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Coherus’ secret weapon: Macular degeneration med

May 5, 2017

BMO Capital Markets said in a note CHS-3351 may be Coherus Biosciences Inc CHRS 2.33%‘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 0.94%‘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 1.22%‘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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