Cancer continues to be a big area of investor interest and Surface Oncology now aims to tap into that with an initial public stock offering that the company hopes will finance tests of its lead immuno-oncology drug.
Surface set a preliminary $75 million goal for the stock offering, according to documents filed with securities regulators late Friday. Surface has applied for a listing on the Nasdaq exchange under the stock symbol “SURF.”
Surface has been developing drugs that could be paired with so-called checkpoint inhibitors, a type of immunotherapy that removes the brakes on the body’s cancer-killing T cells. Surface’s lead drug, SRF231, is meant to target one of the ways that tumors avoid detection by the immune system. The drug blocks a protein found at high levels on the surface of many tumor cells called CD47. This protein helps tumors fend off attack from macrophages, a type of immune cell. In preclinical studies, Surface reported observing greater tumor-destroying activity from macrophages in the presence of the drug.
A Phase 1 study testing SRF231 began in February. As many as 170 patients could participate in the clinical trial, which is enrolling patients with solid tumors as well as those with lymphoma, a cancer of the lymph nodes and lymphatic system. Surface expects to report initial results from that study in the first half of next year.
Surface is hardly alone in targeting CD47 or related proteins. Others with similar drugs in development include Alexo Therapeutics, Arch Oncology, Celgene (NASDAQ: CELG), and Trillium Therapeutics (NASDAQ: TRIL).
As of the end of 2017, Surface reported having $63 million in cash. Last year, Surface spent $47.7 million on research and development, according to the filing. Besides financing more Phase 1 clinical work on SRF231, Surface says the IPO proceeds will support research and development for its other drug programs. Surface also plans to raise $11.5 million in additional funds alongside the IPO. That cash will come from the Novartis Institutes for Biomedical Research (NIBR), a Novartis (NYSE: NVS) unit that has agreed to purchase additional Surface shares at the IPO price, according to Surface’s filing. NIBR’s association with Surface dates to its beginnings in 2015, when NIBR joined the group of investors participating in the startup’s $35 million Series A round of financing.
Novartis is a partner on another Surface drug. In February, the drug giant filed the paperwork to begin clinical testing of SRF373, a Surface drug that targets a different protein, CD73. Novartis has licensed worldwide rights to the drug. Surface says in its filing that clinical trials for that drug are expected to start later this year.
Image of human lymphoma tumor cells by the National Cancer Institute.