Coherus Oncology, Inc. (CHRS) FY 2024 MD&A

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K (“Form 10-K”). This Form 10-K, including the following sections, contains forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those expressed or implied by such forward-looking statements. For a detailed discussion of these risks and uncertainties, see the “Risk Factors” section in Item 1A of this Form 10-K. We caution the reader not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this Form 10-K. We undertake no obligation to update forward-looking statements, which reflect events or circumstances occurring after the date of this Form 10-K.

This MD&A section generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 15, 2024.

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Overview

We are a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative immunotherapies to treat cancer. Our commercial portfolio includes our first product, UDENYCA (pegfilgrastim-cbqv), a biosimilar to Neulasta, a long-acting G-CSF, and LOQTORZI, a novel next-generation PD-1 inhibitor. We are developing an innovative immuno-oncology pipeline that is expected to bring forward new potential indications for LOQTORZI in the U.S. and the development of new product candidates.

UDENYCA was launched commercially in a pre-filled syringe presentation in the United States in January 2019, followed by the launch of UDENYCA in an autoinjector presentation in May 2023 and the launch of UDENYCA ONBODY in February 2024.  On December 2, 2024, we and Intas entered into the UDENYCA Purchase Agreement, pursuant to which, and upon the terms and subject to the conditions thereof, we have agreed to divest the UDENYCA Business to Intas. As consideration for the UDENYCA Sale, Intas has agreed to pay us $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, the Company is also eligible to receive two 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. We anticipate the transactions contemplated by the UDENYCA Purchase Agreement to close late in the first quarter or early in the second quarter of 2025. We expect to use proceeds from the UDENYCA Sale (a) to fully repay our outstanding $230.0 million in aggregate principal amount of 2026 Convertible Notes and (b) to pay $47.7 million to buy out the right to receive royalties on net sales of UDENYCA in accordance with our Revenue Purchase and Sale Agreement. In addition, we will use the proceeds for working capital and general corporate purposes, in connection with our continued business.

On October 27, 2023, we announced that LOQTORZI was approved by the FDA in combination with cisplatin and gemcitabine for the first-line treatment of adults with metastatic or recurrent locally advanced NPC, and as monotherapy for the treatment of adults with recurrent unresectable, or metastatic NPC with disease progression on or after platinum-containing chemotherapy. LOQTORZI is an anti-PD-1 antibody that we developed in collaboration with Junshi Biosciences that is currently the only immune checkpoint inhibitor approved by the FDA for the treatment of these indications. We announced the launch of LOQTORZI in the U.S. on January 2, 2024. Further evaluation of LOQTORZI is expected through multiple current and planned clinical studies by us, Junshi Biosciences and our biopharma partners.

Our pipeline is comprised of earlier stage clinical and preclinical immuno-oncology programs that we plan to develop in combination with LOQTORZI as well as in partnership with other companies with immune activating or cancer agents. Our lead clinical stage product candidate is casdozokitug (CHS-388, formerly SRF388), an investigational antagonist antibody targeting IL-27, an immune regulatory cytokine, that is overexpressed in certain cancers, including hepatocellular, lung and renal cell carcinoma. Casdozokitug received orphan drug designation from the FDA for the treatment of HCC in October 2020 and fast track designation from the FDA for the treatment of patients with HCC previously treated with standard therapies in November 2020. Casdozokitug is currently in three on-going clinical studies, including a Phase 1/2 study in patients with advanced solid tumors, including in combination with toripalimab in non-small cell lung cancer (clinicaltrials.gov identifier# NCT04374877), and a Phase 2 study in HCC (clinicaltrials.gov identifier# NCT05359861). We initiated a randomized Phase 2 study in HCC evaluating casdozokitug in combination with toripalimab and bevacizumab in the fourth quarter of 2024 (clinicaltrials.gov identifier# NCT06679985).

Our second clinical-stage product candidate, CHS-114 (formerly SRF114), is an investigational IgG1 antibody targeting CCR8, a chemokine receptor highly expressed on Treg cells in the TME. We are enrolling patients with advanced solid tumors and HNSCC in the U.S. in a clinical trial evaluating safety and pharmacokinetics of CHS-114 with and without LOQTORZI (clinicaltrials.gov identifier# NCT05635643). We plan to initiate a Phase 1b clinical study of CHS-114 in combination with toripalimab in second-line HNSCC (clinicaltrials.gov identifier# NCT05635643) and initiate a Phase 1b clinical study of CHS-114 in combination with toripalimab and/or other treatments in participants with advanced solid tumors with the first cohort evaluating gastric cancer (clinicaltrials.gov identifier# NCT06657144), each in the first quarter of 2025.

We also have an early-stage development candidate, CHS-1000, an investigational antibody targeting human ILT4, designed to improve anti-PD-1 clinical benefit by transforming an unfavorable TME to a more favorable TME. Our IND for CHS-1000 was allowed to proceed by the FDA in the second quarter of 2024 and initiating the first-in-human clinical study remains subject to further evaluation in our portfolio prioritization process.

In addition, we have a product candidate, GSK4381562, which is exclusively licensed to GSK. Through September 2033, we have an obligation to pay 70% of all milestone- and royalty-based payments that we or our affiliates receive from GSK4381562 to the holders of CVRs.

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We have a depth of scientific expertise, an experienced and robust manufacturing know-how and oncology clinical, regulatory, market access, sales, key account management and medical affairs capabilities in the United States, which has supported the commercialization of LOQTORZI. We expect to further leverage these capabilities as we continue to advance our immuno-oncology franchise.

We primarily operate in the United States and partner with companies that operate in other countries.

Business Update

UDENYCA Sale

On December 2, 2024, we entered into the UDENYCA Purchase Agreement by and between us and Intas. Pursuant to the terms and subject to the conditions set forth in the UDENYCA Purchase Agreement, we have agreed to divest the UDENYCA Business to Intas for $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. In addition, we are 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. The first such payment is payable by Intas to us if net sales of UDENYCA for four consecutive fiscal quarters within the first five full fiscal quarters following the consummation of the UDENYCA Sale are equal to or greater than $300 million, and the second such payment is payable by Intas to us if net sales of UDENYCA for four consecutive fiscal quarters within the first seven full fiscal quarters following the consummation of the UDENYCA Sale are equal to or greater than $350 million.

Our board of directors unanimously approved and declared the UDENYCA Purchase Agreement and the transactions contemplated thereby, including the UDENYCA Sale, to be in the best interest of the Company and its stockholders, and resolved to recommend that the our stockholders adopt the UDENYCA Purchase Agreement. There was a vote of our stockholders at a special stockholder meeting on March 11, 2025 where our stockholders approved the UDENYCA Sale, the UDENYCA Purchase Agreement and the other transactions and ancillary documents contemplated by the Asset Purchase Agreement.

Closing of the UDENYCA Sale is not subject to a financing condition, but is subject to closing conditions, including (i) approval of our 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 our packaging and labeling CMOs for UDENYCA and FDA authorization of commercial supply from our additional packaging and labeling CMO for UDENYCA.

Assuming the satisfaction of the conditions set forth in the UDENYCA Purchase Agreement, we anticipate the transactions contemplated thereby to close late in the first quarter or early in the second quarter of 2025.

UDENYCA Supply Interruption

On September 13, 2024, we announced that our third-party labeling and packaging CMO for UDENYCA delayed production of UDENYCA due to over-commitments and capacity constraints. These delays caused a temporary UDENYCA supply interruption that quickly took away our ability to sell our product UDENYCA, that makes up a large percentage of our total revenue, for a significant period of time. Production resumed in November 2024. The Company announced in January 2025 that due to strong demand in Q4 2024 and into Q1 2025, all three presentations of UDENYCA were being temporarily allocated. Based on individual distributor historical purchasing patterns, supply allocations to wholesalers for all three presentations of UDENYCA were removed between the end of January 2025 and the end of February 2025.

We have made significant progress in our efforts to diversify our labeling and packaging resources. An additional labeling and packaging CMO started production testing and manufacturing saleable product. Commercial supply from that CMO is expected to commence late in the first quarter or early in the second quarter of 2025, subject to FDA authorization. For a discussion of risks related to manufacturing our products and our reliance on third parties, please see “Risk Factors— Risks Related to Manufacturing and Supply Chain” and “Risk Factors—Risks Related to Reliance on Third Parties.”

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Products and Product Candidates

Our portfolio includes the following products and product candidates:

Oncology

On December 11, 2023 we announced that NCCN updated the clinical practice guidelines for NPC to include LOQTORZI as a preferred, category 1 first-line treatment option for adults with metastatic or recurrent locally advanced NPC when used in combination with cisplatin and gemcitabine. On November 26, 2024, NCCN made a further update to the clinical practice guidelines for NPC to specify that LOQTORZI is the only preferred category 1 first-line treatment option for adults with metastatic or recurrent locally advanced NPC when used in combination with cisplatin and gemcitabine. The guidelines also recommend LOQTORZI monotherapy as the only preferred treatment in subsequent lines of therapy if disease progression on or after a platinum-containing therapy.

Further evaluation of LOQTORZI is expected through multiple current and planned clinical studies by us and our partners. We have a postmarketing commitment study active and enrolling patients in locations in the U.S. and Canada in order to further evaluate the efficacy of toripalimab in combination with chemotherapy (cisplatin and gemcitabine) in patients with advanced NPC (clinicaltrials.gov identifier NCT06457503). Junshi Biosciences is currently enrolling in a multiregional Phase 3 clinical study evaluating the treatment of LOQTORZI with its investigational anti-BTLA antibody in LS-SCLC (clinicaltrials.gov identifier NCT06095583). INOVIO Pharmaceuticals, Inc. plans a randomized Phase 3 study of INO-3112 and toripalimab in locally advanced, high risk HPV16/18+ oropharyngeal squamous cell carcinoma. CRI plans to evaluate toripalimab in combination with ENB Therapeutics’ investigational agent ENB-003 in its Phase 2 trial titled, “Immunotherapy Platform Study in Platinum Resistant High Grade Serous Ovarian Cancer (IPROC)” (clinicaltrials.gov identifier NCT04918186) that is being performed in collaboration with CCTG. On June 27, 2024, we entered into the Canada License Agreement with Apotex, pursuant to which, we granted to Apotex an exclusive license under our rights to toripalimab to commercialize toripalimab within Canada.

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Immunology – Sold to HKF pursuant to the YUSIMRY Sale

On June 26, 2024, we entered into the YUSIMRY Purchase Agreement with HKF and we completed the sale of our YUSIMRY franchise for upfront, cash consideration of $40.0 million and the assumption of $17.0 million of inventory purchase commitments by HKF. We retained the rights to certain patents that were licensed to Pfizer under the Pfizer License Agreement.

Ophthalmology – Sold to Sandoz pursuant to the CIMERLI Sale

On January 19, 2024, we entered into the CIMERLI Purchase Agreement by and between us and Sandoz. Pursuant to the terms and subject to the conditions set forth in the CIMERLI Purchase Agreement, on March 1, 2024, we completed the divestiture of our CIMERLI ophthalmology franchise through the sale of our 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.

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License Agreement with Junshi Biosciences

On February 1, 2021, we entered into the Collaboration Agreement with Junshi Biosciences for the co-development and commercialization of LOQTORZI, Junshi Biosciences’ anti-PD-1 antibody in the United States and Canada.

Under the terms of the Collaboration Agreement, we paid $150.0 million upfront for exclusive rights to LOQTORZI in the United States and Canada, an option in these territories to Junshi Biosciences’ anti-TIGIT antibody CHS-006, an option in these territories to a

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next-generation engineered IL-2 cytokine, and certain negotiation rights to two undisclosed preclinical immuno-oncology drug candidates. We obtained the right to conduct all commercial activities of LOQTORZI in the United States and Canada. We are obligated to pay Junshi Biosciences up to an aggregate $380.0 million in one-time payments for the achievement of various regulatory and sales milestones, of which we have already paid $25.0 million, and a royalty in the low twenty percent range on net sales of LOQTORZI. On June 27, 2024, we entered into the Canada License Agreement pursuant to which, we granted to Apotex an exclusive license under our rights to toripalimab to commercialize toripalimab within Canada.

In March 2022, we paid $35.0 million for the exercise of our option to license CHS-006. Subsequent joint development consistent with the Collaboration Agreement commenced. On January 10, 2024, we announced that we had delivered a notice of termination of the TIGIT Program (as defined in the Collaboration Agreement) to Junshi Biosciences pursuant to the Collaboration Agreement. Under the Collaboration Agreement, we retain the right to collaborate in the development of LOQTORZI and the other licensed compounds and will pay for a portion of these co-development activities up to a maximum of $25.0 million per licensed compound per year. Additionally, we are responsible for certain associated regulatory and technology transfer costs for LOQTORZI and other licensed compounds and will reimburse Junshi Biosciences for such costs.

We accounted for the licensing transaction as an asset acquisition under the relevant accounting rules. The $35.0 million payment for the option to license CHS-006 was reflected in our first quarter of 2022 financial statements. As of December 31, 2024, we had an accrued expense of $12.5 million for a milestone payable to Junshi Biosciences, which was paid in January 2025, as well as $1.5 million for our royalty obligation. The additional milestone payments and royalties are contingent upon future events and, therefore, will be recorded if and when it becomes probable that a milestone will be achieved, or when an option fee or royalties are incurred.

Financial Operations Overview

Revenue

Our first FDA-approved product, UDENYCA, was approved in November 2018, and we initiated United States sales of UDENYCA on January 3, 2019. In December 2021, the FDA-approved YUSIMRY, which we launched in the United States in July 2023. On August 2, 2022, the FDA approved CIMERLI, which we launched in the United States in October 2022. LOQTORZI was approved in October 2023, and we launched LOQTORZI in the United States in January 2024. We stopped receiving revenue from CIMERLI sales on March 1, 2024 as a result of the CIMERLI Sale. We stopped receiving revenue from YUSIMRY sales on June 26, 2024 as a result of the YUSIMRY Sale. On June 27, 2024, Apotex paid us an upfront payment of $6.3 million which has been classified as net revenue in the consolidated statements of operations for the year ended December 31, 2024 pursuant to the terms of the Canada License Agreement. Our total net revenues were $267.0 million and $257.2 million in 2024 and 2023, respectively.

On December 2, 2024, we entered into the UDENYCA Purchase Agreement by and between us and Intas. Pursuant to the terms and subject to the conditions set forth in the UDENYCA Purchase Agreement, we have agreed to divest the UDENYCA Business to Intas for $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. In addition, we are 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. The first such payment is payable by Intas to us if net sales of UDENYCA for four consecutive fiscal quarters within the first five full fiscal quarters following the consummation of the UDENYCA Sale are equal to or greater than $300 million, and the second such payment is payable by Intas to us if net sales of UDENYCA for four consecutive fiscal quarters within the first seven full fiscal quarters following the consummation of the UDENYCA Sale are equal to or greater than $350 million.

Cost of Goods Sold

Cost of goods sold consists primarily of third-party manufacturing, distribution, certain overhead costs, and royalties on certain products. On May 2, 2019, we settled a trade secret action brought by Amgen. As a result, cost of goods sold for the five-year period ending on July 1, 2024 reflects a mid-single digit royalty on UDENYCA net product revenue. Additionally, until the CIMERLI Sale on March 1, 2024, we shared a percentage of gross profits on sales of CIMERLI in the United States with Bioeq AG (“Bioeq”) in the low- to mid-fifty percent range. Cost of goods sold includes a royalty in the low twenty percent range on net sales of LOQTORZI.

Research and Development Expense

Research and development expense represents costs incurred to conduct research, such as the discovery and development of our product candidates. We recognize all research and development costs as they are incurred. We currently track research and

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development costs incurred on a product candidate basis only for external research and development expenses. Our external research and development expense consists primarily of:

Internal costs are associated with activities performed by our research and development organization and generally benefit multiple programs. These costs are not separately allocated by product candidate. Unallocated, internal research and development costs consist primarily of:

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming. Furthermore, in the past, we have entered into collaborations with third parties to participate in the development and commercialization of our product candidates, and we may enter into additional collaborations in the future. In situations in which third parties have substantial influence over the development activities for product candidates, the estimated completion dates are not fully under our control. For example, our partners in licensed territories may exert considerable influence on the regulatory filing process globally. Therefore, we cannot forecast with any degree of certainty the duration and completion costs of these or other current or future clinical trials of our product candidates. We may never succeed in achieving regulatory approval for any of our pipeline product candidates. In addition, we may enter into other collaboration arrangements for our other product candidates, which could affect our development plans or capital requirements.

The following table summarizes our research and development expense incurred during the respective periods:

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Selling, General and Administrative Expense

Selling, general and administrative expense consists primarily of personnel costs, allocated facilities costs and other expense for outside professional services, including legal, insurance, human resources, outside marketing, advertising, audit and accounting services, certain transaction costs, and costs associated with establishing commercial capabilities in support of the commercialization of UDENYCA and LOQTORZI and the commercialization of CIMERLI and YUSIMRY up until the CIMERLI Sale and the YUSIMRY Sale, respectively. Personnel costs consist of salaries, benefits and stock-based compensation.

Interest Expense

Interest expense consists primarily of interest incurred on our outstanding indebtedness, our Revenue Purchase and Sale Agreement, and non-cash interest related to the amortization of debt discount and debt issuance costs associated with our outstanding debt agreements.

Gain on Sale Transactions, net

Gain on Sale Transactions, net consists of cash proceeds received from the CIMERLI Sale, net of assets sold (primarily CIMERLI product inventory and prepaid manufacturing assets), other assets derecognized (goodwill and intangible assets), net of related transaction costs, retention bonuses and stock-based compensation expense incurred, and the YUSIMRY Sale, net of assets sold (primarily YUSIMRY product inventory and prepaid manufacturing assets), other assets and liabilities derecognized (primarily purchase commitments and an intangible asset), and related transaction costs.

Loss on Debt Extinguishment

Loss on debt extinguishment consists of losses incurred related to the early repayment of debt obligations.

Other Income (Expense), Net

Other income (expense), net consists primarily of interest earned on our cash and cash equivalents, non-cash accretion of discount on our investments in marketable securities, foreign exchange gains (losses) resulting from currency fluctuations, gains (losses) from financial instruments including the change in fair value of the embedded derivative contained in the Revenue Purchase and Sale Agreement that meets the criteria to be bifurcated and accounted for separately from the Revenue Purchase and Sale Agreement (the "Royalty Fee Derivative Liability"), gains (losses) from disposal of long-lived assets, and income related to services provided under transition service agreements.

Results of Operations

Comparison of Years Ended December 31, 2024 and 2023

Revenue

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UDENYCA net revenue increased $78.9 million primarily due to increased market share driven by sales of UDENYCA ONBODY, launched in February 2024, offset by a change in UDENYCA segment mix and the impact of the fourth quarter temporary UDENYCA supply interruption. The $98.3 million decrease in net revenues of CIMERLI was primarily the result of the CIMERLI Sale. LOQTORZI net revenue reflects initial sales beginning in December 2023 following FDA approval. Other revenue in 2024 included $6.3 million for the sale to Apotex of rights to commercialize toripalimab within Canada on June 27, 2024.

Following the stockholder approval obtained in March 2025, the contemplated UDENYCA Sale was determined to represent a strategic shift. Thus, beginning with the Quarterly Report on Form 10-Q for the first quarter of 2025, net revenues for the UDENYCA franchise and the previously divested CIMERLI and YUSIMRY franchises will be presented as discontinued operations, including comparative prior periods which will be recast. Our remaining product, LOQTORZI, will continue to be reflected in net product revenue, and we anticipate LOQTORZI’s net product revenue will increase in 2025 compared to 2024.

Cost of Goods Sold

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The decrease in cost of goods sold in 2024 compared to 2023 was primarily due to a decrease of $56.9 million in costs from CIMERLI, which was divested during the first quarter of 2024, and a $47.0 million charge in the fourth quarter of 2023 related to slow moving YUSIMRY inventory. These decreases were partially offset by a $34.3 million increase due to higher volumes of UDENYCA and LOQTORZI in 2024, $14.1 million in charges in 2024 for the write-down of UDENYCA inventory that did not meet acceptance criteria, the $7.3 million impact of the sales in 2023 of certain UDENYCA units having no carrying value following a prior period write-down, and $4.4 million in connection with a CMO contract change in 2024.

Following the stockholder approval obtained in March 2025, the contemplated UDENYCA Sale was determined to represent a strategic shift. Thus, beginning with the Quarterly Report on Form 10-Q for the first quarter of 2025, cost of goods sold for the entire biosimilar business, inclusive of the UDENYCA, CIMERLI and YUSIMRY franchises, will be presented as discontinued operations, including comparative prior periods which will be recast, and cost of goods sold will only reflect costs for our remaining product, LOQTORZI.

Research and Development Expense

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The decrease in research and development expense was primarily due to:

The decrease was partially offset by the following:

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Following the stockholder approval obtained in March 2025, the contemplated UDENYCA Sale was determined to represent a strategic shift. Thus, beginning with the Quarterly Report on Form 10-Q for the first quarter of 2025, research and development for the entire biosimilar business, inclusive of the UDENYCA, CIMERLI and YUSIMRY franchises, will be presented as discontinued operations, including comparative prior periods which will be recast. Notwithstanding the retrospective reporting for discontinued operations, we expect our research and development expense in 2025 to increase as compared to 2024 due to continued investments in our immuno-oncology pipeline.

Selling, General and Administrative Expense

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The decrease in selling, general and administrative expense was driven primarily by lower headcount, including reductions of $21.3 million in employee, consultant and travel costs, $9.8 million in stock-based compensation, and decreased operating costs following divestitures. These decreases were partially offset by the $6.8 million net impairment charge in 2024 relating to the full write-off of the out-license intangible asset of $10.6 million and the final remeasurement of the CVR liability of $3.8 million related to NZV930 to its fair value of zero.

Following the stockholder approval obtained in March 2025, the contemplated UDENYCA Sale was determined to represent a strategic shift. Thus, beginning with the Quarterly Report on Form 10-Q for the first quarter of 2025, selling, general and administrative expense for the entire biosimilar business, inclusive of the UDENYCA, CIMERLI and YUSIMRY franchises, will be presented as discontinued operations, including comparative prior periods which will be recast. Notwithstanding the retrospective reporting for discontinued operations, we expect our selling, general and administrative expense for the full year 2025 to be lower than the full year 2024 primarily as a result of decreased operating costs and headcount due to the divestitures.

Interest Expense

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The decrease in interest expense in 2024 was primarily due to fully paying off the $250.0 million principal amount due under our senior secured term loan facility that was entered into on January 5, 2022 (as amended on April 7, 2022, February 6, 2023, and February 5, 2024, the “2027 Term Loans”) in the second quarter of 2024, partially offset by interest on the 2029 Term Loan and the Revenue Purchase and Sale Agreement, both commencing May 8, 2024.

Following the stockholder approval obtained in March 2025, the contemplated UDENYCA Sale was determined to represent a strategic shift. Thus, beginning with the Quarterly Report on Form 10-Q for the first quarter of 2025, revenue and expenses for the entire biosimilar business, inclusive of the UDENYCA, CIMERLI and YUSIMRY franchises, will be presented as discontinued operations, including comparative prior periods which will be recast. As a result, interest on the 2026 Convertible Notes and a portion of the Revenue Purchase and Sale Agreement will be reported as discontinued operations. Notwithstanding the retrospective presentation of discontinued operations, we expect our interest expense for the full year 2025 to be lower than the full year 2024 primarily as a result of fully repaying the $250.0 million principal amount of the 2027 Term Loans during the second quarter of 2024 and our plan to use a portion of the proceeds of the UDENYCA Sale, which we anticipate to close late in the first quarter or early in the second quarter of 2025, to pay off the 2026 Convertible Notes and to buy out the right to receive royalties on net sales of UDENYCA.

Gain on Sale Transactions, net

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The Gain on Sale Transactions, net for 2024 includes net gains for the first quarter CIMERLI Sale and second quarter YUSIMRY Sale. The net gain of $153.8 million on the CIMERLI Sale includes the cash receipts of $187.8 million less assets transferred to Sandoz, other assets derecognized, transaction costs of $7.2 million, and other related employee transition expenses. The net gain of $22.8 million on

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the YUSIMRY Sale to HKF includes the cash receipts of $40.0 million less assets transferred to HKF, other assets and liabilities derecognized, and transaction costs of $1.0 million.

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Loss on Debt Extinguishment

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The $12.6 million loss on debt extinguishment in 2024 resulted from the payoff of the 2027 Term Loans in May 2024, and included the write-off of the unamortized portion of debt discount and debt issuance costs, and the prepayment premium fee, the make-whole interest payment and lender fees.

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Other Income (Expense), Net

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Other income (expense), net in 2024 changed unfavorably compared to 2023 primarily due to the change in fair value of the Royalty Fee Derivative Liability of $4.4 million and a reduction of $1.4 million in investment and interest income, partially offset by an increase in income from transition service agreements of $2.5 million and an increase in foreign exchange gains of $1.9 million.

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Income Tax Provision (Benefit)

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No income tax provision or benefit was recognized for the year ended December 31, 2024. In 2023, income tax provision (benefit) consists of the change in deferred tax balances resulting from the recognition of a deferred tax liability related to the Surface Acquisition, and we recognized $0.4 million of income tax benefit for the year ended December 31, 2023.

Liquidity and Capital Resources

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Certain relevant measures of our liquidity and capital resources are summarized as follows:

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[table omitted - see filing]