Filed by Mereo BioPharma Group plc pursuant
to Rule 425 under the Securities Act of 1933, as amended Subject Companies: Mereo BioPharma Group plc and OncoMed Pharmaceuticals,
Inc. Date: December 6, 2018. This filing relates to a proposed merger of Mereo BioPharma Group plc with OncoMed Pharmaceuticals,
Inc. (Subject Company Commission File No.: 001-35993)
Mereo BioPharma Group PLC (OncoMed)
December 5, 2018
Denise Scots-Knight; Mereo BioPharma; CEO
Richard Jones; Mereo BioPharma; CFO
John Lewicki; OncoMed Pharmaceuticals, Inc.; President, CEO
Brian White; Cantor Fitzgerald; Analyst
Lala Gregorek; Trinity Delta; Analyst
Samir Devani; Rx Securities Limited; Analyst
Operator: Welcome to Mereo and OncoMed Conference Call.
As a reminder, todays conference
is being recorded.
I would now like to turn the call over to your host, Dr. Denise Scots-Knight, Mereos Chief Executive Officer.
Denise Scots-Knight: Good morning to those of you in the U.S., and good afternoon to those in Europe. And welcome to our conference call. This morning we
issued a press release that provides the details of Mereos merger with OncoMed. During this call well discuss the merger, including the terms outlined in the press release. The press release is available on both companies Web Sites
at mereobiopharma.com, and oncomed.com.
On todays call, I will be joined by Dr. John Lewicki, OncoMeds President and Chief Executive
Officer, and Perry Karsen, OncoMeds Executive Chairman of the Board of Directors who is joining the call from OncoMeds Redwood City, California office, as well as Mereo CFO, Richard Jones, who is onsite with me here in London.
Please note that in addition to the press release issued this morning, we have included presentation slides in the webcast of todays call and have
posted a PDF of the slides on both companies Web Sites. We encourage you to access the slides to follow along with todays discussion.
to Slide 2 of the deck, our discussion today will contain forward-looking statements, including the anticipated timing, completion of the benefits of the proposed merger, anticipated future combined operations and offerings, the expected synergies
to be achieved, and pro forma financial results of the combined business.
These statements are based on our assumptions as of the current date and involve risks and uncertainties
that could cause actual results to differ materially from these statements. We caution you to consider the important risk factors that could cause the actual results to differ materially from those in forward-looking statements, in the press
release, and this conference call.
These risk factors are described in our press release, and are more fully detailed under the caption, risk factors, in
each of OncoMeds annual reports on Form
quarterly reports on Form
and other filings with the SEC.
In addition, please note the date of this conference call is December 5th, 2018. And any forward-looking statements that we make today are based on
assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.
Im now pleased to provide an overview of our announcement this morning regarding our proposed merger with OncoMed, a publically traded, oncology
focused, clinical development Company headquartered out of Redwood City, California. This deal that has been unanimously approved by the boards of both companies, and we believe this transaction has the potential to create substantial shareholder
Turning to Slide 3, the combined Company will operate as Mereo BioPharma, and will be listed on NASDAQ in the U.S., and the AIM market in London.
We proposed to merge with OncoMed in an all stock transaction which will value OncoMed at approximately $57 million, and equate to a premium of 34% over OncoMeds closing stock price last night.
On completion, OncoMed shareholders will own approximately 25% of the issued shares of this combined Company based on ordinary shares currently outstanding,
and subject to certain adjustments in respect of OncoMeds net cash at closing. And OncoMed will become a 100% owned subsidiary of Mereo.
the upfront consideration, Mereo will issue approximately 23.7 million new ordinary shares in Mereo which will be listed on AIM, a market operated by the London Stock Exchange, alongside Mereos existing shares. These shares will be
utilized to issue Mereo American depositary receipts, or ADRs, to OncoMeds shareholders. In addition, we will issue contingent value rights, or CVRs, to OncoMeds shareholders, which will provide contingent consideration relating to NAVI
The TIGIT milestone, under the CVR, will be payable if Celgene exercises its
right in respect
of TIGIT, and pays the associated $35 million milestone. In this case, the value of the milestone received by Mereo will be paid out in new Mereo ADRs at the prevailing Mereo share price to the TIGIT CVR holders.
And this is subject to a cap on all Mereo shares issued to OncoMed shareholders of 40% of the enlarged group. The NAVI milestone under the CVR will be become
payable upon a partnership transaction for NAVI. In this case, 70% of any net milestones received by Mereo in the five years following the closing of the merger will be paid to CVR holders in cash. And this will be subject to a total cap of
Myself and the Mereo management team will continue to lead the combined Company which will be headquartered
in London. Two members of the OncoMeds board of directors will join the board at Mereo. Dr. John Lewicki will serve as an advisor to Mereo for the NAVI Partnering Program. Additionally, were planning to retain certain OncoMed
employees to strengthen our infrastructure and capabilities in the U.S.
Subject to customary conditions to closing, including OncoMed shareholder
approval, we expect the transaction to close in the first half of 2019.
I would now like to turn the call over to Dr. John Lewicki, OncoMeds
CEO, for some brief remarks.
John Lewicki: As announced in our joint release this morning, we are pleased to enter into an exciting and value enhancing
merger with Mereo. Combining our companies will create a catalyst-driven organization with a much expanded pipeline of promising therapeutic assets and enhanced capabilities and resources. We look forward to working closely with the Mereo team to
close a transaction and assist in assimilation of the combined assets.
As part of our ongoing analysis of strategic alternatives, our board directed that
we move forward with the evaluation of alternatives to advance our clinical programs to benefit patients and to potentially enhance shareholder value.
The OncoMed management team and board of directors reached the decision to merge with Mereo after we conducted a formal and extensive review of a broad range
of potential merger candidates. As an outcome of this process, we determined that this combination with Mereo has the greatest potential to increase shareholder value and we believe its in the best interest of our shareholders.
The merger with Mereo provides OncoMed shareholders with a significant equity position and what we believe to be a highly promising, catalyst-driven, clinical
biopharma Company with a diversified, late-stage pipeline of products focused on rare diseases while providing an opportunity for OncoMed shareholders to benefit from the potential future success of NAVI and TIGIT through CVR mechanisms.
On Slide 4 is a brief summary of OncoMeds key assets. OncoMed has two lead programs, NAVI, a bispecific anti-VEGF, anti-Dll4 antibody and TIGIT, an
anti-TIGIT antibody. As presented recently at ESMO, NAVI has demonstrated encouraging results as a single agent and in combination with weekly Paclitaxel in late-stage platinum resistant ovarian cancer.
Once the transaction closes, we will work to identify a partnership for NAVI that will enable this
therapeutic product candidate to advance in clinical development for platinum resistant ovarian cancer and potentially create value for both OncoMed and Mereo shareholders.
The TIGIT program is under collaboration with Celgene with a milestone payment related to Celgenes
Specifically, should Celgene
on development and commercialization of this asset, a $35 million
payment would be paid.
Before handing the call back to Denise, Id like to thank the dedicated OncoMed employees who have worked tirelessly over a number of years to advance
our discovery and clinical programs as well as express our appreciation to the physicians and patients who have contributed significantly to our development.
I will now turn the call back over to Denise who will summarize the rationale for the merger and provide an overview of Mereos promising clinical
Denise Scots-Knight: Turning to Slide 5, we believe the transaction will broaden Mereos asset and shareholder base whilst extending the
enlarged groups cash runway.
The combined Company will have a number of product candidates with near-term value catalysts. In particular, there
will be three Phase II readouts in 2019 in Mereos existing orphan products,
for osteogenesis imperfecta and
Antitypsin Deficiency as well as potential partnership opportunity in Mereos and OncoMeds other programs.
The combined Company will also have significant cash resources with approximately $115 million in a pro forma combined basis as of September the 30,
2018. This is expected to extend Mereos cash runway into 2020.
Finally, the combination will provide Mereo with a U.S. operational base and
U.S.-based employees with a great deal of experience and expertise in product development and regulatory affairs as well as two new appointments from OncoMed to the Mereo board.
On Slide 6, you will see that the combined Company will continue to operate under the leadership of the existing Mereo management team with a small but
important contingent from OncoMed.
We are please to have Michael Wyzga, former CFO of Genzyme, and Dr. Deepa Pakianathan of Delphi Ventures, two
directors, join the existing Mereo board of directors on completion of the transaction. This will expand the current Mereo board from eight to 10 directors.
Lastly, Dr. Lewicki will stay on as an advisor for the combined Company as we seek potential partnerships for the NAVI program.
On Page seven and eight, for those on todays call who may not be familiar with Mereo, Ill
briefly provide an overview of our Company strategy on our pipeline of drug products, all of which are in later stages of clinical development. Mereos strategy is to selectively acquire product candidates from large pharmaceutical and biotech
companies that have already received significant investment and have substantial clinical, preclinical, and manufacturing data packages.
Companys four product candidates each have previously generated positive clinical data for Mereos target indication or alternatively for a related indication.
is being evaluated for
Ontogenesis imperfecta, or O.I.
O.I. is a rare genetic disorder, which is commonly referred to as brittle bone disease. Current treatments for O.I. are
based on supportive care, focusing on treating factures and maximizing mobility. There are no FDA nor EMA approved treatments to date.
announced the completion of patient enrollment of 112 adult patients in a Phase IIb does ranging study with some initial data expected in the first half of 2019 and top line dose ranging data expected in late 2019. A pediatric Phase III study design
has also been approved CEMA.
has orphan drug designation in the U.S. and the E.U. and has been accepted into the prime and adaptive pathways in Europe.
is being evaluated for
Antitrypsin Deficiency, another genetic
disorder, which is, in this case, characterized by severe respiratory and liver disease. We recently announced the first patient dosing in a Phase II dose ranging study in the United States and Europe, with data expected in the second half of 2019.
is being evaluated for acute exacerbations of COPD. Acute exacerbations typically occur in the course of
the disease with COPD, but are commonly triggered by infections or external factors such as air pollution.
We announced positive
Phase II results in December 2017. As stated in our interim results press release in August 2018, we continue to explore potential partnerships for
parallel with regulatory interactions and will provide an update once these are available.
Finally, moving onto to
this is being evaluated for Hypogonadotropic Hypogonadism which results from inadequate levels of testosterone. We announced positive
Phase IIb results
in March of 2018 and a
six month Phase IIb safety extension study with
12 month data is expected around the end of this year.
This proposed merger with OncoMed will help diversify our portfolio of assets and consequentially the combined Company will also have additional potential
near term value catalysts.
Turning to page nine, our intention is to continue to focus on advancing our existing product candidates
with two significant clinical readouts in Mereos core orphan product candidates expected in late 2019.
Our strategy is to commercialize our orphan
and rare disease products and to focus on forging partnerships to take forward both Mereos
programs, as well as OncoMeds NAVI program.
Well also continue to seek new opportunities in orphan and rare diseases that meet our very stringent and disciplined selection criteria.
turning to page 10, Mereo and OncoMed expect to file the SEC registration document and related shareholder information ahead of an OncoMed shareholder vote in the first half of 2019, with the transaction closing as soon as possible thereafter.
This concludes our prepared remarks and Im now very happy to open up the call for Q&A. Given that were in separate offices, I will take and
direct the questions to the appropriate person.
Operator: (Operator Instructions)
Brian White with Cantor
Brian White: The first question, hopefully, is easy to answer, as I presume theres no change of control on the Celgene collaboration
with OncoMed post the merger with Mereo.
And then separately, just looking at the partnerships potentially, does Mereo bring anything to OncoMeds
efforts in partnering NAVI, for example, and I just guess looking at NAVI just wondering what kind of data is required for potentially getting [an equal partner] for that program?
Denise Scots-Knight: John, do you want to take the first question? And then I will answer the first half of the second question and you can take the second
John Lewicki: Just to provide a tinge of background, we have a very good relationship with Celgene, which weve maintained over time and this
transaction is not expected to have any impact on the TIGIT and their ability to
So what we are
going to be doing is, were in constant dialogue with Celgene. And were moving toward putting together a data package and things that will enable them to make an
decision on the product.
Really, nothing significant changes there.
Denise Scots-Knight: And Brian, to answer the first part of the second question, at Mereo, obviously
weve done, with the original transaction with Novartis, with the subsequent transaction with AstraZeneca and also with our corporate development groups expertise in both
we have significant transaction corporate partnering expertise. Were very much looking forward to bringing that to work with the OncoMed team on partnering NAVI.
And Ill now hand over to let John talk about the data briefly.
John Lewicki: Yes, so Brian, Im not sure I completely go the question, but just to tell you a little bit about NAVI and the data so NAVI is a
bispecific to two important angiogenic [outfactors], Dll4 and VEGF. And we observed in initial single agent Phase Ia studies that three of 12 patients treated with a bispecific as a single agent exhibited [P.R.s].
Weve subsequently moved into a Phase Ib study in combination with weekly paclitaxel. And theres data and weve talked with many KOLs in the
field and with current therapies, which is basically chemo this is in late line platinum-resistant ovarian cancer response rates are typically 15% or less.
And PFS we anticipate to be somewhere between two and three months two and lets say 3.4 months. And we reported the ESMO data in NAVI that was in
the low 30 number of patients in our Ib study where we have a current response rate of 42% and a PFS of 5.4 months. So we think that very much exceeds the expectations for products that are currently used in this space, which is really a significant
unmet medical need. And we think NAVI is very promising there. Weve been talking with KOLs and I think theres a lot of interest and enthusiasm in pushing that forward.
Operator: (Operator Instructions)
Lala Gregorek with Trinity
Lala Gregorek: I had a
question regarding Celgene. Are there any other details with respect to
the deal terms that youre able to share with us, John?
John Lewicki: No additional details. As weve mentioned, Celgene has an
to TIGIT. Upon exercising their
it actually becomes a license to Celgene. So it converts to a license to Celgene and the
milestone is $35 million. So as I mentioned, a good constant dialogue with them and well be speaking to them after this announcement about next steps and moving things forward.
Lala Gregorek: And sorry, I did have another question for you regarding the cash situation. The deal as it stands is looking at cash of 38 million. Can
you confirm whether that would be at end of year or assumed on deal closure?
Denise Scots-Knight: Richard will take that question.
Richard Jones: Yes, no, were looking at deal closure. That 38 million is the target at deal closure.
Operator: Samir Devani with Rx Securities.
Samir Devani: Just wondering whether theres a break fee in the transaction?
Denise Scots-Knight: Yes, Ill take that. There is a break fee in the transaction and its a typical nature for deals of this size. But were
not disclosing the details of that today.
Operator: And I am showing no further questions in queue. Id like to turn the call back over to
Dr. Denise Scots-Knight for further remarks.
Denise Scots-Knight: Great. Thank you to everybody for attending the conference call. Were very,
very, very pleased today to be announcing this merger. Thank you very much.
Operator: Ladies and gentlemen, thank you for your participation in
todays conference. This concludes the program. You may now disconnect.
This communication contains “forward-looking statements”.
All statements other than statements of historical fact contained in this report are forward-looking statements within the meaning
of Section 27A of the United States Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the
United States Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements usually
relate to future events and anticipated revenues, earnings, cash flows or other aspects of our operations or operating results.
Forward-looking statements are often identified by the words “believe,” “expect,” “anticipate,”
“plan,” “intend,” “foresee,” “should,” “would,” “could,”
“may,” “estimate,” “outlook” and similar expressions, including the negative thereof. The absence
of these words, however, does not mean that the statements are not forward-looking. These forward-looking statements are based
on our current expectations, beliefs and assumptions concerning future developments and business conditions and their potential
effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no
assurance that future developments affecting us will be those that we anticipate.
Factors that could cause actual results to differ materially
from those in the forward-looking statements include failure to obtain applicable stockholder approvals in a timely manner or otherwise;
failure to satisfy other closing conditions to the proposed transaction; failure to realize anticipated benefits of the proposed
transaction; risks relating to unanticipated costs, liabilities or delays of the transaction; failure or delays in research and
development programs; unanticipated changes relating to competitive factors in the companies’ industry; risks relating to
expectations regarding the capitalization, resources and ownership structure of the combined organizations; the availability of
sufficient resources for combined company operations and to conduct or continue planned clinical development programs; the outcome
of any legal proceedings related to the merger; risks related to the ability to correctly estimate operating expenses and expenses
associated with the merger; risks related to the ability to project future cash utilization and reserves needed for contingent
future liabilities and business operations; risks related to the changes in market prices of the shares of OncoMed’s common
stock or Mereo’s ordinary shares relative to the exchange ratio; ability to hire and retain key personnel; the potential
impact of announcement or consummation of the proposed transaction on relationships with third parties; changes in law or regulations
affecting the companies; international, national or local economic, social or political conditions that could adversely affect
the companies and their business; conditions in the credit markets; risks associated with assumptions the parties make in connection
with the parties’ critical accounting estimates and other judgments.
All of our forward-looking statements involve risks and uncertainties
(some of which are significant or beyond our control) and assumptions that could cause actual results to differ materially from
our historical experience and our present expectations or projections. You should carefully consider the foregoing factors and
the other risks and uncertainties that affect the parties’ businesses, including those described in OncoMed’s Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed from time to time by
OncoMed and Mereo’s with the United States Securities and Exchange Commission (the “SEC”) and those described
in Mereo’s annual reports, relevant reports and other documents published from time to time by Mereo. We wish to caution
you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation
to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information,
future events or otherwise, except to the extent required by law.
No Offer or Solicitation
This communication is not intended to and does not constitute
an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities
or the solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction, in each case in contravention of applicable law. No offer of securities
shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act and applicable European
or UK, as appropriate, regulations. Subject to certain exceptions to be approved by the relevant regulators or certain facts to
be ascertained, the public offer will not be made directly or indirectly, in or into any jurisdiction where to do so would constitute
a violation of the laws of such jurisdiction, or by use of the mails or by any means or instrumentality (including without limitation,
facsimile transmission, telephone and the internet) of interstate or foreign commerce, or any facility of a national securities
exchange, of any such jurisdiction.
Important Additional Information Will be Filed with the SEC
Mereo will file with the SEC (1) a Registration Statement on
Form F-4 containing the proxy statement of OncoMed that also constitutes a prospectus of Mereo (the “proxy statement/prospectus”)
and (2) other documents concerning the proposed merger.
BEFORE MAKING ANY VOTING DECISION, INVESTORS AND STOCKHOLDERS ARE URGED
TO CAREFULLY READ THE PROXY STATEMENT/PROSPECTUS, AND OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, IN THEIR ENTIRETY WHEN
THEY BECOME AVAILABLE AND ANY OTHER DOCUMENTS FILED BY EACH OF MEREO AND ONCOMED WITH THE SEC IN CONNECTION WITH THE PROPOSED
MERGER OR INCORPORATED BY REFERENCE THEREIN BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MEREO, ONCOMED, THE PROPOSED
TRANSACTIONS AND RELATED MATTERS
. Investors and stockholders will be able to obtain free copies of the proxy statement/prospectus
and other documents filed with the SEC by the parties through the website maintained by the SEC at
In addition, investors and stockholders will be able to obtain free copies of the proxy statement/prospectus and other documents
filed with the SEC on Mereo’s website at
(for documents filed
with the SEC by Mereo) or on OncoMed’s website at
filed with the SEC by OncoMed).
Participants in the Solicitation
Mereo, Oncomed and their respective directors, executive officers
and certain employees may be deemed to be participants in the solicitation of proxies from the stockholders of Mereo and OncoMed,
respectively in connection with the proposed merger. Stockholders may obtain information regarding the names, affiliations and
interests of OncoMed’s directors and officers in OncoMed’s Annual Report on Form 10-K for the fiscal year ended December
31, 2017, which was filed with the SEC on March 8, 2018, and its definitive proxy statement on Schedule 14A for the 2018 annual
meeting of stockholders, which was filed with the SEC on April 27, 2018. To the extent the holdings of OncoMed’s securities
by the Company’s directors and executive officers have changed since the amounts set forth in OncoMed’s proxy statement
for its 2018 annual meeting of stockholders, such changes have been or will be reflected on Statements of Change in Ownership
on Form 4 filed with the SEC. Information regarding the names, affiliations and interests of Mereo’s directors and officers
is contained in Mereo’s Annual Report for the fiscal year ended December 31, 2017 and can be obtained free of charge from
the sources indicated above. Additional information regarding the interests of such individuals in the proposed merger will
be included in the proxy statement/prospectus relating to the proposed merger when it is filed with the SEC. These documents (when
available) may be obtained free of charge from the SEC’s website at
OncoMed’s website at
and Mereo’s website at