TIDMMPH
RNS Number : 9076E
Mereo BioPharma Group plc
11 November 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED UNDER
THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON PUBLICATION OF
THIS ANNOUNCEMENT THIS INFORMATION IS NOW CONSIDERED IN THE PUBLIC
DOMAIN
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY IN, OR INTO OR FROM ANY JURISDICTION
IN WHICH THE SAME WOULD BE A VIOLATION OF THE LAWS OF SUCH
JURISDICTION
MEREO ANNOUNCES INTENTION TO CONTINUE LISTING ITS ADSs ON NASDAQ
BUT PLANS CANCELLATION OF ADMISSION OF ITS ORDINARY SHARES TO
TRADING ON AIM
Exclusive NASDAQ listing should simplify trading and potentially
increase liquidity
Cancellation of AIM admission has no impact on UK presence
Last day of trading on AIM will be 17 December 2020.
London and Redwood City, Calif., November 11, 2020 - Mereo
BioPharma Group plc (NASDAQ: MREO, AIM: MPH) ("Mereo" or "the
Company"), a clinical stage biopharmaceutical company focused on
oncology and rare diseases, today announced the Company's intention
to cancel the admission of its ordinary shares of GBP0.003 each
("Ordinary Shares") to trading on AIM (the "AIM Delisting") with
effect from 18 December 2020. The Company's last day of trading on
AIM will be 17 December 2020. Mereo will retain its U.S. listing on
NASDAQ of American Depositary Shares (ADSs) under ticker symbol
MREO. Existing holders of ADSs not also holding Ordinary Shares do
not need to take any action as a result of this announcement.
Highlights
-- Following the AIM Delisting, the Company's ADSs will remain
listed on NASDAQ and shares in the Company will only be tradeable
on NASDAQ.
-- By reference to the volume of underlying Ordinary Shares,
approximately 79 per cent. of trading in the past six months has
taken place on NASDAQ.
-- The Board believes that the AIM Delisting should enhance the
liquidity of trading in the Company's ADSs.
-- Company is providing an opportunity for shareholders to
convert their Ordinary Shares into ADSs without cost, prior to the
AIM Delisting becoming effective on 18 December 2020.
"Mereo's ordinary shares were admitted to trading on AIM, a
market of the London Stock Exchange, in 2016, while the Company
listed its ADSs on NASDAQ in 2019. However, In the last 6 months
the vast majority of trading in the Company's securities has been
on NASDAQ. As a result, we now believe it is the right time to
reduce the complexity and expense of a dual listing," stated Denise
Scots-Knight, Mereo's Chief Executive Officer. "The proposed
cancellation of the AIM admission will have no impact on Mereo's UK
presence and may improve share liquidity by funnelling trading into
the market where there appears to be most demand".
The Company will today be posting a circular to shareholders
(the "Circular") which will set out further information on the
process to convert Ordinary Shares into ADSs, including
personalised forms for those holders of certificated Ordinary
Shares who wish to convert. Copies will also be available on
Mereo's website at www.mereobiopharma.com/AIM-Delisting
Background
The Company was founded in 2015 and its Ordinary Shares were
admitted to trading on AIM in June 2016. AIM provided the Company
with important access to capital and share trading liquidity during
the formative phase of Mereo's clinical development business,
enabling the Company to invest in and successfully complete three
Phase 2 studies on the programs purchased from Novartis, comprising
setrusumab for the treatment of osteogenesis imperfecta (OI),
acumapimod for the treatment of acute exacerbations of COPD
(AECOPD) and leflutrozole for the treatment of hypogonadotropic
hypogonadism (HH) in obese men. In March 2017, Mereo raised GBP15
million on AIM enabling the Company to continue the development of
setrusumab for the treatment of OI and, in October 2017, to
complete the in-licensing from AstraZeneca of Mereo's fourth
development program: alvelestat, for the treatment of alpha-1
antitrypsin deficiency (AATD). At the time, almost all the
Company's largest shareholders were UK-based institutional
investors, in addition to Novartis and AstraZeneca.
In recognition of the on-going capital requirements for the
business, the Company announced a merger with Oncomed
Pharmaceuticals, Inc, a US NASDAQ listed company, in December 2018.
This merger completed in April 2019 with an initial public offering
of ADSs on NASDAQ, resulting in Mereo achieving dual-listed status.
The liquidity in the trading of Mereo's Ordinary Shares was
enhanced by the NASDAQ listing and the Company's shareholder base
began to shift towards US investors. In February 2020, the Company
raised a total of $6 million (GBP4.6 million) from two new US
investors, and then, in June 2020, the Company completed a further
private placement of $70 million (GBP56 million) from a group
comprised almost exclusively of US investors. This demand from US
investors has led to a rapid and significant increase in the
proportion of Mereo's Ordinary Shares that are currently held via
ADSs and traded on NASDAQ.
As at 9 November 2020, being the last practicable date prior to
the date of this announcement, 51.27 per cent. of the Company's
Ordinary Shares are held in ADS form and tradeable on NASDAQ. By
reference to the volume of underlying Ordinary Shares,
approximately 79 per cent. of trading in the past six months has
taken place on NASDAQ. All shareholders who have not already
converted their Ordinary Shares into ADSs are currently able to do
so at any time.
The AIM Rules for Companies require that, unless London Stock
Exchange plc otherwise agrees, the cancellation of a company's
shares from trading on AIM requires the consent of not less than 75
per cent. of votes cast by its shareholders given in a general
meeting. However, in the Company's case, given that the listing of
its ADSs on NASDAQ enables shareholders to continue to trade their
shares in the Company in that format and, further, that there is a
process available to shareholders to convert their Ordinary Shares
into ADSs prior to the AIM Delisting, London Stock Exchange plc has
agreed that shareholder consent in a general meeting is not
required for Mereo to proceed with the AIM Delisting.
Reasons for the AIM Delisting
The Board of Directors of the Company has decided to implement
the AIM Delisting for the
following reasons:
-- An increasingly smaller proportion of trading in the
Company's Ordinary Shares is conducted on AIM compared to NASDAQ
and a continuation of the decline in this proportion would be
likely to lead to a decrease in the liquidity of the Ordinary
Shares trading on AIM.
-- The AIM Delisting is expected to further enhance the
liquidity of trading in the Company's ADSs by combining on NASDAQ
the volume of transactions from both NASDAQ and AIM.
-- The cost of complying with the AIM Rules for Companies is
duplicative of that for complying with the NASDAQ market rules and
the Company sees advantages in reducing its cost base as it
progresses its clinical development and commercialisation strategy,
which remains unchanged.
-- Internal financial and legal staff time spent on compliance
with the AIM Rules for Companies is duplicative of that required
for compliance with the NASDAQ market rules.
-- The Company's shares will still be tradeable on NASDAQ in ADS format.
Accordingly, the Directors believe that it is no longer in the
best interests of the Company or its shareholders as a whole for
the Company to retain admission of Ordinary Shares to trading on
AIM. However, the Company is providing an opportunity for
shareholders to convert their Ordinary Shares into ADSs without
cost, prior to the AIM Delisting becoming effective on 18 December
2020.
Effect of the AIM Delisting
Shareholders will no longer be able to buy and sell Ordinary
Shares on AIM after 17 December 2020. Holders of Ordinary Shares
should read "Information for holders of Ordinary Shares" below
which explains in more detail the process of converting Ordinary
Shares into ADSs.
As a company incorporated in England and Wales, the Company will
continue to be subject to the
requirements of the Companies Act 2006.
Following the AIM Delisting taking effect, the Company will no
longer be subject to the AIM Rules for Companies or be required to
retain the services of an independent nominated adviser ("Nomad").
The Company will also no longer be subject to the QCA Corporate
Governance Code or be required to comply with the continuing
obligations set out in the FCA's Disclosure Guidance and
Transparency Rules ("DTRs") or, provided the Company's securities
remain outside the scope of the regulation, the EU Market Abuse
Regulation ("MAR"). In addition, the Company and its shareholders
will no longer be subject to the provisions of the DTRs relating to
the disclosure of changes in significant shareholdings in Mereo.
The Company will, however, continue to comply with all regulatory
requirements for the NASDAQ listing of its ADSs, including all
applicable rules and regulations of the SEC.
Shareholders who continue to hold Ordinary Shares will continue
to be notified in writing of the availability of key documents on
our website, including publication of Annual Reports and Annual
General Meeting documentation. Holders of ADSs will be able to
continue to access all such information via the Mereo website.
Holders of Ordinary Shares and ADSs will both be eligible to
receive any future dividends that may be declared.
Following the AIM Delisting, as the Company will remain a public
limited company incorporated in England and Wales but its
securities will not be admitted to trading on a regulated market or
multilateral trading facility in the United Kingdom (or a stock
exchange in the Channel Islands or the Isle of Man), the City Code
on Takeovers and Mergers (the "Code") will only apply to the
Company if it is considered by the Panel on Takeovers and Mergers
(the "Panel") to have its place of central management and control
in the United Kingdom (or the Channel Islands or the Isle of Man).
This is known as the "residency test". The way in which the test
for central management and control is applied for the purposes of
the Code may be different from the way in which it is applied by
the United Kingdom tax authorities, HM Revenue & Customs
("HMRC"). Under the Code, the Panel looks to where the majority of
the directors of the Company are resident, amongst other factors,
for the purposes of determining where the Company has its place of
central management and control.
Accordingly, following the AIM Delisting, the Panel has
confirmed to the Company that the Code will not apply to the
Company, and the Company and its shareholders will therefore not
have the benefit of the protections the Code affords, including,
but not limited to, the requirement that a person who acquires an
interest in Ordinary Shares carrying 30 per cent. or more of the
voting rights in the Company must make a cash offer to all other
shareholders at the highest price paid in the 12 months before the
offer was announced.
Notwithstanding the above, the Company may become subject to the
Code in the future if any changes to the Board composition result
in the majority of the Directors being resident in the United
Kingdom, Channel Islands or the Isle of Man.
Information for holders of Ordinary Shares
The Company's Ordinary Shares will continue to be traded on AIM
until market close (4.30 p.m. London time) on 17 December 2020.
Thereafter, holders of unconverted Ordinary Shares can still hold
the Ordinary Shares, but there will be no public market in the
United Kingdom on which the Ordinary Shares can be traded, and the
Ordinary Shares will not be tradeable on NASDAQ in this form.
In order to sell Ordinary Shares on a public market following
the AIM Delisting, selling shareholders will need to convert their
Ordinary Shares into ADSs. Each ADS represents five Ordinary
Shares. This conversion can be made at any time, including before
the AIM Delisting, subject in all cases to the provisions of, and
the limitations set forth in, the Company's deposit agreement of 23
April 2019 with Citibank, N.A., as depositary (the "Depositary"),
which governs the Company's ADSs (the "Deposit Agreement"). A copy
of the Deposit Agreement has been filed with the SEC under cover of
a Registration Statement on Form F-6. You may obtain a copy of the
Deposit Agreement from the SEC's website (www.sec.gov). Please
refer to Registration Number 333-249338 when retrieving such
copy.
The Board considers that shareholders should consider converting
their Ordinary Shares into ADSs prior to the AIM Delisting on 18
December 2020 for the following reasons:
-- For those shareholders who hold their Ordinary Shares in
certificated form and wish to convert their Ordinary Shares into
ADSs, the Company's registrar, Link Group, will facilitate, on the
Company's behalf, a block transfer process. Shareholders who hold
their Ordinary Shares in certificated form will find enclosed with
the Circular a personalized block transfer participation request
form for use if they wish to convert their Ordinary Shares into
ADSs. Subject to the requisite documents being returned to Link
Group by the required deadline (being 11:00 a.m. on 4 December
2020), Link Group will arrange for the relevant Ordinary Shares to
be transferred to and through Link Group's CREST account to the
CREST account of Citibank, N.A. - London (the "Custodian"), which
has been appointed by the Depositary to safekeep the Ordinary
Shares upon deposit so that the Depositary can arrange to convert
the Ordinary Shares into the corresponding number of ADSs. The
Custodian, on behalf of the Depositary, will hold all deposited
Ordinary Shares in a separate custody account for the benefit of
the holders and beneficial owners of ADSs.
-- Shareholders who elect to convert their Ordinary Shares into
ADSs prior to the AIM Delisting will not incur a UK stamp duty, or
stamp duty reserve tax ("SDRT"), charge. However, it is expected
that shareholders who elect to convert their Ordinary Shares into
ADSs following the AIM Delisting will incur a stamp duty, or SDRT,
charge, at a rate of 1.5 per cent. of the market value of the
Ordinary Shares being converted, to the UK taxation authority,
HMRC.
-- Ordinarily, shareholders who convert their Ordinary Shares
into ADSs may be charged an ADS issuance fee, by the Depositary, of
up to $0.05 per ADS. However, no ADS issuance fees will be charged
to shareholders who elect to convert their Ordinary Shares into
ADSs from the date of this announcement until (and including) 17
December 2020, being the last day of trading of the Company's
Ordinary Shares on AIM. Thereafter, ADS issuance fees of up to
$0.05 per ADS may be charged by the Depositary in connection with
any future conversions of Ordinary Shares into ADSs.
-- Conversion of Ordinary Shares has to take place in multiples
of five. It is not possible to receive a fraction of an ADS, so in
the event that the conversion is completed after the AIM Delisting,
there is a risk that shareholders will be left with a small number
of Ordinary Shares (up to a maximum of four shares) which cannot be
converted into ADSs. If converted before the AIM Delisting has
taken effect, any residual Ordinary Shares can be sold by
shareholders on AIM prior to 18 December 2020 so long as those
Ordinary Shares are in electronic form. Shareholders who hold their
Ordinary Shares in certificated form may elect to donate their
residual shares to the charity ShareGift by making that election on
their personalised block transfer participation request form.
Shareholders who do not elect to participate in the block
transfer process can utilise the services of a broker who is able
to facilitate conversion at the shareholder's convenience.
Shareholders whose Ordinary Shares are held in uncertificated
form in CREST and who wish to convert their Ordinary Shares into
ADSs, should contact their broker without delay to request that
their Ordinary Shares are converted.
Mereo advises holders of Ordinary Shares which are not in ADS
form to seek independent financial advice regarding the AIM
Delisting and the conversion of their Ordinary Shares into
ADSs.
Information on the process to convert Ordinary Shares into ADSs
and the forms to be completed will accompany the Circular. The
information and forms, and contacts at the Company's registrar,
Link Group, in respect of completion of the block transfer
participation request form for certificated holders, and the
Company's ADS depositary, Citibank, in respect of the conversion of
Ordinary Shares to ADSs, are included on Mereo's website at
www.mereobiopharma.com/AIM-Delisting
UK tax treatment
Many investors purchase AIM-quoted shares because they are
classed as unlisted/unquoted securities which may qualify
individuals who are UK tax resident and UK domiciled for relief
from inheritance taxation and certain other preferential tax
benefits. Mereo cannot and does not provide any form of taxation
advice to shareholders and therefore shareholders are strongly
advised to seek their own taxation advice to confirm the
consequences of continuing to hold unlisted Ordinary Shares or
converting Ordinary Shares into ADSs.
The following summary does not constitute legal or tax advice
and is not exhaustive. The Company's understanding of the current
position for UK individuals who are UK domiciled under UK taxation
law is as follows but it should be noted that the Company has not
taken steps to confirm the current position with HMRC. Therefore,
the following should not be relied upon by shareholders without
taking further advice (and the Company accepts no liability in
respect of any such reliance on any information provided herein on
taxation matters):
-- Following the AIM Delisting, Ordinary Shares should continue
to be accepted by HMRC as qualifying as unlisted/unquoted
securities for the purposes of certain specific UK tax rules
(notably, the UK inheritance tax business property relief rules).
Therefore, those shareholders who elect to continue to hold
unlisted Ordinary Shares should continue to be regarded as holding
unlisted/unquoted securities under those same rules.
-- Under HMRC's stated practice, those shareholders who elect to
convert their holdings of Ordinary Shares to NASDAQ listed ADSs
should not be considered as disposing of the Ordinary Shares for UK
capital gains purposes when transferring the shares to the
Company's ADS depositary, Citibank, in exchange for issue of ADSs
on the basis that the shareholder retains beneficial ownership of
the shares..
It is recommended that shareholders obtain appropriate
professional advice in respect of the application of other UK
taxes.
Shareholders who elect to convert their holdings of Ordinary
Shares to NASDAQ listed ADSs prior to the AIM Delisting should not
incur a stamp duty, or SDRT, charge. It is expected that
shareholders who elect to convert their holdings of Ordinary Shares
to NASDAQ listed ADSs following the AIM Delisting may incur a stamp
duty, or SDRT, charge at the rate of 1.5 per cent. of the market
value of the Ordinary Shares being converted.
If you are in any doubt as to your tax position you should
consult an appropriate professional adviser immediately.
Expected timetable
Dispatch of the Circular 11 November 2020
Last date for receipt by Link 4 December 2020 at 11.00 a.m.
Group from certificated shareholders
of duly completed block transfer
participation request forms and
original share certificates
------------------------------
Last date for receipt by Citibank 9 December 2020 at 3.00 p.m.
from CREST holders of duly completed
issuance forms
------------------------------
Expected date of issuance of 16 December 2020
ADSs to block transfer participants
------------------------------
Expected date of posting of ADS 16 December 2020
receipts to shareholders by Citibank
------------------------------
Last day of dealings in the Ordinary 17 December 2020
Shares on AIM
------------------------------
Cancellation of admission to 18 December 2020 at 7.00 a.m.
trading on AIM of the Ordinary
Shares
------------------------------
Notes
(1) References to time in this announcement are to London time
unless otherwise stated.
(2) Each of the times and dates in the above timetable are
subject to change. If any of the above times and/or dates change,
the revised times and/or dates will be notified to shareholders by
announcement through a Regulatory Information Service.
About Mereo BioPharma
Mereo BioPharma is a biopharmaceutical company focused on the
development and commercialization of innovative therapeutics that
aim to improve outcomes for oncology and rare diseases. Mereo's
lead oncology product candidate, etigilimab (Anti-TIGIT), has
completed a Phase 1a dose escalation clinical trial in patients
with advanced solid tumors and has been evaluated in a Phase 1b
study in combination with nivolumab in select tumor types. Mereo's
rare disease product portfolio consists of setrusumab, which has
completed a Phase 2b dose-ranging study in adults with osteogenesis
imperfecta (OI), as well as alvelestat, which is being investigated
in a Phase 2 proof-of-concept clinical trial in patients with
alpha-1 antitrypsin deficiency (AATD) and in a Phase 1b/2 clinical
trial in COVID-19 respiratory disease.
Forward-Looking Statements
This announcement contains "forward-looking statements" within
the meaning of Section 27A of the United States Securities Act of
1933, as amended and Section 21E of the United States Securities
Exchange Act of 1934, as amended. All statements other than
statements of historical fact contained in this announcement are
forward-looking statements. Forward-looking statements usually
relate to future events. Forward-looking statements are often
identified by the words "believe," "expect," "anticipate," "plan,"
"intend," "foresee," "should," "would," "could," "may," 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 the
Company's current expectations, beliefs and assumptions concerning
future developments and their potential effect on the Company.
While management believes that these forward-looking statements are
reasonable as and when made, there can be no assurance that future
developments affecting the Company will be those that it
anticipates.
All of the Company's forward-looking statements involve known
and unknown risks and uncertainties some of which are significant
or beyond its control and involve assumptions that could cause
actual results to differ materially from the Company's historical
experience and its present expectations. These forward-looking
statements are subject to risks and uncertainties, including, among
other things, those described in the Company's latest Annual Report
on Form 20-F, Reports on Form 6-K and other documents filed from
time to time by the Company with the United States Securities and
Exchange Commission. The Company wishes to caution investors not to
place undue reliance on any forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
to the extent required by law.
Additional Information
The person responsible for arranging the release of this
information on behalf of the Company is Charles Sermon, General
Counsel.
Mereo BioPharma Contacts:
Mereo +44 (0)333 023 7300
Denise Scots-Knight, Chief Executive Officer
N+1 Singer (Nominated Adviser and Broker to Mereo ) +44 (0)20 7496 3081
Phil Davies
Will Goode
Burns McClellan (US Investor Relations Adviser to Mereo ) + 01 212 213 0006
Lisa Burns
Steve Klass
FTI Consulting (UK Public Relations Adviser to Mereo ) +44 (0)20 3727 1000
Simon Conway
Ciara Martin
Investors investors@ mereo biopharma.com
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