Clinical-stage biopharma Surface Oncology, Inc. SURF has developed a prosperous pipeline that targets the tumor micro-environment and leverages the innate and adaptive immune system, according to Baird Equity Research.
The Analyst
Analyst Michael Ulz initiated coverage of Surface Oncology with an Outperform rating and $23 price target.
The Thesis
In the next few years, Ulz said he anticipates "meaningful upside" stemming from early clinical data on antibodies that inhibit CD47, such as SRF231. This candidate is the most advanced in development and enables macrophages to attack tumor cells, he said. (See the analyst's track record here.)
“In preclinical studies, SRF231 has demonstrated potent activity both as a monotherapy and in combination with other cancer therapies and is currently in a Phase 1 study, with initial data expected in the first half of 2019. Multiple competitors are targeting CD47, which has provided early clinical target validation.”
The drug has broad utility and a differentiated safety profile, Ulz said. SRF231 should serve as Surface's value driver, he said.
A Novartis AG NVS partnership should target the adenosine pathway, leading to immunosuppression, Ulz said.
“NZV930 (inhibits CD73), partnered with Novartis, is currently in a Phase 1 study, with data expected in the second half of 2019. SRF617 (inhibits CD39) represents a unique opportunity by targeting further upstream in the adenosine pathway and is expected to enter the clinic in late 2019.”
Supplementary pipeline opportunities like IL-27 have demonstrated encouraging activity in preclinical research, while additional programs will target macrophages, T cells and natural killer cells, Ulz said.
“Overall, Surface has built a robust pipeline consisting of seven immunotherapy programs, with two currently in the clinic and four in total expected to be in the clinic by 2020.”
Price Action
Surface Oncology shares were rallying 9.14 percent to $11.46 at the time of publication Wednesday.
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