More often than not, London biotech listings come from early-stage companies in need of capital to progress experimental drugs into clinical trials. Mereo BioPharma (MPH) may be a brand new company (it was founded in July 2015), but its drugs are by no means early stage. The three drugs it bought from Swiss pharma giant Novartis (ch: NOVN) are in the mid-to-late stage of development and management is aiming for a late-2018 launch of at least one.
Another unusual characteristic of Mereo is that it's not focused on just one therapeutic area. BCT-197 is being developed for the treatment of severe chronic obstructive pulmonary disease (COPD), BGS-649 should help normalise testosterone levels in obese men and BPS-804 is an antibody for brittle bone disease. The latter was recently granted orphan drug status in the US and EU, meaning it could be fast-tracked through clinical trials. The one link these medicines do have is that they were unloved pipeline assets in a big pharma company; their chance for a commercial launch has improved now they're part of a small, fast-moving biotech. That's not to say Novartis has relinquished its claim entirely - it owns almost a fifth of Mereo's shares.
But developing late-stage drugs doesn't come cheap. Mereo spent £24.6m on research and development in the reported period, meaning it's already burnt through a fair amount of the £68.3m raised in June 2016.
MEREO BIOPHARMA (MPH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 305p | MARKET VALUE: | £196m | |
| TOUCH: | 300-310p | 12-MONTH HIGH: | 335p | LOW: 238p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 123p* | NET CASH: | £53.6m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015** | nil | -13.1 | -101 | nil |
| 2016 | nil | -33.7 | -63 | nil |
| % change | - | - | - | - |
*Includes intangible assets of £25.8m, or 40p a share **Period from 10 Mar - 31 Dec 2015, Pre-IPO figures | ||||
