Coherus Oncology's (CHRS) Strategic Reinvention: A High-Conviction Biotech Play for the Long Term

In the ever-evolving biotech landscape, companies that can pivot from operational complexity to strategic clarity often unlock extraordinary value. Coherus Oncology (CHRS) has done just that. The recent $558.4 million divestiture of its UDENYCA franchise to Intas Pharmaceuticals in April 2025 marks a pivotal inflection point, transforming CHRS from a biosimilar player into a focused immuno-oncology innovator. Coupled with LOQTORZI's (toripalimab-tpzi) explosive commercial performance and a pipeline brimming with data catalysts, CHRS now presents a compelling case for long-term investors seeking high-conviction exposure to a repositioned biotech story.

The UDENYCA Divestiture: A Strategic Masterstroke

Coherus's decision to divest UDENYCA—a biosimilar pegfilgrastim product—was not merely a financial maneuver but a strategic realignment. By securing $483.4 million in upfront cash (plus $37.5 million milestone payments contingent on $300–$350 million in annual sales), Coherus has freed itself from the capital-intensive burden of commercializing a commoditized product. The proceeds were swiftly deployed to retire $230 million in convertible debt and $47.7 million in royalty obligations, leaving the company with a robust $237.6 million cash balance as of June 30, 2025. This financial flexibility ensures a cash runway through 2026, a critical period for advancing its pipeline and capitalizing on LOQTORZI's growth.

The divestiture also eliminated operational drag. Intas assumed UDENYCA's U.S. commercial infrastructure, including 40 employees, allowing Coherus to redirect resources to its core oncology focus. The transaction's net gain of $339.1 million (driving a $2.95/share net income in Q2 2025) further underscores its profitability. For investors, this is a textbook example of a company shedding non-core assets to unlock shareholder value.

LOQTORZI: A Monoclonal Marvel with Market Exclusivity

At the heart of Coherus's renaissance is LOQTORZI, the only FDA-approved treatment for recurrent, locally advanced, or metastatic nasopharyngeal carcinoma (NPC) in the U.S. LOQTORZI's Q2 2025 net revenue of $10.0 million—a 36% sequential increase and 163% year-over-year jump—reflects its rapid adoption. This growth is fueled by two key factors:
1. NCCN Preferred Status: LOQTORZI's inclusion in the National Comprehensive Cancer Network (NCCN) guidelines as a preferred NPC therapy has driven demand among head and neck specialists.
2. Market Exclusivity: With no direct competitors in the U.S. for NPC, LOQTORZI holds a de facto monopoly in this niche but high-need indication.

The drug's differentiation lies in its next-generation PD-1 inhibition profile, which has shown efficacy across all lines of therapy and patient subsets. Coherus's focus on expanding LOQTORZI's use in community oncology settings—where cost and accessibility are critical—positions it to capture broader market share.

Pipeline Catalysts: The Road to $1B+ Valuation

While LOQTORZI is a cash cow, Coherus's true long-term potential lies in its pipeline. Two mid-stage programs, CHS-114 (a CCR8-targeting cytolytic antibody) and casdozokitug (an IL-27 antagonist), are set to deliver key data in H1 2026. These candidates are being developed in combination with LOQTORZI for indications like head and neck, gastric, and esophageal cancers.

• CHS-114 is in Phase 1b trials for 2L head and neck cancer and 2L gastric cancer, with its ability to deplete immunosuppressive Tregs offering a novel mechanism to enhance PD-1 efficacy.
• Casdozokitug is showing monotherapy activity in refractory NSCLC and ccRCC, with a Phase 2 trial in 1L hepatocellular carcinoma (HCC) combining it with LOQTORZI and bevacizumab.

These programs, if successful, could expand LOQTORZI's label beyond NPC, unlocking larger markets. For context, the U.S. PD-1/PD-L1 inhibitor market is projected to exceed $15 billion by 2030, with combination therapies dominating growth.

Competitive Landscape: Defending the Fortress

Despite LOQTORZI's U.S. exclusivity, investors may question its durability. While biosimilars like Zytorvi (Dr. Reddy's) have entered the Indian market, the U.S. remains a fortress due to regulatory barriers and Coherus's first-mover advantage. Moreover, Coherus's partnerships—such as its collaboration with Inovio Pharmaceuticals to develop INO-3112 in combination with LOQTORZI for HPV-positive oropharyngeal cancer—add layers of differentiation.

The company's focus on capital-efficient partnerships (e.g., licensing deals for ex-U.S. markets) further mitigates risk while accelerating growth. LOQTORZI's NCCN endorsement and clinical data will be critical in maintaining its market leadership as biosimilars proliferate in other regions.

Financials and Valuation: A Discounted Opportunity

Post-divestiture, Coherus's balance sheet is pristine. With $237.6 million in cash and no near-term debt obligations, the company is well-positioned to fund its pipeline through 2026. At a current market cap of ~$1.2 billion (as of August 2025), CHRS trades at a significant discount to its intrinsic value, assuming successful pipeline readouts and LOQTORZI's continued growth.

Investment Thesis: Why CHRS is a Buy

1. Strategic Clarity: The UDENYCA divestiture has transformed Coherus into a pure-play oncology company with a focused pipeline.
2. Revenue Catalysts: LOQTORZI's 36% sequential growth and NCCN endorsement suggest a trajectory toward $100+ million in annual sales.
3. Pipeline Potential: H1 2026 data from CHS-114 and casdozokitug could unlock billions in market value if they demonstrate synergy with LOQTORZI.
4. Financial Flexibility: A debt-free balance sheet and $237.6 million in cash provide a margin of safety and options for M&A or further partnerships.

Risks to Consider

• Clinical Uncertainty: Pipeline candidates are unproven in larger trials.
• Market Competition: Biosimilars could erode LOQTORZI's U.S. dominance in the long term.
• Regulatory Hurdles: Label expansions depend on positive data and FDA approvals.

Conclusion: A High-Conviction Bet on Oncology Innovation

Coherus Oncology's transformation from a biosimilar company to a focused immuno-oncology innovator is a rare and compelling story. With LOQTORZI as a cash engine, a pipeline rich with data catalysts, and a balance sheet that insulates it from near-term risks, CHRS offers a rare combination of strategic clarity and financial discipline. For long-term investors willing to ride the volatility of a high-conviction biotech play, CHRS represents a compelling opportunity to capitalize on the next phase of oncology innovation.

Investment Recommendation: Buy CHRS for a long-term hold, with a target price of $15–$20 by mid-2026, contingent on positive pipeline readouts and sustained LOQTORZI growth.