What happened

Shares of Coherus BioSciences (NASDAQ:CHRS) fell more than 21% today after the business reported preliminary second-quarter 2019 revenue. The developer of biosimilars (essentially generic biologic drugs) announced that Q2 net sales of Udenyca are expected to be in the range of $79 million to $84 million.

That's significantly better than Q1 2019 net sales of $37.1 million, which shows the drug is quickly gaining market traction after launching in early January. The preliminary net sales estimate is also significantly better than the average expectation on Wall Street for just $50.7 million in Q2 2019 revenue, according to numbers compiled by Yahoo! Finance.

Therefore, the move lower -- as of 1:04 p.m. EDT, the stock had settled to a 19.1% loss -- doesn't immediately make much sense, but there's one plausible explanation.

A pink arrow crashing through the x-axis on a chart.

Image source: Getty Images.

So what

Udenyca is biosimilar to Neulasta from Amgen. Both drugs stimulate white blood cell production in individuals receiving cancer treatments that knock out the body's immune system. It's become a go-to treatment for reducing the risk of infection in such patient populations, as evidenced by the fact Neulasta generated net sales of $4.5 billion in 2018.

On the one hand, Udenyca is expected to have generated first-half 2019 sales of at least $116 million. That signals it's off to a fast start and is rapidly gaining market share.

On the other hand, Coherus BioSciences announced on the first day of July that it had manufactured more than 400,000 prefilled syringes of Udenyca to date. That represents roughly one-third of the annual U.S. market for the drug, which presumably is worth much more than $79 million to $84 million per quarter, even after accounting for steep price discounts accompanying the biosimilar.

Therefore, even though preliminary Q2 2019 sales figures thump Wall Street's expectations as reflected in financial information dashboards, analysts may have been expecting even more from the drug franchise in light of the update on manufacturing volumes.

Now what

Perhaps Wall Street is overreacting (manufacturing 400,000 doses doesn't really say much about the number of doses sold), has reason to worry (perhaps the business sold more doses than expected at a much lower price than expected), or is simply allowing the stock to take a breather (shares of Coherus BioSciences have gained more than 100% year to date even after factoring in today's tumble). That said, fierce competition in the space gives investors something to keep an eye on. Other Neulasta biosimilars to have earned marketing approvals in major global markets include Fulphila from Mylan, Pelmeg from Cinfa Biotech, and Ziextenzo from Novartis. It might be more difficult to gain market share than investors once thought.