On March 2, 2022 Surface Oncology (Nasdaq: SURF), a clinical-stage immuno-oncology company developing next-generation immunotherapies that target the tumor microenvironment, reported financial results and corporate highlights for the fourth quarter and full year 2021, as well as anticipated 2022 corporate milestones (Press release, Surface Oncology, MAR 2, 2022, View Source [SID1234609348]).
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"Surface continues to make great progress advancing our portfolio of next-generation antibody therapies, and we are excited to have planned clinical data readouts this year for both our anti-IL-27 antibody, SRF388, and our anti-CD39 antibody, SRF617," said Rob Ross, M.D., chief executive officer. "The need for new medicines to help patients confronting cancer is profound, and it spurs all of us at Surface to advance our programs with urgency and passion. We are encouraged by the momentum of our programs and their potential to become important therapeutic options for a broad spectrum of cancers."
Ross continued, "Today we announced that Geoffrey McDonough, M.D., is stepping down from the Surface board of directors effective immediately. Geoff joined our board in February of 2018, and we thank him for the significant contributions he made during his tenure. While we will miss his leadership and counsel, the board remains vibrant and was further strengthened with the addition of Ben Hickey and the appointment of Denice Torres as board chair late last year."
Fourth Quarter and Subsequent Corporate Highlights:
In December 2021, Surface announced that the U.S. Food and Drug Administration (FDA) had cleared the Investigational New Drug (IND) application for GSK4381562 (formerly SRF813) to proceed into a first-in-human clinical trial. GSK4381562 is a fully human IgG1 antibody targeting PVRIG (also known as CD112R), an inhibitory protein expressed on natural killer cells (NK cells) and T cells. Surface will receive a $30 million milestone payment in conjunction with the initiation of the first Phase 1 study for GSK4381562 and is eligible to receive an additional $700 million in future milestone payments, as well as be eligible to receive tiered royalties on global net sales.
In December 2021, Surface presented results from a first-in-human dose-escalation study of SRF617 at the European Society for Medical Oncology Immuno-Oncology Congress (ESMO-IO) 2021. These results demonstrated good tolerability, clear evidence of target engagement and pathway inhibition and early but promising signs of activity in combination with chemotherapy and pembrolizumab.
In November 2021, Surface presented scientific posters at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) 2021 Annual Meeting, highlighting SRF617’s potent CD39 inhibition and its effect on promoting pro-inflammatory therapeutic activity in preclinical models.
Additionally, the company presented translational data on IL-27 expression by macrophages in the tumor microenvironment from patients with therapy-resistant non-small-cell lung cancer, supporting continued development of SRF388.
On March 1, 2022, the company granted non-qualified stock options to two new employees to purchase an aggregate of 98,000 shares of the company’s common stock with a per share exercise price of $3.64. The option grants, made under Surface’s 2021 Inducement Plan (the Plan), were granted as an inducement material to the employees entering into employment with the company in accordance with Nasdaq Listing Rule 5635(c)(4) and were granted pursuant to the terms of the Plan.
Selected Anticipated Near-term Corporate Milestones:
Surface will present new translational data on SRF388 at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting in April 2022. In addition, the company anticipates presenting updated clinical data from SRF388 in the second quarter of 2022.
Clinical data update for SRF617 is expected in the second half of 2022.
Financial Results:
As of December 31, 2021, cash, cash equivalents and marketable securities were $154.1 million, compared to $175.1 million on December 31, 2020.
Revenue recognized in the fourth quarter ended December 31, 2021, was $0.2 million, compared to revenue of $87.6 million for the same period in 2020. The decrease 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, 2021, was $2.7 million, compared to $126.2 million for the same period in 2020. The decrease 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 $16.3 million for the fourth quarter ended December 31, 2021, compared to $10.7 million for the same period in 2020. R&D expenses were $53.6 million for the full year ended December 31, 2021, compared to $41.0 million for the same period in 2020. This increase was primarily driven by continued enrollment and advancement into the expansion stages of our ongoing SRF617 and SRF388 Phase 1 clinical trials. R&D expenses included $2.4 million in stock-based compensation expense for the full year ended December 31, 2021.
General and administrative (G&A) expenses were $7.2 million for the fourth quarter ended December 31, 2021, compared to $8.9 million for the same period in 2020. G&A expenses were $25.1 million for the full year ended December 31, 2021, compared to $23.6 million for the same period in 2020. The decrease in the fourth quarter ended December 31, 2021, was primarily due to increased consulting costs related to the GSK agreement and higher performance bonus achievement in 2020. The increase for the full year ended December 31, 2021, was primarily due to increased salary, recruiting and stock compensation expense associated with an increased headcount in 2021. G&A expenses included $6.1 million in stock-based compensation expense for the full year ended December 31, 2021.
For the fourth quarter ended December 31, 2021, net loss was $24.1 million, or basic and diluted net loss per share of $(0.52). Net income was $67.3 million for the same period in 2020, or basic net income per share of $1.66, and diluted net income per share of $1.56. For the full year ended December 31, 2021, net loss was $78.5 million, or basic and diluted net loss per share of $(1.77). Net income was $59.3 million for the same period in 2020, or basic net income per share of $1.67 and diluted net income per share of $1.57.
Based upon its current operating plan, Surface continues to project cash runway sufficient through 2023.