What happened

Shares of Coherus Biosciences (NASDAQ:CHRS) opened Monday down 31.6% on sky-high volume. The drugmaker's stock is getting pummeled as the result of the U.S. Food and Drug Administration rejecting the company's Biologics License Application for drug candidate CHS-1701, which is a biosimilar version of Amgen's (NASDAQ:AMGN) blockbuster white-cell booster Neulasta.

The FDA cited a need to reanalyze existing data and more manufacturing information on CHS-1701 as the reasons for the rejection. As of 9:44 a.m. EDT, Amgen's shares were up 1.54% on the back of this positive regulatory development.

Falling stock chart

Image source: Getty Images.

So what

With sales of roughly $4.6 billion in 2016, Neulasta generated about 21% of Amgen's total annual revenue last year. So, if Coherus were able to break into this highly lucrative market with its biosimilar, the drugmaker should be able to haul in at least $500 million at peak from this single product -- depending on competition from other companies and the evolution of pricing points for Neulasta biosimilars along the way. That's a tidy sum for a company currently sporting a market cap of $732 million. 

Now what

Today's news isn't all doom and gloom for Coherus. The FDA, after all, isn't requiring any additional clinical trials that may require a costly capital raise at shareholders' expense, according to the company's press release. So under a best-case scenario, Coherus might be able to turn around this failed regulatory application within just a matter of months, and still have CHS-1701 on the market sometime in 2018. In other words, this steep sell-off is probably overdone, and may represent an attractive buying opportunity.

Amgen, for its part, gets a few more months of reprieve from biosimilars for one of its key products, which is obviously great news. The biotech, after all, still hasn't totally established a dominant commercial footprint for its next generation of products, which are designed to offset any declines in top sellers like Neulasta.

George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.