The Prospects For CHS-3351, Coherus' Most Underappreciated Asset

BMO Capital Markets said in a note CHS-3351 may be Coherus Biosciences Inc CHRS's most underappreciated asset. CHS-3351 is a biosimilar of ranibizumab, an mAb fragment against VEGF-A used to treat neovascular age-related macular degeneration, or AMD.

Promising Potential

Analyst Ian Somaiya said CHS-3351 targets the $1.41 billion in U.S. revenues of Roche Holding Ltd. (ADR) RHHBY's Lucentis in wet AMD, whose U.S. patents expire in 2020. The analyst also feels it could take share away from Regeneron Pharmaceuticals Inc REGN's Eylea, which raked in sales of $3.2 billion in 2016.

"A concentrated prescriber base should enable Coherus to commercialize independently in the US. CHS-3351 could generate peak sales of $500mn and drive upside of $25 per share (from $75 to $100) to our Upside scenario," the firm said.

Initiating At Outperform

BMO Capital Markets initiated coverage of the shares of Coherus Biosciences at Outperform, with a $54 price target.

The firm clarified the current valuation assumes FDA approval of CHS-1701 would be delayed and reflects little or no value for the rest of the pipeline.

"We believe this dynamic provides an attractive entry point as a likely on-time approval of CHS-1701 could enable CHRS shares to rapidly approach our price target, with a delay of upwards of 18–24 months resulting in downside to $15 per share," the firm said.

"CHS-1701's approval by June 9th BsUFA action date would ensure first-to-market advantage and support our $1.5 billion peak sales and Outperform rating."

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