Novartis signs $170M immuno-oncology pact with Surface

(Adds details about $170 payment to Surface)

By John Miller

ZURICH, Jan 11 (Reuters) - Novartis AG (LSE: 0QLR.L - news) has struck a $170 million alliance with U.S (Other OTC: UBGXF - news) .-based Surface Oncology as it seeks to boost its portfolio of medicines that help the body's immune system fight cancer.

The accord, which it announced on Monday, gives Novartis access to four pre-clinical programmes aiming to help prevent tumours from evading the immune system, including one that targets so-called regulatory T cell populations that can migrate into tumours and impair the body's ability to fight the disease.

Novartis has been expanding its cancer-fighting arsenal by striking deals with smaller companies as it races to keep pace with rivals including Roche, Merck (Other OTC: MKGAF - news) and Bristol Myers.

Last year, Novartis acquired Admune Therapeutics and forged licensing agreements with small drug developers Xoma and Palobiofarma as part of this same push.

"This alliance is another building block in our strategy to develop a portfolio of programs that we believe will lead the next wave of immuno-oncology medicines," said Mark Fishman, president of Novartis's research arm, on the deal with Surface.

Surface Oncology Chief Executive Officer Detlev Biniszkiewicz was previously head of oncology strategy at AstraZeneca (NYSE: AZN - news) and a former manager at Novartis under Fishman.

The Surface programmes that Novartis is buying access to also focus on inhibitory cytokines, which help suppress immune response, and immunosuppressive metabolites that may contribute to a cancer's ability to survive.

Novartis plans to test Surfaces' investigatory therapies as stand-alone monotherapies, as well as in combination with other drugs within its portfolios, the Swiss company said.

Under the terms of the agreement, Surface is eligible to receive up to $170 million in upfront, equity, and near-term milestone payments, Cambridge, Massachusetts-based Surface said in a statement.

Surface is also eligible to get up to double-digit royalties on product sales, it said, adding the company has the option to retain U.S. development and commercialisation rights for at least half of the collaboration's programs. (Reporting by Michael Shields and John Miller in Zurich; Editing by Joshua Franklin and Alexander Smith)