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Acquisition and Disposition | 6 Months Ended
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Jun. 30, 2024
Acquisition and Disposition |
Acquisition and Disposition | 6. Acquisition and Dispositions 2024 Dispositions ​ YUSIMRY Sale On June 26, 2024, the Company completed the sale of its YUSIMRY immunology franchise which comprised certain assets, including certain YUSIMRY intellectual property, contracts, YUSIMRY inventory, and all activities related to research and development of YUSIMRY. In exchange, HKF paid upfront cash consideration of $40.0 million and assumed certain liabilities, including $17.0 million of inventory purchase commitments. During the second quarter of 2024, the Company recognized a net gain on the YUSIMRY Sale of $22.9 million, which included the cash receipts of $40.0 million less net assets transferred to HKF or otherwise derecognized and transaction costs of $0.9 million. At June 30, 2024, unpaid transaction costs totaled $0.9 million. The pretax profit (loss) related to the YUSIMRY immunology franchise prior to the YUSIMRY Sale, which excludes any corporate overhead allocations, was $0.9 million and $1.4 million during the three and six months ended June 30, 2024, respectively, and $0.8 million and $(10.1) million during the three and six months ended June 30, 2023, respectively. In connection with the YUSIMRY Sale, the Company and HKF entered into the YUSIMRY TSA, pursuant to which the Company is providing certain business support services on behalf of HKF including billings, collections, and the remittance of rebates, to ensure business continuity for patients and customers for a period not expected to extend beyond December 31, 2024. Under the YUSIMRY TSA, the Company is entitled to be reimbursed for its costs which were immaterial for the three and six months ended June 30, 2024. As of June 30, 2024, assets related to transactions entered into on behalf of HKF in accordance with the YUSIMRY TSA of $0.3 million were presented in TSA receivables, net and liabilities related to transactions entered into on behalf of HKF in accordance with the YUSIMRY TSA of $0.3 million were presented in TSA payables and other accrued liabilities in the condensed consolidated balance sheets. ​ CIMERLI Sale On March 1, 2024, the Company completed the sale of its CIMERLI ophthalmology franchise through the sale of its subsidiary, Coherus Ophthalmology, to Sandoz for upfront, all-cash consideration of $170.0 million plus an additional $17.8 million for CIMERLI product inventory and prepaid manufacturing assets. During the first quarter of 2024, the Company recognized a net gain on the CIMERLI Sale of $153.6 million, which includes the cash receipts of $187.8 million less assets transferred to Sandoz, assets derecognized, transaction costs of $7.2 million, and other related employee transition expenses. As of June 30, 2024, unpaid transaction costs and commitments for retention bonuses totaled $10.0 million. The pretax profit (loss) related to the CIMERLI ophthalmology franchise prior to the CIMERLI Sale, which excludes any corporate overhead allocations, was $7.4 million during the six months ended June 30, 2024, and $2.7 million and $(1.2) million during the three and six months ended June 30, 2023, respectively. ​ In connection with the CIMERLI Sale, the Company and Sandoz entered into the CIMERLI TSA, pursuant to which the Company is providing certain business support services on behalf of Sandoz including billings, collections, and the remittance of rebates, to ensure business continuity for patients and customers for a period not expected to extend beyond December 31, 2024. Under the CIMERLI TSA, the Company is entitled to be reimbursed for its costs and has recorded income of $0.8 million and $1.1 million for the three and six months ended June 30, 2024 in other income (expense), net in the condensed consolidated statements of operations. As of June 30, 2024, assets related to transactions entered into on behalf of Sandoz in accordance with the CIMERLI TSA of $138.0 million were presented in TSA receivables, net and liabilities related to transactions entered into on behalf of Sandoz in accordance with the CIMERLI TSA of $133.3 million were presented in TSA payables and other accrued liabilities in the condensed consolidated balance sheet. 2023 Acquisition 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. (“Merger Sub I”), Crimson Merger Sub II, LLC (“Merger Sub II,” and together with Merger Sub I, the “Merger Subs”), and Surface, the Company completed the Surface Acquisition. 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 (subject to certain exceptions) 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);
| ● | 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 royalty and milestone payments for CHS-114 and casdozokitug. 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
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 that, even after reassessing its identification of all assets acquired and liabilities assumed, 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 amounts allocated to identifiable intangible assets was as follows: ​
​ | ​ | ​ | ​ | ​ | ​
(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
​ The out-license intangible assets represent potential milestone and royalty-based payments to be received under two out-licensed partnership programs to advance certain next-generation cancer therapies, Novartis Institutes (NZV930) and GSK (GSK4381562). Surface shareholders received CVRs for certain percentages of these milestone and royalty-based payments, as further explained above. The exclusive license of NZV930 to Novartis Institutes was terminated by Novartis Institutes with an effective date of October 2, 2024. As a result, during the first quarter of 2024, the Company recognized a net impairment charge of $6.8 million in selling, general and administrative expenses in the condensed consolidated statements of operations relating to the write-off of the net carrying value of the Novartis Institutes out-license intangible asset of $10.6 million and the final remeasurement of the CVR liability related to NZV930 of $3.8 million to its fair value of zero.

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