Global Cancer Trends Will Benefit Immune-Oncology Pipeline Despite Setbacks

Key Takeaways

• Strategic shift to immuno-oncology and partnerships is driving clinical progress, operational efficiency, and positions the company for growth in innovative cancer therapies.
  
• Divestiture of biosimilar assets and cost reductions should improve margins and allow greater investment in high-potential oncology pipeline programs.
  
• Heavy reliance on a few key oncology assets, coupled with divestitures and mounting competitive and regulatory pressures, threatens sustainable revenue growth and profitability.

Catalysts

A biopharmaceutical company, researches, develops, and commercializes immunotherapies to treat cancer in the United States.

• The company is positioned to benefit from increasing global incidence of cancer, which is being driven by demographic shifts such as an aging population and the rising prevalence of cancers in emerging markets; this trend expands the addressable market for innovative oncology drugs like LOQTORZI and its pipeline assets, underpinning future revenue growth.
  
• There is a continued emphasis, both domestically and internationally, on making cancer care more effective and affordable, which increases the pressure to adopt differentiated, efficacious therapies and combination regimens—a dynamic that favors companies, like Coherus, that are innovating with next-generation immune-oncology agents; this should accelerate clinical uptake and support sustained top-line growth and market share.
  
• The strategic pivot from biosimilars to a focused immuno-oncology portfolio with LOQTORZI (an FDA-approved PD-1 inhibitor) and promising pipeline candidates (CHS-114 and Casdozokitug) creates multiple near
• and mid-term clinical catalysts through label and indication expansion, pivotal trial readouts, and partnership-driven co-development; these milestones de-risk future earnings potential and could drive multiple expansion.
  
• The innovative development strategy—partnering with other biotech firms for combination trials in large, high-need indications at minimal cost to Coherus—enables operational leverage, reduces capital requirements, and increases the probability of multiple future drug approvals, supporting long-term gross margin improvement and cash flow stability.
  
• The company is undergoing a significant efficiency transformation, with the divestiture of biosimilar assets and associated workforce reductions, lowering SG&A and redirecting resources to high-value growth opportunities in oncology; this shift is expected to both improve net margins and free up capital for R&D investment into a differentiated, growing portfolio.

Coherus BioSciences Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Coherus Oncology's revenue will decrease by 23.4% annually over the next 3 years.
• Analysts are not forecasting that Coherus Oncology will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Coherus Oncology's profit margin will increase from 18.1% to the average US Biotechs industry of 14.1% in 3 years.
• If Coherus Oncology's profit margin were to converge on the industry average, you could expect earnings to reach $17.3 million (and earnings per share of $0.15) by about August 2028, down from $49.1 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 43.9x on those 2028 earnings, up from 2.1x today. This future PE is greater than the current PE for the US Biotechs industry at 16.9x.
• Analysts expect the number of shares outstanding to grow by 0.63% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.07%, as per the Simply Wall St company report.

Coherus BioSciences Future Earnings Per Share Growth

Risks

• Coherus now relies heavily on a narrow pipeline focused primarily on LOQTORZI and a handful of early
• to mid-stage innovative oncology assets; setbacks in regulatory approvals, clinical data, or commercial uptake for these cornerstone assets could create significant revenue volatility and impede the transition to profitability.
  
• The UDENYCA divestiture eliminates legacy biosimilar revenue streams, increasing dependence on successful indication expansions and market penetration of LOQTORZI and pipeline candidates; commercial underperformance or delays could lead to persistent operating losses and cash burn, particularly as existing cash reserves are drawn down.
  
• Royalties in the “low 20% range” on LOQTORZI sales, coupled with ongoing sizable R&D spend to advance CHS-114 and Casdozokitug, may compress net margins and extend the timeline to positive free cash flow, especially if clinical programs do not translate into substantial near-term revenues.
  
• The company’s growth depends on navigating competitive threats, including entrenched off-label use of established PD-1 inhibitors (e.g., KEYTRUDA), slow physician adoption despite favorable NCCN guidelines, and rising innovation from other firms developing CCR8 or novel immuno-oncology agents—all of which could limit long-term revenue growth and market share.
  
• Changes in regulatory dynamics at the FDA and industry-wide headwinds (e.g., staff turnover, evolving approval guidelines, global cost-containment pressures) introduce uncertainty and execution risk for both new approvals and label expansions, potentially delaying commercialization and affecting long-term earnings visibility.

Valuation

• The analysts have a consensus price target of $4.7 for Coherus Oncology based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $7.0, and the most bearish reporting a price target of just $1.1.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $122.6 million, earnings will come to $17.3 million, and it would be trading on a PE ratio of 43.9x, assuming you use a discount rate of 11.1%.
• Given the current share price of $0.88, the analyst price target of $4.7 is 81.2% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.