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Acquisition and Disposition

12 Months Ended

Dec. 31, 2024

6. Acquisition and Dispositions

2024 Dispositions

UDENYCA Sale (subject to closing)

On December 2, 2024, the Company and Intas entered into the UDENYCA Purchase Agreement, pursuant to which, and upon the terms and subject to the conditions thereof, the Company has agreed to divest the UDENYCA Business to Intas. As consideration for the UDENYCA Sale, Intas has agreed to pay the Company $483.4 million in cash, inclusive of $118.4 million of UDENYCA product inventory, subject to downward adjustment by the amount of inventory delivered at the closing of the UDENYCA Sale less than the Inventory Target. Intas has designated Accord to purchase the physical assets, including product inventory. In addition, upon the achievement of certain contingent events by Intas, the Company is also eligible to receive two additional Earnout Payments of $37.5 million each, provided that certain minimum UDENYCA Net Sales thresholds are met during specified periods after the closing of the UDENYCA Sale. If the UDENYCA Sale is consummated, the Company plans to use a portion of the proceeds to pay off the 2026 Convertible Notes and buy out certain royalty obligations related to UDENYCA pursuant to the Revenue Purchase and Sale Agreement.

Closing of the UDENYCA Sale is not subject to a financing condition, but is subject to closing conditions, including (i) approval of the Company’s stockholders, which has occurred, (ii) the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which has occurred, (iii) clearance from Committee on Foreign Investment in the United States or any member agency thereof acting in its capacity as a member agency, which has occurred, and (iv) certain additional closing conditions related to packaging by the Company’s packaging and labeling CMOs for UDENYCA and FDA authorization of commercial supply from the Company’s additional packaging and labeling CMO for UDENYCA.

The Company anticipates the transactions contemplated by the UDENYCA Purchase Agreement to close late in the first quarter or early in the second quarter of 2025. Costs of $6.7 million related to the UDENYCA Sale were recorded in selling, general and administrative expense in the consolidated statements of operations during the year ended December 31, 2024.

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 2024, the Company recognized a net gain on the YUSIMRY Sale of $22.8 million, which included the cash receipts of $40.0 million less net assets transferred to HKF or otherwise derecognized and transaction costs of $1.0 million. At December 31, 2024, unpaid transaction costs totaled $0.9 million. The pretax profit (loss) related to the YUSIMRY immunology franchise, which excludes any corporate overhead allocations, was $(3.1) million, $(59.7) million and $(34.4) million during the years ended December 31, 2024, 2023 and 2022, 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 and were substantially completed by December 31, 2024. Under the YUSIMRY TSA, the Company is entitled to be reimbursed for its costs and has recorded income of $0.8 million for the year ended December 31, 2024 in other income (expense), net in the consolidated statements of operations. As of December 31, 2024, assets of $2.3 million and liabilities of $4.3 million related to transactions entered into on behalf of HKF in accordance with the YUSIMRY TSA were presented in TSA receivables, net and TSA payables and other accrued liabilities, respectively, in the 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 2024, the Company recognized a net gain on the CIMERLI Sale of $153.8 million, which included 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 December 31, 2024, unpaid commitments for retention bonuses totaled $4.7 million. The pretax profit (loss) related to the CIMERLI ophthalmology franchise, which excludes any corporate

overhead allocations, was $2.4 million, $16.6 million and $(16.7) million during the years ended December 31, 2024, 2023 and 2022, 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 July 15, 2025. Under the CIMERLI TSA, the Company is entitled to be reimbursed for its costs and has recorded income of $1.7 million for the year ended December 31, 2024 in other income (expense), net in the consolidated statements of operations. As of December 31, 2024, assets related to transactions entered into on behalf of Sandoz in accordance with the CIMERLI TSA of $8.7 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 $6.8 million were presented in TSA payables and other accrued liabilities in the consolidated balance sheets.

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 immuno-oncology pipeline by adding important new assets, including: casdozokitug (CHS-388, formerly SRF388), an investigational, novel IL-27-targeted antibody, and CHS-114 (formerly SRF114), an investigational, CCR8-targeted antibody.

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 ten-year period following September 8, 2023, for the sum of the following, less any permitted deductions in accordance with the CVR Agreement:

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70% of all milestone- and royalty-based payments received by the Company or its affiliates under the GSK Agreement related to the program GSK4381562;

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

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50% of any upfront payment 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 total consideration paid for the Surface Acquisition of $64.6 million consisted of the following:


(in thousands, except share and 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 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 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 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.

Unaudited Pro Forma Summary of Operations

The following table shows the unaudited pro forma summary of operations for the years ended December 31, 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:


	Year Ended December 31,
(in thousands)		2023		2022
Total revenues	$	257,244	$	241,042
Net loss	$	(284,575)	$	(369,442)

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 summary of operations does not reflect the income tax effects, if any, of the pro forma adjustments, given the combined entity incurred significant losses during the historical periods presented.

Acquisition-related costs of $5.1 million were recorded in selling, general and administrative expense in the consolidated statements of operations during the year ended December 31, 2023.