Mereo Launches With $119 Million, Three Drugs from Novartis AG and a Partnership with ICON
Published: Jul 29, 2015
July 29, 2015
By Mark Terry, BioSpace.com Breaking News Staff
London-based Mereo Biopharma announced today that it raised $119 million from blue chip institutional investors. In addition, Mereo acquired a portfolio of three clinical-stage development programs from Novartis Pharmaceuticals.
The company was founded in March 2015 with the intention of funding and developing specialty products from large pharmaceutical or biotechnology companies. The idea is that even large pharmaceutical companies can’t fund all of the trials for their entire pipeline, especially the later-stage trials.
“We were looking for an underlying mechanism of action,” said Denise Scots-Knight, chief executive officer of Mereo in a Reuters interview, “that was known, proof-of-concept data, a clinical study which as a smaller company we felt we could finance, and decent market size.”
Scots-Knight also indicated the company’s belief that all of the products acquired from Novartis could support drugs that brought in $1 billion. “The long-term goals is to have five to seven products in the portfolio,” she said.
Included in the investors was Woodford Investment and Invesco Perpetual. Novartis, as part of the program acquisitions, took an equity stake in the company.
The three Novartis drugs include BPS-804 for the orphan disease Osteogenesis Imperfecta, or Brittle Bone Syndrome, BCT-197 for acute exacerbations of chronic obstructive pulmonary disease (AECOPD), and BGS-649 for hypogonadotrophic hypogonadism. BCT-197 is currently in Phase IIa development, BPS-804 is entering Phase III and BGS-649 is entering Phase IIb. Financial details were not disclosed.
In addition, Mereo created a strategic development partnership with ICON. ICON, based in Ireland, conducts clinical trials for pharmaceutical companies.
Mereo’s management team is made up of Denise Scots-Knight, chief executive officer and co-founder. Before Mereo, she lad Phase4 Partners’ MBO from Nomura in 2010 and eventually became Phase4’s managing partner.
Additional co-founders are Charles Sermon, general counsel, Alastair MacKinnon, chief medical officer, and John Richard, head of corporate development. Richard Bungay will act as chief financial officer and chief operating officer.
“We are pleased that through this deal with Mereo,” said David Epstein, head of Novartis in an statement, “we have found a way to work together to bring these valued innovations to patients.”
“We believe that by acquiring quality assets from Novartis and securing substantial financing we have put in place the building blocks to create a successful specialty biopharmaceutical company,” said Scots-Knight in a statement. “Through the experience and connections of the team and Board, we are delighted to have been able to work with a visionary global leader in Novartis Pharmaceuticals in building a new model to help optimize the development of pharmaceutical pipelines. We believe the exceptional experience and track record of the Mereo team and Board will enable us to rapidly build a globally competitive business.”
These types of risk-sharing deals are gaining interest for big pharmaceutical companies that own the rights to drugs that fall outside their primary focus. An example is GlaxoSmithKline spinning off an Alzheimer’s drug into a new company, Axovant Sciences Ltd.