Mereo BioPharma raise money to back Phase III trials

Orphan drug specialist Mereo BioPharma Group plc (London) raised $5m from Novartis Pharma AG and  entered into a Securities Purchase Agreement to issue up to $28m of American Depositary Shares (ADSs), including a $3 million initial purchase, with Aspire Capital Fund, LLC to push pivotal Phase III trials of its lead setrusumab in US patients with osteogenesis imperfecta.

The EMA supports the initiation of a planned pivotal peadiatric Phase III study in Europe on the basis of the previously approved pediatric investigational plan.

Under the terms of the convertible equity financing, Novartis will purchase $5m in a convertible loan note at a fixed price of £0.265 per ordinary share. Over three years, the loan note loan note will bear an interest rate of 6% per annum. The company also issued a warrant instrument to Novartis to purchase up to 1,449,614 of the Company’s ordinary shares, which are exercisable at an exercise price of £0.265 per ordinary share.

Under the terms of the Securities Purchase Agreement, Aspire Capital has made an initial investment of $3m to purchase 11,432,925 ordinary shares (2,286,585 ADSs). In consideration for Aspire Capital’s initial investment and its commitment to purchase up to an additional $25m ADSs, Mereo has agreed to pay Aspire Capital a commission to be satisfied wholly by the issue to Aspire Capital of a further 2,862,595 of the Company’s ordinary shares (equivalent to 572,519 ADSs).