Coherus BioSciences, Inc. (NasdaqGM:CHRS) entered into a definitive merger agreement to acquire Surface Oncology, Inc. (NasdaqGM : SURF) from Novartis Institutes for BioMedical Research, Inc., Atlas Venture Fund IX, L.P., managed by Atlas Venture L.P., ARK Investment Management LLC, EcoR1 Capital, LLC and others for transaction value of $65 million on June 15, 2023. Under the terms of the agreement, Coherus will issue shares of its common stock at a price of $5.2831 per share to acquire all outstanding shares of Surface stock for a total value equal to the sum of $40 million plus Surface?s net cash at closing of the transaction (currently expected to be between $20 and $25 million). Surface shareholders will also receive CVRs (contingent value right) for 70% of milestone and royalty-based value of existing programs with Novartis AG (NZV930) and GSK plc (GSK4381562), as well as CVRs for 25% of upfront payments made pursuant to potential ex-US licensing agreements for SRF114 and 50% of upfront payments made pursuant to potential ex-US licensing agreements for SRF388, subject to certain deductions as set forth in the contingent value rights agreement. Amounts under these CVRs are payable for a period of ten years following the closing of this transaction. Under the Merger Agreement, the Company would be required to pay a termination fee to Parent equal to $2,000,000, less the amount of previously paid Parent transaction expenses up to $500,000, if any, if the Merger Agreement is terminated in certain circumstances, including if the board of directors of the Company authorizes entry into a definitive agreement relating to a superior proposal.

The closing of the transaction is subject to certain conditions, including Surface shareholder approval; the availability at closing of at least $19.6 million of Surface cash net of short-term and long-term liabilities, transaction expenses, and other obligations; and other customary conditions. In conjunction with the transaction announcement, Surface is implementing a workforce reduction of approximately 50% of its employees. The transaction was unanimously approved by the boards of directors of both companies and is expected to close in the third quarter of 2023.

Truist Securities is acting as financial advisor and Lowell Dashefsky, Michael Penney, David Sausen, Uri Horowitz, Howard Sklamberg, Daniel Reisner, Debbie Feinstein and Jami Vibbert of Arnold & Porter Kaye Scholer LLP and Latham & Watkins LLP are acting as legal advisors to Coherus. Wedbush Securities Inc. is acting as exclusive strategic financial advisor and fairness opinion provider and Goodwin Procter LLP is acting as legal advisor to Surface. Surface has agreed to pay Wedbush a fee of $500,000 for rendering this opinion, which fee is not contingent upon consummation of the mergers. Innisfree M&A Incorporated acted as information agent and will receive a fee of approximately $60,000, plus reimbursement for certain out-of-pocket fees and expenses. The Depository Trust Company acted as depository bank to Surface Oncology in the transaction.

Coherus BioSciences, Inc. (NasdaqGM:CHRS) completed the acquisition of Surface Oncology, Inc. (NasdaqGM : SURF) from Novartis Institutes for BioMedical Research, Inc., Atlas Venture Fund IX, L.P., managed by Atlas Venture L.P., ARK Investment Management LLC, EcoR1 Capital, LLC and others on September 8, 2023. For each issued and outstanding share of Surface, 0.1960 shares of Coherus common stock were issued in exchange.