Soon enough, there's a big chance that the plucky biotech Coherus Biosciences (CHRS 5.70%) is going to be eating AbbVie's (ABBV -4.58%) lunch. Assuming it does, it's not going to be stealing a fry from the corner of AbbVie's plate -- it's going for a big-mouth chomp of the cheeseburger with all the fixings. And there's nothing the larger company can do about it. 

AbbVie shareholders are doubtless bracing themselves. But does that mean you should be considering an investment in Coherus? Let's find out.

This company's boon will be AbbVie's lament

Coherus develops new oncology drugs with a combination of in-licensing candidates and its own research and development (R&D) activities, but it also currently sells biosimilar drugs that are copies of medicines developed by other companies. While none of its internally developed therapies have been commercialized yet, it has two biosimilars on the market, and it plans to launch three more by the end of 2023. Sales of those biosimilars brought in $211 million in 2022, but its existing portfolio of marketed medicines hasn't been enough to make the company profitable yet. Still, if regulators give it the green light to commercialize its biosimilar to Humira, AbbVie's crown jewel, that could change almost overnight. 

In case you aren't familiar, Humira is one of the world's highest-grossing medicines. It treats rheumatoid arthritis, ankylosing spondylitis, Crohn's disease, plaque psoriasis, and several other conditions, and in 2022, global sales of the drug were $21.2 billion. But since 2023, Humira no longer has the exclusivity protections that prevented competitors from making generic copies of it. 

That's where Coherus is looking to profit. Its management estimates that the generic market for Humira will be worth around $17 billion per year. The company plans to market its biosimilar to Humira under the trade name Yusimry, and the strategy will be to keep its pricing as low as possible in order to compete on scale. Its price point will be $995 per carton, which is 85% lower than brand-name Humira, so AbbVie has practically zero chance of retaining its market share.

By the end of July, Yusimry is likely to be on the market. Amgen already launched its biosimilar to Humira, and other competing entries are on the way too. But Amgen's pricing will be between $1,557 and $3,288 per two-week supply, so Coherus will have an advantage despite showing up late to the market.

Does any of the above make this stock a buy?

The return Coherus is anticipating from commercializing Yusimry is likely to be quite significant. Wall Street analysts are estimating that its total revenue will rise by more than 41% this year, and then by 94% in 2024, potentially bringing in roughly $581 million. By the end of 2024, that should make it profitable, per Wall Street. 

As of Q1, it had $471 million in long-term debt and $128 million in cash, equivalents, and short-term investments, and its trailing 12-month operating expenses are $398 million. It also just issued quite a lot of stock, raising $50 million in the process. Even with the boost from the new share issuance, something is going to have to give within the next 12 months, as it simply doesn't have enough money to pay for its operations at their current level. 

Given its sunny near-term prospects, it can probably take out more debt to tide it over for the next year and a half or so without too much trouble. But if reaching profitability by scaling up Yusimry hits a bump in the road, it might need to dilute its shareholders more by issuing more stock or taking out even more debt. In the long term, the more it needs to borrow today, the lower its earnings will be in the future, at least until it's generating enough free cash flow (FCF) to deleverage aggressively, which could take a few years. 

Overall, investors don't have any hard evidence that Coherus will actually be profitable in the foreseeable future. Investors will be closely watching whether the company can follow through on its ambition to commercialize one of its non-generic therapy programs while also launching four biosimilars (including Yusimry) over the next year or so. If all of these play out as anticipated, it's hard to see how the stock would do anything other than go up.

Investors will also be watching if Coherus can demonstrate that its discount pricing strategy makes Yusimry more appealing to buyers than the other biosimilars to Humira over the coming quarters. Again, if successful, that'll be another strong point in the stock's favor. 

With that said, there aren't any major red flags aside from its debt, but there is still a solid possibility that its plans are more expansive than what it can actually accomplish given its financial constraints right now. So if you're willing to take a moderately risky shot, it could be worth buying a few shares, but there's no rush.