Interview – Mereo’s quest for diamonds in the rough

It is a tried and tested strategy for smaller companies: buy an unwanted asset from big pharma, complete clinical development and reap the rewards. But for every success story there are instances where it becomes clear why the larger group wanted out, with Axovant’s Alzheimer’s project intepirdine being a recent example.

Still, the UK group Mereo Biopharma is confident of making this approach work with a pipeline licensed from Novartis and Astrazeneca. Mereo’s chief executive, Denise Scots-Knight, argues that its four projects are not cast-offs but rather hidden jewels. “We’ve been through a massive selection process,” she tells EP Vantage.

Ms Scots-Knight contends that there is nothing sinister behind the bigger groups’ decisions not to continue with the assets. “It is usually [down to] deprioritisation of a therapeutic area. Or because pharma has to make choices about the strategic areas they are focusing on.”

Mereo pipeline
Project Indication Pharma class Originator Status Trial(s)
BCT-197/acumapimod COPD acute exacerbations p38 MAPK inhibitor Novartis Phase II NCT02700919
BGS-649/leflutrozole Hypogonadotropic hypogonadism Aromatase inhibitor Novartis Phase IIb NCT02730169
BPS-804/setrusumab Osteogenesis imperfecta  Anti-sclerostin MAb Novartis Phase IIb* Asteroid, NCT03118570
AZD-9668/alvelestat Alpha-1 antitrypsin deficiency Neutrophil elastase inhibitor Astrazeneca Phase II Not started
*Potentially pivotal trial; Source: Company website.

A phase II win in December with BCT-197 in acute exacerbations of chronic obstructive pulmonary disease (COPD) could help build confidence in the AIM-listed company, which quickly followed that news with an announcement that it would float in the US. Mereo did not give any details about how much it hopes to raise or which index it will list on.

The group obviously needs cash in the meantime, and in late December drew down the final £10m ($13.6m) tranche from a credit facility set up in August with Silicon Valley Bank and Kreos Capital. 

Mereo will now look for a partner for BCT-197, Ms Scots-Knight says. “We think this programme belongs with somebody with a strong respiratory franchise. We’re looking for somebody to take the programme over and run the next phase, and also possibly commercialise.” However, she will not be drawn on whether Novartis might be interested in regaining rights to the project.

Coincidentally BCT-197 has the same mechanism as Array's ARRY-797; this is in development for LMNA-related dilated cardiomyopathy, and was recently assigned to Array's Yarra subsidiary (Pharma news over Christmas, January 2, 2018).

The next big readout for Mereo will come in the first quarter of 2018, with data from a phase II trial of BGS-649 in hypogonadotropic hypogonadism in obese men. If this is successful the company could carry out phase III development itself, according to the chief exec, who notes that the phase III trial of BGS-649 would be less complicated than that of BCT-197.

Rare focus

These two projects aside, Mereo’s attention is now shifting towards rare diseases. To this end, in October it gained rights from Astrazeneca to AZD9668, a neutrophil elastase inhibitor that its originator had been developing in respiratory disorders, but which Mereo intends to take forward in an orphan indication, alpha-1 antitrypsin deficiency.

People with the inherited condition experience progressive lung destruction due to a lack of alpha-1 antitrypsin, which normally protects against damaging enzymes released during inflammation, specifically neutrophil elastase.

“It looks like the mechanism of action might be very well suited to [this] indication, and it’s not something [Astra was] strategically going to develop,” says Ms Scots-Knight.

Mereo plans to conduct a phase II study of AZD9668 in 2018 in 150 patients with mutations leading to very low or zero alpha-1 antitrypsin levels; it has an option to acquire the compound outright.

There are few options for these patients, with the focus currently on treating conditions caused by the deficiency, such as COPD. However, Adverum Biotechnologies recently began a phase I/II trial of its gene therapy candidate, ADVM-043, which could emerge as a rival to AZD9668. 

Mereo’s pipeline is rounded out with BPS-804, in development for the rare brittle bone disorder osteogenesis imperfecta. Mereo began recruitment into a potentially registrational phase IIb trial in the first half of 2017; Ms Scots-Knight is reluctant to say when data might be available.

It seems that the company is on the lookout for more unwanted assets from big pharma. “As we’re looking at future acquisitions, we’re really trying to home in on the rare disease space,” says the chief exec, “because that’s what we’re going to build the commercial story around.”

First, though, Mereo will need to prove that it has indeed unearthed treasure rather than just other companies’ unwanted goods.

To contact the writer of this story email Madeleine Armstrong in London at or follow @ByMadeleineA on Twitter

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