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How Has The Mereo BioPharma (MREO) Stock Appreciated 6% In Extended Trading?

Mereo BioPharma Group plc (MREO) shares rose 6.25% to $1.02 in after-hours trading following its refusal to implement reform proposals. MREO stock closed the regular session at $0.96, increasing 7.85% or $0.07.

What makes MREO reluctant to accept the proposals?

The Board of Mereo BioPharma (MREO) has received from Rubric Capital Management LP (“Rubric”) a valid notice under section 303 of the Companies Act 2006 requiring it to call a general meeting of Mereo BioPharma shareholders (the “General Meeting”).

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If Rubric’s resolutions are passed, they will effectively take over MREO’s Board by replacing a majority of its independent directors with Rubric’s handpicked candidates, substantially weakening it and putting the Company’s efforts to maximize risk-adjusted returns on its assets and programs at risk.

  • As a compromise to Rubric’s overreaching demands, Mereo BioPharma offered to put one of Rubric’s principals and another new, fully independent candidate on its Board, in an effort to minimize disruption and expense, prior to receiving a valid notice from Rubric.
  • Rubric’s previous invalid notices included Rubric’s proposal to nominate four directors. By escalating its proposal today, Rubric attempts to control the Board and the Company’s future strategy through its resolutions, in response to this reasonable offer.
  • Rubric declined this offer, declined to counteroffer, and responded today with an escalated proposal that nominates five directors.
  • Rubric’s resolutions should be rejected by MREO shareholders at the General Meeting, according to the Board of Directors.
  • As a result of its board’s comments, Mereo BioPharma has urged its shareholders to reject the Rubric’s proposals since they are not in the best interest of the company or its shareholders.
  • To ensure that MREO advances its most promising programs, optimizes operations, and maximizes shareholder value, Mereo’s Board has been carefully crafted to ensure an optimal combination of skills, experience, and expertise, including with respect to strategic partnerships and M&A.
  • After September 2021, MREO has added three new, highly experienced Board members, each of whom has deep industry experience.
  • Its Board composition has evolved as MREO business needs have changed.

How is MREO dealing with it?

As a result of considered investments and judicious partnership efforts, Mereo BioPharma (MREO) is following the right strategy and in the best interest of all of its shareholders. Mereo remained confident that focusing its resources on setrusumab and taking alvelestat through regulatory testing is the clearest path to maximizing shareholder value, as MREO can continue to achieve multiple value-driving milestones over the next two years by focusing on these two, late-stage, rare disease programs, which have already delivered encouraging clinical results.

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