Bosses of AIM-listed rare disease company¬†Mereo BioPharma¬†and Nasdaq-listed¬†OncoMed Pharmaceuticals¬†have agreed a merger deal that would
The ordinary shares underlying the Mereo American Depository Receipts to be issued in exchange for each OncoMed share in the deal would represent an aggregate value of approximately US$57.4m based on the Mereo share price of 190p at close on 4 December and a premium of 34% over the OncoMed closing market capitalisation of $42.9m.
Based upon an OncoMed net cash balance of US$38m at completion, current Mereo shareholders are expected to own approximately 75% of the enlarged group.
OncoMed shareholders will receive contingent value rights representing the right to receive future conditional cash payments and additional ADRs based on the achievement of certain milestones relating to OncoMed assets.
The combined business would have a dual UK-US market listing and shareholder base, combined cash balance of $115.5m as of 30 September 2018, a combined portfolio of six assets with near-term catalysts, including three Phase III readouts for core orphan products in 2019, potential partnerships of two Mereo products and a potential partnership of one of OncoMed‚Äôs.
The US company has an ongoing collaboration with Celgene, with an option to licence OncoMed‚Äôs etigilimab.
The cash pile would extend‚Äôs Mereo‚Äôs runway into 2020, which management think would offer a potential opportunity to further extend through partnering or etigilimab option exercise.
Mereo directors will remain in their current roles and current OncoMed directors Michael Wyzga and Dr Deepa Pakianathan will be appointed as independent non-executive directors, with two executive directors, while OncoMed chief executive John Lewicki will continue as an advisor to Mereo as the company explores partnership opportunities for the navicixizumab program.
Mereo chief executive Denise Scots-Knight said: ‚ÄúI am delighted to announce our proposed combination with OncoMed. The Transaction allows us to broaden our asset base, including strengthening our cash position to enable us to progress beyond our key clinical milestones.”
She said the plan to initiate a US ADR programme on Nasdaq, in addition to the continued listing of the ordinary shares on AIM, “will facilitate a deep engagement with the broadest range of appropriate investors”.
Lewicki added: ‚ÄúWe believe this is a value-enhancing transaction for both companies, forming an organization with a much expanded pipeline of diversified assets and strengthened capabilities and resources. We look forward to working closely with the Mereo team to finalize the transaction and assist in assimilation of the combined assets.‚Äù