LONDON (Alliance News) - Mereo BioPharma Group PLC on Wednesday said it will buy US oncology-focused clinical stage biopharmaceutical business OncoMed Pharmaceuticals Inc via a all-stock deal valued at USD57.4 million.
Both the board of OncoMed and the board of Mereo, itself a biopharmaceutical company, have unanimously approved the combination.
The combination will be effected by an all-stock transaction as well as the issue of contingent value rights and is expected to complete in the first half of 2019.
Under the agreement, Mereo will issue around 23.7 million new ordinary shares, which will be deposited with a depositary in order to issue Mereo American Depositary Receipts to current OncoMed shareholders. OncoMed shareholders will also receive contingent value rights representing the right to receive future cash payments based on milestone achievements.
Based on Mereo's closing share price of 190 pence on Tuesday, the shares underlying the Mereo ADRs represent an aggregate value of around USD57.4 million, a premium of 34% over the OncoMed market capitalisation of USD42.9 million.
Shares in Mereo were untraded on Wednesday afternoon.
At completion, Moero shareholders are expected to own 75% of the enlarged group, while OncoMed shareholders will own 25% through their holding of ADRs.
In addition to Mereo's existing listing on AIM market, the combined business would initiate a US American depositary receipt programme on NASDAQ.
The combined business would have a portfolio of seven assets. As of September 30, the proforma cash resources of the combined business were USD115.5 million, including OncoMed's USD70.9 million cash resources.
"We believe that our plan to initiate a US ADR programme on NASDAQ, in addition to the continued listing of our ordinary shares on AIM, will facilitate a deep engagement with the broadest range of appropriate investors," Mereo Chief Executive Denise Scots-Knight said.
Scots-Knight also said the move would allow Mereo to broaden its asset base and strengthen its cash position beyond key clinical milestones.
