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Mereo BioPharma (NASDAQ: MREO, AIM: MPH) shares are rallying premarket on Friday after the company announced a license and collaboration agreement with Ultragenyx Pharmaceutical (NASDAQ: RARE) for setrusumab, a monoclonal antibody in clinical development for osteogenesis imperfecta (OI).

Mereo’s stock price is up 38% at $3.05 following the news after closing on Thursday at $2.21 per share.

The companies said they will expand and initially prioritise the development of setrusumab for pediatric patients with Ol with development plans being finalised which may include changes to current study designs and will require discussions with regulatory agencies, for a pediatric Phase 2/3 study. The study will first focus on determining the optimal dose.

Following determination of the dose, the study is intended to adapt into a pivotal Phase 3 stage, evaluating fracture reduction over an estimated 15 to 24 months as the primary endpoint pending regulatory review. The pediatric Phase 2/3 study is expected to start in 2021. A separate pivotal study is also being planned for adults with OI.

“Setrusumab is a great complement to Ultragenyx’s product portfolio and enables us to leverage the broad expertise and infrastructure we have established in metabolic bone diseases with Crysvita,” stated Emil D. Kakkis, Chief Executive Officer and President of Ultragenyx.

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