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Why Surface Oncology Stock Soared Today

By Keith Speights – Oct 12, 2020 at 3:41PM

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The small biotech could be preparing to sell to a big drugmaker.

What happened

Shares of Surface Oncology (SURF -1.11%) were soaring 19.1% higher as of 3:26 p.m. EDT on Monday. The big jump came after StreetInsider reported that Surface Oncology has hired an investment bank to explore selling the company, with GlaxoSmithKline (GSK 0.60%) expressing interest in acquiring the biotech. 

So what

Reports of potential acquisitions almost always spark a sharp gain for small biotech stocks like Surface Oncology. The key question for investors, though, is whether or not the reports will actually pan out.

Woman drawing a big fish about to swallow a small fish.

Image source: Getty Images.

It wouldn't be surprising if GlaxoSmithKline (GSK) is interested in a deal. Surface has a promising early-stage pipeline with three candidates targeting the inhibition of different antibodies. GSK has focused on building its oncology pipeline in recent years, with its 2019 acquisition of Tesaro a key milestone in that effort.

The reported move by Surface to bring in an investment bank could also be encouraging news for investors. GSK might not be the only big drugmaker interested in scooping up Surface's pipeline. 

Now what

Neither Surface Oncology nor GlaxoSmithKline has confirmed StreetInsider's report yet. But should a deal be in the making, it's quite possible that Surface will have even more room to run. 

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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