Truist Securities analyst Robyn Karnauskas reiterated a Buy rating on the shares of Coherus BioSciences, Inc. (NASDAQ:CHRS), lowering the price target to $22 from $24.

Coherus BioSciences has recently agreed to acquire Surface Oncology Inc (NASDAQ:SURF), a clinical-stage immuno-oncology (I-O) company developing next-generation immunotherapies that target the tumor microenvironment.

Following the acquisition, the company will focus on pipeline prioritization of target R&D and reduce expenses, which will enable CHRS to save at least $50 million, the analyst notes.

Also Read: Coherus' Toripalimab/Chemo Combo Cuts Death Risk By 37% In Nasopharyngeal Cancer Patients

The analyst believes the acquisition "makes sense" considering the combination potential of Tori with SURF novel agents and that company is not getting credit for the cost savings due to R&D synergies.

Coherus will issue shares at $5.2831 per share, equivalent to $40 million plus Surface's net cash (currently expected to be between $20 and $25 million).

In addition, the acquisition adds up to $25 million in cash at closing to CHRS balance sheet, Karnauskas adds.

Overall, the analyst thinks this is the year of transition for the company, with prospects to achieve profitability in 2024 and become cash flow positive.

Price Action: CHRS shares are trading lower by 6.90% to $3.85 on the last check Tuesday.