Rare Daily Staff

Mereo BioPharma Group said it entered into an exclusive license agreement with AstraZeneca, including an option to acquire an experimental therapy to treat alpha-1 antitrypsin deficiency, a rare genetic disease that causes pulmonary emphysema and other serious complications.

There are about 100,000 patients in the United States and 120,000 patients in Europe with the condition.

AZD9668 is an oral inhibitor of neutrophil elastase, an enzyme that can damage connective tissue. People with alpha-1 antitrypsin deficiency fail to produce a protein in the liver that protect the patients from lung damage from neutrophil elastase.

Under terms of the license agreement, Mereo made an upfront payment of $5 million for the license and option. This included $3 million in cash and 490,798 shares in Mereo stock. Deferred payments in cash and stock would be payable on certain milestones based on completion and success of the proof of concept study in alpha-1 antitrypsin deficiency and upon the initiation of a potentially pivotal study in this indication.

Additional global filing and approval milestones are payable following successful pivotal data. Following product launch, if approved, Mereo will pay AstraZeneca commercial milestones, sales-related payments and royalties.

AstraZeneca has conducted a number of early- and mid-stage clinical studies with AZD9668 in respiratory conditions that share some common pathology with alpha-1 antitrypsin deficiency, specifically chronic obstructive pulmonary disease, cystic fibrosis and bronchiectasis.

Mereo will conduct a mid-stage study of the experimental drug for the treatment of alpha-1 antitrypsin deficiency. Mereo has the right to exercise its option to acquire AZD9668 after the initiation of pivotal studies.

“The structure of this license and option agreement allows us to complete the phase 2 study with our existing resources before triggering additional payments to acquire the asset outright,” said Denise Scots-Knight, CEO of Mereo.

October 30, 2017

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