Mereo BioPharma and Sentynl sign option deal for alvelestat in lung disease

On August 11, 2026, Mereo BioPharma Group plc and Sentynl Therapeutics, Inc., a subsidiary of Zydus Lifesciences Limited, entered into an option and license agreement covering U.S. commercial rights and global manufacturing rights to alvelestat for treating alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD).¹

Under the deal terms, Sentynl receives the exclusive option to obtain a license for commercializing alvelestat in the AATD-LD indication within the United States, while Mereo keeps commercial rights for the rest of the world.¹ Sentynl also gains worldwide manufacturing rights for the drug, and if it exercises the option, it will help fund the Phase 3 program, which the companies say could start in early 2027.¹

Financially, Mereo will collect a non-refundable fee for granting the option, and if Sentynl exercises it, Mereo would receive $40 million combined in upfront and R&D payments.¹ Beyond that, Mereo could earn as much as $435 million in additional payments tied to regulatory and sales milestones, plus royalties in the double digits on a tiered basis calculated from U.S. sales.¹

On development responsibilities, Mereo will direct the global Phase 3 trial and handle regulatory matters through its completion, while the two companies work together during the option period on manufacturing plans and refining the trial's design.¹

Alvelestat is described as a neutrophil elastase inhibitor being readied for Phase 3 that, if approved, would be the first oral treatment for this rare, progressive genetic lung disease affecting an estimated 50,000-80,000 individuals in the United States.¹ The compound holds Orphan Drug Designation for AATD-LD from both the European Commission and the FDA, along with FDA Fast Track designation.¹