Mereo BioPharma Group, a United Kingdom-based clinical-stage biopharmaceutical firm, has agreed to merge with OncoMed Pharmaceuticals, an oncology-focused clinical stage biopharmaceutical business, it was reported yesterday.

The deal has been unanimously approved by the board of directors of each company. Subject to potential adjustment as described below, based upon an OncoMed net cash balance of USD38m at completion, current Mereo shareholders are expected to own around 75% of the issued share capital of the Enlarged Group, while current OncoMed shareholders are expected to own approximately 25% of the issued share capital of the Enlarged Group (through their holding of ADRs). In addition, OncoMed shareholders will receive CVRs representing the right to receive future conditional cash payments and additional ADRs based on the achievement of certain milestones relating to OncoMed assets.

Based on the terms of an agreement and plan of merger and reorganisation, unanimously approved by each party's board of directors, each share of OncoMed issued and held immediately prior to the deal becoming effective will be converted into the right to receive, Mereo ADRs pursuant to an exchange ratio that has been agreed, and one CVR representing the contingent right to receive certain cash payments and Mereo ADRs upon the achievement of certain milestones relating to the drugs etigilimab and navicixizumab.