Mereo BioPharma Group is planning to raise up to £15m to support development its brittle bone disease treatment following its acceptance to participate in the European Medicine Agency's adaptive pathways programme.
The funds will be used to develop BPS-804, a treatment for osteogenesis imperfecta (OI), or brittle bone disease, to include children.
The AIM-listed company will place 9.65m new share of 0.003p, which represents about 15% of its share capital, to raise about £15m on Friday.
The new shares will then be admitted to trade on AIM around 3 April.
Chief executive Denise Scots-Knight said: "OI is a serious, debilitating and painful disease that affects a significant number of children as well as adults. We believe BPS-804 could reduce the incidence of fractures, and therefore meaningfully improve quality of life.
She said that following its acceptance to participate in the European Medicine Agency's programme, the company remains on track to initiate a potentially pivotal clinical programme for BPS-804 in the first half of 2017 that will now include a paediatric study.
Shares in Mereo BioPharma Group were down 0.83% to 300p at 0942 BST.