XML 20 R11.htm IDEA: XBRL DOCUMENT

Inventory

9 Months Ended

Sep. 30, 2022

4. Inventory

Inventory consisted of the following:


	September 30,		December 31,
(in thousands)	2022		2021
Raw materials	$	10,432	$	4,870
Work in process		77,296		65,117
Finished goods		17,429		23,265
Total	$	105,157	$	93,252

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 and 2021, the Company recorded write-downs of inventory of $26.0 million and $5.2 million, respectively, in cost of goods sold in the condensed consolidated statements of operations. The write-down during the third quarter of 2022 was due to the competitive environment and lower demand for UDENYCA resulting in certain inventory becoming at risk of expiration, which increased net loss by $26.0 million and basic and diluted net loss per share by $0.33 and $0.34 per share for the three- and nine-month periods ended September 30, 2022, respectively. The inventory write-down during the third quarter of 2021 was for inventory that did not meet acceptance criteria. Inventory reserves were $26.0 million and $0.2 million as of September 30, 2022 and December 31, 2021, respectively.

The Company began capitalizing YUSIMRY inventory in the second quarter of 2022 and had $24.6 million of such inventory recognized on the condensed consolidated balance sheets at September 30, 2022. 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, 2022 and December 31, 2021, the non-current portion of inventory consisted of raw materials, work in process and a portion of finished goods. The following tables presents the inventory balance sheet classifications:


	September 30,		December 31,
(in thousands)	2022		2021
Inventory	$	27,719	$	37,642
Inventory, non-current		77,438		55,610
Total	$	105,157	$	93,252

Prepaid manufacturing of $20.6 million as of September 30, 2022 includes prepayments of $16.6 million to contract manufacturing organizations (“CMOs”) for manufacturing services for our products, which the Company expects to be converted into inventory within the next twelve months; and prepayments of $4.0 million to various CMOs for research

and development pipeline programs. Prepaid manufacturing of $13.7 million as of December 31, 2021 included prepayments of $8.3 million to a CMO for manufacturing services for UDENYCA; and prepayments of $5.4 million to various CMOs for research and development pipeline programs.

In February 2021, the Company announced the discontinuation of the development of CHS-2020, a biosimilar of Eylea® as part of a realignment of research and development resources toward other development programs. As a result, during the quarter ended March 31, 2021, the Company recognized $11.5 million within research and development expenses on its condensed consolidated statement of operations, which included an impairment charge of $3.2 million for the write-off of prepaid manufacturing services no longer deemed to have future benefits. No material expense relating to the discontinuation of CHS-2020 was recognized after March 31, 2021.