Item 7.01 Regulation FD Disclosure
On September 13, 2024, the Company provided an update regarding its supply chain, including steps designed to strengthen its full supply chain to meet increasing demand for its UDENYCA product lines over the long term while reducing costs. UDENYCA is a single dose biosimilar to Neulasta (pegfilgrastim), licensed in three formulations (prefilled syringe, autoinjector, and prefilled syringe co-packaged with an on-body injector) that allow doctors and patients to choose which format best fits the patients’ needs and lifestyle.
The Company’s U.S.-based, third-party Contract Manufacturing Organization (“CMO”) for final packaging recently informed the Company of its over-commitments and capacity constraints at its final labeling and packaging facility that will cause a temporary UDENYCA supply interruption. The delays in production are related only to labeling and final packaging and do not concern availability or supply of the UDENYCA active pharmaceutical ingredient or manufacturing of the UDENYCA drug product or finished product components.
Coherus projects channel supply to be substantially depleted by mid-October as inventories draw down. Concurrently, based on target production schedules provided by the CMO, the Company expects manufacturing to resume in mid-October, with product availability to begin to resume by early November.
The Company is dedicated to ensuring that its commercial products reach the patients who rely on them in a timely and efficient manner. The Company has used this same CMO for final packaging across multiple products for more than ten years without incident or interruption. The Company is working closely with the CMO to address the delay.
The Company also will be working closely with its wholesalers and prescribers to minimize any disruption caused by the temporary supply interruption. Among other actions, the Company has put in place expedited shipping measures to get product to customers as quickly as possible when supply resumes. The Company is also accelerating its existing plans, initiated in early 2024 as part of a strategic effort, to strengthen, diversify, and supplement its final packaging capabilities. In connection with this effort, the Company has engaged an additional final packaging and labeling CMO, executed requisite agreements, and is planning to manufacture product by the end of 2024, with commercial supply from that CMO expected to commence in the first quarter of 2025.
Supply Chain Investments and Expansion
Since 2021, the Company has invested more than $30 million with the goal of diversifying and increasing its product production across the entire supply chain. These efforts include the following:
•Drug Substance Manufacturing. The Company has invested approximately $25 million since 2021 with the goal of doubling its drug substance manufacturing capacity to a final product equivalent of approximately 1 million UDENYCA doses. The Company also secured FDA approval for the use of frozen bulk product with three-year expiration. This enabled the Company to increase its production capacity and extend product stability, limiting the risk for potential outages.
•Drug Product Fill Manufacturing. The Company has invested more than $6 million since 2023 to significantly increase its drug product fill manufacturing capacity, enabling the Company to produce approximately 1.5 million UDENYCA doses annually.
•Drug Packaging and Labeling Manufacturing. As noted above, the Company has secured a second final packaging and labeling CMO. Once qualification of manufacturing at the second facility is completed and commercially operational, the Company expects that this will more than double its UDENYCA packaging and labeling capacity to over 1 million packaged UDENYCA units.
The Company projects that these actions will collectively reduce the production cost of UDENYCA by approximately one-third from current levels.