With ma­jor fund­ing from No­var­tis, Sur­face On­col­o­gy launch­es a CD47 tri­al amid a swarm of ri­vals and files for $75M IPO

With a lead can­cer drug now in the clin­ic in pur­suit of a trendy tar­get, biotech start­up Sur­face On­col­o­gy is mak­ing a bid for IPO glo­ry, boast­ing of a heavy­weight al­ly that’s been pro­vid­ing much of the op­er­at­ing cash.

Jeff Goater, CEO

The biotech filed its S-1 late Fri­day, pen­cil­ing in $75 mil­lion as the goal while out­lin­ing close to $200 mil­lion in back­ing — the li­on’s share com­ing from its close part­ner No­var­tis.

The Cam­bridge, MA-based biotech at­tract­ed con­sid­er­able ear­ly at­ten­tion for its work jump­ing in­to the in­tense­ly com­pet­i­tive field of tu­mor mi­croen­vi­ron­ment en­gi­neer­ing work. With the CT­LA-4/PD-/L1 check­points mak­ing im­pres­sive in­roads for some seg­ments of can­cer pa­tients, Sur­face is one of a myr­i­ad of star­tups look­ing to add some ad­di­tion­al fire­pow­er with add-ons that can ei­ther take the brakes off of an im­mune as­sault or bring in ad­di­tion­al weapons to take down can­cer cells. In their case, the key fo­cus is on coun­ter­ing im­muno­sup­pres­sion.

No­var­tis has a PD-1 in late-stage de­vel­op­ment, but ex­ecs tend to down­play its im­por­tance, con­cen­trat­ing on their strate­gic mis­sion to have their own check­point to use in com­bos rather than as a ri­val to the 5 PD-1/L1s cur­rent­ly on the mar­ket, with Re­gen­eron/Sanofi and many more crowd­ing in. Their work with Sur­face has brought them in on one pre­clin­i­cal al­liance on CD73, with an IL-27 part­ner­ship hang­ing in the bal­ance.

So far, ac­cord­ing to the S-1, No­var­tis has front­ed their work with $163.5 mil­lion in cash, in­clud­ing a $70 mil­lion up­front, $80 mil­lion for op­tions and mile­stones and $13.5 mil­lion in stock. That in­cludes a $45 mil­lion pay­ment last month fol­low­ing “re­ceipt of the first fi­nal au­dit­ed GLP tox­i­col­o­gy study re­port for SRF373.” Four VCs — At­las, F-Prime, Lil­ly Ven­tures and NEA — split up $28 mil­lion in shares, with each adding $7 mil­lion. At­las owns the largest chunk shares, with 23%.

Their deal with No­var­tis al­so orig­i­nal­ly in­clud­ed $1.17 bil­lion in mile­stones, which wasn’t dis­closed at the sign­ing time, though the phar­ma gi­ant al­so dropped two of the four po­ten­tial op­tions it had signed up for. No­var­tis will al­so help out with the IPO, pur­chas­ing $11.5 mil­lion more in stock.

Sur­face had burned through $74 mil­lion of its cash by the end of last year, with 56 staffers.

Ini­tial­ly fo­cused on CD47, a “don’t-eat-me” tar­get that has whipped up a line­up of con­tenders, No­var­tis ul­ti­mate­ly passed on that pro­gram and left world­wide rights to the Phase I as­set to Sur­face. Sur­face al­so owns the CD-39 pro­gram.

Sur­face has some im­pres­sive back­ers, in­clud­ing for­mer Bris­tol-My­ers R&D chief El­liott Si­gal, who owns some stock and sits on the board.

“As we dis­cussed last year, it is crit­i­cal in the im­mune-on­col­o­gy field to ‘skate to where the puck will be’, that is, to ad­dress the ques­tion of what is be­yond PD-1 and oth­er T-cell, check­point in­hibitors,” Si­gal not­ed to me back in ear­ly 2016, when No­var­tis signed on. But they’re by no means the on­ly biotech with the same ap­proach.

Com­pet­i­tive? The burst of in­vest­ment in im­muno-on­col­o­gy has left Sur­face with a long ros­ter of ri­vals. Their list in­cludes the fol­low­ing ex­am­ples:

For CD47 alone: Alexo Ther­a­peu­tics, Arch On­col­o­gy, Au­ri­gene, Blink Bio­med­ical, Cel­gene, Forty Sev­en, Novim­mune, OSE Im­munother­a­peu­tics, Sor­ren­to, Syn­thon Hold­ing and Tril­li­um Ther­a­peu­tics.

For the rest of the tu­mor mi­croen­vi­ron­ment: Ar­cus Bio­sciences, As­traZeneca, Bris­tol-My­ers Squibb, Corvus Phar­ma­ceu­ti­cals, In­nate Phar­ma and Palo­bio­far­ma, to name a few.

Not every­thing has gone com­plete­ly ac­cord­ing to plan at Sur­face. Found­ing CEO Dnetlev Bin­iszkiewicz re­signed with­out ex­pla­na­tion last fall, re­placed by the CBO, Jeff Goater. Goater now is in line for a $465,000 an­nu­al salary plus op­tions, which brought his com­pen­sa­tion pack­age last year to $1.4 mil­lion.

Gold­man Sachs, Cowen and Ever­core ISI are do­ing the hon­ors on the un­der­writ­ing.

Brian Kaspar. AveXis via Twitter

AveX­is sci­en­tif­ic founder fires back at No­var­tis CEO Vas Narasimhan, 'cat­e­gor­i­cal­ly de­nies any wrong­do­ing'

Brian Kaspar’s head was among the first to roll at Novartis after company execs became aware of the fact that manipulated data had been included in its application for Zolgensma, now the world’s most expensive therapy.

But in his first public response, the scientific founder at AveXis — acquired by Novartis for $8.7 billion — is firing back. And he says that not only was he not involved in any wrongdoing, he’s ready to defend his name as needed.

I reached out to Brian Kaspar after Novartis put out word that he and his brother Allen had been axed in mid-May, two months after the company became aware of the allegations related to manipulated data. His response came back through his attorneys.

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UP­DAT­ED: An em­bold­ened As­traZeneca splurges $95M on a pri­or­i­ty re­view vouch­er. Where do they need the FDA to hus­tle up?

AstraZeneca is in a hurry.

We learned this morning that the pharma giant — not known as a big spender, until recently — forked over $95 million to get its hands on a priority review voucher from Sobi, otherwise known as Swedish Orphan Biovitrum.

That marks another step down on price for a PRV, which allows the holder to slash 4 months off of any FDA review time.

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Martin Shkreli [via Getty]

Pris­on­er #87850-053 does not get to add drug de­vel­op­er to his list of cred­its

Just days after Retrophin shed its last ties to founder Martin Shkreli, the biotech is reporting that the lead drug he co-invented flopped in a pivotal trial. Fosmetpantotenate flunked both the primary and key secondary endpoints in a placebo-controlled trial for a rare disease called pantothenate kinase-associated neurodegeneration, or PKAN.

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We­bi­nar: Re­al World End­points — the brave new world com­ing in build­ing fran­chise ther­a­pies

Several biopharma companies have been working on expanding drug labels through the use of real world endpoints, combing through the data to find evidence of a drug’s efficacy for particular indications. But we’ve just begun. Real World Evidence is becoming an important part of every clinical development plan, in the soup-through-nuts approach used in building franchises.

I’ve recruited a panel of 3 top experts in the field — the first in a series of premium webinars — to look at the practical realities governing what can be done today, and where this is headed over the next few years, at the prodding of the FDA.

ZHEN SU — Merck Serono’s Senior Vice President and Global Head of Oncology
ELLIOTT LEVY — Amgen’s Senior Vice President of Global Development
CHRIS BOSHOFF — Pfizer Oncology’s Chief Development Officer

A premium subscription to Endpoints News is required to attend this webinar. Please upgrade to either an Insider or Enterprise plan for access. Already have Endpoints Premium? Please sign-in below. You can contact our Subscriptions team at help@endpointsnews.com with any issues.

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Am­gen, Al­ler­gan biosim­i­lar of Roche's block­buster Rit­ux­an clears an­oth­er US piv­otal study 

Novartis $NVS may have given up, but Amgen $AMGN and Allergan $AGN are plowing ahead with their knockoff of Roche’s blockbuster biologic Rituxan in the United States.

Their copycat, ABP 798, was found to have a clinically equivalent impact as Rituxan — meeting the main goal of the study involving CD20-positive B-cell non-Hodgkin’s lymphoma patients. This is the second trial supporting the profile of the biosimilar. In January, it came through with positive PK results in patients with rheumatoid arthritis.

BeiGene and Mus­tang nail down spe­cial FDA sta­tus for top drugs; Roche bags added cov­er­age for Hem­li­bra

→ BeiGene $BGNE is getting a boost in its drive to field a rival to Imbruvica. The FDA has offered an accelerated review to zanubrutinib, a BTK inhibitor that has posted positive results for mantle cell lymphoma. The PDUFA date lands on February 27, 2020. The drug scored breakthrough status at the beginning of the year.

→ BeiGene isn’t the only biopharma company to gain special regulatory status today. Mustang Bio $MBIO and St. Jude Children’s Research Hospital announced that MB-107, a lentiviral gene therapy for the treatment of X-linked severe combined immunodeficiency, also known as bubble boy disease, has been granted Regenerative Medicine Advanced Therapy status.

Trump ad­min­is­tra­tion re­vives bid to get drug list prices on TV ads

The Trump administration is not giving up just yet. On Wednesday, the HHS filed an appeal against a judge’s decision in July to overturn a ruling obligating drug manufacturers to disclose the list price of their therapies in television adverts — hours before it was stipulated to go into effect.

In May, the HHS published a final ruling requiring drugmakers to divulge the wholesale acquisition cost— of a 30-day supply of the drug — in tv ads in a bid to enhance price transparency in the United States. The pharmaceutical industry has vehemently opposed the rule, asserting that list prices are not what a typical patient in the United States pays for treatment — that number is typically determined by the type of (or lack thereof) insurance coverage, deductibles and out-of-pocket costs. Although there is truth to that claim, the move was considered symbolic in the Trump administration’s healthcare agenda to hold drugmakers accountable in a climate where skyrocketing drug prices have incensed Americans on both sides of the aisle.

Bob Smith, Pfizer

Pfiz­er is mak­ing a $500M state­ment to­day: Here’s how you be­come a lead play­er in the boom­ing gene ther­a­py sec­tor

Three years ago, Pfizer anted up $150 million in cash to buy Bamboo Therapeutics in Chapel Hill, NC as it cautiously stuck a toe in the small gene therapy pool of research and development.

Company execs followed up a year later with a $100 million expansion of the manufacturing operations they picked up in that deal for the UNC spinout, which came with $495 million in milestones.

And now they’re really going for it.

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Video: Putting the AI in R&D — with Badhri Srini­vasan, Tony Wood, Rosana Kapeller, Hugo Ceule­mans, Saurabh Sa­ha and Shoibal Dat­ta

During BIO this year, I had a chance to moderate a panel among some of the top tech experts in biopharma on their real-world use of artificial intelligence in R&D. There’s been a lot said about the potential of AI, but I wanted to explore more about what some of the larger players are actually doing with this technology today, and how they see it advancing in the future. It was a fascinating exchange, which you can see here. The transcript has been edited for brevity and clarity. — John Carroll