– Surface acquisition and potential toripalimab approval will transform Coherus into an I-O company with multiple next-generation immunotherapies in clinical development funded by growing revenues –

– Acquisition significantly advances Coherus’ I-O pipeline with anti-IL-27 and anti-CCR8 clinical programs–

– Stock for stock transaction valued at up to $65 million, an approximate three-fold premium over Surface’s anticipated net cash of $20 to $25 million at closing; Surface shareholders will also receive CVRs based on potential future payments for previously partnered assets and for potential ex-US licensing –

– Coherus projects $48 – 53 million of net product revenue in 2Q 2023, and affirms prior FY 2023 revenue and expense guidance –

REDWOOD CITY, CA and CAMBRIDGE, MA, USA I June 16, 2023 I Coherus BioSciences, Inc. (Coherus, Nasdaq: CHRS) and Surface Oncology, Inc. (Surface, Nasdaq: SURF) today announced that the companies have entered into a definitive merger agreement providing that, at the closing, Coherus will acquire Surface Oncology, a clinical-stage immuno-oncology (I-O) company developing next-generation immunotherapies that target the tumor microenvironment. The Surface acquisition adds two differentiated clinical stage assets to Coherus’ novel I-O pipeline: SRF388, a novel IL-27-targeted antibody currently being evaluated in Phase 2 clinical trials in lung cancer and liver cancer, and SFR114, a CCR8-targeted antibody currently in a Phase 1/2 study as a monotherapy in patients with advanced solid tumors.

The transaction was unanimously approved by the boards of directors of both companies and is expected to close in the third quarter of 2023.

“This transaction is well-timed, as it coincides with the accelerating growth of our biosimilar revenues driven by the launch of CIMERLI® and 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,” said Denny Lanfear, Chairman and Chief Executive Officer of Coherus. “Toripalimab has recently demonstrated potentially practice-changing overall survival data in nasopharyngeal carcinoma, and its differentiated mechanism of action defines it as a next-generation PD-1. Existing marketed PD-1’s transformed the treatment of cancer over the past decade but are effective in only a minority of patients. Additional overall survival gains must come from novel combinations that more broadly target the cancer immunity cycle. The addition of Surface’s IL-27 and CCR8 antibodies expands our next-generation I-O pipeline beyond checkpoint inhibition to agents targeting immune-suppressive mechanisms of the tumor microenvironment.”

Commenting on the merger, Rob Ross, MD, President and Chief Executive Officer, Surface said, “This combination presents a rare opportunity for two complementary organizations to join together and forge something that is greater than the sum of its parts. By augmenting Coherus’ existing capabilities and infrastructure with Surface’s innovative pipeline and deep I-O expertise, Coherus is well positioned to develop important I-O medicines for patients which deliver real value for the shareholders of both companies.”

Regarding the SRF388 data, Dr. Ross added, “While still early, the new hepatocellular carcinoma (HCC) data are encouraging and suggest that when administered in triplet combination with checkpoint and VEGF inhibitors, SRF388 holds exciting potential to improve the treatment paradigm for liver cancer. Based on the growing body of data in HCC, non-small-cell lung cancer (NSCLC) and renal cell carcinoma (RCC), SRF388 would be a compelling agent to study in combination with toripalimab in many highly prevalent tumor types.”

Benefits of the Transaction

Strengthens Coherus’ pipeline with global rights to innovative, competitively positioned, clinical-stage I-O assets

  • SRF388, the only IL-27 targeted antibody in clinical development worldwide, has demonstrated monotherapy activity in multiple tumor types and is currently being evaluated in Phase 2 clinical trials in lung cancer and liver cancer as monotherapy and in combination with checkpoint inhibitors.
  • SRF114, a high affinity, fully human IgG1 antibody demonstrated to bind exclusively to CCR8, has established proof of mechanism with pharmacodynamic activity observed in the ongoing Phase 1 trial.
  • SRF388 and SRF114 have potential as monotherapy and as combination treatments with other
    I-O agents, including Coherus’ toripalimab.

Expands Coherus’ I-O franchise to the treatment of tumor types with significant unmet needs

  • Coherus plans to launch toripalimab directly upon approval by the United States Food and Drug Administration (FDA) for nasopharyngeal carcinoma.
  • Coherus plans to evaluate SRF388 and SRF114 as monotherapies and in combination with toripalimab for lung cancer, head and neck cancer, and certain other tumor types.
  • Novel I-O clinical development will extend Coherus’ reach in oncology and expand physician experience with toripalimab. Combinations of toripalimab with SRF388 or SRF114 could yield net sales from multiple Coherus proprietary I-O agents.

Positive financial impact

  • $20 – $25 million in Surface net cash projected at closing will strengthen Coherus’ balance sheet and fund ongoing SRF388 and SRF114 clinical trials through year-end 2024, beyond significant value inflection points in 2023 and 2024.
  • Pipeline prioritization enabled by the acquisition will focus clinical development activities on competitively positioned I-O programs and reduce budgeted R&D spending by at least $50 million through 2025.
  • Potential out-licensing of ex-US rights to SRF388 and SRF114 could raise significant non-dilutive capital in 2024 and 2025.

Transaction Details

Under the terms of the agreement, Coherus will issue shares of its common stock at a price of $5.2831 per share to acquire all outstanding shares of Surface stock for a total value equal to the sum of $40 million plus Surface’s net cash at closing of the transaction (currently expected to be between $20 and $25 million). Surface shareholders will also receive CVRs for 70% of milestone and royalty-based value of existing programs with Novartis AG (NZV930) and GSK plc (GSK4381562), as well as CVRs for 25% of upfront payments made pursuant to potential ex-US licensing agreements for SRF114 and 50% of upfront payments made pursuant to potential ex-US licensing agreements for SRF388, subject to certain deductions as set forth in the contingent value rights agreement. Amounts under these CVRs are payable for a period of ten years following the closing of this transaction.

The transaction was unanimously approved by the boards of directors of both companies and is expected to close in the third quarter of 2023. The closing of the transaction is subject to certain conditions, including Surface shareholder approval; the availability at closing of at least $19.6 million of Surface cash net of short-term and long-term liabilities, transaction expenses, and other obligations; and other customary conditions. In conjunction with the transaction announcement, Surface is implementing a workforce reduction of approximately 50% of its employees.

Truist Securities is acting as financial advisor and Arnold & Porter Kaye Scholer LLP and Latham & Watkins LLP are acting as legal advisors to Coherus. Wedbush Securities Inc. is acting as exclusive strategic financial advisor and Goodwin Procter LLP is acting as legal advisor to Surface.

Coherus financial guidance

For Q2 2023, Coherus expects to report at least $48 – 53 million of net product revenue from sales of UDENYCA® and CIMERLI®. For the fiscal year 2023, Coherus continues to project net revenues in excess of $275 million, including at least $100 million from net sales of CIMERLI®, with the balance comprising net sales of UDENYCA®, YUSIMRY™ and toripalimab. Additionally, Coherus affirms prior guidance for full year 2023 combined R&D and SG&A expenses in the range of $315 to $335 million, including approximately $50 million of stock-based compensation expense and excluding the Surface Oncology acquisition cost as well as any potential collaboration upfront payments to Klinge Pharma for the in-license of its Eylea® biosimilar program or milestone payments to Junshi Biosciences due upon U.S. approval of toripalimab.

Surface program updates

SRF388, a novel antibody targeting IL-27

  • In the Phase 2 study evaluating SRF388 as a monotherapy in NSCLC, two confirmed partial responses were observed as of the data cut-off (April 14, 2023) in PD-L1 negative or low patients with squamous NSCLC, as well as one confirmed report of durable disease stabilization in a patient with adenocarcinoma. All 3 of these patients were previously treated with PD-(L)1 antibodies. The overall response rate (ORR) in the subset of patients with squamous NSCLC (n=2/6) was 33% in this data cut.
  • Surface has fully enrolled the lead-in stage of the Phase 2 trial investigating SRF388 in combination with atezolizumab and bevacizumab for patients with first-line advanced hepatocellular carcinoma (n=30). In an early data cut (April 2023) with an average of 15 weeks of follow-up and only approximately half of patients with more than one post-treatment imaging assessment, SRF388 in combination with atezolizumab and bevacizumab demonstrated a 27% ORR (n=7/26) with a 65% disease control rate in response-evaluable patients. Additional follow-up data are expected by the end of the year. 
  • SRF388 has demonstrated an acceptable safety profile in both studies to date, and there were no concerning safety signals observed in either trial as monotherapy or in combination with other agents including checkpoint inhibitors. 

SRF114, a highly selective, competitively positioned antibody targeting CCR8

  • The Phase 1 trial of SRF114 in patients with advanced solid tumors is currently enrolling in monotherapy dose escalation (n=6). Early evidence of biological effect has been seen with regulatory T cell depletion in peripheral blood CCR8+ Treg cells following treatment with SRF114, with no effect observed on non-CCR8+ Treg cells. No concerning safety signals were observed to date and dose escalation continues.

Near-term projected I-O catalysts

  • Q3 2023: FDA approval decision on toripalimab
  • Q4 2023: toripalimab mechanism of action/differentiation as a next generation PD-1 presentation; SRF388 NSCLC data presentation; ILT4 investigational new drug filing
  • Q1 2024: SRF388 HCC combination data presentation
  • Q2 2024: ILT4 preclinical data presentation; SRF114 Phase 1 data

Conference Call and Webcast Information

Coherus and Surface Oncology management will host a conference call to review details of the transaction beginning at 8:30 a.m. Eastern Daylight Time/5:30 a.m. Pacific Daylight Time, June 16, 2023.

The press release and live webcast of the conference call can be accessed through a link that is posted on Investors section of the Coherus website: https://investors.coherus.com/ and Investors section of the Surface Oncology website: https://investors.surfaceoncology.com/.

Webcast Link: https://edge.media-server.com/mmc/p/zfig6oyn

To access the live conference call, please pre-register through the following link:


All registrants will receive dial-in information and a PIN allowing them to access the live call.

The webcast replay will be available on the Coherus and Surface websites upon completion of the event.

About Surface’s Immuno-oncology Pipeline

Surface’s immuno-oncology pipeline includes multiple antibody immunotherapy candidates focused on enhancing the innate and adaptive immune responses to enable a robust immunologic response and enhance outcomes for patients with cancer. SRF388 is a novel anti-IL-27 antibody currently being evaluated in Phase 1/2 clinical trials in lung and liver cancer. SRF114 is a highly selective, competitively positioned anti-CCR8 antibody currently in a Phase 1/2 study as a monotherapy in patients with advanced solid tumors. Surface also has two out-licensed partnership programs to advance its next-generation cancer therapies.

About Coherus’ Immuno-oncology Pipeline

Coherus is developing an innovative immuno-oncology pipeline that will be synergistic with its proven commercial capabilities in oncology. Through an in-licensing agreement with Junshi Biosciences, Coherus is developing toripalimab, an anti-PD-1 antibody, in the United States and Canada. A biologics license application for toripalimab for the treatment of nasopharyngeal carcinoma (NPC) is under review by the FDA. Toripalimab is approved in China for the second-line treatment of melanoma, urothelial cancer, and nasopharyngeal carcinoma.

Coherus’ earlier-stage immuno-oncology pipeline targets immune-suppressive mechanisms in the tumor microenvironment, including CHS-006, a TIGIT-targeted antibody, being evaluated in a Phase 1/2 clinical trial in combination with toripalimab in patients with advanced solid tumors, and CHS-1000, a preclinical program targeting the novel pathway ILT4.

About Coherus BioSciences

Coherus is a commercial-stage biopharmaceutical company focused on the research, development and commercialization of innovative immunotherapies to treat cancer. Coherus’ strategy is to build a leading immuno-oncology franchise funded with cash generated through net sales of its diversified portfolio of FDA-approved therapeutics.

In 2021, Coherus in-licensed toripalimab, an anti-PD-1 antibody, in the United States and Canada. The Biologics License Application for toripalimab in combination with chemotherapy as treatment for recurrent or metastatic nasopharyngeal carcinoma is currently under review by the FDA.

Coherus markets UDENYCA® (pegfilgrastim-cbqv), a biosimilar of Neulasta®, and CIMERLI®(ranibizumab-eqrn), a biosimilar of Lucentis®, in the U.S., and expects to launch the FDA-approved Humira® biosimilar YUSIMRY™ (adalimumab-aqvh) in the U.S. in July 2023.

About Surface Oncology

Surface Oncology is an immuno-oncology company developing next-generation antibody therapies focused on the tumor microenvironment. Its pipeline includes two wholly-owned programs: SRF388, a Phase 2 program that targets IL-27, and SRF114, a Phase 1 program, which selectively depletes regulatory T cells in the tumor microenvironment via targeting CCR8. In addition, Surface has two partnerships with major pharmaceutical companies: a collaboration with Novartis targeting CD73 (NZV930; Phase 1) and a collaboration with GlaxoSmithKline targeting PVRIG (GSK4381562, formerly SRF813; Phase 1). Surface’s novel investigational cancer immunotherapies are designed to achieve a clinically meaningful and sustained anti-tumor response and may be used alone or in combination with other therapies.

SOURCE: Coherus BioSciences