Oral AATD Lung Disease Therapy Enters Phase 3

Mereo BioPharma Group's alvelestat (MPH-966) is a clinical candidate without a separate brand name, a small molecule administered orally that selectively inhibits neutrophil elastase (NE), which degrades elastin in lung tissue. Phase 2 ASTRAEUS involved administering 120mg or 240mg to 99 patients in the U.S. and Europe, assessing changes in NE activity and disease biomarkers such as desmosine. ATALANTA evaluated 120mg in 63 patients. In the ATALANTA study, the augmented therapy non-users and early-stage lung disease subgroup showed improved SGRQ activity scores at week 12 compared to placebo, with a p-value of 0.0106. While these two studies and respiratory disease clinical data from over 1,000 patients support further development, alvelestat is still in the pre-approval Phase 3 preparation stage.

Option Agreement Transfers Funding Risk

Sentinel Therapeutics has secured an option to acquire exclusive U.S. commercial rights and global manufacturing rights for alvelestat, while Mereo retains commercial rights outside the U.S. and global clinical leadership. Upon exercising the option, Mereo will receive an upfront payment and research and development funding totaling $40 million, potential regulatory and commercial milestone payments up to $435 million, and tiered double-digit royalties on net sales in the U.S. Sentinel will fund the Phase 3 trial and pay a separate, non-refundable option fee, bearing the cost of tying up assets during the deal consideration period. This provides Mereo with non-dilutive funding, with $36.2 million in cash on hand as of March 31, 2026, and a cash runway through mid-2027, as previously planned.

Global Phase 3 in Early 2027 is a Key Inflection Point

Both companies will refine the manufacturing process and trial design during the short option period, and if the option is exercised, they plan to initiate a single, global Phase 3 trial in early 2027, evaluating approximately 220 patients over 18 months. The primary endpoint for U.S. approval will be the St. George's Respiratory Questionnaire Total Score (SGRQ), while the primary endpoint for European approval will be CT lung density, with a planned dose of 240mg. Mereo will continue to lead clinical trials and FDA/EMA interactions, while Sentinel will be responsible for manufacturing and U.S. commercialization, resulting in a clear division of responsibilities. The FDA granted Orphan Drug Designation on October 25, 2021, and Fast Track Designation on October 2022, and the EU designated it as an orphan drug on January 16, 2025, but it has not yet entered the approval review or AdComm voting stage.

Competing with Intravenous Augmentation Therapy in a $3.3 Billion Market

In 2026, the global AATD treatment market is estimated at approximately $3.3 billion, with approximately 50,000 to 80,000 patients with PiZZ AATD-LD in the U.S. Currently, approved treatments primarily consist of weekly intravenous infusions of plasma-derived alpha-1 antitrypsin inhibitors, such as Grifols' Prolastin-C, CSL Limited's Zemaira, and Takeda Pharmaceutical's Glassia and Aralast NP. Alvelestat differentiates itself by directly inhibiting NE in the lungs without supplementing the deficient protein, offering oral convenience and potential for early patient expansion. Meanwhile, Beam Therapeutics' single base editing candidate BEAM-302 is in Phase 1/2 for AATD, and Takeda and Arrowhead Pharmaceuticals' fazirsiran are in Phase 3 for AATD liver disease, meaning that in the long term, it will compete with disease-modifying approaches.