Rubric Capital Management Reaches Agreement with Mereo BioPharma Group (MREO)
Key Summary: Rubric Capital (14.32%) criticized Mereo's governance, urging cost optimization, asset review, and winding down clinical operations to maximize shareholder value.It called for a general meeting to replace four directors with its nominees due to poor governance and misleading statements.On October 28, 2022, Rubric and Mereo reached a Cooperation Agreement, appointing Rubric's four nominees to the Board.
Market Cap: $123 million | Mereo BioPharma Group plc, a biopharmaceutical company, develops and commercializes therapeutics for the treatment of oncology and rare diseases in the United Kingdom and internationally.
- On May 26, 2022, Rubric Capital Management (12.82%) expressed its belief that the company needed to take immediate steps to maximize shareholder value. It emphasized that any plan must include a rapid optimization of the company’s expenses to maintain its existing cash balances and maximize the value of the license and collaboration agreement for Setrusumab. Source
- On June 9, 2022, Rubric Capital Management (13.1%) delivered a letter to the company discussing in further detail the issues set forth in its previous 13D filing.
Valuation Insight
"We believe the Board must immediately launch a review of the Company’s assets with a view to winding down clinical operations and partnering alvelestat and the Company’s other compounds, to the extent possible, with an eye to maximizing the value of the cash and rights to Setrusumab. The conclusion to us is clear: Mereo shares could be worth more than $4.00 per ADS on a risk-adjusted basis without ascribing any value to alvelestat or etiglimab, but the market is ascribing over negative $600 million to the current Board stewardship of the Company and its assets."
- On June 14, 2022, Rubric Capital Management increased its stake to 14.07%.
- On August 19, 2022, Rubric Capital Management (14.32%) delivered a letter to the company, requiring it to convene a general meeting no later than 21 days after receiving the requisition. The purpose was to consider the removal of Dr. Peter Fellner, Dr. Anders Ekblom, Dr. Deepika Pakianathan, and Mr. Michael Wyzga from their positions as directors of the company and to appoint Dr. Annalisa Jenkins, Dr. Daniel Shames, Mr. Marc Yoskowitz, and Mr. Justin Roberts as directors.
- On September 15, 2022, Rubric Capital Management delivered a revised letter to the company, requiring it to convene a general meeting. It also published an open letter to shareholders, highlighting the company's poor corporate governance and performance, and addressing the company’s many misleading public statements regarding Rubric’s attempts to constructively engage with the Board and maximize shareholder value.
Update
- On October 28, 2022, Rubric Capital Management entered into a Cooperation Agreement with the company. Pursuant to this agreement, the company agreed to appoint four director nominees nominated by Rubric to the Board.
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