Full Press Release Details
Coherus to Acquire Surface Oncology
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
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
Companies to host joint conference call at 8:30 am ET / 5:30 am PT today
REDWOOD CITY, Calif. and CAMBRIDGE, MASS., June 16, 2023 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
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
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
Coherus pipeline with global rights to innovative, competitively positioned, clinical-stage I-O assets
Expands Coherus I-O franchise to the treatment of tumor types with significant unmet needs
Positive financial impact
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
selective, competitively positioned antibody targeting CCR8
Near-term projected I-O catalysts
Conference Call and Webcast Information
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.
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.
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.
Forward-Looking Statements
This communication relates to the proposed transaction pursuant to the terms of the Agreement and Plan of Merger, dated June 15, 2023, by and among
Coherus, Crimson Merger Sub I, Inc. (Merger Sub I), Crimson Merger Sub II, LLC (Merger Sub II), and Surface. This communication includes express or implied forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act ), about the proposed transaction between Coherus and Surface and the operations of the combined company that involve risks and
uncertainties relating to future events and the future performance of Coherus and Surface. Actual events or results may differ materially from these forward-looking statements. Words such as will, could, would,
should, expect, plan, anticipate, intend, believe, estimate, predict, project, potential, continue,
future, opportunity, will likely result, target, variations of such words, and similar expressions or negatives of these words are intended to identify such forward-looking statements, although not all
forward-looking statements contain these identifying words. Examples of such forward-looking statements include, but are not limited to, express or implied statements regarding: the business combination and related matters, including, but not
limited to, satisfaction of closing conditions to the proposed transaction, prospective performance and opportunities with respect to Coherus, Surface or the combined company, post-closing operations and the outlook for the companies
businesses; prospective developments or results in the pipelines of Coherus, Surface or the combined company and expansion of Coherus I-O franchise; the prospects for approval of toripalimab;
Coherus , Surface s or the combined company s targets, plans, objectives or goals for future operations, including those related to Coherus and Surface s product candidates, research and development, product candidate
introductions and product candidate approvals, as well as cooperation