Mereo proxy feud continues as activist investor rejects offer

Sept. 26, 2022

Mereo BioPharma Group reports that it offered to resolve matters with its largest shareholder, but the activist investor promptly rejected the olive branch — and refused to provide a counteroffer.

Back in August,  Rubric Capital Management — which is currently the largest shareholder of London-based Mereo, holding an approximate 14.32% stake — called for a special meeting to replace four long-tenured directors on the Mereo board with "four highly qualified, independent candidates, who are committed to exploring all avenues to maximize shareholder value."

Upset that it's June letter that had outlined what the activist felt was a "low-risk strategy to unlock the value of Mire's assets" was ignored, Rubric said the Mereo board has "forced its hand. and called specifically for the removal of Dr. Peter Fellner, Dr. Anders Ekblom, Dr. Deepika Pakianathan and Michael Wyzga as directors of the company.

Now, the small biotech focused on developing therapies targeting cancer and rare diseases has put forth a compromise: Offering to put a Rubric principal and another new director on its board immediately, as two existing Mereo directors retire. But, according to Mereo, Rubric has rejected the proposal and refused to negotiate toward  a resolution, seeking instead to pursue a proxy campaign that Mereo claims will be expensive for the company and its shareholders.

Mereo has a portfolio of six clinical stage product candidates, two of which are rare disease treatments — setrusumab for the treatment of osteogenesis imperfecta and alvelestat for the treatment of severe Alpha-1 antitrypsin deficiency and Bronchiolitis Obliterans Syndrome. The company's share prices surged back in June when a market report from The Times said that AstraZeneca was interested in acquiring the company