On March 9, 2021 Surface Oncology (Nasdaq: SURF), a clinical-stage immuno-oncology company developing next-generation therapies that target the tumor microenvironment, reported financial results and corporate highlights for the fourth quarter and full year 2020, as well as anticipated 2021 corporate milestones (Press release, Surface Oncology, MAR 9, 2021, View Source [SID1234576296]).
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"The fourth quarter of 2020 was transformational for Surface. During this quarter, we provided encouraging clinical data from our lead candidates and validated our preclinical discovery capabilities with a second major outlicense agreement that provided the company with substantial financial flexibility for several years," said Rob Ross, M.D., incoming chief executive officer. "Today, we are also announcing another clinical trial collaboration further enabling rapid assessment of our lead product candidates (in this case SRF388) in combination with pembrolizumab, focusing on patients with liver and kidney cancers. As we look forward into 2021, we are targeting ASCO (Free ASCO Whitepaper) in June to share additional clinical data on SRF617 and SRF388, and we will work with our partner, GSK, to advance SRF813 into the clinic."
Recent Corporate Highlights:
On March 9, 2021, Surface announced a clinical trial collaboration with Merck to evaluate the safety and efficacy of combining Surface’s SRF388, an investigational antibody therapy targeting IL-27, with Merck’s KEYTRUDA (pembrolizumab), the first anti-PD-1 therapy approved in the United States. This combination will be studied as a component of the first-in-human Phase 1 study of SRF388 and will be evaluated in patients with solid tumors, with a focus on patients with liver cancer and kidney cancer.
In December, Surface announced an agreement for GlaxoSmithKline (GSK) to exclusively license worldwide development and commercial rights to Surface Oncology’s preclinical program SRF813, a fully human IgG1 antibody targeting PVRIG (also known as CD112R), an inhibitory protein expressed on natural killer cells (NK cells) and T cells. Under the terms of the agreement, GSK made an $85 million upfront payment in December 2020. In addition, Surface Oncology may receive up to an additional $730 million in future milestone payments, as well as be eligible to receive tiered royalties on global net sales.
In November, Surface announced that both of its lead clinical programs, SRF617 (targeting CD39) and SRF388 (targeting IL-27), have achieved predefined criteria for advancement into combination and expansion stages of the ongoing Phase 1 trials. These criteria include acceptable safety profiles at biologically relevant doses, as well as demonstration of target engagement and meaningful pharmacodynamic activity in the ongoing Phase 1 trials.
Effective April 1, 2021, Rob Ross, M.D., who has served as chief medical officer at Surface Oncology since 2016, will become the company’s president and chief executive officer and will also be appointed to the board of directors. Rob will succeed current CEO Jeff Goater, who will assume the role of chairman of the Surface Oncology board of directors.
Selected Anticipated Near-term Corporate Milestones:
Preclinical data presentations for SRF617 and SRF388 at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Virtual Annual Meeting in April.
Targeting the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Virtual Annual Meeting in June for detailed clinical data presentations for SRF617 and SRF388.
Investigational new drug (IND) filing for SRF813 anticipated in 2021.
Financial Results:
As of December 31, 2020, cash, cash equivalents and marketable securities were $175.1 million, compared to $105.2 million on December 31, 2019.
Revenue recognized in the fourth quarter ended December 31, 2020 was $87.6 million, compared to revenue of less than $1.0 million for the same period in 2019. The increase was a result of the $85 million upfront payment received in the fourth quarter 2020 from GSK. Revenue recognized in the full year ended December 31, 2020 was $126.2 million, compared to $15.4 million for the same period in 2019. The increase was a result of the $85 million upfront payment received in the fourth quarter 2020 from GSK, as well as the expiration of the final Novartis option purchase period in January 2020 and the corresponding recognition of the remaining deferred revenue under the agreement.
Research and development (R&D) expenses were $10.7 million for the fourth quarter ended December 31, 2020, compared to $11.7 million for the same period in 2019. R&D expenses were $41.0 million for the full year ended December 31, 2020, compared to $52.1 million for the same period in 2019. This decrease was primarily driven by a reduction in expenses associated with contract manufacturing and other IND-enabling activities, as a result of the SRF617 and SRF388 IND filings in 2019, offset by an increase in spend on the SRF617 and SRF388 Phase 1 clinical trials, which began in 2020. R&D expenses included $2.8 million in stock-based compensation expense for the full year ended December 31, 2020.
General and administrative (G&A) expenses were $8.9 million for the fourth quarter ended December 31, 2020, compared to $5.1 million for the same period in 2019. G&A expenses were $23.6 million for the full year ended December 31, 2020, compared to $20.6 million for the same period in 2019. This increase was primarily due to increased consulting costs related to the GSK Agreement, as well as increased stock-based compensation expense and bonus achieved in 2020. G&A expenses included $4.9 million in stock-based compensation expense for the full year ended December 31, 2020.
For the fourth quarter ended December 31, 2020, net income was $67.3 million, or basic net income per share attributable to common stockholders of $1.66, and diluted net income per share attributable to common stockholders of $1.56. Net loss was $16.0 million for the same period in 2019, or basic and diluted net loss per share attributable to common stockholders of $0.57. For the full year ended December 31, 2020 net income was $59.3 million, or basic net income per share attributable to common stockholders of $1.67, and diluted net income per share attributable to common stockholders of $1.57. Net loss was $54.8 million for the same period in 2019, or basic and diluted net loss per share attributable to common stockholders of $1.97.
Financial Outlook:
Based upon our current operating plan, Surface continues to project cash runway sufficient through 2023.