Mereo BioPharma Group plc (NASDAQ: MREO) has entered into an option and license agreement with Sentynl Therapeutics, Inc., granting Sentynl the exclusive right to commercialize alvelestat in the United States for the treatment of alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD), a rare genetic respiratory condition.

Under the agreement, Mereo will receive a non-refundable upfront option fee. Upon option exercise, Mereo would receive $40 million in upfront and research and development payments, up to $435 million in regulatory and commercial milestone payments, and double-digit tiered royalties on U.S. net sales. Sentynl also receives global manufacturing rights for alvelestat in AATD-LD.

Mereo will retain commercial rights outside the United States and will lead the global Phase 3 study and regulatory interactions. During the option period, both companies will collaborate to refine the Phase 3 study design and advance manufacturing. A Phase 3 program could be initiated in early 2027.

Alvelestat is an oral neutrophil elastase inhibitor that has received Orphan Drug Designation from both the U.S. Food and Drug Administration and the European Commission, as well as Fast Track designation from the FDA. The drug has been studied in clinical trials involving more than 1,000 patients across multiple respiratory conditions.

AATD-LD is estimated to affect between 50,000 and 80,000 individuals in the United States. According to the press release, no oral treatment is currently approved for the condition.

Sentynl Therapeutics is a wholly-owned subsidiary of Zydus Lifesciences Limited, an India-based global life sciences company.