Coherus Expands Portfolio with $65M Acquisition of Surface Oncology

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Coherus Biosciences announced plans Friday to acquire Surface Oncology, a clinical-stage immuno-oncology company, in a deal worth up to $65 million. The acquisition aims to bolster Coherus’ position in cancer therapeutics and expand its product portfolio.

Under the terms of the agreement, Coherus will pay Surface $28 million upfront, with additional milestone payments potentially reaching up to $37 million in the future. The deal, expected to close in the third quarter of 2023, will see Surface shareholders receive Coherus Biosciences stock as consideration for the acquisition.

Surface stock surged by 49% in premarket trading on Friday following the deal’s announcement, according to MarketWatch. Under the terms of the agreement, Coherus will issue its common stock at a price of $5.28 per share to acquire all outstanding shares of Surface stock, resulting in a total value of $40 million.

The deal will provide Coherus access to a pipeline of novel immuno-oncology therapies, including Surface’s IL-27 and CCR8 antibodies. IL-27-directed antibody SRF388, currently in Phase II trials, targets lung and liver cancer. The CCR8 antibody SRF114, in Phase I/II trials, targets solid tumors.

The acquisition comes seven months after Surface reduced its workforce by 20% and streamlined its pipeline, which included a program targeting CD39. As part of the deal announced Friday, Surface plans to further reduce its workforce by an additional 50%, resulting in the departure of approximately 30 employees based on the headcount figure from March 6. Notable departures include Vito Palombella, the company’s science chief, and Henry Rath, its chief business officer, as reported by Endpoints News.

The acquisition is a significant pipeline enhancement to Coherus, expanding its scope beyond biosimilars. The company is poised to launch Yusimry, a biosimilar of Humira, in July. Coherus also currently markets biosimilars of Neulasta and Lucentis. The biotech is also awaiting FDA approval for toripalimab, a PD-1 inhibitor developed in partnership with Junshi Biosciences.

“This transaction is well-timed, as it coincides with the accelerating growth of our biosimilar revenues driven by the launch of Cimerli and the near-term launch of Yusimry. With the agreement to acquire Surface and the expected near-term approval of toripalimab, Coherus is positioned to become one of the very few I-O companies with demonstrated commercial expertise, significant product revenues, and unique, competitively positioned R&D programs addressing critical unmet medical needs,” Coherus CEO Denny Lanfear said in a statement.

In 2020, GSK expressed interest in Surface's programs, entering into an agreement for worldwide development and commercial rights to SRF813, a fully human IgG1 antibody and immunotherapy designed to treat cancer.

The overall deal value of $65 million announced Friday includes Surface’s net cash, estimated to be between $20 million and $25 million, at the time of the transaction’s completion.

Surface shareholders will receive contingent value rights for 70% of the milestone and royalty-based value associated with existing programs in collaboration with Novartis and GSK. They will also receive contingent value rights for 25% of upfront payments from potential ex-U.S. licensing agreements for SRF114 and 50% of upfront payments from potential ex-U.S. licensing agreements for SRF388. Coherus stock has experienced a 5% decline in premarket trading.

Lisa Munger is a senior editor at BioSpace. You can reach her at lisa.munger@biospace.com. Follow her on LinkedIn.

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