AstraZeneca licenses genetic disease drug to Mereo Biopharma for $5 million, becomes shareholder

AstraZeneca has agreed to license AZD9668, its experimental drug for the treatment of alpha-1 antitrypsin deficiency, to Mereo Biopharma for an upfront cash payment of $3 million plus 490,728 shares, making a total of $5 million and giving AZ shareholder status in the biotech group.

This marks the latest move by AZ to divest its non-core properties and instead focus on blockbuster products including those in the oncology space.

"Under the exclusive license the company plans to conduct a Phase II study for the treatment of alpha-1 antitrypsin deficiency, a congenital orphan condition," Mereo said in a statement. "Additional global filing and approval milestones are payable following successful pivotal data. Under the agreement, following product launch, if approved, the company will pay AstraZeneca commercial milestones, sales-related payments and royalties, each in line with rates for analogous licensing deals for drugs at this stage of development."

Alpha-1 antitrypsin deficiency is a rare genetic disease which causes lung and liver problems which can become life-threatening. AZD9668 tackles this by inhibiting neutrophil elastase, and as part of the deal, Mereo will also have the option to acquire the drug following the launch of clinical trials.

Kumar Srinivasan, Vice President of Scientific Partnering and Alliances at AstraZeneca, added: "This transaction reaffirms AstraZeneca’s commitment to patients by repositioning an asset into an orphan indication with a high unmet need. We will continue to divest or out-license deprioritised assets where we believe it will help accelerate the development of new medicines."