Mereo BioPharma pulled its proposed $81 million Nasdaq IPO last April due to “challenging stock market conditions.” Now, 10 months later, the company is officially withdrawing that listing as it works to close its merger with OncoMed.
Withdrawing the offering altogether is “just a formality” for Mereo, which already trades on the London Stock Exchange, a spokesperson told FierceBiotech via email on Thursday. It comes nearly three months after Mereo and OncoMed announced their “proposed combination,” a reverse merger that would give the London-based biotech a foot in the U.S. stock market.
Under the deal, Mereo will issue 23.7 million American depository shares, shares that a non-U.S. company makes available for purchase on a U.S. stock exchange. At the deal’s close, expected in the first half of this year, Mereo shareholders will own about 75% of the combined company, according to their announcement.
Mereo will also get its hands on OncoMed’s cancer drugs—one of which, etigilimab, is part of a collaboration with Celgene—as well as a U.S. base in Redwood City, California, and “a select number of OncoMed employees.” OncoMed shareholders also stand to receive milestone payments based on the progress of etigilimab and navicixizumab, an anti-DLL4/VEGF bispecific antibody that is being tested in ovarian cancer.
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"We received positive feedback and strong levels of institutional interest during the offering process,” said Mereo CEO Denise Scots-Knight, Ph.D., in a statement last April. “However, challenging stock market conditions have led our Board to take the decision to withdraw our global offering and postpone our proposed listing of ADSs on Nasdaq in the interests of our existing shareholders.”
At the time, other companies found the market conditions just fine. That same month, Morphosys smashed past its $150 million goal, raising $208 million in its Nasdaq debut to develop its anti-CD19 antibody MOR208. And overall in 2018, biotech companies were going public at higher and higher valuations—even those that had never tested their therapies in humans, such as Allogene, Rubius Therapeutics and Homology.
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As for OncoMed, it’s had a bit of a rough ride. A 2008 Fierce 15 company, it got off an $82 million IPO in 2013, selling its shares for $17 apiece. But the company faced a number of setbacks in the last couple of years from which its share price has not recovered. In April 2017, OncoMed revealed that its Celgene-partnered lead asset demcizumab had flunked a phase 2 pancreatic cancer trial and Bayer had walked away from two drugs, triggering a 40% drop in its stock price. A week later, the company announced its anti-Notch2/3 drug tarextumab, in combination with etoposide and chemo in first-line patients with small cell lung cancer, missed its primary endpoint of progression-free survival, as well as its secondary endpoints.
All told, the combined company will have $155.5 million in cash, giving it enough runway into 2020, Mereo said in the statement.