British pharmaceutical company Mereo BioPharma Group has announced a proposal to merge with US-based drugmaker OncoMed Pharmaceuticals.

The integrated business will feature a portfolio of seven assets, including three of Mereo’s Phase II candidates for osteogenesis imperfecta and alpha-1 antitrypsin deficiency.

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Mereo BioPharma noted that after the completion of the merger, its focus will be on orphan diseases.

The company also expects potential alliances between its BCT-197 and BGS-649 programmes and OncoMed’s navicixizumab programme.

In addition, the combined entity will retain its ongoing partnership with Celgene, with an option to licence OncoMed’s etigilimab (anti-TIGIT) programme.

The business is also expected to benefit from combined skills and expertise, established operational base in the US and expanded board of directors.

Mereo BioPharma CEO Dr Denise Scots-Knight said: “The transaction allows us to broaden our asset base, including strengthening our cash position to enable us to progress beyond our key clinical milestones.

“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.”

“The transaction allows us to broaden our asset base, including strengthening our cash position to enable us to progress beyond our key clinical milestones.”

OncoMed is undertaking a restructuring that will see significant reduction in existing workforce.

OncoMed Pharmaceuticals president and CEO Dr John Lewicki said: “We believe this is a value-enhancing transaction for both companies, forming an organisation with a much expanded pipeline of diversified assets and strengthened capabilities and resources.

“We look forward to working closely with the Mereo team to finalise the transaction and assist in assimilation of the combined assets.”

Subject to customary closing conditions, the transaction is expected to close in the first half of next year. After the closing, OncoMed is set to operate as a 100% owned subsidiary of Mereo Biopharma.