After delayed IPO, Mereo gets US listing via OncoMed merger

UK biotech Mereo BioPharma is merging with Californian biotech OncoMed in an all-stock deal that swells its pipeline and gives it a potential licensing deal with Celgene. The offer is a premium of around a third on OncoMed’s closing share price ahead of the announcement, and values the US company – which has been in the doldrums after a series of setbacks last year – at around $57 million. Once completed, it will add three programmes in early clinical trials to Mereo’s stable of four phase II candidates – and give the UK firm a short-cut to a stock listing in the US after it abandoned an IPO earlier this year blaming “challenging market conditions.”
Mereo’s chief executive Denise Scots-Knight said on a conference call that after the merger the company would have around $115 million in cash, enough to fund its operations into 2020, even with seven candidates in the clinic. The deal should close in the second half of next year and, once completed, the combined company will be listed both in London on the AIM and the Nasdaq in the US – which Scots-Knight said would “facilitate a deep engagement with the broadest range of appropriate investors.” OncoMed’s pipeline is headed by navicixizumab, a bispecific antibody that blocks delta-like ligand 4 and vascular endothelial growth factor and is in a phase Ib trial in platinum-resistant ovarian cancer. Celgene had an option on that programme but decided against taking it up a couple of months ago.