Positive Phase 1 interaction study with BCT-197

Mereo BioPharma Group plc

("Mereo" or the "Company")

Positive Phase 1 interaction study with BCT-197 (acumapimod)

London, 3 November 2016 - Mereo BioPharma Group plc (AIM: MPH), a clinical stage, UK-based, biopharmaceutical company focused on rare and specialty diseases, today announces the positive outcome of its Phase 1 drug interaction study with acumapimod, the active compound in the Company's novel p38 MAP kinase inhibitor BCT-197. BCT-197 is currently in a Phase 2 study for the treatment of acute exacerbations of COPD (AECOPD).

This study evaluated potential drug interactions between acumapimod and the antibiotic azithromycin. The study confirmed no drug interaction or evidence of adverse effects on safety and tolerability, meaning acumapimod may therefore be dosed with azithromycin.

Dr Alastair Mackinnon, Chief Medical Officer of Mereo, said "We are delighted to announce the results of our Phase 1 drug interaction study. Patients with COPD frequently use azithromycin in the management of acute exacerbations and some use it as a maintenance therapy for their disease. The results of this study are encouraging as they remove restrictions on patients already taking azithromycin for the ongoing clinical programme and allow physicians to use this common antibiotic in the management of AECOPDs alongside BCT-197."

ENDS

About BCT-197(acumapimod)BCT-197 is an orally active p38 MAP kinase inhibitor being developed as first-line acute therapy alongside existing treatment and supportive care for AECOPD. The ongoing Phase 2 study is planned to enroll 270 patients in the US and EU and is designed to study different dosing regimes of BCT-197 on top of standard of care in patients presenting with an AECOPD in the hospital setting. The primary end point is lung capacity, as measured by FEV1, with a range of exploratory secondary end points including hospital stay times, patient reported outcomes and re-exacerbation rates during a six month follow-up period.

About AECOPD

An AECOPD is characterised by a sudden worsening in the COPD patient's symptoms of dyspnoea, cough and sputum production. Acute exacerbations last for several days and require a step up of medication and often hospitalisation. AECOPDs occur in the natural course of the disease and are commonly triggered by infections and air pollution, however one third do not have an identifiable trigger. Both airway and systemic inflammation are characteristic drivers of the disease

About Mereo

Mereo is a UK-based biopharmaceutical company focused on the development of innovative medicines that aim to address unmet medical needs in rare and specialty disease areas and improve patient quality of life. The Company seeks to selectively acquire development-stage product candidates with demonstrated clinically meaningful data from large pharmaceutical companies and to rapidly progress these product candidates to subsequent value inflection points.

Mereo combines the operational discipline and efficiency of a small company with the financial resources to conduct comprehensive clinical studies. The Company has the option to directly commercialise products, for example in orphan diseases, in addition to partnering or divesting its products.

Mereo's initial portfolio consists of three mid-late stage clinical assets that were acquired from Novartis in July 2015. BPS-804 is being developed for the prevention of fractures resulting from osteogenesis imperfecta (brittle bone disease); BCT-197, is being developed to treat inflammation in patients with an acute exacerbation of chronic obstructive pulmonary disease; and BGS-649 is a once-weekly pill to restore normal testosterone levels in men with hypogonadal hypogonadism.

In H1 2016 the Company initiated a Phase 2 study with BCT-197 and a Phase 2b study with BGS-649. Mereo submitted its proposed Phase 2b/3 pivotal study design package for BPS-804 to the regulator in H1 2016 and expects to commence the trial during H1 2017, pending feedback from the regulator. Additional product opportunities, from a range of large pharmaceutical companies, are under active evaluation.

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