LONDON - Mereo BioPharma Group plc (NASDAQ: MREO), a biopharmaceutical company specializing in rare diseases, has announced the pricing of its public offering of 12,531,300 American Depositary Shares (ADSs) at $3.99 each. The offering, expected to close on June 17, 2024, is anticipated to raise gross proceeds of approximately $50 million, before underwriting discounts and commissions and other offering expenses.
The net proceeds from the sale are earmarked for the advancement of Mereo's setrusumab program, specifically to fund supply and pre-launch activities in Europe, as well as for working capital and general corporate uses. Setrusumab is a product candidate for the treatment of osteogenesis imperfecta, a genetic bone disorder. The company also has another candidate, alvelestat, for severe alpha-1 antitrypsin deficiency-associated lung disease.
The offering has attracted a mix of new and existing institutional investors, including Frazier Life Sciences, Deerfield Management, Perceptive Advisors, Rubric Capital Management, Rock Springs Capital, and Janus Henderson Investors.
Jefferies, Leerink Partners, and Cantor are serving as the joint book-running managers for the offering. The sale is being conducted under an effective shelf registration statement filed with the Securities and Exchange Commission (SEC) on May 22, 2024.
Mereo has partnered with Ultragenyx Pharmaceutical (NASDAQ:RARE), Inc., which has recently completed enrollment for Phase 3 studies of setrusumab in both young adults and pediatric patients.
The partnership could lead to additional milestone payments of up to $245 million for Mereo, plus royalties on sales in Ultragenyx territories. Mereo retains commercial rights in the EU and UK and will pay royalties to Ultragenyx on sales in these regions.
This article is based on a press release statement from Mereo BioPharma Group plc.
In other recent news, Mereo BioPharma has seen positive developments in its clinical trials, leading to raised price targets by Needham and BTIG. Needham increased its target from $6.00 to $7.00, citing promising results from the Phase II segment of the Orbit study for setrusumab, a treatment for osteogenesis imperfecta. The study revealed a significant reduction in fracture rates and improved bone strength.
BTIG also raised its target from $4.00 to $6.00 following the completion of enrollment for the Phase 3 Orbit and Cosmic trials of setrusumab. The firm's increased target reflects a raised probability of success for setrusumab.
Moreover, Mereo BioPharma has updated its timeline for the complete enrollment of the Cosmic study, aiming for the first half of 2024 and the company has reached an agreement with the FDA on the primary endpoint for its pivotal study of alvelestat.
Lastly, Mereo BioPharma concluded the year with a cash position of $57 million, expected to fund operations into 2026.
InvestingPro Insights
As Mereo BioPharma Group plc (NASDAQ: MREO) gears up for its public offering with the aim of funding its promising setrusumab program, the company's financial and market performance metrics provide a mixed backdrop for potential investors. According to InvestingPro data, Mereo BioPharma holds a market capitalization of $558.7 million USD, reflecting a significant market presence in the biopharmaceutical sector focusing on rare diseases.
InvestingPro Tips indicate that analysts are optimistic about sales growth in the current year, which may align with the company's expectations for its setrusumab and alvelestat programs. However, they also signal caution as the Relative Strength Index (RSI) suggests the stock is currently in overbought territory. This could imply that the stock's recent price movements may be more reflective of investor sentiment than underlying business performance.
Investors may also note the strong performance over the last year, with a 189.13% price total return, which includes a 16.67% return in the last week alone. While this rapid appreciation could attract those looking for growth, it also raises questions about the sustainability of such momentum. Additionally, the company does not expect to be profitable this year, and with a high Price / Book ratio of 13.04, the stock is trading at a premium relative to its book value.
For those considering taking a position in Mereo BioPharma, it's worth noting that the company operates with a moderate level of debt and that its liquid assets exceed its short-term obligations, which may offer some financial stability. For more detailed analysis and additional InvestingPro Tips, potential investors can visit https://www.investing.com/pro/MREO. And for those ready to dive deeper, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a total of 14 InvestingPro Tips that could further inform investment decisions.
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