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Novartis forms Mereo as UK biotech spin-off

Published on 29/07/15 at 10:20am
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Novartis has formed a new UK biotech company by selling three investigational drugs in exchange for shares in the new firm, Mereo.

Novartis will have a stake in the success of any new compounds, including receiving payments on milestones and royalties on future commercial sales.

The new company will focus on acquiring and developing innovative medicines, particularly in rare and specialist disease areas, through the acquisition of validated, mid stage development programs.

The deal involves compounds in areas of unmet medical need including BPS-804, to improve bone density in brittle bone syndrome, an orphan disease; BCT-197 for acute exacerbations in COPD, and BGS-649 for obese men with hypogonadotrophic hypogonadism to normalise testosterone levels.

Mereo intends to enter into partnership deals with other firms. It has already successfully raised £76.5m ($119m) from blue chip institutional investors, including UK institutional investors Woodford Investment Management and Invesco Perpetual, to develop and bring the three investigational drugs to market. 

The Mereo team is led by chief executive Dr Denise Scots-Knight and Dr Peter Fellner as chairman, who have a wide range of experience in biotechnology and pharma companies. 

"We are pleased that through this deal with Mereo we have found a way to work together to bring these valued innovations to patients," says David Epstein, head of Novartis Pharmaceuticals.

And commenting on the announcement, Dr Denise Scots-Knight says: “We believe that by acquiring quality assets from Novartis and securing substantial financing we have put in place the building blocks to create a successful specialty biopharmaceutical company.

“Through the experience and connections of the team and board we are delighted to have been able to work with a visionary global leader in Novartis Pharmaceuticals in building a new model to help optimise the development of pharmaceutical pipelines.” 

Dr Peter Fellner, chairman of Mereo, says: “We believe the substantial fundraising underpinning the launch of Mereo is a strong endorsement from the investment community of our vision to create a UK-based biopharmaceutical leader.  This reflects both the extensive experience of the management team and Board, as well as the extremely high quality of programmes acquired from Novartis which form the initial portfolio of Mereo.” 

Lilian Anekwe

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