AstraZeneca licenses genetic disease drug to Mereo BioPharma

London: Mereo BioPharma has agreed a licensing deal and acquisition option for a rare disease drug from AstraZeneca as the big drugmaker continues to divest non-core assets.

Mereo shares gained 6.5 percent on Monday on the news.

Mereo has secured access to the experimental drug for alpha-1 antitrypsin deficiency - a rare and potentially life-threatening genetic disease via an initial cash payment of $3 million and 490,798 shares, making AstraZeneca a shareholder in the biotech group.

The two companies said Mereo had the right to exercise its option to acquire the drug, known as AZD9668, after the initiation of pivotal clinical studies. Mereo will make further payments as the drug advances in development.

AstraZeneca has sold rights to a number of peripheral drugs in recent years as it concentrates resources on developing medicines in cancer and other core therapy areas such as respiratory and cardiovascular medicine.

(Reporting by Ben Hirschler, editing by Louise Heavens)