Coherus Biosciences Inc (CHRS) Hits ‘Speed Bump’ for CHS-1701; Maxim Remains Positive

Yesterday, Coherus Biosciences Inc (NASDAQ:CHRS) received a Complete Response Letter (CRL) from the FDA for its Biologics License Application (BLA) on CHS-1701, a biosimilar to Amgen’s Neulasta (pegfilgrastim), designed to prevent infections for patients receiving chemotherapy.

In reaction, Maxim analyst Jason McCarthy reiterated a Buy rating on CHRS, while lowering the price target from $44 to $40, which represents an upside of nearly 155% compared to where the shares last closed.

The drug maker needs to submit further immunogenicity data concerning a subset of patient sample from a previous study to the FDA, yet it is not required any additional clinical trial nor PK data. Although this submission delays CHS-1701 launch one year from now, McCarthy looks on the bright side, and adds Coherus “could potentially resolve these issues and gain approval within 12-months, positioning launch for late 2018/early 2019.”

The analyst cuts the price target to reflect the delayed launch, yet expects a higher initial share for Coherus in the early years as they are less biosimilar entrants. Additionally, McCarthy lowers operating expenses estimates, with respect to the guidance outlook range.

“The CHS-1701 CRL is a speed bump, not a wreck, in our view. Management is saying that the FDA is not requesting another trial, PK data, or manufacturing inspection. For Coherus to gain approval next summer, two catalysts have to play out; 1) The manufacturing-related process information needs to be resolved and 2) The company must satisfy the immunogenicity data request…both within 6-months time for the resubmission to be reviewed by next summer,” concludes the analyst.

As usual, we advise taking analysts’ recommendations with a grain of salt. According to TipRanks, a financial engine that measures and ranks analysts’ and bloggers’ performance, Jason McCarthy is ranked #4502 out of #4567 analysts. McCarthy has a 32% success rate and generates an annual yield of -13%. When recommending CHRS, the analyst earns a -31.9% average profit on the stock.

TipRanks analytics show CHRS as a Strong Buy. Based on 7 analysts offering recommendations for this share, all 7 issue a Buy rating. The 12-month average price target stands at $40.67, making a nearly 150% upside from where the stock is currently trading.


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