Shares of Surface Oncology (SURF 10.64%) had soared by 11.3% as of 10:44 a.m. EDT on Wednesday. The big gain came after the company announced late on Tuesday that the Food and Drug Administration had granted an orphan drug designation to its candidate drug SRF617 as a potential treatment for pancreatic cancer.
Good news for pipeline candidates usually lights a spark beneath biotech stocks, especially those like Surface that only have early-stage candidates. So exactly how good is this latest news?
The FDA grants orphan drug status only to treatments that target rare diseases and conditions for which it would normally be unprofitable to develop treatments. Companies that receive the designation for their candidates receive partial tax credits for their clinical study expenses. They don't have to pay the FDA's user fees for those drugs. And most importantly, such drugs can be eligible for seven years of marketing exclusivity in the U.S. if they are approved. This last benefit of the orphan drug designation can translate to a lot of extra money for drugmakers.
Surface Oncology is currently evaluating SRF617 in phase 1/1b studies targeting several types of solid tumors. These studies include a combination of the experimental drug with chemotherapy gemcitabine and Bristol Myers Squibb's Abraxane in treating pancreatic cancer.
The biotech plans to present preclinical data for SRF617 and for another pipeline candidate, SRF388, at the American Association for Cancer Research Virtual Annual Meeting in April. Surface Oncology also hopes to provide more detailed data for both experimental drugs at the American Society of Clinical Oncology Virtual Annual Meeting in June.