Mereo BioPharma Group plc
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
MREO$0.28+0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0000950170-24-095777
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0000950170-24-124637
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 124 previous paragraphs and 118 current paragraphs.
59 unchanged; 46 reworded; 12 added; 14 removed; 5 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
The decrease was primarily due to reductions in R&D expenses of $0.6 million and $0.4 million for etigilimab and alvelestat, respectively, partially offset by an increase of $0.4 million for setrusumab.
Current report
Interest income increased $0.3 million, or 43%, from $0.7 million in the three months ended September 30, 2023 to $1.0 million in the three months ended September 30, 2024. The increase was principally due to a higher cash and cash equivalents balance in the quarter from the proceeds of the underwritten registered direct offering in June 2024.
Current report
Comparison of the nine months ended September 30, 2024 and 2023
Current report
R&D expenses
Current report
Total R&D expenses decreased by $0.5 million, or 4%, from $12.6 million in the nine months ended September 30, 2023 to $12.1 million in the nine months ended September 30, 2024.
Current report
General and administrative expenses increased by $5.2 million, or 35%, from $14.8 million in the nine months ended September 30, 2023 to $20.0 million in the nine months ended September 30, 2024.
Current report
Interest income increased $0.8 million, or 58%, from $1.4 million in the nine months ended September 30, 2023 to $2.2 million in the nine months ended September 30, 2024. The increase was principally due to higher cash and cash equivalents balances from the proceeds of the underwritten registered direct offering in June 2024.
Current report
Comparison of the nine months ended September 30, 2024 and 2023
Current report
Net cash used in operating activities for the nine months ended September 30, 2024 was $23.4 million, an increase of $9.1 million from $14.3 million in the nine months ended September 30, 2023. The most significant items driving this increase were:
Current report
(ii) receipt of $1.8 million in research and development tax credits in the nine months ended September 30, 2023 with no similar amounts received in the nine months ended September 30, 2024;
Current report
(iv) approximately $0.6 million higher other net cash operating expenses.
Current report
Net cash provided by financing activities for the nine months ended September 30, 2024 was $46.2 million, an increase of $38.2 million from $8.0 million in the nine months ended September 30, 2023. The increase represents the difference between the net proceeds received from the underwritten registered direct offering in June 2024 of $46.2 million in the nine months ended September 30, 2024 and the net proceeds of an “at-the-market” offering of $11.1 million, offset by $3.2 million paid to redeem the Private Placement loan notes in the nine months ended September 30, 2023.
Removed paragraphs (14)
Previous report
On June 11, 2024, we and our partner, Ultragenyx jointly announced positive 14-month results from the Phase 2 portion of the ongoing Phase 2/3 Orbit study (NCT05125809) demonstrating that, as of a May 24, 2024 data cut-off date, treatment with setrusumab (UX143) continued to significantly reduce incidence of fractures in patients with OI with at least 14 months of follow-up. Treatment with setrusumab also resulted in ongoing and meaningful improvements in lumbar spine bone mineral density (BMD) at month 12 without evidence of plateau.
Previous report
The large reduction in annualized radiologically confirmed fracture rate previously reported in patients treated for a minimum of 6 months was sustained in patients treated for at least 14 months with a high degree of significance. The median annualized rate of radiologically confirmed fractures across all 24 patients in the 2 years prior to treatment was 0.72. Following a mean treatment duration period of 16 months, the median annualized fracture rate was reduced 67% to 0.00 (p=0.0014; n=24). The annualized fracture rate excluded morphometric vertebral fractures and fractures of the fingers, toes, skull, and face, consistent with the Phase 3 study primary efficacy endpoint.
Previous report
On June 17, 2024, we issued 12,531,300 ADSs representing 62,656,500 ordinary shares through an underwritten registered direct offering priced at-the-market on June 14, 2024 at a price of $3.99 per ADS. We raised aggregate gross proceeds of $50.0 million, or $47.0 million after underwriting discounts of $3.0 million. We also incurred other issuance costs of $1.0 million.
Previous report
Total R&D expenses increased by $1.2 million, or 33%, from $3.7 million in the three months ended June 30, 2023 to $4.9 million in the three months ended June 30, 2024.
Previous report
Total interest income increased from $0.4 million in the three months ended June 30, 2023 to $0.6 million in the three months ended June 30, 2024. The increase was principally due to higher interest rates on short-term deposits.
Previous report
The total change in fair value of financial instruments for the three months ended June 30, 2024 was an unrealized loss of $0.1 million, compared to an unrealized loss of $0.1 million in the three months ended June 30, 2023. The unrealized loss in 2024 is principally due to the increase in the share price of the Company's ADSs while the unrealized gain in 2023 was due to the Private Placement warrants, which reduced in value as they neared expiration in June 2023.
Previous report
Comparison of the Six Months Ended June 30, 2024 and 2023
Previous report
Revenue
Previous report
Cost of revenue
Previous report
General and administrative expenses increased by $4.7 million, or 51%, from $9.1 million in the six months ended June 30, 2023 to $13.8 million in the six months ended June 30, 2024.
Previous report
The increase is primarily related to:
Previous report
Total interest income increased from $0.7 million in the six months ended June 30, 2023 to $1.2 million in the six months ended June 30, 2024. The increase was principally due to higher interest rates on short-term deposits.
Previous report
Comparison of The Six Months Ended June 30, 2024, and 2023
Previous report
Net cash provided by financing activities for the six months ended June 30, 2024 was $46.8 million, an increase of $46.7 million from $0.1 million in the six months ended June 30, 2023. The increase was due to the net proceeds received from the underwritten registered direct offering in June 2024.
Reworded paragraphs (46)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2023, included in our Annual Report on Form 10-K that was filed with the SEC on March 27, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023, our actual results could differ materially from the results described in, or implied by, these forward-looking statements.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2023, included in our 2023 Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of our 2023 Annual Report, our actual results could differ materially from the results described in, or implied by, these forward-looking statements.
Previous wording
We are a biopharmaceutical company focused on the development of innovative therapeutics for rare diseases. We have developed a portfolio of late-stage clinical product candidates. Our two rare disease product candidates are setrusumab for the treatment of osteogenesis imperfecta (OI) and alvelestat primarily for the treatment of severe alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD). Setrusumab has received orphan designation for OI from the European Medicines Agency (EMA) and the U.S. Food and Drug Administration (FDA), PRIME designation from the EMA and has rare pediatric disease designation from the FDA. Alvelestat has received U.S. Orphan Drug Designation for the treatment of AATD and Fast Track designation from the FDA for the treatment of AATD-LD.
Current wording
We are a biopharmaceutical company focused on the development of innovative therapeutics for rare diseases. We have developed a portfolio of late-stage clinical product candidates. Our two rare disease product candidates are setrusumab for the treatment of osteogenesis imperfecta (OI) and alvelestat primarily for the treatment of severe alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD). Setrusumab has received orphan designation for OI from the European Medicines Agency (EMA) and the U.S. Food and Drug Administration (FDA), PRIME designation from the EMA and has rare pediatric disease designation and breakthrough therapy designation from the FDA. Alvelestat has received U.S. Orphan Drug Designation for the treatment of AATD and Fast Track designation from the FDA for the treatment of AATD-LD.
Previous wording
Our strategy is to selectively acquire and develop product candidates for rare diseases that have already received significant investment from large pharmaceutical and biotechnology companies and that have substantial pre-clinical, clinical and manufacturing data packages. Since our formation in March 2015, we have successfully executed on this strategy by acquiring six clinical-stage product candidates of which four were in rare diseases and oncology. Four of our six clinical-stage product candidates were acquired from large pharmaceutical companies and two were acquired in our merger with OncoMed Pharmaceuticals Inc in 2019. We have successfully completed large, randomized Phase 2 clinical trials for four of our product candidates and the Phase 1b portion of a Phase 1b/2 for a fifth product candidate.
Current wording
Our strategy is to selectively acquire and develop product candidates for rare diseases that have already received significant investment from large pharmaceutical and biotechnology companies and that have substantial pre-clinical, clinical and manufacturing data packages. Since our formation in March 2015, we have successfully executed this strategy by acquiring six clinical-stage product candidates of which four were in rare diseases and oncology. Four of our six clinical-stage product candidates were acquired from large pharmaceutical companies and two were acquired in our merger with OncoMed Pharmaceuticals Inc in 2019. We have successfully completed large, randomized Phase 2 clinical trials for four of our product candidates and the Phase 1b portion of a Phase 1b/2 for a fifth product candidate.
Previous wording
Total R&D expenses decreased by $0.1 million, or 1%, from $9.0 million in the six months ended June 30, 2023 to $8.9 million in the three months ended June 30, 2024.
Current wording
Total R&D expenses decreased by $0.4 million, or 12%, from $3.6 million in the three months ended September 30, 2023 to $3.2 million in the three months ended September 30, 2024.
Previous wording
The reduction in etigilimab expenses was primarily due to the winding down and completion during 2023 of the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types.
Current wording
The reduction in program expenses for etigilimab was primarily due to the winding down and completion during 2023 of the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types.
Previous wording
The increase in the program expenses for alvelestat primarily relates to preparatory work for the Phase 3 study, including manufacturing and drug formulation activities, St. Georges Respiratory Questionnaire (SGRQ) validation activities and regulatory filings and interactions.
Current wording
The reduction in the program expenses for alvelestat primarily relates to lower levels of preparatory activity undertaken in respect of the Phase 3 study in the three months ended September 30, 2024 compared to 2023, particularly including manufacturing and drug formulation activities and regulatory interactions.
Previous wording
The increase in program expenses for setrusumab is driven by additional activities in Europe, and resources for the input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development program is funded by Ultragenyx pursuant to our license and collaboration agreement.
Current wording
The increase in program expenses for setrusumab was driven by additional activities in Europe and resources for input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development program is funded by Ultragenyx pursuant to our license and collaboration agreement.
Previous wording
General and administrative expenses increased by $5.2 million, or 195%, from $2.7 million in the three months ended June 30, 2023 to $7.9 million in the three months ended June 30, 2024. The increase is primarily related to: (i) a $3.4 million reduction in expenses which was recognized in the three months ended June 30, 2023 for amounts from our depository to reimburse certain expenses incurred by us in respect of our ADR program, whereas in 2024, $1.7 million was received from our depository in the three months ended March 31, 2024; and (ii) pre-commercial activities to lay the foundation for the commercial launch of setrusumab in Europe, including those to support pricing and reimbursement by HTA authorities and payor decision-makers in Europe of $0.9 million.
Current wording
General and administrative expenses increased by $0.5 million, or 9%, from $5.7 million in the three months ended September 30, 2023 to $6.2 million in the three months ended September 30, 2024. The increase primarily reflects $0.2 million higher pre-commercial activities to lay the foundation for the commercial launch of setrusumab in Europe, including those to support pricing and reimbursement by HTA authorities and payor decision-makers in Europe. The remaining increase represents increases in various corporate expenses.
Previous wording
Total interest expense decreased from $1.0 million in the three months ended June 30, 2023 to $0.3 million in the three months ended June 30, 2024. This decrease was principally due to the lower balance in the quarter of convertible loan notes as the private placement loan notes were fully converted and redeemed in August 2023.
Current wording
Interest expense decreased $0.3 million, or 49%, from $0.7 million in the three months ended September 30, 2023 to $0.4 million in the three months ended September 30, 2024. The decrease was principally due to the lower balance in the quarter of convertible loan notes as the private placement loan notes were fully converted and redeemed in August 2023.
Previous wording
The net foreign exchange gain for the three months ended June 30, 2024 was less than $0.1 million compared to a loss of $0.8 million in for the three months ended June 30, 2023. This change primarily reflects the impact of a slight weakening in the value of U.S. dollars when translating U.S. dollar foreign currency balances into our functional currency of pound sterling in the three months ended June 30, 2024, compared to a greater strengthening of U.S. dollars in the three months ended June 30, 2023.
Current wording
The net foreign exchange loss for the three months ended September 30, 2024 was $6.4 million, compared to a gain of $2.5 million for the three months ended September 30, 2023. This change primarily reflects (i) the impact of a weakening in the value of U.S. dollars when translating U.S. dollar balances into our functional currency of pound sterling in the three months ended September 30, 2024, compared to a strengthening of U.S. dollars in the three months ended September 30, 2023, and (ii) higher U.S. dollar balances following the underwritten registered direct offering in June 2024.
Previous wording
The foreign currency translation adjustment for the six months ended June 30, 2024 was a loss of $0.8 million compared to a gain of $3.7 million for the six months ended June 30, 2023. The $ 4.5 million change primarily reflects the impact of the strengthening of U.S. dollars when translating from the functional currency of the Company (pound sterling) into the presentational currency (U.S. dollars).
Current wording
The foreign currency translation adjustment for the three months ended September 30, 2024 was a gain of $7.2 million, compared to a loss of $3.6 million in the three months ended September 30, 2023. The change primarily reflects the impact of the significant weakening of U.S. dollars when translating the net assets of the Company from its functional currency (pound sterling) into its presentational currency (U.S. dollars).
Previous wording
The following table sets forth Mereo’s results of operations for the six months ended June 30, 2024 and 2023.
Current wording
The following table sets forth Mereo’s results of operations for the nine months ended September 30, 2024 and 2023.
Previous wording
No revenue was recognized for the three months ended June 30, 2024. Revenue of $9.0 million for the three months ended June 30, 2023 comprised a one-time milestone payment of $9.0 million resulting from the achievement of a clinical milestone on setrusumab by Ultragenyx.
Current wording
No revenue was recognized in the nine months ended September 30, 2024. Revenue of $9.0 million for the nine months ended September 30, 2023 comprised a one-time milestone payment of $9.0 million resulting from the achievement of a clinical milestone on setrusumab by Ultragenyx.
Previous wording
No cost of revenue was recognized for the three months ended June 30, 2024. Cost of revenue for the three months ended June 30, 2023 was $3.4 million and primarily represents amounts payable pursuant to our 2015 agreement with Novartis, under which the Company pays a percentage of proceeds resulting from milestone revenue received, subject to certain deductions, and other amounts on the achievement of clinical milestones.
Current wording
No cost of revenue was recognized in the nine months ended September 30, 2024. Cost of revenue of $2.8 million for the nine months ended September 30, 2023 primarily represents amounts payable pursuant to our 2015 agreement with Novartis, under which the Company pays a percentage of proceeds resulting from milestone revenue received, subject to certain deductions and other amounts, on the achievement of clinical milestones.
Previous wording
The following table sets forth our R&D expenses by product development program for the six months ended June 30, 2024 and 2023.
Current wording
The following table sets forth our R&D expenses by product development program for the nine months ended September 30, 2024 and 2023.
Previous wording
The decrease was primarily due to a $3.3 million reduction in R&D expenses for etigilimab, partially offset by increases of $2.2 million and $1.2 million of R&D expenses for alvelestat and setrusumab, respectively.
Current wording
The decrease was primarily due to a $3.9 million reduction in R&D expenses for etigilimab, partially offset by increases of $1.8 million and $1.6 million for alvelestat and setrusumab, respectively.
Previous wording
The reduction in etigilimab expenses was primarily due to the winding down and completion during 2023 of the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types.
Current wording
The decrease in program expenses for etigilimab was primarily due to the winding down and completion during 2023 of the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types.
Previous wording
The increase in the program expenses for alvelestat primarily relates to preparatory work for the Phase 3 study, including manufacturing and drug formulation activities, St. Georges Respiratory Questionnaire (SGRQ) validation activities and regulatory interactions.
Current wording
The increase in program expenses for alvelestat primarily relates to preparatory work for the Phase 3 study, including manufacturing and drug formulation activities, St. Georges Respiratory Questionnaire (SGRQ) validation activities and regulatory interactions.
Previous wording
The increase in program expenses for setrusumab is driven by additional activities in Europe and resources for the input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development program is funded by Ultragenyx pursuant to our license and collaboration agreement.
Current wording
The increase in program expenses for setrusumab was driven by additional activities in Europe, and resources for the input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development program is funded by Ultragenyx pursuant to our license and collaboration agreement.
Previous wording
The increase was primarily due to increases of $1.9 million and $0.9 million of R&D expenses for alvelestat and setrusumab, respectively, partially offset by a $1.5 million reduction in R&D expenses for etigilimab.
Current wording
The increase was primarily due to:
Previous wording
Pre-commercial activities to lay the foundation for the commercial launch of setrusumab in Europe, including those to support pricing and reimbursement by HTA authorities and payor decision-makers in Europe of $1.3 million.
Current wording
pre-commercial activities to lay the foundation for the commercial launch of setrusumab in Europe, including those to support pricing and reimbursement by HTA authorities and payor decision-makers in Europe of $1.4 million;
Previous wording
Net increases in other general and administrative expenses of approximately $1.7 million, including legal and professional fees in respect of compliance with the U.S. domestic reporting regime and employee-related costs.
Current wording
net increases in other general and administrative expenses of approximately $1.9 million, including employee-related costs, and legal and professional fees in respect of compliance with the U.S. domestic reporting regime; and
Previous wording
A reduction of $1.7 million in the amount received from our depository to reimburse certain expenses incurred by us in respect of our ADR program in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current wording
a reduction of $1.7 million in the amount received from our depository to reimburse certain expenses incurred by us in respect of our ADR program in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Previous wording
Total interest expense decreased from $1.8 million in the six months ended June 30, 2023 to $0.6 million in the six months ended June 30, 2024. This decrease was principally due to the lower balance in the six months of convertible loan notes as the private placement loan notes were fully converted and redeemed in August 2023.
Current wording
Interest expense decreased $1.5 million, or 61%, from $2.5 million in the nine months ended September 30, 2023 to $1.0 million in the nine months ended September 30, 2024. This decrease was principally due to the lower balance of convertible loan notes in the period as the private placement loan notes were fully converted and redeemed in August 2023.
Previous wording
The total change in fair value of financial instruments for the six months ended June 30, 2024 was an unrealized loss of $0.5 million, compared to an unrealized gain of $0.4 million in the six months ended June 30, 2023. The unrealized loss in 2024 is principally due to the increase in the share price of the Company's ADSs during the period, while the unrealized gain in 2023 was due to the Private Placement warrants, which reduced in value as they neared expiration in June 2023.
Current wording
Changes in the fair value of financial instruments were an unrealized loss of $0.6 million in the nine months ended September 30, 2024, compared to an unrealized gain of $0.4 million in the nine months ended September 30, 2023. The unrealized loss in the nine months ended September 30, 2024 was primarily due to the impact of the increase in the price of the Company's ADSs on the value of the warrant liabilities, whereas in the nine months ended September 30, 2023, the unrealized gain was primarily due to the expiry of the Private Placement warrants in June 2023.
Previous wording
The net foreign exchange gain for the six months ended June 30, 2024 was $0.6 million compared to a loss of $2.0 million in for the six months ended June 30, 2023. This change primarily reflects the impact of a slight weakening in the value of U.S. dollars when translating U.S. dollar foreign currency balances into into our functional currency of pound sterling in the six months ended June 30 2024 compared to a greater strengthening of U.S. dollars in the six months ended June 30, 2023.
Current wording
The net foreign exchange loss for the nine months ended September 30, 2024 was $5.8 million, compared to a gain of $0.5 million in the nine months ended September 30, 2023. This change primarily reflects (i) the impact of a significant weakening in the value of U.S. dollars when translating U.S. dollar balances into our functional currency of pound sterling in the nine months ended September 30, 2024, compared to a slight strengthening of U.S. dollars in the nine months ended September 30, 2023, and (ii) higher U.S. dollar cash and cash equivalent balances following the underwritten registered direct offering in June 2024.
Previous wording
The benefit from research and development tax credits was $0.8 million for the six months ended June 30, 2024 compared to $1.1 million for the six months ended June 30, 2023, which reflects a combination of a lower level of qualifying expenditure in 2024 and a reduction in the proportion of qualifying expenditure that can be reclaimed under the scheme rules. The tax credits represent eligible cash rebates paid or receivable from the tax authorities in the jurisdictions within which we operate for eligible types of research and development activities and associated expenditure (the “R&D tax credit”).
Current wording
The benefit from research and development tax credit decreased by $0.1 million, from $1.2 million in the nine months ended September 30, 2023 to $1.1 million in the nine months ended September 30, 2024. This decrease reflects a combination of a lower level of qualifying expenditure in the nine months ended September 30, 2024 and a reduction in the proportion of qualifying expenditure that can be reclaimed under the scheme rules. The tax credits represent eligible cash rebates paid or receivable from the tax authorities in the jurisdictions within which we operate for eligible types of research and development activities and associated expenditure (the “R&D tax credit”).
Previous wording
The foreign currency translation adjustment for the three months ended June 30, 2024 was a gain of less than $0.1 million, compared to a gain of $1.4 million for the three months ended June 30, 2023. The $1.4 million change primarily reflects the impact of the weakening of U.S. dollars when translating the net assets of the Company from its functional currency (pound sterling) into its presentational currency (U.S. dollars) which was fully offset by the change in the weighted average historical exchange rate used to translate the equity components.
Current wording
The foreign currency translation adjustment for the nine months ended September 30, 2024 was a gain of $6.4 million, compared to a gain of $0.1 million in the nine months ended September 30, 2023. The change primarily reflects the impact of the significant weakening of U.S. dollars when translating the net assets of the Company from its functional currency (pound sterling) into its presentational currency (U.S. dollars).
Previous wording
Under the current business plan and cash flow forecasts, and in consideration of our ongoing research and development efforts and our general corporate funding requirements, we anticipate that our current on-hand cash resources will extend into 2027. However, we will need additional external funding to complete our development plans and potentially commercialize selected rare disease products. We plan to fund our operations through cash on hand and a combination of non-dilutive funding sources, public or private equity or debt financings or other sources.
Current wording
Under the current business plan and cash flow forecasts, and in consideration of our ongoing research and development efforts and our general corporate funding requirements, we anticipate that our current on-hand cash resources will extend into 2027. However, we will need additional external funding to complete our development plans and potentially commercialize selected rare disease products. We plan to fund our operations through cash on hand and a combination of non-dilutive funding sources, public or private equity or debt financing or other sources.
Previous wording
We do not currently have any approved product candidates and as a result, have not generated any revenue from product sales. As a result, to date, we have financed our operations primarily through the issuances of our equity securities, convertible debt and warrants. These offerings have raised approximately $259 million, including through the $50.0 million underwritten registered direct offering in June 2024 and the $12.0 million “at-the-market” offering pursuant to our Open Market Sale Agreement with Jefferies LLC in July 2023 (all amounts are gross proceeds before fees and discounts).
Current wording
We do not currently have any approved product candidates and as a result, have not generated any revenue from product sales. As a result, to date, we have financed our operations primarily through the issuances of our equity securities, convertible debt and warrants. These offerings have raised approximately $259.0 million, including through the $50.0 million underwritten registered direct offering in June 2024 and the $12.0 million “at-the-market” offering pursuant to our Open Market Sale Agreement with Jefferies LLC in July 2023 (all amounts are gross proceeds before fees and discounts).
Previous wording
We have also received payments under various license and collaboration agreements, including:
Current wording
We have also received payments under various license and collaboration agreements, including payments of:
Previous wording
An upfront payment of $50.0 million under the license and collaboration agreement with Ultragenyx for setrusumab in 2021 and a further milestone payment of $9.0 million in July 2023.
Current wording
$50.0 million under the license and collaboration agreement with Ultragenyx for setrusumab in 2021 and a further milestone payment of $9.0 million in July 2023;
Previous wording
An upfront payment of $4.0 million under the license and collaboration agreement with Feng Biosciences (formerly OncXerna) for navicixizumab in 2020 and a further milestone payment of $2.0 million in 2022.
Current wording
$4.0 million under the license and collaboration agreement with Feng Biosciences (formerly OncXerna) for navicixizumab in 2020 and a further milestone payment of $2.0 million in 2022; and
Previous wording
An upfront payment of $1.0 million under the global license agreement with ReproNovo for leflutrozole in December 2023.
Current wording
$1.0 million under the global license agreement with ReproNovo for leflutrozole in December 2023.
Previous wording
As further described in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 27, 2023, under “Item 1. Business—Material Agreements—Novartis Agreements” and “Item 1. Business—Material Agreements—Licensing Agreement with AstraZeneca,” under various agreements with Novartis and AstraZeneca, Mereo has agreed to make milestone payments and pay royalties on potential future commercial sales. The amount, timing, and likelihood of such payments are not known and will remain uncertain for the foreseeable future.
Current wording
As further described in our 2023 Annual Report, under “Item 1. Business—Material Agreements—Novartis Agreements” (as updated in note 16 to the condensed consolidated financial statements included in this Quarterly Report) and “Item 1. Business—Material Agreements—Licensing Agreement with AstraZeneca,” under various agreements with Novartis and AstraZeneca, we have agreed to make milestone payments and pay royalties on potential future commercial sales. The amount, timing, and likelihood of such payments are not known and will remain uncertain for the foreseeable future.
Previous wording
In addition, Mereo enters into contracts in the ordinary course of business with CROs, CMOs, and other vendors to assist in the performance of its research and development activities and other services and products for operating purposes. The contracts with CROs generally provide for termination on notice, and therefore are cancelable contracts. We have manufacturing commitments with CMOs of $2.4 million as of June 30, 2024.
Current wording
In addition, we enter into contracts in the ordinary course of business with CROs, CMOs, and other vendors to assist in the performance of its research and development activities and other services and products for operating purposes. The contracts with CROs generally provide for termination on notice, and therefore are cancelable contracts. We have manufacturing commitments with CMOs of $2.4 million as of September 30, 2024.
Previous wording
The table below summarizes our cash flows (used in) from operating, investing and financing activities for the six months ended June 30, 2024 and 2023.
Current wording
The table below summarizes our cash flows (used in) from operating, investing and financing activities for the nine months ended September 30, 2024 and 2023.
Previous wording
No revenue was recognized for the six months ended June 30, 2024. Revenue of $9.0 million for the six months ended June 30, 2023 comprised a one-time milestone payment of $9.0 million resulting from the achievement of a clinical milestone on setrusumab by Ultragenyx.
Current wording
(i) a one-time milestone payment of$9.0 million being received in the three months ended September 30, 2023 resulting from the achievement of a clinical milestone on setrusumab from Ultragenyx;
Previous wording
Net cash used in operating activities for the six months ended June 30, 2024, was $15.9 million, a decrease of $1.1 million from $17.0 million in the six months ended June 30, 2023. The decrease was primarily driven by$2.0 million received from a claim on our Directors and Officers insurance policy to reimburse us for certain legal and professional costs incurred in prior years and $1.5 million higher net interest inflows. These decreases were partially offset by receipt of $1.7 million less from our depository to reimburse certain expenses incurred by us in respect of our ADR program in the six months ended June 30, 2024 than the six months ended June 30, 2023 and $0.7 million higher operating expense payments.
Current wording
(iii) receipt of $1.7 million less from our depository to reimburse certain expenses incurred by us in respect of our ADR program in the nine months ended September 30, 2024 than the nine months ended September 30, 2023; and
Previous wording
Net cash used in investing activities for the six months ended June 30, 2024, was $0.7 million, an increase of $0.3 million from $0.4 million in the six months ended June 30, 2023. In both periods, these cash flows relate to payments to acquire intangible assets.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2024 was $0.7 million, an increase of $0.3 million from $0.4 million in the nine months ended September 30, 2023. The increase is due to additional payments to acquire intangible assets in the nine months ended September 30, 2024 compared to 2023.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
These increases were partially offset by the receipt of $2.0 million from a claim on our Directors and Officers insurance policy to reimburse us for certain legal and professional costs incurred in prior years and $1.8 million higher net interest inflows.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
The benefit from research and development tax credits was $0.4 million for the three months ended June 30, 2024 and $0.6 million for the three months ended June 30, 2023, which reflects a combination of a lower level of qualifying expenditure in 2024 and a reduction in the proportion of qualifying expenditure that can be reclaimed under the scheme rules. The tax credits represent eligible cash rebates paid or receivable from the tax authorities in the jurisdictions within which we operate for eligible types of research and development activities and associated expenditure (the “R&D tax credit”).
Previous report — wording carried elsewhere
No cost of revenue was recognized for the six months ended June 30, 2024. Cost of revenue for the six months ended June 30, 2023 was $3.1 million and primarily represents amounts payable pursuant to our 2015 agreement with Novartis, under which the Company pays a percentage of proceeds resulting from milestone revenue received, subject to certain deductions, and other amounts on the achievement of clinical milestones.
Previous report — wording carried elsewhere
Research and development (“R&D”) Expenses
Previous report — wording carried elsewhere
Changes in the fair value of financial instruments
Previous report — wording carried elsewhere
Benefit from research and development tax credit