock upon vesting of restricted stock units ("RSUs") (in shares)			93,606
Issuance of common stock in connection with Surface Acquisition:(1)
Stock-based compensation expense						12,388					12,388
Taxes paid related to net share settlement of RSUs						(321)					(321)
Taxes paid related to net share settlement of RSUs (in shares)			(32,319)
Ending Balances at Sep. 30, 2022			$ 7			1,185,868	(270)	(1,282,738)			(97,133)
Ending Balances (in shares) at Sep. 30, 2022			77,770,593
Beginning Balances at Dec. 31, 2022			$ 8			1,204,431	(249)	(1,341,608)			$ (137,418)
Beginning Balances (in shares) at Dec. 31, 2022			78,851,516								78,851,516
Net loss								(75,729)			$ (75,729)
Issuance of common stock upon exercise of stock options						103					103
Issuance of common stock upon exercise of stock options (in shares)			24,107
Issuance of common stock upon vesting of restricted stock units ("RSUs") (in shares)			771,167
Issuance of common stock in connection with Surface Acquisition:(1)
Stock-based compensation expense						12,288					12,288
Issuance of common stock under Offering, net of issuance costs				$ 7,059					$ 7,059
Issuance of common stock under Offering, net of issuance costs (in shares)	1,131,450
Taxes paid related to net share settlement of RSUs						(2,781)					(2,781)
Taxes paid related to net share settlement of RSUs (in shares)			(289,944)
Other comprehensive gain (loss), net of tax							(29)				(29)
Ending Balances at Mar. 31, 2023			$ 8			1,221,100	(278)	(1,417,337)			(196,507)
Ending Balances (in shares) at Mar. 31, 2023			80,488,296
Beginning Balances at Dec. 31, 2022			$ 8			1,204,431	(249)	(1,341,608)			$ (137,418)
Beginning Balances (in shares) at Dec. 31, 2022			78,851,516								78,851,516
Net loss											$ (158,239)
Issuance of common stock in connection with Surface Acquisition:(1)
Issuance of common stock under Offering, net of issuance costs (in shares)									3,559,761
Ending Balances at Sep. 30, 2023			$ 11			1,366,502	(265)	(1,499,847)			$ (133,599)
Ending Balances (in shares) at Sep. 30, 2023			109,113,046								109,113,046
Beginning Balances at Mar. 31, 2023			$ 8			1,221,100	(278)	(1,417,337)			$ (196,507)
Beginning Balances (in shares) at Mar. 31, 2023			80,488,296
Net loss								(42,869)			(42,869)
Issuance of common stock upon exercise of stock options						14					14
Issuance of common stock upon exercise of stock options (in shares)			8,182
Issuance of common stock upon vesting of restricted stock units ("RSUs") (in shares)			142,982
Issuance of common stock in connection with Surface Acquisition:(1)
Stock-based compensation expense						10,034					10,034
Issuance of common stock under Offering, net of issuance costs		$ 1			$ 53,624					$ 53,625
Issuance of common stock under Offering, net of issuance costs (in shares)		13,529,411
Offering costs associated with ATM offering				(74)					$ (74)
Issuance of common stock under the employee stock purchase plan ("ESPP")						1,337					1,337
Issuance of common stock under the employee stock purchase plan ("ESPP") (in shares)			321,672
Taxes paid related to net share settlement of RSUs						(305)					(305)
Taxes paid related to net share settlement of RSUs (in shares)			(48,529)
Other comprehensive gain (loss), net of tax							(19)				(19)
Ending Balances at Jun. 30, 2023			$ 9			1,285,730	(297)	(1,460,206)			(174,764)
Ending Balances (in shares) at Jun. 30, 2023			94,442,014
Net loss								(39,641)			(39,641)
Issuance of common stock upon exercise of stock options						53					53
Issuance of common stock upon exercise of stock options (in shares)			27,977
Issuance of common stock upon vesting of restricted stock units ("RSUs") (in shares)			72,918
Issuance of common stock in connection with Surface Acquisition:(1)
Issuance to Surface shareholders for acquisition			$ 1			58,540					58,541
Issuance to Surface shareholders for acquisition (in shares)			11,971,460
Accelerated vesting of equity awards (in shares)			261,239
Accelerated vesting of equity awards						1,053					1,053
Taxes paid related to net share settlement of equity awards (in shares)			(65,732)
Taxes paid related to net share settlement of equity awards						(347)					(347)
Stock-based compensation expense						10,152					10,152
Issuance of common stock under Offering, net of issuance costs	$ 1			$ 11,436					$ 11,437
Issuance of common stock under Offering, net of issuance costs (in shares)	2,428,311								2,428,311
Taxes paid related to net share settlement of RSUs						(115)					(115)
Taxes paid related to net share settlement of RSUs (in shares)			(25,141)
Other comprehensive gain (loss), net of tax							32				32
Ending Balances at Sep. 30, 2023			$ 11			$ 1,366,502	$ (265)	$ (1,499,847)			$ (133,599)
Ending Balances (in shares) at Sep. 30, 2023			109,113,046								109,113,046

Debt Obligations - 2026 Convertible Notes Future Payments (Details) - Convertible Notes - 1.5% Convertible Senior Subordinated Notes due 2026 $ in Thousands	Sep. 30, 2023 USD ($)
Debt Instrument
Remainder of 2023 - interest only	$ 1,725
2024 - interest only	3,450
2025 - interest only	3,450
2026	231,725
Total minimum payments	240,350
Less amount representing interest	(10,350)
2026 Convertible Notes, principal amount	230,000
Less unamortized debt discount and debt issuance costs	(3,443)
Net Carrying Value	$ 226,557

Surface Acquisition - The amount allocated to identifiable intangible assets (Details) - Surface Oncology, Inc. $ in Thousands	Sep. 08, 2023 USD ($)
Surface Acquisition
Identifiable intangible assets	$ 39,769
Out-license - GSK
Surface Acquisition
Identifiable intangible assets	$ 2,506
Useful Lives	15 years
Out-license - Novartis Institutes
Surface Acquisition
Identifiable intangible assets	$ 11,024
Useful Lives	15 years
In-process research and development - SRF 388
Surface Acquisition
Identifiable intangible assets	$ 25,899
In-process research and development - SRF 114
Surface Acquisition
Identifiable intangible assets	$ 340

Inventory

9 Months Ended

Sep. 30, 2023

Inventory

Inventory

4. Inventory

Inventory consisted of the following:


	September 30,		December 31,
(in thousands)	2023		2022
Raw materials	$	11,326	$	10,262
Work in process		106,608		86,712
Finished goods		27,851		18,077
Total	$	145,785	$	115,051

Inventory is stated at the lower of cost or estimated net realizable value with cost determined under the first-in first-out method. The determination of excess or obsolete inventory requires judgment including consideration of many factors, such as estimates of future product demand, current and future market conditions, product expiration information, and potential product obsolescence, among others. During the third quarter of 2022, the Company recorded a $26.0 million write-down of inventory in cost of goods sold in the condensed consolidated statement of operations. The write-down was due to the competitive environment and lower demand for UDENYCA resulting in certain inventory becoming at risk of expiration.

The Company began capitalizing YUSIMRY inventory in the second quarter of 2022 and had $41.1 million and $23.7 million of such inventory as of September 30, 2023 and December 31, 2022, respectively. Inventory expected to be sold

more than twelve months from the balance sheet date is classified as inventory, non-current on the condensed consolidated balance sheets. As of September 30, 2023 and December 31, 2022, the non-current portion of inventory consisted of raw materials, work in process and a portion of finished goods. The following table presents the inventory balance sheet classifications:


	September 30,		December 31,
(in thousands)	2023		2022
Inventory	$	66,783	$	38,791
Inventory, non-current		79,002		76,260
Total	$	145,785	$	115,051

Prepaid manufacturing of $13.8 million as of September 30, 2023 includes prepayments of $12.4 million to contract manufacturing organizations (“CMOs”) for manufacturing services for the Company’s products, which the Company expects to be converted into inventory within the next twelve months; and prepayments of $1.4 million to various CMOs for research and development pipeline programs. Prepaid manufacturing of $17.9 million as of December 31, 2022 included prepayments of $13.0 million to CMOs for manufacturing services of the Company’s products and prepayments of $4.9 million to various CMOs for research and development pipeline programs.

Surface Acquisition

9 Months Ended

Sep. 30, 2023

Surface Acquisition

Surface Acquisition

6. Surface Acquisition

On September 8, 2023 (the “Acquisition Date”), in accordance with an Agreement and Plan of Merger dated June 15, 2023 (the “Merger Agreement”) by and among the Company, Crimson Merger Sub I, Inc., a direct, wholly owned subsidiary of the Company (“Merger Sub I”), Crimson Merger Sub II, LLC, a direct, wholly owned subsidiary of the Company (“Merger Sub II,” and together with Merger Sub I, the “Merger Subs”), and Surface, the Company completed the Surface Acquisition. Surface is a clinical-stage immuno-oncology (“I-O”) company focused on using its specialized knowledge of the biological pathways critical to the immunosuppressive tumor microenvironment for the development of next-generation cancer therapies. The Surface Acquisition expanded the Company’s I-O pipeline with the following: casdozokitug (CHS-388, formerly SRF388), an investigational, novel IL-27-targeted antibody currently being evaluated in

a Phase 2 clinical trial in HCC, and CHS-114 (formerly SRF114), an investigational, CCR8-targeted antibody currently in a Phase 1/2 study as a monotherapy in patients with advanced solid tumors.

On the Acquisition Date, and in accordance with the Merger Agreement, the Company issued to the holders of all outstanding Surface common stock (other than treasury shares, any shares of Surface common stock held directly by the Company or the Merger Subs immediately prior to the Acquisition Date and shares of Surface common stock issued and outstanding immediately prior to the Acquisition Date and held by any holder properly demanding appraisal for such shares in accordance with Section 262 of the Delaware General Corporation Law) 0.1960 shares of Coherus common stock in exchange for each share of outstanding Surface common stock and certain outstanding Surface employee equity awards. The exchange ratio was calculated pursuant to the terms of the Merger Agreement and was based on a $5.2831 per share price of Coherus common stock and a nominal total amount of cash in lieu of fractional shares. Surface shareholders also received one CVR for each share of Surface common stock and employee equity award converted. Each CVR entitles the holder to receive quarterly contingent payments in the form of cash, stock or a combination of cash and stock at the Company’s discretion during the 10-year period following September 8, 2023, for the sum of the following, less any permitted deductions (in accordance with the Contingent Value Rights Agreement, dated September 8, 2023, by and among the Company and Computershare Inc. and its affiliate Computershare Trust Company, N.A., together, as the rights agent thereunder (the “CVR Agreement”)):

●

70% of all milestone- and royalty-based payments actually received by the Company or its affiliates from GSK under a license agreement with GSK, dated December 16, 2020, which was subsequently amended in August 2021 (as amended, the “GSK Agreement”) related to the existing program (GSK4381562);

●

70% of all milestone- and royalty-based payments actually received by the Company or its affiliates from Novartis Institutes under the collaboration agreement between Surface and Novartis Institutes dated January 9, 2016 which was subsequently amended in May 2016, July 2017, September 2017, and October 2018 (as amended, the “Novartis Agreement”) related to the existing program (NZV930);

●

25% of any upfront payment actually received by the Company or its affiliates pursuant to potential ex-U.S. licensing agreements for CHS-114; and

●

50% of any upfront payment actually received by the Company or its affiliates pursuant to potential ex-U.S. licensing agreements for casdozokitug.

The Company has recorded a contingent consideration liability for the fair value of the potential payments under the CVR Agreement described above. The Company is unable to estimate a range of outcomes for potential upfront payments for CHS-114 and casdozokitug.

The total consideration paid for the Surface Acquisition of $64.6 million consisted of the following:


(in thousands, except per share amounts)		As of Acquisition Date
Coherus common stock issued		11,971,460
Coherus common stock share price	$	4.89

Fair value of components of purchase price consideration at closing:
Equity of combined company owned by Surface equity holders	$	58,540
Contingent CVR liability		5,290
Equity of combined company owned by Surface former employees ⁽¹⁾		766
Fair value of total purchase consideration	$	64,596

(1)	Represents 161,100 shares of Coherus common stock, net of shares withheld for taxes, issued to Surface’s former employees on the Acquisition Date.

The Company has accounted for the Surface Acquisition as a business combination which requires, among other things, that the assets acquired and liabilities assumed generally be recognized at their fair value on the Acquisition Date. Fair value estimates are based on management’s estimated future cash flows from revenues of acquired assets, the timing and projection of costs and expenses and the related profit margins, tax rates, and discount rate. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations. The purchase price allocation for the Surface Acquisition is preliminary and subject to revisions as additional information about fair value of assets and liabilities becomes available. This is primarily related to the Company’s deferred tax liabilities assumed in connection with the Surface Acquisition, as the 2023 short period tax returns have not yet been filed. Additional information that existed as of the Acquisition Date, but is unknown to the Company, may become known during the remainder of the measurement period, not to exceed 12 months from the Acquisition Date. The following table below sets forth the purchase price allocation to the estimated fair value of the net assets acquired:


(in thousands)		Amounts Recognized at Acquisition Date
Assets Acquired
Cash and cash equivalents	$	6,997
Investments in marketable securities		21,791
Other prepaids and other assets		5,260
In-process research and development		26,239
Out-licenses		13,530
Total assets	$	73,817
Liabilities Assumed
Accrued and other current liabilities	$	7,722
Deferred tax liability		1,499
Total liabilities		9,221
Total net assets acquired	$	64,596

The Company believes it was able to acquire Surface for a price that was completely allocable to identifiable assets acquired and liabilities assumed with no residual attributable to goodwill primarily due to Surface’s need to raise additional capital to finance its operations, the challenging biotech funding environment at the time the transaction was initially announced, and the value of the acquired net assets.

The amount allocated to identifiable intangible assets has been attributed to the following assets:


(in thousands)	Useful lives		Fair Value at Acquisition Date
In-process research and development - casdozokitug	n/a	$	25,899
In-process research and development - CHS-114	n/a		340
Out-license - GSK	15 years		2,506
Out-license - Novartis Institutes	15 years		11,024
Total identifiable intangible assets		$	39,769

Surface had two out-licensed partnership programs, with Novartis Institutes (NZV930) and GSK (GSK4381562), to advance certain next-generation cancer therapies. The out-license intangible assets represent potential milestone and royalty-based payments to be received in the future. Surface shareholders received CVRs for certain percentages of these milestone and royalty-based payments on existing programs with Novartis Institutes (NZV930) and GSK (GSK4381562), as further explained above.

Following the Acquisition Date, the operating results of Surface have been included in the condensed consolidated financial statements. For the period September 9, 2023 through September 30, 2023, there was no revenue attributable

to Surface and operating losses attributable to Surface for such period were $1.4 million, excluding acquisition-related costs.

Unaudited Pro Forma Summary of Operations

The following table shows the unaudited pro forma summary of operations for the three and nine months ended September 30, 2023 and 2022, as if the Surface Acquisition had occurred on January 1, 2022. This pro forma information does not purport to represent what the Company’s actual results would have been if the acquisition had occurred as of January 1, 2022, and it is not indicative of what such results would be expected for any future period:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Total revenues	$	74,568	$	45,424	$	165,720	$	195,690
Net loss	$	(49,984)	$	(108,472)	$	(204,922)	$	(291,341)

The unaudited pro forma financial information was prepared using the acquisition method of accounting and was based on the historical financial information of the Company and Surface. In order to reflect the Surface Acquisition as if it had occurred on January 1, 2022, the summary pro forma financial information includes adjustments to reflect Surface’s severance expense, the early termination and related amortization expense of Surface’s corporate headquarters operating lease, the loss on debt extinguishment and historical interest expense related to the cash settlement of Surface’s convertible note as if it had occurred on January 1, 2022, and amortization expense on the acquired finite-lived intangible assets. The unaudited pro forma condensed combined financial information does not reflect the income tax effects of the pro forma adjustments, as management believes income tax adjustments to not be meaningful given the combined entity incurred significant losses during the historical periods presented.

Acquisition-related costs of $2.6 million and $4.5 million were recorded in selling, general and administrative expense in the condensed consolidated statement of operations during the three and nine months ended September 30, 2023, respectively.

Commitments and Contingencies - Schedule of Non-Cancelable Contractual Obligations (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Commitments and Contingencies.
2023	$ 15,117
2024	54,929
2025	11,050
2026	839
Total obligations	$ 81,935

Condensed Consolidated Balance Sheets (Parentheticals) (unaudited) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheets
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	109,113,046	78,851,516
Common stock, shares outstanding	109,113,046	78,851,516

Debt Obligations (Tables)

9 Months Ended

Sep. 30, 2023

Debt Instrument

Schedule of Company's Debt Obligations

A summary of the Company’s debt obligations, including level within the fair value hierarchy (see Note 3), is as follows:


	At September 30, 2023
(in thousands)	Principal Amount			Unamortized Debt Discount and Debt Issuance Costs	Net Carrying Value		Estimated Fair Value		Level
Financial Liabilities:
2027 Term Loans	$	250,000	$	(3,783)	$	246,217	$	246,217	Level 2*
2026 Convertible Notes	$	230,000	$	(3,443)	$	226,557	$	139,007	Level 2**

	At December 31, 2022
(in thousands)	Principal Amount		Unamortized Debt Discount and Debt Issuance Costs		Net Carrying Value		Estimated Fair Value		Level
Financial Liabilities:
2027 Term Loans	$	250,000	$	(4,517)	$	245,483	$	245,483	Level 2*
2026 Convertible Notes	$	230,000	$	(4,425)	$	225,575	$	157,205	Level 2**

The principal amounts outstanding are subject to variable interest rates, which are based on three-month SOFR starting April 1, 2023 plus fixed percentages. Through March 31, 2023, the variable component was based on the three-month LIBOR. Therefore, the Company believes the carrying amount of these obligations approximates fair value.

The fair value is influenced by interest rates, the Company’s stock price and stock price volatility and is determined by prices observed in market trading. Since the market for trading of the 2026 Convertible Notes is not considered to be an active market, the estimated fair value is based on Level 2 inputs.

2027 Term Loans

Debt Instrument

Schedule of Components of Interest Expense

The following table presents the components of interest expense related to the 2027 Term Loans:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Contractual interest	$	8,790	$	5,665	$	25,404	$	12,577
Amortization of debt discount and debt issuance costs		255		622		830		4,122
Total interest expense	$	9,045	$	6,287	$	26,234	$	16,699

Schedule of Future Payments on Debt

Assuming the third quarter of 2023 interest rate of 13.76%, future payments on the 2027 Term Loans as of September 30, 2023 are as follows:


Year ending December 31, (in thousands)
Remainder of 2023 - interest only	$	8,790
2024 - interest only		34,970
2025 - interest only		34,873
2026 - principal and interest		224,345
2027 - principal and interest		50,095
Total minimum payments		353,073
Less amount representing interest		(103,073)
2027 Term Loans, gross		250,000
Less unamortized debt discount and debt issuance costs		(3,783)
Net carrying amount of 2027 Term Loans	$	246,217

1.5% Convertible Senior Subordinated Notes due 2026

Debt Instrument

Schedule of Components of Interest Expense

The following table presents the components of interest expense related to the 2026 Convertible Notes:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Stated coupon interest	$	863	$	863	$	2,588	$	2,588
Amortization of debt discount and debt issuance costs		329		322		982		962
Total interest expense	$	1,192	$	1,185	$	3,570	$	3,550

Schedule of Future Payments on Debt


Year ending December 31, (in thousands)
Remainder of 2023 - interest only	$	1,725
2024 - interest only		3,450
2025 - interest only		3,450
2026		231,725
Total minimum payments		240,350
Less amount representing interest		(10,350)
2026 Convertible Notes, principal amount		230,000
Less unamortized debt discount and debt issuance costs		(3,443)
Net carrying amount of 2026 Convertible Notes	$	226,557

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 835
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Stockholders' Deficit (Tables)

9 Months Ended

Sep. 30, 2023

Stockholders Deficit..

Schedule of Settlements Under Shares Offering


	Three Months Ended		Nine Months Ended
(in thousands, except share and per share data)	September 30, 2023		September 30, 2023
Number of common stock shares sold during the period	2,428,311		3,559,761
Weighted-average price per share	$	4.92	$	5.43
Gross proceeds	$	11,938	$	19,339
Less commissions and fees		(298)		(483)
Net proceeds after commissions and fees	$	11,640	$	18,856

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions	1 Months Ended
	Apr. 30, 2022	Sep. 30, 2023	Dec. 31, 2022
Loss Contingencies
Claims related to certain sales of UDENYCA from October 2020 through December 2021	$ 14.0
Accrued rebates, fees and reserves
Loss Contingencies
Accruals		$ 6.4	$ 4.7

Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating activities
Net loss	$ (158,239)	$ (232,884)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,728	2,649
Stock-based compensation expense	32,312	39,011
Inventory write-offs, net	4,369	26,000
Non-cash accretion of discount on marketable securities	(2,835)
Non-cash interest expense from amortization of debt discount & issuance costs	1,812	5,631
Non-cash operating lease expense	2,016	1,854
Option payment to Shanghai Junshi Biosciences Co., Ltd. ("Junshi Biosciences")		35,000
Loss on debt extinguishment		6,222
Other non-cash adjustments, net	(915)	(10)
Changes in operating assets and liabilities:
Trade receivables, net	(106,626)	31,849
Inventory	(34,941)	(37,556)
Prepaid manufacturing	4,108	(6,967)
Other prepaid, current and non-current assets	10,702	(12,509)
Accounts payable	24,545	(6,149)
Accrued rebates, fees and reserves	60,602	(25,006)
Accrued compensation	(8,810)	(623)
Accrued and other current and non-current liabilities	7,225	32,317
Net cash used in operating activities	(161,947)	(141,171)
Investing activities
Purchases of property and equipment	(252)	(1,952)
Proceeds from disposal of property and equipment	769
Purchases of investments in marketable securities	(19,507)
Proceeds from maturities of investments in marketable securities	108,148
Proceeds from sale of investments in marketable securities	13,282
Cash and cash equivalents acquired from Surface Acquisition	6,997
Option payment to Junshi Biosciences		(35,000)
Net cash provided by (used in) investing activities	109,437	(36,952)
Financing activities
Proceeds from 2027 Term Loans, net of debt discount & issuance costs		240,679
Proceeds from issuance of common stock upon exercise of stock options	170	631
Proceeds from purchase under the employee stock purchase plan	1,337	1,655
Taxes paid related to net share settlement	(3,261)	(3,621)
Repayment of 2022 Convertible Notes and premiums		(109,000)
Repayment of 2025 Term Loan, premiums and exit fees		(81,750)
Other financing activities	(835)	(861)
Net cash provided by financing activities	69,234	47,733
Net increase (decrease) in cash, cash equivalents and restricted cash	16,724	(130,390)
Cash, cash equivalents and restricted cash at beginning of period	63,987	417,635
Cash, cash equivalents and restricted cash at end of period	80,711	$ 287,245
At The Market Offering.
Financing activities
Proceeds from issuance of common stock under Offering, net of issuance costs	18,198
Public Offering
Financing activities
Proceeds from issuance of common stock under Offering, net of issuance costs	$ 53,625

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies.

Commitments and Contingencies

9. Commitments and Contingencies

Purchase Commitments

The Company entered into agreements with certain vendors to secure raw materials and certain CMOs to manufacture its supply of products. As of September 30, 2023, the Company’s non-cancelable purchase commitments under the terms of its agreements are as follows:


Year ending December 31, (in thousands)
2023*	$	15,117
2024		54,929
2025		11,050
2026		839
Total obligations	$	81,935

*	Includes a reduction compared to December 31, 2022 resulting from a contract change to lower the number of UDENYCA batches to be produced at a specific CMO.

The Company enters into contracts in the normal course of business with contract research organizations for preclinical studies and clinical trials and CMOs for the manufacture of clinical trial materials. The contracts are generally cancellable, with varying provisions regarding termination. If a contract with a specific vendor were to be terminated, the Company would generally only be obligated for products or services that the Company had received as of the effective date of the termination and any applicable cancellation fees.

Guarantees and Indemnifications

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations. The Company assesses the likelihood of any adverse judgments or related claims, as well as ranges of probable losses. In the cases where the Company believes that a reasonably possible or probable loss exists, it will disclose the facts and circumstances of the claims, including an estimate range, if possible.

Legal Proceedings and Other Claims

The Company is a party to various legal proceedings and claims that arise in the ordinary, routine course of business and that have not been fully resolved. The outcome of such legal proceedings and claims is inherently uncertain. Accruals are recognized for such legal proceedings and claims to the extent that a loss is both probable and reasonably estimable. The best estimate of a loss within a range is accrued; however, if no estimate in the range is better than any other, then the minimum amount in the range is accrued. If it is determined that a material loss is reasonably possible and the loss or range of loss can be estimated, the possible loss is disclosed. Sometimes it is not possible to determine the outcome of these matters or, unless otherwise noted, the outcome (including in excess of any accrual) is not expected to be material, and the maximum potential exposure or the range of possible loss cannot be reasonably estimated. As of September 30, 2023 and December 31, 2022, the Company had an accrual of $6.4 million and $4.7 million, respectively, related to such matters that was included in accrued rebates, fees and reserves on the condensed consolidated balance sheets.

In late April of 2022, the Company received a demand letter from Zinc Health Services, LLC (“Zinc”) asserting that Zinc was entitled to approximately $14.0 million from the Company for claims related to certain sales of UDENYCA from October 2020 through December 2021. The Company is continuing to evaluate the claims in the letter. No legal

proceeding has been filed in connection with the claims in the letter and based on currently available information the final resolution of the matter is uncertain. The Company intends to defend any legal proceeding that may be filed. The Company’s accrual as of September 30, 2023 represented its estimated liability to resolve the matter. Loss contingencies are inherently unpredictable, the assessment is highly subjective and requires judgments about future events and unfavorable developments or resolutions can occur. The Company regularly reviews litigation matters to determine whether its accrual is adequate. The amount of ultimate loss may differ materially from the amount accrued to date.

Other than the matter in connection with the demand letter described in this Note 9, there are no pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party, or that any of the Company or its subsidiaries' property is subject.

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies.

Schedule of Non-cancelable Contractual Obligations


Year ending December 31, (in thousands)
2023*	$	15,117
2024		54,929
2025		11,050
2026		839
Total obligations	$	81,935

Derivatives - Derivative fair value (Details) $ in Millions	Sep. 30, 2023 USD ($) derivative
Derivatives
Number of Derivative Instrument Held For Trading or Speculative Purpose \| derivative	0
Derivative Assets	$ 0.0
Derivative Liabilities	$ 0.0

- Definition

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+ Details

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Employee And Nonemployee Stock Option Restricted Stock Units

Employee Service Share Based Compensation Allocation Of Recognized Period Costs

Schedule of Stock-Based Compensation Expense


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Cost of goods sold ⁽¹⁾	$	174	$	184	$	535	$	555
Research and development		2,929		5,173		11,760		14,707
Selling, general and administrative		6,850		6,925		20,017		23,749
Stock-based compensation expense	$	9,953	$	12,282	$	32,312	$	39,011

Stock-based compensation expense capitalized into inventory	$	373	$	290	$	697	$	904

(1)	Stock-based compensation capitalized into inventory is recognized as cost of goods sold when the related product is sold.

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2023	Oct. 31, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-36721
Entity Registrant Name	Coherus BioSciences, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-3615821
Entity Address, Address Line One	333 Twin Dolphin Drive
Entity Address, Address Line Two	Suite 600
Entity Address, City or Town	Redwood City
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94065
City Area Code	650
Local Phone Number	649-3530
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	CHRS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		111,364,152
Entity Central Index Key	0001512762
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

Organization and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

Organization and Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Coherus and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring accruals, that the Company believes are necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) filed with the SEC.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities when these values are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current information. Accounting estimates and judgements are inherently uncertain and therefore actual results could differ from these estimates.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets, which, in aggregate, represent the amount reported in the condensed consolidated statements of cash flows:



(in thousands)	January 1,
At beginning of period:	2023		2022
Cash and cash equivalents	$	63,547	$	417,195
Restricted cash		440		440
Total cash, cash equivalents and restricted cash	$	63,987	$	417,635

	September 30,
At end of period:	2023		2022
Cash and cash equivalents	$	80,259	$	286,805
Restricted cash		452		440
Total cash, cash equivalents and restricted cash	$	80,711	$	287,245

Restricted cash consists of deposits for letters of credit that the Company has provided to secure its obligations under certain leases and is included in other assets, non-current on the condensed consolidated balance sheets.

Trade Receivables

Trade receivables are recorded net of allowances for chargebacks, cash discounts for prompt payment and credit losses. The Company estimates an allowance for expected credit losses by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The corresponding expense for the credit loss allowance is reflected in selling, general and administrative expenses. The credit loss allowance was immaterial as of September 30, 2023 and December 31, 2022.

Derivative Instruments

In January 2023, the Company commenced using derivative contracts (foreign exchange option contracts) for the purpose of economically hedging exposure to changes in currency fluctuations between the U.S. Dollar and the Euro. The Company recognizes all derivatives at fair value on the condensed consolidated balance sheets, and corresponding gains and losses are recognized in other income (expense), net in the condensed consolidated statements of operations. The estimated fair value of derivative financial instruments represents the amount required to enter into similar

contracts with similar remaining maturities based on quoted market prices. During the periods presented, the Company did not apply hedge accounting to these instruments (see Note 10).

Business Combination Accounting & Valuation of Acquired Assets

Business Combination Accounting & Valuation of Acquired Assets

The Company accounts for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. Judgment is required in assessing whether the acquired processes or activities, along with their inputs, meet the criteria to constitute a business, as defined by U.S. GAAP.

The acquisition method of accounting requires the recognition of assets acquired and liabilities assumed at their acquisition date fair values. The excess of the fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill, or when there is an excess of the fair values of these identifiable assets and liabilities over the fair value of purchase consideration, a bargain purchase gain is recorded in the condensed consolidated statement of operations. The estimations of fair values based on non-observable inputs that are included in valuation models. An income approach, which generally relies upon projected cash flow models, is used in estimating the fair value of the acquired intangible assets. These cash flow projections are based on management's estimates of economic and market conditions including the estimated future cash flows from revenues of acquired assets, the timing and projection of costs and expenses and the related profit margins, tax rates, and discount rate.

During the measurement period, which occurs before finalization of the purchase price allocation, changes in assumptions and estimates that result in adjustments to the fair values of assets acquired and liabilities assumed, if based on facts and circumstances existing at the acquisition date, are recorded on a retroactive basis as of the acquisition date, with the corresponding offset to goodwill or bargain purchase gain. (See Note 6)

Intangible Assets

Intangible Assets

Acquired in-process research and development (“IPR&D”) that the Company acquires in conjunction with the acquisition of a business represents the fair value assigned to incomplete research projects which, at the time of acquisition, have not reached technological feasibility. The amounts are capitalized and are accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each IPR&D project, the Company will commence amortization over the useful life of the intangible asset, which will generally be determined by the period in which the substantial majority of the cash flows are expected to be generated. The Company evaluates IPR&D for impairment on an annual basis, during the fourth quarter, or more frequently if impairment indicators exist.

Definite-lived intangible assets are generally amortized on a straight-line basis over their estimated economic life and are reviewed periodically for impairment. The amortization expense related to capitalized milestone payments under license agreements is recorded as a component of cost of goods sold in the consolidated statements of operations, and amortization expense from out-licenses is recorded in cost of goods sold. The estimated life for capitalized milestone payments is ten years and fifteen years for acquired out-licenses.

Contingent Consideration

Contingent Consideration

Contingent consideration relates to the potential payments to holders of Contingent Value Rights (“CVRs”) that are contingent upon the achievement of the Company and certain third-parties meeting product development or financial performance milestones. For transactions accounted for as business combinations, the Company records contingent consideration at fair value at the date of the acquisition based on the consideration expected to be transferred. Liabilities for contingent consideration are remeasured each reporting period and subsequent changes in fair value are recognized within loss from operations in the condensed consolidated statement of operations. The assumptions utilized in the calculation of the fair values include probability of success and the discount rates. Contingent

consideration involves certain assumptions requiring significant judgment and actual results may differ from estimated amounts.

Stock-Based Compensation

Stock-Based Compensation

The Company’s compensation programs include stock-based awards, and the related grants under these programs are accounted for at fair value. The fair values are recognized as compensation expense on a straight-line basis over the vesting period with the related costs recorded in cost of goods sold, research and development, and selling, general and administrative expense, as appropriate. The Company accounts for forfeitures as they occur. The Company accounts for stock issued in connection with business combinations based on the fair value of the Company’s common stock on the date of issuance.

Recent Accounting Pronouncements

The Company has reviewed recent accounting pronouncements and concluded they are either not applicable to the business or that no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

Investments in Marketable Securities

Revenue - Net Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Revenue - Net Revenue (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Net revenue	$ 74,568	$ 45,424	$ 165,720	$ 165,690
Total net product revenue
Disaggregation of Revenue [Line Items]
Net revenue	74,364	45,325	165,174	165,512
UDENYCA
Disaggregation of Revenue [Line Items]
Net revenue	32,967	45,325	90,875	165,512
CIMERLI
Disaggregation of Revenue [Line Items]
Net revenue	40,037		72,939
YUSIMRY
Disaggregation of Revenue [Line Items]
Net revenue	1,360		1,360
Other
Disaggregation of Revenue [Line Items]
Net revenue	$ 204	$ 99	$ 546	$ 178

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479941/924-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-4

+ Details

Restructuring Charges (Details) - Employee Severance $ in Millions		3 Months Ended		9 Months Ended
	Mar. 10, 2023 employee	Sep. 30, 2023 USD ($)	Mar. 31, 2023 USD ($) item	Sep. 30, 2023 USD ($)
Restructuring Cost And Reserve [Line Items]
Employees impacted \| employee	50
Restructuring Charges			$ 3.9
Stock-based compensation includes restructuring charges			1.5
Forfeiture credit			$ 0.5
Restructuring And Related Activities \| item			2
Research and Development Expense
Restructuring Cost And Reserve [Line Items]
Restructuring Charges				$ 3.6
Stock-based compensation includes restructuring charges		$ 0.0		1.1
Selling, General and Administrative Expenses
Restructuring Cost And Reserve [Line Items]
Restructuring Charges				1.3
Forfeiture credit				$ 0.1

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

Debt Obligations - Convertible Notes due 2022 Narrative (Details) - USD ($) $ in Thousands		1 Months Ended		9 Months Ended
	Feb. 29, 2016	Mar. 31, 2022	Jan. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Debt Instrument
Outstanding amount payoff					$ 109,000
Amortization of debt discount and debt issuance costs				$ 1,812	5,631
8.2% Convertible Notes due 2022
Debt Instrument
Interest expense					2,600
Interest rate description	The 2022 Convertible Notes constituted general, senior unsubordinated obligations of the Company, bore interest at a fixed coupon rate of 8.2% per annum payable quarterly in arrears and matured on March 31, 2022.
Stated coupon interest					2,100
Amortization of debt discount and debt issuance costs					$ 500
Convertible Notes \| 8.2% Convertible Notes due 2022
Debt Instrument
Principal Amount	$ 100,000		$ 100,000
Stated interest rate	8.20%	8.20%
Debt instrument maturity date	Mar. 31, 2022
Outstanding amount payoff		$ 111,100	$ 111,100
Convertible Notes Payable		$ 0
Convertible notes, premium percentage		9.00%

Derivatives

9 Months Ended

Sep. 30, 2023

Derivatives

Derivatives

10. Derivatives

The Company is exposed to foreign currency exchange rate risk related to its international purchases. In the first quarter of 2023, the Company started utilizing euro currency contracts to manage euro currency risk in purchasing inventory and future settlement of euro denominated assets and liabilities. The volume of the Company’s foreign currency contract activity is limited by the amount of transaction exposure in each foreign currency and the Company’s election whether to hedge the transactions. There are no derivative instruments entered into for speculative or trading purposes.

The Company did not elect hedge accounting for any of its currency contracts. All outstanding contracts are with the same counterparty. Changes in the net fair value of contracts are recorded in other income (expense), net in the condensed consolidated statements of operations.

Since the Company's derivatives all matured and settled by September 30, 2023, there were no derivative assets or derivative liabilities as of September 30, 2023.

The pre-tax gain (loss) of foreign currency contracts not designated as hedging instruments were recorded on the condensed consolidated statements of operations as follows:


		Three Months Ended		Nine Months Ended
(in thousands)	Statement of Operations Classification	September 30, 2023		September 30, 2023
Currency contracts	Other income (expense), net	$	82	$	—

Debt Obligations - 2027 Term Loan Future Payments (Details) - 2027 Term Loans - BioPharma Credit Investments V GP LLC $ in Thousands	Sep. 30, 2023 USD ($)
Debt Instrument [Line Items]
Remainder of 2023 - interest only	$ 8,790
2024 - interest only	34,970
2025 - interest only	34,873
2026 - principal and interest	224,345
2027 - principal and interest	50,095
Total minimum payments	353,073
Less amount representing interest	(103,073)
2027 Term Loans, gross	250,000
Less unamortized debt discount and debt issuance costs	(3,783)
Net Carrying Value	$ 246,217

Derivatives - Pre-tax gain (loss) of foreign currency contracts not designated as hedging instruments (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2023 USD ($)
Derivatives
Currency contracts recorded in Other income (expense), net	$ 82

Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Stock-Based Compensation

Stock-Based Compensation

12. Stock-Based Compensation

The following table summarizes the classification of stock-based compensation expense in the Company’s condensed consolidated statements of operations related to options and restricted stock units granted to employees and nonemployees:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Cost of goods sold ⁽¹⁾	$	174	$	184	$	535	$	555
Research and development		2,929		5,173		11,760		14,707
Selling, general and administrative		6,850		6,925		20,017		23,749
Stock-based compensation expense	$	9,953	$	12,282	$	32,312	$	39,011

Stock-based compensation expense capitalized into inventory	$	373	$	290	$	697	$	904

(1)	Stock-based compensation capitalized into inventory is recognized as cost of goods sold when the related product is sold.

The stock-based compensation for the nine months ended September 30, 2023 includes restructuring charges described in Note 14 of $1.1 million in research and development expense and a net forfeiture credit of $0.1 million in selling, general and administrative expense. For the three months ended September 30, 2023, there were no restructuring charges included in stock-based compensation.

The stock-based compensation expense recorded in connection with the Surface Acquisition that was not included in the consideration transferred was immaterial.

Derivatives (Tables)

9 Months Ended

Sep. 30, 2023

Derivatives

Schedule of pre-tax gain (loss) of foreign currency contracts not designated as hedging instruments


		Three Months Ended		Nine Months Ended
(in thousands)	Statement of Operations Classification	September 30, 2023		September 30, 2023
Currency contracts	Other income (expense), net	$	82	$	—

Revenue (Tables)

9 Months Ended

Sep. 30, 2023

Revenue

Schedule of Net product revenue in United States, and Company's net revenue


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Products
UDENYCA	$	32,967	$	45,325	$	90,875	$	165,512
CIMERLI		40,037		—		72,939		—
YUSIMRY		1,360		—		1,360		—
Total net product revenue		74,364		45,325		165,174		165,512
Other		204		99		546		178
Total net revenue	$	74,568	$	45,424	$	165,720	$	165,690

Schedule of Gross Revenues by Significant Customer as a Percentage of Total Gross Revenues

Gross product revenues by significant customer as a percentage of total gross product revenues were as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
McKesson Corporation	44	%	37	%	38	%	37	%
AmeriSource-Bergen Corporation	41	%	45	%	45	%	45	%
Cardinal Health, Inc.	13	%	17	%	15	%	17	%

Schedule of Activities and Ending Reserve Balances for Each Significant Category of Discounts and Allowances

The activities and ending reserve balances for each significant category of discounts and allowances, which constitute variable consideration, were as follows:


	Nine Months Ended September 30, 2023
	Chargebacks				Other Fees,
	and Discounts				Co-pay
	for Prompt				Assistance
(in thousands)	Payment		Rebates		and Returns		Total
Balances at December 31, 2022	$	42,677	$	38,713	$	19,113	$	100,503
Provision related to sales made in:
Current period		387,238		83,009		69,362		539,609
Prior period - increase (decrease)		(1,375)		1,540		4,469		4,634
Payments and customer credits issued		(379,076)		(42,097)		(55,681)		(476,854)
Balances at September 30, 2023	$	49,464	$	81,165	$	37,263	$	167,892


	Nine Months Ended September 30, 2022
	Chargebacks				Other Fees,
	and Discounts				Co-pay
	for Prompt				Assistance
(in thousands)	Payment		Rebates		and Returns		Total
Balances at December 31, 2021	$	29,665	$	54,004	$	26,054	$	109,723
Provision related to sales made in:
Current period		321,056		50,939		54,967		426,962
Prior period - increase (decrease)		(2,055)		(5,064)		(181)		(7,300)
Payments and customer credits issued		(320,022)		(64,869)		(61,829)		(446,720)
Balances at September 30, 2022	$	28,644	$	35,010	$	19,011	$	82,665

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Measurements

Schedule of Financial Assets and Liabilities Measured on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized as follows:


	Fair Value Measurements
	September 30, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Financial Assets:
Money market funds	$	62,389	$	—	$	—	$	62,389
Marketable debt securities:
U.S. government agency securities		18,111		—		—		18,111
U.S. treasury securities		24,986		—		—		24,986
Commercial paper and corporate notes		—		7,721		—		7,721
Total	$	105,486	$	7,721	$	—	$	113,207
Financial Liabilities:
Contingent consideration	$	—	$	—	$	5,392	$	5,392


	Fair Value Measurements
	December 31, 2022
(in thousands)	Level 1		Level 2		Level 3		Total
Financial Assets:
Money market funds	$	55,060	$	—	$	—	$	55,060
Marketable debt securities:
U.S. government agency securities		19,964		—		—		19,964
U.S. treasury securities		68,418		—		—		68,418
Commercial paper and corporate notes		—		48,203		—		48,203
Total	$	143,442	$	48,203	$	—	$	191,645

Schedule of Cash and cash equivalents, marketable securities and restricted cash


	September 30, 2023
(in thousands)	Cost		Unrealized Gain		Unrealized (Loss)		Fair Value
Money market funds	$	62,389	$	—	$	—	$	62,389
U.S. government agency securities		18,134		—		(23)		18,111
U.S. treasury securities		24,988		1		(3)		24,986
Commercial paper and corporate notes		7,742		—		(21)		7,721
Total	$	113,253	$	1	$	(47)	$	113,207


	December 31, 2022
(in thousands)	Cost		Unrealized Gain		Unrealized (Loss)		Fair Value
Money market funds	$	55,060	$	—	$	—	$	55,060
U.S. government agency securities		19,929		35		—		19,964
U.S. treasury securities		68,431		8		(21)		68,418
Commercial paper and corporate notes		48,203		—		—		48,203
Total	$	191,623	$	43	$	(21)	$	191,645

Debt Obligations

9 Months Ended

Sep. 30, 2023

Debt Obligations

Debt Obligations

8. Debt Obligations

A summary of the Company’s debt obligations, including level within the fair value hierarchy (see Note 3), is as follows:


	At September 30, 2023
(in thousands)	Principal Amount			Unamortized Debt Discount and Debt Issuance Costs	Net Carrying Value		Estimated Fair Value		Level
Financial Liabilities:
2027 Term Loans	$	250,000	$	(3,783)	$	246,217	$	246,217	Level 2*
2026 Convertible Notes	$	230,000	$	(3,443)	$	226,557	$	139,007	Level 2**

	At December 31, 2022
(in thousands)	Principal Amount		Unamortized Debt Discount and Debt Issuance Costs		Net Carrying Value		Estimated Fair Value		Level
Financial Liabilities:
2027 Term Loans	$	250,000	$	(4,517)	$	245,483	$	245,483	Level 2*
2026 Convertible Notes	$	230,000	$	(4,425)	$	225,575	$	157,205	Level 2**

2027 Term Loans

The Company entered into a loan agreement in January 2022 (as amended to date, the “Loan Agreement”) with BioPharma Credit, PLC, (as the “Collateral Agent”), BPCR Limited Partnership (as a “Lender”), and Biopharma Credit Investments V (Master) LP, acting by its general partner, BioPharma Credit Investments V GP LLC (as a “Lender”) that provides for a senior secured term loan facility of up to $300.0 million to be funded in four committed tranches: (i) a Tranche A Loan in an aggregate principal amount of $100.0 million (the “Tranche A Loan”) that was funded on January 5, 2022 (the “Tranche A Closing Date”); (ii) a Tranche B Loan in an aggregate principal amount of $100.0 million (the “Tranche B Loan”) that was funded on March 31, 2022; (iii) a Tranche C Loan in an aggregate principal amount of $50.0 million (the “Tranche C Loan”) that was not funded; and (iv) a Tranche D Loan in an aggregate principal amount of $50.0 million (the “Tranche D Loan” and, together with the Tranche A Loan, the Tranche B Loan, and the Tranche C Loan, the “2027 Term Loans”) that was funded on September 14, 2022. The Company has the right to request an uncommitted additional facility amount of up to $100.0 million that is subject to new terms and conditions.

The 2027 Term Loans mature on either (i) the fifth anniversary of the Tranche A Closing Date; or (ii) October 15, 2025, if the outstanding aggregate principal amount of the 2026 Convertible Notes is greater than $50.0 million on October 1, 2025. The 2027 Term Loans accrued interest from inception through March 31, 2023 at 8.25% plus three-month LIBOR per annum with a LIBOR floor of 1.0%; and starting April 1, 2023, accrue interest at 8.25% plus the sum (the “Adjusted Term SOFR”) of three-month SOFR and 0.26161% per annum, with a floor on Adjusted Term SOFR of 1.0%. The interest rate for the third quarter of 2023 was 13.76%. Interest is payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year. Repayment of outstanding principal of the 2027 Term Loans will be made in five equal quarterly payments of principal commencing March 31, 2026.

The Company adopted the prospective method to account for future cash payments. Under the prospective method, the effective interest rate is not constant, and any change in the expected cash flows is recognized prospectively as an adjustment to the effective yield.

The obligations under the Loan Agreement are secured pursuant to customary security documentation, including a guaranty and security agreement among the Credit Parties and the Collateral Agent which provides for a lien on substantially all of the Company’s tangible and intangible assets and property, including intellectual property.

Pursuant to the Loan Agreement, and subject to certain restrictions, proceeds of the 2027 Term Loans were used to fund the Company’s general corporate and working capital requirements except for the following: in January 2022, proceeds of the Tranche A Loan were used to repay in full all amounts outstanding under the Company’s $75.0 million aggregate principal credit agreement with affiliates of Healthcare Royalty Partners (the “2025 Term Loan”), as well as all associated costs and expenses pursuant to which a payoff amount of $81.9 million was outstanding; in March 2022, proceeds of the Tranche B Loan were drawn in connection with the full repayment of all amounts outstanding under the Company’s $100.0 million aggregate principal amount 8.2% Convertible Senior Notes (the “2022 Convertible Notes”), as well as all associated costs and expenses pursuant to which a payoff amount of $111.1 million was outstanding.

The Loan Agreement contains certain customary representations and warranties. In addition, the Loan Agreement includes affirmative covenants, such as the requirement to maintain minimum trailing twelve-month net sales in an amount that begins at $200.0 million for the quarter ending March 31, 2022, increases to $210.0 million for the quarter ended March 31, 2024, increases to $230.0 million for the quarter ending June 30, 2024, increases to $270.0 million for the quarter ending September 30, 2024, and increases to $300.0 million for the quarter ended December 31, 2024 and thereafter. Further, the Loan Agreement includes certain other affirmative covenants and negative covenants, including, covenants and restrictions that among other things, restrict the Company’s ability to incur liens, incur additional indebtedness, make investments, engage in certain mergers and acquisitions or asset sales, and declare dividends or redeem or repurchase capital stock. The Loan Agreement also contains customary events of default, including among other things, the Company’s failure to make any principal or interest payments when due, the occurrence of certain bankruptcy or insolvency events or its breach of the covenants under the Loan Agreement. Upon the occurrence of an event of default, the Lenders may, among other things, accelerate the Company’s obligations under the Loan Agreement. A change of control of the Company triggers a mandatory prepayment of the 2027 Term Loans within ten business days.

As of September 30, 2023, the Company was in full compliance with these covenants, and there were no events of default under the 2027 Term Loans.

In connection with the closing of Tranche A, the Company incurred $7.8 million in debt discounts and issuance costs of which $6.8 million related to all the tranches of the 2027 Term Loans and was thus allocated pro rata between the tranches. The unamortized debt discount and issuance costs allocated to funded tranches are presented as deductions to the 2027 Term Loan balance and are amortized into interest expense using the effective interest method. The $2.3 million allocated to Tranche B was fully amortized over the commitment period prior to funding and recognized as interest expense in the first quarter of 2022. The associated debt discounts and issuance costs of unfunded tranches were deferred as assets and amortized into interest expense using the straight-line method over the commitment period of the respective tranches. At the closing dates of Tranche B on March 31, 2022 and Tranche D on September 14, 2022, the Company incurred an additional $1.0 million and $0.5 million, respectively, in debt issuance costs. As of September 30, 2023, the total remaining unamortized debt discount and debt offering costs related to Tranches A, B and D of $3.8 million will be amortized using the effective interest rate over the remaining term of 3.3 years.

The following table presents the components of interest expense related to the 2027 Term Loans:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Contractual interest	$	8,790	$	5,665	$	25,404	$	12,577
Amortization of debt discount and debt issuance costs		255		622		830		4,122
Total interest expense	$	9,045	$	6,287	$	26,234	$	16,699

Assuming the third quarter of 2023 interest rate of 13.76%, future payments on the 2027 Term Loans as of September 30, 2023 are as follows:


Year ending December 31, (in thousands)
Remainder of 2023 - interest only	$	8,790
2024 - interest only		34,970
2025 - interest only		34,873
2026 - principal and interest		224,345
2027 - principal and interest		50,095
Total minimum payments		353,073
Less amount representing interest		(103,073)
2027 Term Loans, gross		250,000
Less unamortized debt discount and debt issuance costs		(3,783)
Net carrying amount of 2027 Term Loans	$	246,217

1.5% Convertible Senior Subordinated Notes due 2026

In April 2020, the Company issued and sold $230.0 million aggregate principal amount of its 1.5% Convertible Senior Subordinated notes due 2026 (the “2026 Convertible Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The net proceeds from the offering were $222.2 million after deducting initial purchasers’ fees and offering expenses. The 2026 Convertible Notes are general unsecured obligations and will be subordinated to the Company’s designated senior indebtedness (as defined in the indenture for the 2026 Convertible Notes) and structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables. The 2026 Convertible Notes accrue interest at a rate of 1.5% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, since October 15, 2020, and will mature on April 15, 2026, unless earlier repurchased or converted.

At any time before the close of business on the second scheduled trading day immediately before the maturity date, noteholders may convert their 2026 Convertible Notes at their option into shares of the Company’s common stock, together, if applicable, with cash in lieu of any fractional share, at the then-applicable conversion rate. Since inception, the conversion price has been 51.9224 shares of common stock per $1,000 principal amount of the 2026 Convertible Notes, which represents a conversion price of approximately $19.26 per share of common stock. The initial conversion price represents a premium of approximately 30.0% over the last reported sale of $14.82 per share of the Company’s common stock on the Nasdaq Global Market on April 14, 2020, the date the 2026 Convertible Notes were issued. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. If a “make-whole fundamental change” (as defined in the indenture for the 2026 Convertible Notes) occurs, the Company will, in certain circumstances, increase the conversion rate for a specified period of time for noteholders who convert their 2026 Convertible Notes in connection with that make-whole fundamental change. The 2026 Convertible Notes are not redeemable at the Company’s election before maturity. If a “fundamental change” (as defined in the indenture for the 2026 Convertible Notes) occurs, then, subject to a limited exception, noteholders may require the Company to repurchase their 2026 Convertible Notes for cash. The repurchase price will be equal to the principal amount of the 2026

Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

The 2026 Convertible Notes have customary provisions relating to the occurrence of “events of default” (as defined in the Indenture for the 2026 Convertible Notes). The occurrence of such events of default could result in the acceleration of all amounts due under the 2026 Convertible Notes.

As of September 30, 2023, the Company was in full compliance with these covenants and there were no events of default under the 2026 Convertible Notes.

The Company evaluated the features embedded in the 2026 Convertible Notes under the relevant accounting rules and concluded that the embedded features do not meet the requirements for bifurcation, and therefore do not need to be separately accounted for as an equity component. The proceeds received from the issuance of the convertible debt were recorded as a liability on the condensed consolidated balance sheets.

Capped Call Transactions

In connection with the pricing of the 2026 Convertible Notes, the Company paid $18.2 million to enter into privately negotiated capped call transactions with one or a combination of the initial purchasers, their respective affiliates and other financial institutions. The capped call transactions are generally expected to reduce the potential dilution upon conversion of the 2026 Convertible Notes in the event that the market price per share of the Company’s common stock, as measured under the terms of the capped call transactions, is greater than the strike price of the capped call transactions, which initially corresponds to the conversion price of the 2026 Convertible Notes, and is subject to anti-dilution adjustments generally similar to those applicable to the conversion rate of the 2026 Convertible Notes. Since inception, the cap price has been $25.93 per share, which represents a premium of approximately 75.0% over the last reported sale price of the Company’s common stock of $14.82 per share on April 14, 2020, and is subject to certain adjustments under the terms of the capped call transactions.

The capped call transactions are accounted for as separate transactions from the 2026 Convertible Notes and classified as equity instruments; thus, they are recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets. The capped calls will not be subsequently re-measured as long as the conditions for equity classification continue to be met.

The Company incurred $0.9 million of debt issuance costs relating to the issuance of the 2026 Convertible Notes, which were recorded as a reduction to the notes on the condensed consolidated balance sheets. The debt issuance costs are being amortized and recognized as additional interest expense over the six-year contractual term of the notes using the effective interest rate method.

If the 2026 Convertible Notes were converted on September 30, 2023, the holders of the 2026 Convertible Notes would have received common shares with an aggregate value of $44.7 million based on the Company’s closing stock price of $3.74 as of September 29, 2023.

The following table presents the components of interest expense related to the 2026 Convertible Notes:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Stated coupon interest	$	863	$	863	$	2,588	$	2,588
Amortization of debt discount and debt issuance costs		329		322		982		962
Total interest expense	$	1,192	$	1,185	$	3,570	$	3,550

The remaining unamortized debt discount and debt offering costs related to the 2026 Convertible Notes of $3.4 million as of September 30, 2023 will be amortized using the effective interest rate over the remaining term of the 2026 Convertible Notes. The annual effective interest rate is 2.1% for the 2026 Convertible Notes.

Future payments on the 2026 Convertible Notes as of September 30, 2023 are as follows:


Year ending December 31, (in thousands)
Remainder of 2023 - interest only	$	1,725
2024 - interest only		3,450
2025 - interest only		3,450
2026		231,725
Total minimum payments		240,350
Less amount representing interest		(10,350)
2026 Convertible Notes, principal amount		230,000
Less unamortized debt discount and debt issuance costs		(3,443)
Net carrying amount of 2026 Convertible Notes	$	226,557

8.2% Convertible Notes due 2022

On February 29, 2016, the Company issued and sold $100.0 million aggregate principal amount of its 8.2% Convertible Senior Notes due 2022. The 2022 Convertible Notes constituted general, senior unsubordinated obligations of the Company, bore interest at a fixed coupon rate of 8.2% per annum payable quarterly in arrears and matured on March 31, 2022. In March 2022, the Company fully repaid the 2022 Convertible Notes, and as a result had no continuing obligations associated with them thereafter. The payoff amount of $111.1 million included the repayment of the entire outstanding principal amount, the 9% premium of the outstanding principal amount and accrued and unpaid interest. For the nine months ended September 30, 2022, interest expense on the 2022 Convertible Notes was $2.6 million, which included $2.1 million of stated coupon interest and $0.5 million amortization of debt discount and debt issuance costs.

2025 Term Loan

On January 7, 2019, the Company entered into a credit agreement with affiliates of Healthcare Royalty Partners. The 2025 Term Loan consisted of a six-year term loan facility for an aggregate principal amount of $75.0 million (the “Borrowings”).

Pursuant to the terms of the 2025 Term Loan, the Company was required to begin paying principal on the Borrowings in equal quarterly installments beginning on the third anniversary of the 2025 Term Loan Closing Date, with the outstanding balance to be repaid on January 7, 2025, the maturity date. In January 2022, pursuant to the Company entering into the 2027 Term Loans, the Company voluntarily prepaid all amounts outstanding under the 2025 Term Loan. The payoff amount of $81.9 million included principal repayment in full, accrued interest, a 5.0% prepayment premium fee of the Borrowings principal amount, and an exit fee of 4.0% of the Borrowings principal amount. The prepayment premium fee and unamortized exit fee, debt discount and debt issuance costs, net from the payoff of the 2025 Term Loan totaled $6.2 million and was recorded in loss on debt extinguishment in the condensed consolidated statement of operations for the nine months ended September 30, 2022. For the nine months ended September 30, 2022, interest expense on the 2025 Term Loan was $0.2 million which represented stated coupon interest.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Organization and Summary of Significant Accounting Policies

Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

Organization

Coherus BioSciences, Inc. (the “Company” or “Coherus”) is a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative immunotherapies to treat cancer. Coherus’ strategy is to build a leading immuno-oncology franchise funded with cash generated from net sales of its diversified portfolio of United States Food and Drug Administration (“FDA”)-approved therapeutics. The Company’s headquarters and laboratories are located in Redwood City, California and in Camarillo, California, respectively. The Company sells UDENYCA® (pegfilgrastim-cbqv), a biosimilar to Neulasta, a long-acting granulocyte-colony stimulating factor, in the United States. On August 2, 2022, the FDA approved CIMERLI® (ranibizumab-eqrn), a biosimilar to Lucentis, and commercial launch commenced in October 2022 in the United States. The Company launched YUSIMRY™ (adalimumab-aqvh), a biosimilar to Humira (adalimumab), in the United States in July 2023. On October 27, 2023, the Company announced that the FDA approved LOQTORZI™ (toripalimab-tpzi) in combination with cisplatin and gemcitabine for the first-line treatment of adults with metastatic or recurrent locally advanced nasopharyngeal carcinoma (“NPC”), and as monotherapy for the treatment of adults with recurrent, unresectable, or metastatic NPC with disease progression on or after platinum-containing chemotherapy. LOQTORZI is an anti-PD-1 antibody that the Company developed in collaboration with Shanghai Junshi Biosciences Co., Ltd. (“Junshi Biosciences”). The Company expects to launch LOQTORZI in the U.S. in the first quarter of 2024.

The Company’s product pipeline comprises the following four product candidates: CHS-006, an antibody targeting TIGIT being developed in collaboration with Junshi Biosciences; CHS-1000, an antibody targeting ILT4; casdozokitug (CHS-388, formerly SRF388), an antibody targeting interleukin 27 (“IL-27”); and CHS-114 (formerly SRF114), a highly specific afucosylated immunoglobulin isotype G1 (“IgG1”) antibody targeting CCR8. In addition to the Company’s internally developed portfolio of product candidates, the Company has two product candidates, NZV930 and GSK4381562, which are exclusively licensed to Novartis Institutes for Biomedical Research, Inc. (“Novartis Institutes”) and GlaxoSmithKline Intellectual Property No. 4 Limited (“GSK”), respectively. On January 9, 2023, the Company announced that it entered into a binding term sheet (the “Term Sheet”) with Klinge Biopharma GmbH (“Klinge Biopharma”) for the exclusive commercialization rights to FYB203, a biosimilar candidate to Eylea® (aflibercept), in the United States. The Company and Klinge Biopharma continue to conduct due diligence and discuss terms of the transaction. The material terms of the transaction with Klinge Biopharma will be included in a subsequent filing by the Company when definitive agreements are executed.

Basis of Consolidation

Use of Estimates

Cash, Cash Equivalents and Restricted Cash



(in thousands)	January 1,
At beginning of period:	2023		2022
Cash and cash equivalents	$	63,547	$	417,195
Restricted cash		440		440
Total cash, cash equivalents and restricted cash	$	63,987	$	417,635

	September 30,
At end of period:	2023		2022
Cash and cash equivalents	$	80,259	$	286,805
Restricted cash		452		440
Total cash, cash equivalents and restricted cash	$	80,711	$	287,245

Trade Receivables

Derivative Instruments

contracts with similar remaining maturities based on quoted market prices. During the periods presented, the Company did not apply hedge accounting to these instruments (see Note 10).

Business Combination Accounting & Valuation of Acquired Assets

Intangible Assets

Contingent Consideration

consideration involves certain assumptions requiring significant judgment and actual results may differ from estimated amounts.

Stock-Based Compensation

Recent Accounting Pronouncements

Balance Sheet Components - Other Liabilities, Non-current (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Balance Sheet Components
Contingent consideration, non-current	$ 1,352	$ 102
Deferred tax liability	1,102
Other	1,059	3,365
Total Other liabilities, non-current	$ 3,513	$ 3,467

Fair Value Measurements - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($) position	Sep. 30, 2022 USD ($)
Fair Value Measurements
Unrealized gain (loss) on securities		$ 0
Positions that were in unrealized loss positions \| position	14
Remaining contractual maturities of available-for-sale securities	1 year
Average maturity of investments upon acquisition	10 months
Impairment on securities recognized	$ 0
Investments in marketable securities		$ 0

Revenue - Activities and Ending Reserve Balances for Each Significant Category of Discounts and Allowances (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Accounts Notes And Loans Receivable
Activities and reserve balance, beginning balance			$ 100,503	$ 109,723
Provision related to sales made in:
Current period			539,609	426,962
Prior period - increase (decrease)	$ 1,100	$ (1,400)	4,634	(7,300)
Payments and customer credits issued			(476,854)	(446,720)
Activities and reserve balance, ending balance	167,892	82,665	167,892	82,665
Chargebacks and Discounts for Prompt Payment
Accounts Notes And Loans Receivable
Activities and reserve balance, beginning balance			42,677	29,665
Provision related to sales made in:
Current period			387,238	321,056
Prior period - increase (decrease)			(1,375)	(2,055)
Payments and customer credits issued			(379,076)	(320,022)
Activities and reserve balance, ending balance	49,464	28,644	49,464	28,644
Rebates
Accounts Notes And Loans Receivable
Activities and reserve balance, beginning balance			38,713	54,004
Provision related to sales made in:
Current period			83,009	50,939
Prior period - increase (decrease)			1,540	(5,064)
Payments and customer credits issued			(42,097)	(64,869)
Activities and reserve balance, ending balance	81,165	35,010	81,165	35,010
Other Fees, Co-pay Assistance and Returns
Accounts Notes And Loans Receivable
Activities and reserve balance, beginning balance			19,113	26,054
Provision related to sales made in:
Current period			69,362	54,967
Prior period - increase (decrease)			4,469	(181)
Payments and customer credits issued			(55,681)	(61,829)
Activities and reserve balance, ending balance	$ 37,263	$ 19,011	$ 37,263	$ 19,011

Balance Sheet Components - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Balance Sheet Components
Depreciation and amortization expense related to property and equipment, net	$ 0.8	$ 0.9	$ 2.5	$ 2.6
Software implementation costs	$ 3.2		$ 3.2		$ 3.5

Balance Sheet Components - Goodwill and Intangible Assets, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Balance Sheet Components
Goodwill	$ 943	$ 943
Indefinite-lived assets - IPR&D	28,859	2,620
Finite-lived assets, net	16,722	2,368
Total Goodwill and intangible assets, net	46,524	$ 5,931
Finite-Lived Intangible Asset, Expected Amortization, for Each of Five Succeeding Fiscal Years	$ 1,300

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 80,259	$ 63,547
Investments in marketable securities	50,818	128,134
Trade receivables, net	216,511	109,964
Inventory	66,783	38,791
Prepaid manufacturing	13,772	17,880
Other prepaids and current assets	16,222	22,918
Total current assets	444,365	381,234
Property and equipment, net	6,069	8,754
Inventory, non-current	79,002	76,260
Goodwill and intangible assets, net	46,524	5,931
Other assets, non-current	7,823	8,668
Total assets	583,783	480,847
Current liabilities:
Accounts payable	37,092	11,526
Accrued rebates, fees and reserves	117,369	54,461
Accrued compensation	18,084	22,610
Accrued and other current liabilities	67,114	50,097
Total current liabilities	239,659	138,694
Term loans	246,217	245,483
Convertible notes	226,557	225,575
Lease liabilities, non-current	1,436	5,046
Other liabilities, non-current	3,513	3,467
Total liabilities	717,382	618,265
Commitments and contingencies (Note 9)
Stockholders' deficit:
Common stock ($0.0001 par value; shares authorized: 300,000,000; shares issued and outstanding: 109,113,046 and 78,851,516 at September 30, 2023 and December 31, 2022, respectively)	11	8
Additional paid-in capital	1,366,502	1,204,431
Accumulated other comprehensive loss	(265)	(249)
Accumulated deficit	(1,499,847)	(1,341,608)
Total stockholders' deficit	(133,599)	(137,418)
Total liabilities and stockholders' deficit	$ 583,783	$ 480,847

Fair Value Measurements - Cost, Unrealized Gains or Losses, and Fair Value by Investment Type (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cost	$ 113,253	$ 191,623
Unrealized Gain	1	43
Unrealized (Loss)	(47)	(21)
Fair Value	113,207	191,645
Money Market Funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cost	62,389	55,060
Fair Value	62,389	55,060
U.S. government agency securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cost	18,134	19,929
Unrealized Gain		35
Unrealized (Loss)	(23)
Fair Value	18,111	19,964
US Treasury Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cost	24,988	68,431
Unrealized Gain	1	8
Unrealized (Loss)	(3)	(21)
Fair Value	24,986	68,418
Commercial paper and corporate notes
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cost	7,742	48,203
Unrealized (Loss)	(21)
Fair Value	$ 7,721	$ 48,203

Restructuring Charges

9 Months Ended

Sep. 30, 2023

Restructuring Charges.

Restructuring Charges

14. Restructuring Charges

On March 3, 2023, the Company committed to a plan to reduce its workforce to focus resources on strategic priorities including the commercialization of its diversified product portfolio and development of innovative immuno-oncology product candidates. The reduction in force impacted approximately 50 full-time and part-time employees, effective March 10, 2023 for most of these employees. In the first quarter of 2023, non-recurring restructuring charges associated with the reduction in force consisted of $3.9 million in cash expenses related to personnel expenses such as salaries, severance payments and other benefits; and $1.5 million in non-cash stock-based compensation related to acceleration of vesting and extension of the stock option exercise windows for two impacted executives; partially offset by $0.5 million in non-cash stock-based compensation forfeiture credits. There were no additional restructuring charges in the third quarter of 2023, as the reduction in force was completed during the second quarter of 2023.

For the nine months ended September 30, 2023, the condensed consolidated statement of operations includes $3.6 million in research and development expense and $1.3 million in selling, general and administrative expense related to the reduction in force.

Debt Obligations - Capped Call Transactions - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended
	Apr. 30, 2020	Sep. 29, 2023	Apr. 14, 2020
Option Indexed to Issuer's Equity [Line Items]
Closing stock, price per share		$ 3.74	$ 14.82
Capped Call Transactions in connection with the 2026 Convertible Notes
Option Indexed to Issuer's Equity [Line Items]
Payment for capped call transactions	$ 18.2
Initial cap price of capped call transactions.	$ 25.93
Percentage of cap price	75.00%
Closing stock, price per share			$ 14.82

Condensed Consolidated Statements of Comprehensive Loss (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Condensed Consolidated Statements of Comprehensive Loss
Net loss	$ (39,641)	$ (86,650)	$ (158,239)	$ (232,884)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities, net of tax	32		(15)
Foreign currency translation adjustments, net of tax			(1)
Comprehensive loss	$ (39,609)	$ (86,650)	$ (158,255)	$ (232,884)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 323
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481687/323-10-50-3

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 825
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 28
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482907/825-10-50-28

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
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+ Details

Net Loss Per Share

9 Months Ended

Sep. 30, 2023

Net Loss Per Share

Net Loss Per Share

13. Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive common shares. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period, without consideration for any potential dilutive common share equivalents as their effect would be antidilutive.

The following outstanding dilutive potential shares were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2023	2022	2023	2022
Stock options, including shares subject to ESPP	24,558,893	22,535,371	24,003,706	22,267,304
Restricted stock units	2,141,403	2,305,743	2,354,166	2,401,188
Shares issuable upon conversion of 2022 Convertible Notes	—	—	—	1,442,127
Shares issuable upon conversion of 2026 Convertible Notes	11,942,152	11,942,152	11,942,152	11,942,152
Total	38,642,448	36,783,266	38,300,024	38,052,771

The amounts in the table above exclude any shares contingently issuable pursuant to the CVR Agreement because the conditions that could result in a payment becoming due were not met.

Debt Obligations - Convertible Senior Subordinated Notes due 2026 - Narrative (Details)	1 Months Ended	9 Months Ended
	Apr. 30, 2020 USD ($) $ / shares shares	Sep. 30, 2023 USD ($)	Sep. 29, 2023 $ / shares	Apr. 14, 2020 $ / shares
Debt Instrument
Closing stock, price per share \| $ / shares			$ 3.74	$ 14.82
1.5% Convertible Senior Subordinated Notes due 2026
Debt Instrument
Number of events in default		0
Contractual term		6 years
Convertible Notes \| 1.5% Convertible Senior Subordinated Notes due 2026
Debt Instrument
Principal Amount	$ 230,000,000.0
Stated interest rate	1.50%
Net proceeds from offering	$ 222,200,000
Initial conversion rate, shares of common stock \| shares	51.9224
Principal amount of notes converted into shares	$ 1,000
Initial conversion price per common share \| $ / shares	$ 19.26
Interest rate description	The 2026 Convertible Notes accrue interest at a rate of 1.5% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, since October 15, 2020
Debt instrument maturity date	Apr. 15, 2026
Convertible notes, premium percentage	30.00%
Convertible notes, covenant compliance		As of September 30, 2023, the Company was in full compliance with these covenants and there were no events of default under the 2026 Convertible Notes.
Debt issuance costs		$ 900,000
Remaining unamortized debt discount and debt offering costs		$ 3,443,000
Effective interest rate		2.10%
Convertible Notes \| 1.5% Convertible Senior Subordinated Notes due 2026 \| Scenario, Plan
Debt Instrument
Convertible notes, converted amount		$ 44,700,000

Balance Sheet Components - Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Balance Sheet Components
Accrued commercial and research and development manufacturing	$ 17,057	$ 21,774
Accrued co-development costs payable to Junshi Biosciences	1,293	8,356
Accrued royalties	30,557	5,015
Accrued other	9,698	10,634
Lease liabilities, current	4,469	4,318
Contingent consideration, current	4,040
Total Accrued and other current liabilities	$ 67,114	$ 50,097

Subsequent Events

9 Months Ended

Sep. 30, 2023

Subsequent Events

Subsequent Events

15. Subsequent Events

Common Stock

On October 9, 2023, in accordance with the terms of an Optional Stock Purchase Agreement entered with a CMO on September 28, 2023 (the “Optional Stock Purchase Agreement”), the Company issued 2,225,513 shares of its common stock to the CMO for a price of $3.675 per share, representing an aggregate value of $8.2 million. The Optional Stock Purchase Agreement gave the Company the option, in its sole discretion to elect to pay for certain manufacturing services provided by the CMO by either paying cash or issuing shares of its common stock in a private placement offering (the “Stock Service Fee Payment”). On October 4, 2023, the Company notified the CMO of its election of the Stock Service Fee Payment. The price per share of common stock was equal to the volume-weighted average closing trading price per share of common stock on the Nasdaq Global Market over the ten-trading day period ending on and including October 6, 2023.

Sixth Amendment to Lease

The Company has been a party to an existing Office Lease (as amended, the “Lease”) with Hudson 333 Twin Dolphin Plaza, LLC (the “Landlord”), under which the Company leases approximately 47,789 square feet of office space located at 333 Twin Dolphin Drive, Redwood City, California for the Company’s principal executive offices with an expiration date of September 30, 2024. On October 24, 2023, the Company entered into the Sixth Amendment (the “Amendment”) to the Lease with the Landlord. Under the Amendment, the Company has extended the term of the Lease through September 30, 2027 for only approximately 27,532 square feet of office space (the “Remaining Premises”). For the other 20,257 square feet of office space (the “Reduction Space”), the Amendment provides that the term of the lease shall expire for the Reduction Space on December 31, 2023. After December 31, 2023, the leased premises shall consist only of the Remaining Premises.

Except for the early expiration described above for the Reduction Space, the term of the Lease is extended through September 30, 2027.

The Amendment provides for monthly base rent on the Remaining Premises of approximately $0.2 million per month from January 1, 2024 through September 30, 2024. The Amendment also provides for certain limited rent abatements on the Remaining Premises prior to September 30, 2024. The Amendment provides for annual base rent on

the Remaining Premises from October 1, 2024 through September 30, 2027 starting at approximately $1.8 million per year and increases up to approximately $1.9 million per year.

The Landlord has agreed that the Company shall not be required to remove (or pay for the removal) of certain tenant improvements existing in the Reduction Space. The Company is obligated to pay the Landlord certain costs, taxes and operating expenses related to the Remaining Premises pursuant to the Lease.

Approval of LOQTORZI

On October 27, 2023, the FDA approved LOQTORZI in combination with cisplatin and gemcitabine for the first-line treatment of adults with metastatic or recurrent locally advanced NPC, and as monotherapy for the treatment of adults with recurrent, unresectable, or metastatic NPC with disease progression on or after platinum-containing chemotherapy. The approval was based on results of the JUPITER-02 Phase 3 study and the POLARIS-02 Phase 2 study and is irrespective of a patient’s PD-L1 status. LOQTORZI is a next-generation, programmed death receptor-1 (PD-1) monoclonal antibody that blocks PD-1 ligands PD-L1 and PD-L2 with high potency at a unique site on the PD-1 receptor, enabling the immune system to activate and kill the tumor. The Company plans and projects payment of the $25.0 million milestone due to Junshi Biosciences pursuant to the Collaboration Agreement dated as of February 1, 2021 to occur in March 2024.

Surface Acquisition (Tables)

9 Months Ended

Sep. 30, 2023

Surface Acquisition

Schedule of total consideration paid


(in thousands, except per share amounts)		As of Acquisition Date
Coherus common stock issued		11,971,460
Coherus common stock share price	$	4.89

Fair value of components of purchase price consideration at closing:
Equity of combined company owned by Surface equity holders	$	58,540
Contingent CVR liability		5,290
Equity of combined company owned by Surface former employees ⁽¹⁾		766
Fair value of total purchase consideration	$	64,596

(1)	Represents 161,100 shares of Coherus common stock, net of shares withheld for taxes, issued to Surface’s former employees on the Acquisition Date.

Schedule of purchase price allocation to the estimated fair value of the net assets acquired


(in thousands)		Amounts Recognized at Acquisition Date
Assets Acquired
Cash and cash equivalents	$	6,997
Investments in marketable securities		21,791
Other prepaids and other assets		5,260
In-process research and development		26,239
Out-licenses		13,530
Total assets	$	73,817
Liabilities Assumed
Accrued and other current liabilities	$	7,722
Deferred tax liability		1,499
Total liabilities		9,221
Total net assets acquired	$	64,596

Schedule of amount allocated to identifiable intangible assets


(in thousands)	Useful lives		Fair Value at Acquisition Date
In-process research and development - casdozokitug	n/a	$	25,899
In-process research and development - CHS-114	n/a		340
Out-license - GSK	15 years		2,506
Out-license - Novartis Institutes	15 years		11,024
Total identifiable intangible assets		$	39,769

Schedule of pro forma information does not purport to represent what the Company's actual results would have been if the acquisition had occurred as of January 1, 2022


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Total revenues	$	74,568	$	45,424	$	165,720	$	195,690
Net loss	$	(49,984)	$	(108,472)	$	(204,922)	$	(291,341)

Stock-Based Compensation - Stock-Based Compensation (Details) - Employee And Nonemployee Stock Option And Restricted Stock Units [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Employee Service Share Based Compensation Allocation Of Recognized Period Costs
Stock-based compensation expense	$ 9,953	$ 12,282	$ 32,312	$ 39,011
Stock-based compensation expense capitalized into inventory	373	290	697	904
Cost of Goods Sold
Employee Service Share Based Compensation Allocation Of Recognized Period Costs
Stock-based compensation expense	174	184	535	555
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs
Stock-based compensation expense	2,929	5,173	11,760	14,707
Selling, General and Administrative Expenses
Employee Service Share Based Compensation Allocation Of Recognized Period Costs
Stock-based compensation expense	$ 6,850	$ 6,925	$ 20,017	$ 23,749

Debt Obligations - 2027 Term Loan - Narrative (Details) $ in Thousands		1 Months Ended		3 Months Ended		9 Months Ended
	Jan. 07, 2019 USD ($)	Mar. 31, 2022 USD ($)	Jan. 31, 2022 USD ($) item	Sep. 30, 2023 USD ($)	Mar. 31, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 14, 2022 USD ($)	Jan. 05, 2022 USD ($) tranche	Apr. 30, 2020 USD ($)	Feb. 29, 2016 USD ($)
Debt Instrument [Line Items]
Outstanding amount paid off							$ 81,750
Outstanding amount payoff							$ 109,000
2027 Term Loans
Debt Instrument [Line Items]
Interest rate				13.76%
2027 Term Loans \| BioPharma Credit Investments V GP LLC
Debt Instrument [Line Items]
Principal amount									$ 300,000
Number of tranches \| tranche									4
Net carrying value				$ 246,217		$ 246,217
Quarterly payments \| item			5
Loan agreement covenants, minimum trailing twelve month net sales for current quarter			$ 200,000
Loan agreement covenants, minimum trailing twelve month net sales for the quarter ended March 30, 2024			210,000
Loan agreement covenants, minimum trailing twelve-month net sales for the quarter ended June 30, 2024			230,000
Loan agreement covenants, minimum trailing twelve-month net sales for the quarter ended September 30, 2024			270,000
Loan agreement covenants, minimum trailing twelve-month net sales for the quarter ended December 31, 2024 and thereafter			$ 300,000
Mandatory prepayment term			10 days
Debt discounts and issuance costs			$ 6,800
Remaining unamortized debt discount and debt offering costs				$ 3,783		$ 3,783
Interest rate				13.76%
2027 Term Loans \| Additional facility amount \| BioPharma Credit Investments V GP LLC
Debt Instrument [Line Items]
Principal amount			$ 100,000
2027 Term Loans \| Through March 31, 2023 \| BioPharma Credit Investments V GP LLC
Debt Instrument [Line Items]
Stated interest rate			8.25%
2027 Term Loans \| Through March 31, 2023 \| BioPharma Credit Investments V GP LLC \| LIBOR
Debt Instrument [Line Items]
Floor On Variable Rate			1.00%
2027 Term Loans \| Starting April 1, 2023 \| Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument [Line Items]
Amount added to the variable component						0.26161%
Floor On Variable Rate						1.00%
2027 Term Loans \| Starting April 1, 2023 \| BioPharma Credit Investments V GP LLC
Debt Instrument [Line Items]
Stated interest rate				8.25%		8.25%
Tranche A Loan, funded January 5, 2022 \| BioPharma Credit Investments V GP LLC
Debt Instrument [Line Items]
Principal amount									$ 100,000
Debt discounts and issuance costs			$ 7,800
Tranche B Loan, funded on March 31, 2022 \| BioPharma Credit Investments V GP LLC
Debt Instrument [Line Items]
Principal amount		$ 100,000			$ 100,000
Debt discounts and issuance costs					2,300
Convertible notes, Issuance Cost		$ 1,000			$ 1,000
Tranche C Loan, not funded between April 1, 2022 and March 17, 2023 \| BioPharma Credit Investments V GP LLC
Debt Instrument [Line Items]
Principal amount			50,000
Tranche D Loan, funded on September 14, 2022 \| BioPharma Credit Investments V GP LLC
Debt Instrument [Line Items]
Principal amount								$ 50,000
Convertible notes, Issuance Cost								$ 500
1.5% Convertible Senior Subordinated Notes due 2026 \| Convertible Notes
Debt Instrument [Line Items]
Principal amount										$ 230,000
Net carrying value				$ 226,557		$ 226,557
Stated interest rate										1.50%
Remaining unamortized debt discount and debt offering costs				$ 3,443		$ 3,443
Effective interest rate				2.10%		2.10%
1.5% Convertible Senior Subordinated Notes due 2026 \| BioPharma Credit Investments V GP LLC \| Scenario, Plan \| Minimum
Debt Instrument [Line Items]
Principal amount			50,000
8.2% Convertible Notes due 2022 \| Convertible Notes
Debt Instrument [Line Items]
Principal amount			100,000								$ 100,000
Stated interest rate		8.20%			8.20%						8.20%
Outstanding amount payoff		$ 111,100	111,100
2025 Term Loan \| Lender
Debt Instrument [Line Items]
Principal amount	$ 75,000		75,000
Outstanding amount paid off			$ 81,900
Total term of the loan	6 years
Tranches A, B and D \| BioPharma Credit Investments V GP LLC
Debt Instrument [Line Items]
Remaining unamortized debt discount and debt offering costs				$ 3,800		$ 3,800
Remaining term						3 years 3 months 18 days

Collaborations and Other Arrangements (Details) $ in Thousands, € in Millions			1 Months Ended				3 Months Ended				9 Months Ended		12 Months Ended
	Feb. 01, 2021 USD ($) item	Nov. 04, 2019 EUR (€)	Mar. 31, 2022 USD ($)	Dec. 31, 2020 USD ($)	Oct. 31, 2018 USD ($) item	Jan. 31, 2016 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2022 EUR (€)	Sep. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 EUR (€)	Dec. 31, 2022 USD ($)
Collaborative Arrangements And Noncollaborative Arrangement Transactions
License Agreement Fee			$ 35,000
Royalties due							$ 27,800				$ 27,800				$ 2,900
Research and development							$ 25,647		$ 45,808		$ 83,068	$ 170,336
Finite-Lived Intangible Asset, Useful Life							10 years				10 years
Bioeq IP AG
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Initial term of agreement		10 years
Percentage of gross profits shared		50.00%
Bioeq IP AG \| Licensed Products
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Maximum aggregate milestone payments \| €		€ 12.5
Additional milestone payments related to FDA approval \| €								€ 2.5
Bioeq IP AG \| Research and development
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Upfront and milestone payment													$ 11,100	€ 10.0
Collaboration Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions
License Agreement Fee	$ 35,000
Collaboration Agreement \| Anti-TIGIT Antibody and IL-2 cytokine
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Collaboration Agreement , Maximum Payments On Attainment Of Certain Sales Thresholds For Each Option Program			170,000							$ 170,000
Adimab Development and Option Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Maximum number of antibodies under for research option \| item					10
Minimum Number of Antibodies under Commercialization option \| item					20
Minimum antibodies to be commercialized under commercialization option \| item					1
Technical milestone payments obligated to pay					$ 300
Period for payment of nominal research maintenance fee					4 years
Maximum aggregate milestone payments to be made					$ 13,000
Maximum antibodies partially exercised under commercialization option \| item					10
Percentage of option fee to be paid on partial exercise of commercialization option					65.00%
Additional payment to be made					$ 0
Expiration term from the effective date without providing materials that pass quality control					12 months
Term of agreement					10 years
Novartis Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Potential development milestones						$ 325,000
Sales milestones						$ 200,000
GSK Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Term of agreement				10 years
Sales milestones				$ 485,000
Additional clinical milestones eligible to receive				60,000
Regulatory milestones eligible to receive				$ 155,000
GSK Agreement \| Surface
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Milestone payments earned			$ 30,000
Junshi Biosciences
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Undisclosed preclinical \| item	2
License Agreement Fee										$ 35,000
Collaboration agreement, royalty on net sales for each exercised option, percentage	18.00%
Collaboration agreement, Maximum aggregate one-time payment for achievement of milestones, for each option program	$ 85,000
Maximum paid amount for co-development activities (per licensed compound)	25,000
Research and development							$ 3,100		$ 7,600		$ 7,700	$ 67,600
Junshi Biosciences \| Accrued and other current liabilities
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Co-development, regulatory and technology transfer costs							1,300				1,300
Junshi Biosciences \| Accounts payable
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Co-development, regulatory and technology transfer costs							$ 9,500				$ 9,500
Junshi Biosciences \| Toripalimab
Collaborative Arrangements And Noncollaborative Arrangement Transactions
Collaboration Agreement, upfront amount paid	$ 150,000
Collaboration agreement, royalty on net sales, percentage	20.00%
Collaboration agreement, Maximum aggregate one-time payments for the achievement of various regulatory and sales milestones	$ 380,000

Stockholders' Deficit

9 Months Ended

Sep. 30, 2023

Stockholders Deficit.

Stockholders Deficit

11. Stockholders’ Deficit

Public Offering

On May 16, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with J.P. Morgan Securities LLC and Citigroup Global Markets Inc., as representatives of the several underwriters named therein (collectively, the “Underwriters”), pursuant to which the Company issued and sold an aggregate of 11,764,706 shares (the “Firm Shares”) of its common stock, par value $0.0001 per share, to the Underwriters (the “Public Offering”). Additionally, under the terms of the Underwriting Agreement, the Company granted the Underwriters an option, for 30 days from the date of the Underwriting Agreement, to purchase up to an additional 1,764,705 shares of common stock (the “Option Shares,” and together with the Firm Shares, the “Shares”), which the Underwriters elected to exercise in full. The price to the public in the Public Offering was $4.25 per share. The Underwriters agreed to purchase the Shares from the Company pursuant to the Underwriting Agreement at a price of $3.995 per share.

The Offering was made pursuant to a prospectus supplement and related prospectus filed with the SEC pursuant to the Company’s shelf registration statement on Form S-3 that was declared effective on November 17, 2022 (the

“Registration Statement”) under which the Company may offer and sell up to $150.0 million in the aggregate of its common stock, preferred stock, debt securities, warrants and units from time to time in one or more offerings.

On May 18, 2023, the Company completed the sale and issuance of an aggregate of 13,529,411 Shares, including the exercise in full of the Underwriters’ option to purchase the Option Shares. The Company received net proceeds of approximately $53.6 million, after deducting the Underwriters’ discounts and commissions and offering expenses payable by the Company.

ATM Offering

On November 8, 2022, the Company filed the Registration Statement. Also on November 8, 2022, the Company entered into a sales agreement (“Sales Agreement”) with Cowen and Company, LLC (“TD Cowen”), pursuant to which the Company may issue and sell from time to time up to $150.0 million of its common stock through or to TD Cowen as the Company’s sales agent or principal in an at-the-market offering (“ATM Offering”).

On May 15, 2023, pursuant to an Amendment No. 1 to Sales Agreement and in connection with the Public Offering, the Company reduced the amount of shares that could be issued and sold pursuant to its ATM Offering with TD Cowen by $86.25 million, lowering the aggregate offering price under the Sales Agreement from $150.0 million to $63.75 million.

On September 11, 2023, pursuant to an Amendment No. 2 to Sales Agreement, the Company increased the amount of shares that could be issued and sold pursuant to its ATM Offering with TD Cowen by $28.75 million, increasing the aggregate offering price under the Sales Agreement from $63.75 million to $92.5 million.

The following table summarizes information regarding settlements under the ATM Offering for the three and nine months ended September 30, 2023:


	Three Months Ended		Nine Months Ended
(in thousands, except share and per share data)	September 30, 2023		September 30, 2023
Number of common stock shares sold during the period	2,428,311		3,559,761
Weighted-average price per share	$	4.92	$	5.43
Gross proceeds	$	11,938	$	19,339
Less commissions and fees		(298)		(483)
Net proceeds after commissions and fees	$	11,640	$	18,856

As of September 30, 2023, the Company had approximately $66.5 million of its common stock remaining available for sales under the ATM Offering.

Stockholders' Deficit (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended			9 Months Ended
	Sep. 11, 2023	May 18, 2023	May 16, 2023	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2023	May 15, 2023	Dec. 31, 2022	Nov. 17, 2022	Nov. 08, 2022
Stockholders' Deficit
Common stock, par value				$ 0.0001			$ 0.0001		$ 0.0001
Public Offering
Stockholders' Deficit
Common stock, shares issued and sold		13,529,411	11,764,706
Common stock, par value			$ 0.0001
Aggregate offering price					$ 53,625
Proceeds from issuance of common stock under Offering, net of issuance costs		$ 53,600					$ 53,625
Share price			$ 4.25
Public Offering \| Maximum
Stockholders' Deficit
Shares Offering, Aggregate Amount										$ 150,000
At The Market Offering.
Stockholders' Deficit
Common stock, shares issued and sold				2,428,311			3,559,761
Aggregate offering price				$ 11,437		$ 7,059
Proceeds from issuance of common stock under Offering, net of issuance costs							$ 18,198
Shares Offering, Aggregate Amount, Decrease								$ 86,250
Increase in Amount of Shares To be Issued and Sold	$ 28,750
Common stock, net proceeds				11,640			18,856
Gross proceeds				11,938			19,339
Less commissions and fees				(298)			(483)
Net proceeds after commissions and fees				11,640			18,856
Common stock remaining available for sales under the ATM Offering				$ 66,500			$ 66,500
At The Market Offering. \| Weighted Average
Stockholders' Deficit
Weighted-average price per share				$ 4.92			$ 5.43
At The Market Offering. \| Maximum
Stockholders' Deficit
Shares Offering, Aggregate Amount	$ 92,500							$ 63,750			$ 150,000
Underwriters' Option to Purchase Additional Shares
Stockholders' Deficit
Common stock, shares issued and sold			1,764,705
Share price			$ 3.995
Term of share offering			30 days

Subsequent Events (Details) - Subsequent Event $ / shares in Units, $ in Millions	Oct. 27, 2023 USD ($)	Oct. 24, 2023 USD ($) ft²	Oct. 09, 2023 USD ($) $ / shares shares	Oct. 04, 2023
Junshi Biosciences \| LOQTORZI
Subsequent Event [Line Items]
Milestone payment	$ 25.0
Optional Stock Purchase Agreement \| CMO
Subsequent Event [Line Items]
Issuance of common stock under Offering, net of issuance costs (in shares) \| shares			2,225,513
Share price \| $ / shares			$ 3.675
Issuance of common stock under Offering, net of issuance costs			$ 8.2
Number of trading days considered for price per share of common stock				10 days
Sixth amendment to lease \| Maximum
Subsequent Event [Line Items]
Area of land \| ft²		47,789
Sixth amendment to lease \| Remaining Premises \| Maximum
Subsequent Event [Line Items]
Area of land \| ft²		27,532
Sixth amendment to lease \| January 1, 2024 through September 30, 2024
Subsequent Event [Line Items]
Base rent per month		$ 0.2
Sixth amendment to lease \| October 1, 2024 through September 30, 2027
Subsequent Event [Line Items]
Base rent per year		1.8
Sixth amendment to lease \| October 1, 2024 through September 30, 2027 \| Maximum
Subsequent Event [Line Items]
Base rent per year		$ 1.9
Sixth amendment to lease \| Reduction Space
Subsequent Event [Line Items]
Area of land \| ft²		20,257

Net Loss Per Share - Outstanding Dilutive Potential Shares Excluded from Calculation of Diluted Net loss Per Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Antidilutive securities excluded from computation of EPS
Antidilutive securities excluded from the calculation of diluted net (loss) income per share	38,642,448	36,783,266	38,300,024	38,052,771
Stock options, including shares subject to ESPP
Antidilutive securities excluded from computation of EPS
Antidilutive securities excluded from the calculation of diluted net (loss) income per share	24,558,893	22,535,371	24,003,706	22,267,304
Restricted stock units
Antidilutive securities excluded from computation of EPS
Antidilutive securities excluded from the calculation of diluted net (loss) income per share	2,141,403	2,305,743	2,354,166	2,401,188
8.2% Convertible Notes due 2022 \| Shares issuable upon conversion of convertible notes
Antidilutive securities excluded from computation of EPS
Antidilutive securities excluded from the calculation of diluted net (loss) income per share				1,442,127
1.5% Convertible Senior Subordinated Notes due 2026 \| Shares issuable upon conversion of convertible notes
Antidilutive securities excluded from computation of EPS
Antidilutive securities excluded from the calculation of diluted net (loss) income per share	11,942,152	11,942,152	11,942,152	11,942,152

Inventory (Tables)

9 Months Ended

Sep. 30, 2023

Inventory

Schedule of Inventory

Inventory consisted of the following:


	September 30,		December 31,
(in thousands)	2023		2022
Raw materials	$	11,326	$	10,262
Work in process		106,608		86,712
Finished goods		27,851		18,077
Total	$	145,785	$	115,051

Schedule of Balance Sheet Classification


	September 30,		December 31,
(in thousands)	2023		2022
Inventory	$	66,783	$	38,791
Inventory, non-current		79,002		76,260
Total	$	145,785	$	115,051

Inventory - Balance Sheet Classifications (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventory
Inventory	$ 66,783	$ 38,791
Inventory, non-current	79,002	76,260
Total	$ 145,785	$ 115,051

Balance Sheet Components (Tables)

9 Months Ended

Sep. 30, 2023

Organization and Operations

Schedule of Property and Equipment, Net

Property and equipment, net consisted of the following:


	September 30,		December 31,
(in thousands)	2023		2022
Machinery and equipment	$	13,141	$	12,944
Computer equipment and software		3,232		3,183
Furniture and fixtures		1,258		1,258
Leasehold improvements		6,234		6,198
Finance lease right of use assets		2,663		4,632
Construction in progress		407		696
Total property and equipment		26,935		28,911
Accumulated depreciation and amortization		(20,866)		(20,157)
Property and equipment, net	$	6,069	$	8,754

Schedule of Goodwill and Intangible Assets, Net


	September 30,		December 31,
(in thousands)	2023		2022
Goodwill	$	943	$	943
Indefinite-lived assets - IPR&D		28,859		2,620
Finite-lived assets, net		16,722		2,368
Total Goodwill and intangible assets, net	$	46,524	$	5,931

Schedule of Accrued Liabilities

Accrued and other current liabilities consisted of the following:


	September 30,		December 31,
(in thousands)	2023		2022
Accrued commercial and research and development manufacturing	$	17,057	$	21,774
Accrued co-development costs payable to Junshi Biosciences		1,293		8,356
Accrued royalties		30,557		5,015
Accrued other		9,698		10,634
Lease liabilities, current		4,469		4,318
Contingent consideration, current		4,040		—
Total Accrued and other current liabilities	$	67,114	$	50,097

Schedule of Other Liabilities, Non-current


	September 30,		December 31,
(in thousands)	2023		2022
Contingent consideration, non-current	$	1,352	$	102
Deferred tax liability		1,102		—
Other		1,059		3,365
Total Other liabilities, non-current	$	3,513	$	3,467

Surface Acquisition - Consideration paid (Details) - Surface Oncology, Inc. $ / shares in Units, $ in Thousands	Sep. 08, 2023 USD ($) $ / shares shares
Surface Acquisition
Coherus common stock issued \| shares	11,971,460
Share price (in dollars per share) \| $ / shares	$ 4.89
Equity of combined company owned by Surface equity holders	$ 58,540
Contingent CVR liability	5,290
Equity of combined company owned by Surface former employees (1)	766
Business Combination, Consideration Transferred, Total	$ 64,596

Organization and Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Organization and Summary of Significant Accounting Policies
Cash and cash equivalents	$ 80,259	$ 63,547	$ 286,805	$ 417,195
Restricted cash	452	440	440	440
Total cash, cash equivalents and restricted cash	$ 80,711	$ 63,987	$ 287,245	$ 417,635

Debt Obligations - 2027 Term Loans Interest Expense Components (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Debt Instrument [Line Items]
Amortization of debt discount and debt issuance costs			$ 1,812	$ 5,631
2027 Term Loans \| BioPharma Credit Investments V GP LLC
Debt Instrument [Line Items]
Contractual interest	$ 8,790	$ 5,665	25,404	12,577
Amortization of debt discount and debt issuance costs	255	622	830	4,122
Total Interest expense	$ 9,045	$ 6,287	$ 26,234	$ 16,699

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Surface Acquisition - Estimated fair value of the net assets acquired (Details) - Surface Oncology, Inc. $ in Thousands	Sep. 08, 2023 USD ($)
Assets Acquired
Cash and cash equivalents	$ 6,997
Investments in marketable securities	21,791
Other prepaids and other assets	5,260
Identifiable intangible assets	39,769
Total assets	73,817
Liabilities Assumed
Accrued and other current liabilities	7,722
Deferred tax liability	1,499
Total liabilities	9,221
Total net assets acquired	64,596
Out-licenses
Assets Acquired
Identifiable intangible assets	13,530
In-process research and development
Assets Acquired
Identifiable intangible assets	$ 26,239

Stock-Based Compensation - Additional Information (Details) - Employee Severance [Member] - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2023
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation includes restructuring charges		$ 1.5
Forfeiture credit		$ 0.5
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation includes restructuring charges	$ 0.0		$ 1.1
Selling, General and Administrative Expenses
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Forfeiture credit			$ 0.1

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (39,641)	$ (42,869)	$ (75,729)	$ (86,650)	$ (50,150)	$ (96,084)	$ (158,239)	$ (232,884)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventory
Raw materials	$ 11,326	$ 10,262
Work in process	106,608	86,712
Finished goods	27,851	18,077
Total	$ 145,785	$ 115,051

Organization and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Organization and Summary of Significant Accounting Policies

Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash



(in thousands)	January 1,
At beginning of period:	2023		2022
Cash and cash equivalents	$	63,547	$	417,195
Restricted cash		440		440
Total cash, cash equivalents and restricted cash	$	63,987	$	417,635

	September 30,
At end of period:	2023		2022
Cash and cash equivalents	$	80,259	$	286,805
Restricted cash		452		440
Total cash, cash equivalents and restricted cash	$	80,711	$	287,245

Inventory - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Inventory [Line Items]
Write-down of inventory in cost of goods sold	$ 26,000	$ 4,369	$ 26,000
Inventory		66,783		$ 38,791
Prepayment made for manufacturing services		13,772		17,880
Prepayments made to a CMO for manufacturing services for UDENYCA		12,400		13,000
Prepayments made to a CMO For Other Research And Development Pipeline Program		1,400		4,900
YUSIMRY
Inventory [Line Items]
Inventory		$ 41,100		$ 23,700

Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue:
Net revenue	$ 74,568	$ 45,424	$ 165,720	$ 165,690
Costs and expenses:
Cost of goods sold	32,703	35,234	74,425	55,881
Research and development	25,647	45,808	83,068	170,336
Selling, general and administrative	48,224	44,831	142,521	144,860
Total costs and expenses	106,574	125,873	300,014	371,077
Loss from operations	(32,006)	(80,449)	(134,294)	(205,387)
Interest expense	(10,268)	(7,540)	(29,923)	(23,089)
Loss on debt extinguishment				(6,222)
Other income (expense), net	2,253	1,339	5,598	1,814
Loss before income taxes	(40,021)	(86,650)	(158,619)	(232,884)
Income tax provision (benefit)	(380)		(380)
Net loss	$ (39,641)	$ (86,650)	$ (158,239)	$ (232,884)
Net (loss) income per share:
Basic (In dollar per share)	$ (0.41)	$ (1.11)	$ (1.79)	$ (3.00)
Diluted (In dollar per share)	$ (0.41)	$ (1.11)	$ (1.79)	$ (3.00)
Weighted-average number of shares used in computing basic and diluted net loss per share:
Basic (In shares)	97,738,509	77,746,895	88,277,936	77,520,244
Diluted (In shares)	97,738,509	77,746,895	88,277,936	77,520,244

Fair Value Measurements - Financial Assets Measured on a Recurring Basis (Details) - Fair Value Measurements Recurring Basis - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financial assets measured at fair value on a recurring basis
Total financial assets	$ 113,207	$ 191,645
Contingent consideration	5,392
Level 1
Financial assets measured at fair value on a recurring basis
Total financial assets	105,486	143,442
Level 2
Financial assets measured at fair value on a recurring basis
Total financial assets	7,721	48,203
Level 3
Financial assets measured at fair value on a recurring basis
Contingent consideration	5,392
U.S. government agency securities
Financial assets measured at fair value on a recurring basis
Total financial assets	18,111	19,964
U.S. government agency securities \| Level 1
Financial assets measured at fair value on a recurring basis
Total financial assets	18,111	19,964
US Treasury Securities
Financial assets measured at fair value on a recurring basis
Total financial assets	24,986	68,418
US Treasury Securities \| Level 1
Financial assets measured at fair value on a recurring basis
Total financial assets	24,986	68,418
Commercial paper and corporate notes
Financial assets measured at fair value on a recurring basis
Total financial assets	7,721	48,203
Commercial paper and corporate notes \| Level 2
Financial assets measured at fair value on a recurring basis
Total financial assets	7,721	48,203
Money market funds
Financial assets measured at fair value on a recurring basis
Total financial assets	62,389	55,060
Money market funds \| Level 1
Financial assets measured at fair value on a recurring basis
Total financial assets	$ 62,389	$ 55,060

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Collaborations and Other Arrangements

9 Months Ended

Sep. 30, 2023

Collaborations and Other Arrangements

Collaborations and Other Arrangements

7. Collaborations and Other Arrangements

In-Licensing Agreements

Junshi Biosciences

On February 1, 2021, the Company entered into an Exclusive License and Commercialization Agreement (the “Collaboration Agreement”) with Junshi Biosciences for the co-development and commercialization of LOQTORZI, Junshi Biosciences’ anti-PD-1 antibody, in the United States and Canada.

Under the terms of the Collaboration Agreement, the Company paid $150.0 million upfront for exclusive rights to LOQTORZI in the United States and Canada, an option in these territories to Junshi Biosciences’ anti-TIGIT antibody CHS-006, an option in these territories to a next-generation engineered IL-2 cytokine, and certain negotiation rights to two undisclosed preclinical immuno-oncology drug candidates. The Company will have the right to conduct all commercial activities of LOQTORZI in the United States and Canada. The Company will be obligated to pay Junshi Biosciences a 20% royalty on net sales of LOQTORZI and up to an aggregate $380.0 million in one-time payments for the achievement of various regulatory and sales milestones.

In March 2022, the Company paid $35.0 million for the exercise of its option to license CHS-006. Junshi Biosciences and the Company are jointly developing CHS-006 with each party responsible for the associated development costs as set forth in the Collaboration Agreement. If the Company exercises its remaining option for the IL-2 cytokine, it will be

obligated to pay an additional option exercise fee of $35.0 million. Additionally, for each exercised option, the Company will be obligated to pay Junshi Biosciences an 18% royalty on net sales, up to $85.0 million for the achievement of certain regulatory approvals, and up to $170.0 million for the attainment of certain sales thresholds. Under the Collaboration Agreement, the Company retains the right to collaborate in the development of LOQTORZI and the other licensed compounds, including CHS-006, and will pay for a portion of these co-development activities up to a maximum of $25.0 million per licensed compound per year. Beginning in 2023, the scope of the development plan for LOQTORZI in the United States was reduced based on changes approved by the Company and Junshi Biosciences. Additionally, the Company is responsible for certain associated regulatory and technology transfer costs for LOQTORZI and other licensed compounds and will reimburse Junshi Biosciences for such costs.

The licensing transaction and the exercise of the option were accounted for as asset acquisitions under the relevant accounting rules. Research and development expenses recognized for obligations to Junshi Biosciences were $3.1 million and $7.7 million for the three and nine months ended September 30, 2023, respectively. Research and development expenses were $7.6 million for the three months ended September 30, 2022 and $67.6 million in the nine months ended September 30, 2022, inclusive of the $35.0 million option fee incurred in the first quarter of 2022. In the condensed consolidated balance sheets as of September 30, 2023, the Company has classified $1.3 million in accrued and other current liabilities and $9.5 million in accounts payable related to the co-development, regulatory and technology transfer costs related to these programs.

As of September 30, 2023, the Company did not have any outstanding milestone or royalty payment obligations to Junshi Biosciences. The additional milestone payments and royalties are contingent upon future events and, therefore, will be recorded when it is probable that a milestone will be achieved or when royalties are due.

Bioeq

On November 4, 2019, the Company entered into a license agreement with Bioeq AG (“Bioeq”) (the “Bioeq License Agreement”) for the commercialization of CIMERLI, a biosimilar version of ranibizumab (Lucentis), in certain dosage forms in both a vial and pre-filled syringe presentation (the “Bioeq Licensed Products”). Under the Bioeq License Agreement, Bioeq granted to the Company an exclusive, royalty-bearing license to commercialize the Bioeq Licensed Products in the field of ophthalmology (and any other approved labelled indication) in the United States. Bioeq will supply to the Company the Bioeq Licensed Products in accordance with terms and conditions specified in the Bioeq License Agreement and a manufacturing and supply agreement to be executed by the parties in accordance therewith. The Bioeq License Agreement’s initial term continues in effect for ten years after the first commercial sale of a Bioeq Licensed Product in the United States, and thereafter renews for an unlimited period of time unless otherwise terminated in accordance with its terms.

Bioeq will manufacture and supply the Bioeq Licensed Products to the Company in accordance with terms and conditions specified in the Bioeq License Agreement and a manufacturing and supply agreement between the Company and Bioeq dated September 29, 2022 (the “Bioeq Manufacturing Agreement”). The Bioeq Manufacturing Agreement will remain in force until the first to occur of the following: (1) the termination of the Bioeq License Agreement; (2) the exercise of a right to termination by the Company or Bioeq for a material breach of the other party that is not cured in accordance with the Bioeq Manufacturing Agreement; and (3) the exercise of a right to termination by Bioeq if invoices are not paid in full in accordance with the Bioeq Manufacturing Agreement.

Under the Bioeq License Agreement, the Company was required to use commercially reasonable efforts to develop and obtain regulatory approval of the Bioeq Licensed Products in the United States in accordance with a development and manufacturing plan, and the Company was required to use commercially reasonable efforts to commercialize the Bioeq Licensed Products in accordance with a commercialization plan. Additionally, the Company was required to commit certain post-launch resources to the commercialization of the Bioeq Licensed Products for a limited time as specified in the agreement.

The Company accounted for the licensing transaction as an asset acquisition under the relevant accounting rules. The Company paid Bioeq an upfront and a milestone payment aggregating to €10 million ($11.1 million), which was recorded as research and development expense in the Company’s consolidated statement of operations in 2019. The terms of the Bioeq License Agreement include an aggregate of up to €12.5 million in additional milestone payments in connection with the achievement of certain development and regulatory milestones with respect to the Bioeq Licensed Products in the United States including a €2.5 million milestone related to the FDA approval of the CIMERLI Section 351(k) BLA that was paid in the fourth quarter of 2022. This was recorded as an intangible asset and is being amortized over ten years. The Company shares a percentage of gross profits on sales of Bioeq Licensed Products in the United States with Bioeq in the low- to mid-fifty percent range. Royalties due to Bioeq were $27.8 million and $2.9 million as of September 30, 2023 and December 31, 2022, respectively. The remaining milestone payments and royalties are contingent upon future events and, therefore, will be recorded when it becomes probable that a milestone will be achieved.

Adimab Development and Option Agreement

In October 2018, Surface and Adimab LLC (“Adimab”), entered into an amended and restated development and option agreement, (as amended by the amendments dated as of December 16, 2020, June 1, 2022 and July 18, 2022, “the A&R Adimab Agreement”), which amended and restated the development and option agreement with Adimab dated July 2014, as amended, (“the Original Adimab Agreement”), for the discovery and optimization of proprietary antibodies as potential therapeutic product candidates. Under the A&R Adimab Agreement, the Company will select biological targets against which Adimab will use its proprietary platform technology to research and develop antibody proteins using a mutually agreed upon research plan. The A&R Adimab Agreement, among other things, extended the discovery term of the Original Adimab Agreement, provided access to additional antibodies, and expanded the Company’s right to evaluate and use antibodies that were modified or derived using Adimab technology for diagnostic purposes.

Upon the Company’s selection of a target, the Company and Adimab will initiate a research plan and the discovery term begins. During the discovery term, Adimab will grant the Company a non-exclusive, non-sublicensable license under its technology with respect to the target, to research, design and preclinically develop and use antibodies that were modified or derived using Adimab technology, solely to evaluate such antibodies, perform the Company’s responsibilities under the research plan, and use such antibodies for certain diagnostic purposes. The Company also will grant to Adimab a non-exclusive, nontransferable license with respect to the target under the Company’s technology that covers or relates to such target, solely to perform its responsibilities under the research plan during the discovery period. The Company is required to pay Adimab at an agreed upon rate for its full-time employees during the discovery period while Adimab performs research on each target under the applicable research plan.

Adimab granted the Company an exclusive option to obtain a non-exclusive, worldwide, fully paid-up, sublicensable license under Adimab’s platform patents and other Adimab technology solely to research up to ten antibodies, chosen by the Company against a specific biological target for a specified period of time (the “Research Option”). In addition, Adimab granted the Company an exclusive option to obtain a worldwide, royalty-bearing, sublicensable license under Adimab platform patents and other Adimab technology to exploit, including commercially, 20 or more antibodies against specific biological targets (the “Commercialization Option”). Upon the exercise of a Commercialization Option, and payment of the applicable option fee to Adimab, Adimab will assign the Company the patents that cover the antibodies selected by such Commercialization Option. The Company will be required to use commercially reasonable efforts to develop, seek market approval of, and commercialize at least one antibody against the target covered by the Commercialization Option in specified markets upon the exercise of a Commercialization Option.

Under the A&R Adimab Agreement, the Company is obligated to make milestone payments and to pay specified fees upon the exercise of the Research Option or Commercialization Option. During the discovery term, the Company may be obligated to pay Adimab up to $0.3 million for technical milestones achieved against each biological target. Upon exercise of a Research Option, the Company is obligated to pay a nominal research maintenance fee on each of the next

four anniversaries of the exercise. Upon the exercise of each Commercialization Option, the Company will be required to pay an option exercise fee of a low seven-digit dollar amount, and the Company may be responsible for milestone payments of up to an aggregate of $13.0 million for each licensed product that receives marketing approval. For any licensed product that is commercialized, the Company is obligated to pay Adimab tiered royalties of a low to mid single-digit percentage on worldwide net sales of such product. The Company may also partially exercise a Commercialization Option with respect to ten antibodies against a biological target by paying 65% of the option fee and later either (i) paying the balance and choosing additional antibodies for commercialization, up to the maximum number under the Commercialization Option, or (ii) foregoing the Commercialization Option entirely. For any Adimab diagnostic product that is used with or in connection with any compound or product other than a licensed antibody or licensed product, the Company is obligated to pay Adimab up to a low seven digits in regulatory milestone payments and low single-digit royalties on net sales. No additional payment is due with respect to any companion diagnostic or any diagnostic product that does not contain any licensed antibody. Any payments payable to Adimab as a result of any product candidates being developed pursuant to the GSK Agreement, will be payable to Adimab directly by GSK.

The A&R Adimab Agreement will remain in effect until (a) the earlier of (i) the expiration of the Research and Commercialization Options (if they expire without exercise) and (ii) 12 months from the effective date without the Company providing materials that pass Adimab’s quality control; or (b) if a Research Option is exercised but the Commercialization Option is not, then upon the expiration of the last to expire research license term; or (c) upon commercialization of a product, until the end of the royalty term, which will vary on a product-by-product and country-by-country basis, ending on the later of (y) the expiration of the last valid claim covering the licensed product in such country as the product is manufactured or sold, or (z) ten years after the first commercial sale of the licensed product in such country.

Either party may terminate the A&R Adimab Agreement for material breach if such breach remains uncured for a specified period of time, however, if a Research Option or Commercialization Option has been exercised and the breach only applies to the applicable target of such Research Option or Commercialization Option, then the termination right will only apply to such target. The Company may also terminate the A&R Adimab Agreement for any reason with prior notice to Adimab. If Adimab is bankrupt, the Company will be entitled to a complete duplicate of, or complete access to, all rights and licenses granted under or pursuant to the A&R Adimab Agreement.

Out-Licensing Agreements Acquired as part of the Surface Acquisition

On September 8, 2023, at the closing of the Surface Acquisition, all the assets, liabilities, rights and obligations of Surface were assumed by the Company’s direct, wholly-owned subsidiary, Surface Oncology, LLC. See further details in Note 6. Surface Acquisition above.

Novartis Institutes

In January 2016, Surface entered into the Novartis Agreement. Pursuant to the Novartis Agreement, Surface granted Novartis Institutes a worldwide exclusive license to research, develop, manufacture and commercialize antibodies that target cluster of differentiation 73 (“CD73”). Under the Novartis Agreement, the Company is currently entitled to potential development milestones of $325.0 million and sales milestones of $200.0 million, as well as tiered royalties on annual net sales by Novartis Institutes ranging from high single-digit to mid-teens percentages upon the successful commercialization of NZV930. Due to the uncertainty of pharmaceutical development and the historical failure rates generally associated with drug development, the Company may not receive any milestone payments or any royalty payments under the Novartis Agreement. The Company did not recognize any revenue relating to the Novartis Agreement during the three months ended September 30, 2023.

Unless terminated earlier, the Novartis Agreement will continue in effect until neither the Company nor Novartis Institutes is researching, developing, manufacturing or commercializing NZV930. Novartis Institutes may terminate the Novartis Agreement for any or no reason upon prior notice to the Company within a specified time period. Either party

may terminate the Novartis Agreement in full if an undisputed material breach is not cured within a certain period of time or upon notice of insolvency of the other party. To the extent Novartis Institutes terminates for convenience, or the Company terminates for Novartis Institutes’ uncured material breach, Novartis Institutes will grant the Company, on mutually agreeable financial terms, an exclusive, worldwide, irrevocable, perpetual and royalty-bearing license with respect to intellectual property controlled by Novartis Institutes that is reasonably necessary to research, develop, manufacture or commercialize NZV930.

GSK Agreement

In December 2020, Surface entered into the GSK Agreement. Pursuant to the GSK Agreement, Surface granted GSK a worldwide exclusive, sublicensable license to develop, manufacture and commercialize antibodies that target CD112R, also known as PVRIG, including the antibody GSK4381562 (the “Licensed Antibodies”). GSK is responsible for the development, manufacturing and commercialization of the Licensed Antibodies and a joint development committee was formed to facilitate information sharing. GSK is responsible for all costs and expenses of such development, manufacturing and commercialization and is obligated to provide the Company with updates on its development, manufacturing and commercialization activities through the joint development committee. In March 2022, Surface earned a $30.0 million milestone payment from GSK upon the dosing of the first patient in the Phase 1 trial of GSK4381562. The Company is eligible to receive up to $60.0 million in additional clinical milestones and $155.0 million in regulatory milestones. In addition, the Company may receive up to $485.0 million in sales milestone payments. The Company is also eligible to receive royalties on global net sales of any approved products based on the Licensed Antibodies, ranging in percentages from high single digits to mid-teens. Due to the uncertainty of pharmaceutical development and the historical failure rates generally associated with drug development, the Company may not receive any milestone payments or any royalty payments under the GSK Agreement. The Company did not recognize license-related revenue under the GSK Agreement during the three months ended September 30, 2023.

Unless terminated earlier, the GSK Agreement expires on a licensed product-by-licensed product and country-by-country basis on the later of ten years from the date of first commercial sale or when there is no longer a valid patent claim or regulatory exclusivity covering such licensed product in such country. Either party may terminate the GSK Agreement for an uncured material breach by the other party or upon the bankruptcy or insolvency of the other party. GSK may terminate the GSK Agreement for its convenience. The Company may terminate the GSK Agreement if GSK institutes certain actions related to the licensed patents or if GSK ceases development activities, other than for certain specified technical or safety reasons. In the event of termination, the Company would regain worldwide rights to the terminated program.

Other

On January 9, 2023, the Company announced that it entered into the Term Sheet with Klinge Biopharma for the exclusive commercialization rights to FYB203, a biosimilar candidate to Eylea® (aflibercept), in the United States. The Company and Klinge Biopharma continue to conduct due diligence and discuss terms of the transaction. The material terms of the transaction with Klinge Biopharma will be included in a subsequent filing by the Company when definitive agreements are executed.

Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2023

Net Loss Per Share

Schedule of Outstanding Dilutive Potential Shares Excluded from Calculation of Diluted Net loss Per Share

The following outstanding dilutive potential shares were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2023	2022	2023	2022
Stock options, including shares subject to ESPP	24,558,893	22,535,371	24,003,706	22,267,304
Restricted stock units	2,141,403	2,305,743	2,354,166	2,401,188
Shares issuable upon conversion of 2022 Convertible Notes	—	—	—	1,442,127
Shares issuable upon conversion of 2026 Convertible Notes	11,942,152	11,942,152	11,942,152	11,942,152
Total	38,642,448	36,783,266	38,300,024	38,052,771

Debt Obligations - 2026 Convertible Notes Interest Expense Components (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Debt Instrument
Amortization of debt discount and debt issuance costs			$ 1,812	$ 5,631
1.5% Convertible Senior Subordinated Notes due 2026 \| Convertible Notes
Debt Instrument
Stated coupon interest	$ 863	$ 863	2,588	2,588
Amortization of debt discount and debt issuance costs	329	322	982	962
Total Interest expense	$ 1,192	$ 1,185	$ 3,570	$ 3,550

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Debt Obligations - 2025 Term Loan - Narrative (Details) - USD ($) $ in Thousands		1 Months Ended	9 Months Ended
	Jan. 07, 2019	Jan. 31, 2022	Sep. 30, 2022
Debt Instrument
Outstanding amount paid off			$ 81,750
Loss on debt extinguishment			(6,222)
Lender \| 2025 Term Loan
Debt Instrument
Total term of the loan	6 years
Principal Amount	$ 75,000	$ 75,000
Outstanding amount paid off		$ 81,900
Prepayment premium percentage		5.00%
Percentage required to pay an additional exit fee on principal amount		4.00%
Loss on debt extinguishment		$ (6,200)
Interest expense			$ 200

Surface Acquisition (Details) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended	9 Months Ended
	Sep. 08, 2023 USD ($) item $ / shares shares	Sep. 30, 2023 USD ($) $ / shares	Sep. 30, 2023 USD ($) $ / shares	Sep. 30, 2023 USD ($) $ / shares	Dec. 31, 2022 USD ($) $ / shares
Surface Acquisition
Common stock, par value \| $ / shares		$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001
Goodwill		$ 943	$ 943	$ 943	$ 943
Surface Oncology, Inc.
Surface Acquisition
Business Combination, Number of Shares Issued in Exchange of Each Share of Acquiree \| shares	0.1960
Share price (in dollars per share) \| $ / shares	$ 4.89
Contingent value right per share \| item	1
Contingent value rights payment period	10 years
Share price \| $ / shares	$ 5.2831
Business combination consideration transferred	$ 64,596
Business Combination, Number of Shares Issued to Former Employees of Acquiree shares \| shares	161,100
Goodwill	$ 0
Business Combination, Number of Out Licensed Partnership Program \| item	2
Revenue of Acquiree since Acquisition Date		0
Earnings or Loss of Acquiree since Acquisition Date		$ 1,400
Acquisition related costs			$ 2,600	$ 4,500
Surface Oncology, Inc. \| Surface GSK Agreement
Surface Acquisition
Milestone and royalty based CVR payments (as percent)	70.00%
Surface Oncology, Inc. \| Surface Novartis Agreement
Surface Acquisition
Milestone and royalty based CVR payments (as percent)	70.00%
Surface Oncology, Inc. \| Surface's SRF114 proprietary drug product candidate
Surface Acquisition
Upfront payment based CVR payments (as percent)	25.00%
Surface Oncology, Inc. \| Surface's SRF388 proprietary drug product candidate
Surface Acquisition
Upfront payment based CVR payments (as percent)	50.00%