Mereo BioPharma

Private placement raises $70m (£56m)

Lighthouse | 4 June 2020

Share this note

  • Mereo Biophama has successfully raised an impressive $70m (£56m) gross through a private placement with new and current US institutional investors. The fund raise was led by Orbimed and brought in Vivo Capital, Surveyor Capital (a Citadel company), Pontifax Venture Capital, Samsara BioCapital, Commodore Capital, and funds managed by Janus Henderson Investors. Existing investors such as Boxer Capital (Tavistock Group) and Aspire Capital Fund also participated.
  • A total of 89.1m new shares have been issued at a price of 17.4p per share to raise $19.4m (£15.5m) gross, on a non-pre-emptive basis using existing authorities. The remaining $50.6m (£40.5m) is in the form of Convertible Loan Notes.
  • Conditional warrants are attached to both the issued shares and Convertible Loan Notes that allow the purchase of an additional 50% of the holding at an exercise price of 34.8p per share. The exercise period is three years, after which the warrants expire.
  • The funds will be used primarily to progress etigilimab (anti-TIGIT) into a Phase Ib study in Q420, alongside progressing the rare disease product portfolio. This portfolio is detailed in our Outlook note (January 2020) and consists of six clinical assets, three from the original deal with Novartis, the fourth licensed in from AstraZeneca, and two more from the OncoMed deal.
  • Etigilimab targets the TIGIT (T-cell immunoreceptor with immunoglobulin and ITIM) domains. It is an IgG1 monoclonal antibody that selectively binds to TIGIT receptors and potentiates the body’s T-cell and NK cell anti-tumor activity. TIGIT is a particularly exciting target in immuno-oncology, being a receptor that stops T-cells from attacking tumour cells in a manner similar to the PD-1 inhibitory protein.
  • The funds will also be used to complete the Phase II study of alvelestat for the treatment of alpha-1 antitrypsin deficiency (AATD), with topline data currently expected in H221. The pivotal Phase III trial for setrusumab in the treatment of oestogenesis imperfecta (OI) will be performed with a strategic partner.

Trinity Delta view: Mereo BioPharma has developed a portfolio of innovative oncology and rare disease products. The strategy is to progress these to a sizeable value-inflection point and then partner with a larger player. Management intends to retain some rights for self-commercialisation, with the longer-term goal to create a self-sustaining speciality pharmaceutical company that addresses oncology, orphan and rare diseases. This sizeable fund raise is a tangible validation of the approach and allows management to better pursue its strategy. In line with our policy we suspend our valuation and forecasts, with the intention of reinstating them as soon as practicable. For context, our previous valuation was £442m ($574m), equivalent to 412p/share or $20.60/ADS (fully diluted).


4 June 2020

Price (UK share)
Market Cap£28.4m
ExchangesAIM London
Company CodeMPH.L
Corporate clientYes

Company description

Mereo BioPharma develops and commercialises innovative therapeutics addressing oncology, rare and specialty diseases. These are acquired or licensed in at clinical stages from large pharmaceutical companies. The portfolio consists of six compounds that are progressing through late clinical development.


Lala Gregorek
+44 (0) 20 3637 5043

Franc Gregori
+44 (0) 20 3637 5041


Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.

ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.

In the preparation of this report TDRL has used publically available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.

Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.

This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.

Copyright 2020 Trinity Delta Research Limited. All rights reserved.