Surface Oncology, Mereo BioPharma gun for $156M Nasdaq IPOs

A quiet immuno-oncology startup that has just began clinical tests and a rare disease biotech using Big Pharma meds are both looking to raise funds on the U.S. IPO market.

First up is Cambridge, Massachusetts-based Surface, a former Fierce 15 winner, which emerged in 2015 with $35 million from a syndicate featuring Atlas Venture, Amgen Ventures, Lilly Ventures, F-Prime, New Enterprise Associates and Novartis.

Surface lured Detlev Biniszkiewicz, Ph.D., from AstraZeneca to serve as its CEO shortly after this round, but Biniszkiewicz quietly exited the role sometime last year, leaving executive chairman Daniel Lynch in charge on an interim basis, while Biniszkiewicz remained a director.

The, just over a month ago, its CBO Jeff Goater was named as chief, coming with a résumé that lists a starring role in Voyager Therapeutics’ IPO and a decade in investment banking among its highlights.

It was believed he was brought on board for his IPO experience and sure enough, six weeks later, Surface is looking to raise $75 million on the Nasdaq under the ticker SURF.

The biotech started its first clinical trial in February, although by the standards of the red-hot immuno-oncology sector, Surface has cut a relatively low public profile on those fronts, with only the $35 million series A and hook-up with Novartis to its name.

According to its SEC filing, its leading candidate SRF231 targets a protein called cluster of differentiation, or the so-called "don't eat me" CD47. It started a phase 1 last month and expects to post data from this from in the first half of next year, although it's certainly not the only one in this field, with other startups, such as Forty Seven, also going after this target with help from Roche, with other players in this areas including Celgene. 

Meanwhile, an IND for its next program, SRF373, which targets CD73, was sponsored and filed by Novartis with the FDA, also just last month (a busy few weeks for the biotech), and “we anticipate SRF373 entering clinical trials in 2018. SRF373 has been exclusively licensed on a worldwide basis to Novartis,” the company says, with the Swiss major also buying up around $11 million in shares, although it has backed away from several early programs with Surface in the last year or so. 

And its lead product candidates CD39 and interleukin 27 programs, namely: SRF617 and SRF388, respectively, should start IND-enabling studies this year, it adds.

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And then there’s U.K.-based Mereo, which already trades on the London Stock exchange, which wants an $81 million Nasdaq IPO under the ticker ‘MPH’.

Last fall, AstraZeneca outlicensed a stagnating respiratory disease asset to Mereo, a deal that saw AstraZeneca join Novartis among Mereo’s shareholders and further its efforts to offload deprioritized drugs.

Mereo paid $3 million up front in cash and gave AstraZeneca $2 million in stock to license the drug, known then as AZD9668. That cleared Mereo to move the human neutrophil elastase inhibitor into phase 2 in patients with alpha-1 antitrypsin deficiency (AATD), a rare disease associated with lung and liver problems.

That pact represented a slight twist on the model Mereo established when it emerged armed with three ex-Novartis drugs in 2015. As with AZD9668, development of the Novartis’ drugs had stalled. But Novartis had already tested the candidates in the indications chosen by Mereo for further development. That is not the case with AZD9668.

AstraZeneca moved the drug into a suite of clinical trials between 2008 and 2010 to evaluate its effect on conditions including chronic obstructive pulmonary disease and cystic fibrosis. But work came to a halt after phase 2b trials in the two aforementioned respiratory indications failed to link AZD9668 to significant benefits.

Mereo is now looking to breathe new life into the program by aiming it at AATD, a genetic disease that makes patients more likely to develop COPD.

And last week, it posted positive top-line results from another program, a phase 2b dose-ranging study with its med BGS-649 for the treatment of hypogonadotropic hypogonadism in obese men. The drug is a once-weekly oral aromatase inhibitor designed to restore a patient’s own testosterone to normal levels by inhibiting the conversion of testosterone to oestradiol.

The study met its primary endpoint, normalizing total testosterone levels in over 75% of patients after 24 weeks of treatment. Results from the BGS-649 six-month safety extension study are slated for the fourth quarter.

The company said in its filing that it also “intend[s] to commence additional late-stage clinical trials in 2018.”