Shares of Coherus(NASDAQ: CHRS) rallied as much as 21.7% early Monday, then gave up its gains to trade up around 2.4% as of 2:40 p.m. ET. This occurred after the company announced an agreement to divest its ophthalmology franchise.
Coherus divests a non-core asset
In a press release this morning, Coherus announced a deal to divest its Cimerli franchise, a biosimilar drug to treat vision impairment and loss, to biosimilars company Sandoz Group(OTC: SDZN.Y). The latter will pay Coherus $170 million in cash up front for Cimerli and its supporting commercial infrastructure, plus an additional amount (to be determined at closing) for working capital adjustments and Cimerli product inventory.
Coherus entered the ophthalmology market in 2022, gaining significant market share in the non-core area of its business.
What's next for Coherus shareholders?
"We believe it is prudent to now monetize these non-core assets to pay down debt, reduce interest costs, and take the opportunity to focus on our core therapeutic area, oncology," stated Coherus Chairman and CEO Denny Lanfear. "Additionally, this divestiture will allow us to reduce our headcount and overhead costs, enhancing our sustainable and growing oncology business."
Coherus recently received a long-awaited U.S. Food and Drug Administration (FDA) approval for Udenyca Onbody, its on-body injection system that can be taken to prevent infection in chemotherapy patients. Coherus is planning to make Udenyca Onbody commercially available by the end of the first quarter of 2024. The company also recently launched its Loqtorzi product in the U.S. earlier this month after receiving FDA approval for the rare cancer treatment in October 2023.
In the end, while Coherus' early pop has faded in the afternoon, it's worth keeping in mind that shares have climbed nearly 60% over the past two months. Though some investors are choosing to take some of their quick gains off the table, I wouldn't be the least bit surprised if Coherus extends its rally as the fruits of its cancer treatment business become more clear.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
