Coherus To Acquire Surface Oncology; Surface To Slash 50% Workforce

(RTTNews) - Coherus BioSciences, Inc. (CHRS), announced on Friday that it has entered into a definitive merger agreement to acquire Surface Oncology Inc. (SURF).

The acquisition significantly advances Coherus' I-O pipeline with anti-IL-27 and anti-CCR8 clinical programs.

Under the terms of the agreement, the deal is a stock for stock transaction valued up to $65 million, or around three times more than Surface's net cash of $20 million to $25 million estimated at closing. Coherus will issue its common stock at $5.2831 per share to acquire all common shares of Surface for a consideration of $40 million.

Surface shareholders will also receive CVRs for 70% of milestone and royalty based on the value of the existing programs with Novartis AG and GSK plc. They will further receive CVRs for 25% of upfront payments.

The deal, unanimously approved by the boards of directors of both companies, is expected to close in the third quarter of 2023.

According to Coherus, the projected cash range of $20 million to $25 million from Surface will strengthen its balance sheet and fund ongoing SRF388 and SRF114 clinical trials through year-end 2024. The transaction will also reduce budgeted R&D spending by at least $50 million through 2025.

Coherus expects to raise non-dilutive capital in 2024 and 2025 based on out-licensing of ex-US rights to SRF388 and SRF114.

Looking ahead to the second quarter of 2023, Coherus expects net product revenue to be in the range of $48 million to $53 million.

For the full year, it affirms its previous guidance and expects net revenues in excess of $275 million.

In conjunction with the transaction announcement, Surface is implementing a workforce reduction of approximately 50% of its employees.

In premarket activity, shares of Coherus are trading at $5.00, down 7.24% or $0.39 on the Nasdaq. Shares of Surface are trading at $1.02 up 37.84% or $0.28.