Mereo BioPharma Group plc
For the period ended Mar 31, 2025. Filed May 13, 2025.
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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.
Mar 31, 2025 · Filed May 13, 2025
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 2024-09-30; filed 2024-11-12.
0000950170-24-124637
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-13.
0000950170-25-069816
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 118 previous paragraphs and 81 current paragraphs.
52 unchanged; 26 reworded; 3 added; 35 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 3 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 (3)
Current report
Foreign currency transaction (loss)/gain
Current report
Net cash provided by financing activities for the three months ended March 31, 2025 was $0.4 million, compared to net cash provided by financing activities of less than $0.1 million in the three months ended March 31, 2024. The increase principally represents the $0.5 million received upon exercise of the 2020 Novartis Warrants.
Current report
milestone payments under the Amended AstraZeneca Agreements; and
Removed paragraphs (35)
Previous report
Percentage change not meaningful
Previous report
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 report
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 report
Foreign currency transaction gain/(loss)
Previous report
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 report
Revenue
Previous report
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 report
Cost of revenue
Previous report
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 report
R&D expenses
Previous 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.
Previous report
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 report
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 report
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 report
General and administrative expenses
Previous 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.
Previous report
(i)
Previous report
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 report
(ii)
Previous report
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 report
(iii)
Previous report
Interest income and expense
Previous 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.
Previous report
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 report
Foreign currency transaction gain/(loss)
Previous report
Other comprehensive loss– Foreign currency translation adjustments
Previous report
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 report
Comparison of the nine months ended September 30, 2024 and 2023
Previous 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:
Previous report
(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 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;
Previous report
(iv) approximately $0.6 million higher other net cash operating expenses.
Previous 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.
Previous report
milestone payments under our license and option agreement with AstraZeneca;
Previous report
whether we need to repay the principal and interest on our Convertible Loan Note with Novartis due in February 2025. We currently assume it will be converted or otherwise refinanced with new debt or equity; and
Reworded paragraphs (26)
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 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.
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 OI and alvelestat for the treatment of severe alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD). Setrusumab has received orphan designation for OI from the European Commission ("EC") and the U.S. Food and Drug Administration ("FDA"), PRIME designation from the European Medicines Agency ("EMA") and has Breakthrough Therapy designation and rare pediatric disease designation from the FDA. Alvelestat has received orphan designation for AATD from the EC and the FDA, and Fast Track designation for the treatment of AATD-LD from the FDA.
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 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 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.
Previous 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.
Current wording
Total R&D expenses decreased by $0.1 million, from $4.0 million in the three months ended March 31, 2024 to $3.9 million in the three months ended March 31, 2025.
Previous wording
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 wording
The decrease was primarily due to decreases of $1.2 million and $0.1 million in R&D expenses for alvelestat and etigilimab, offset by an increase of $1.3 million in R&D expenses for setrusumab.
Previous 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.
Current wording
The decrease in program expenses for alvelestat was primarily due to undertaking reduced drug formulation and manufacturing activities in preparation for the Phase 3 study in the three months ended March 31, 2025, compared to the three months ended March 31, 2024.
Previous 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.
Current wording
The increase in program expenses for setrusumab was primarily driven by amounts due under the manufacturing and supply agreement with our partner, Ultragenyx, ongoing activities related to real-world evidence programs and medical affairs activities in Europe and input into development, regulatory and manufacturing plans with Ultragenyx, who fund the global development of the program pursuant to our license and collaboration agreement.
Previous wording
The increase was primarily due to:
Current wording
General and administrative expenses increased by $1.4 million, from $5.9 million in the three months ended March 31, 2024 to $7.3 million in the three months ended March 31, 2025. The increase was primarily due to the recognition of a $1.7 million reduction in expenses in the three months ended March 31, 2024 for amounts received from our depository to reimburse certain expenses incurred by us in respect of our ADR program, partially offset by a net decrease in employee-related expenses and professional fees. A reimbursement in respect of our ADR program is anticipated in 2025.
Previous wording
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 wording
Interest income increased by less than $0.1 million, from $0.6 million in the three months ended March 31, 2024 to $0.7 million in the three months ended March 31, 2025, principally due to a higher cash and cash equivalents balance as a result of receiving the net proceeds of $46.2 million from the underwritten registered direct offering in June 2024, offset by lower interest rates earned.
Previous 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.
Current wording
Interest expense decreased by $0.1 million, from $0.3 million in the three months ended March 31, 2024 to $0.2 million in the three months ended March 31, 2025. The decrease was principally due to the conversion of convertible loan notes in February 2025.
Previous wording
Changes in the fair value of financial instruments
Current wording
Changes in the fair value of warrants
Previous 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.
Current wording
The total change in fair value of warrants for the three months ended March 31, 2025 was an unrealized gain of $0.4 million, compared to an unrealized loss of $0.4 million in the three months ended March 31, 2024. The unrealized gain in the three months ended March 31, 2025 was primarily due to the impact of a decrease in the price of the Company’s ADSs on the value of the warrant liabilities, whereas in the three months ended March 31, 2024, the unrealized loss was primarily due to an increase in the ADS price in the period.
Previous 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.
Current wording
The net foreign exchange loss for the three months ended March 31, 2025 was $2.8 million, compared to a gain of $0.6 million for the three months ended March 31, 2024. 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 March 31, 2025, compared to a strengthening of U.S. dollars in the three months ended March 31, 2024, and (ii) higher U.S. dollar balances following the underwritten registered direct offering in June 2024.
Previous 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”).
Current wording
The benefit from research and development tax credit decreased by $0.3 million, from $0.5 million in the three months ended March 31, 2024 to $0.2 million in the three months ended March 31, 2025. This decrease reflects a combination of a lower level of qualifying expenditure in the three months ended March 31, 2025 and a reduction in the proportion of qualifying expenditure that can be reclaimed under the scheme rules. The income tax benefit represents 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.
Previous 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.
Current wording
The foreign currency translation adjustment for the three months ended March 31, 2025 was a gain of $3.6 million, compared to a loss of $0.8 million in the three months ended March 31, 2024. This change primarily reflects the impact of a greater 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 March 31, 2025, compared to a lesser weakening of U.S. dollars in the three months ended March 31, 2024.
Previous 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.
Current wording
In addition, we enter into contracts in the ordinary course of business with CROs, CMOs, and other vendors, including Ultragenyx for the manufacture of setrusumab as described in our 2024 Annual Report in “Item 1. Business—Material Agreements—Agreements with Ultragenyx for Setrusumab”, 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 $0.3 million and $0.5 million as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
Comparison of the nine months ended September 30, 2024 and 2023
Current wording
Comparison of the three months ended March 31, 2025 and 2024
Previous 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.
Current wording
The table below summarizes our cash flows (used in) from operating, investing and financing activities for the three months ended March 31, 2025 and 2024.
Previous 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
Current wording
Net cash used in operating activities for the three months ended March 31, 2025 was $8.3 million, an increase of $0.3 million from $8.0 million in the three months ended March 31, 2024. This increase is primarily due toreceipt of $1.7 million from our depository to reimburse certain expenses incurred by us in respect of our ADR program and 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 in the three months ended March 31, 2024 with no similar amounts recognized in the three months ended March 31, 2025. These increases were partially offset by approximately $2.3 million in lower cash operating expenses andreceipt of $1.1 million in R&D tax credits in the three months ended March 31, 2025.
Previous 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.
Current wording
Net cash used in investing activities for the three months ended March 31, 2025 was $0.3 million, a decrease of $0.4 million from $0.7 million in the three months ended March 31, 2024. The decrease is principally due to lower payments to acquire intangible assets in the three months ended March 31, 2025.
Previous wording
As of September 30, 2024, we had an accumulated deficit of $455.8 million. We expect to continue to report significant operating losses for the foreseeable future as we continue our research and development efforts and seek to obtain regulatory approval of our product candidates and any future product we develop.
Current wording
As of March 31, 2025, we had an accumulated deficit of $472.0 million. We expect to continue to report significant operating losses for the foreseeable future as we continue our research and development efforts and seek to obtain regulatory approval of our product candidates and any future product we develop.
Previous wording
establish a sales, marketing, and distribution infrastructure and scale-up manufacturing capabilities to commercialize or co-commercialize any product candidates for which we may obtain regulatory approval and chose to commercialize directly;
Current wording
potentially establish a sales, marketing, and distribution infrastructure and scale-up manufacturing capabilities to commercialize or co-commercialize any product candidates for which we may obtain regulatory approval and chose to commercialize directly;
Previous wording
add further clinical, scientific, operational, financial, legal and management information systems, and personnel, including personnel to support our development and to support our operations as a U.S. public company listed on Nasdaq; or
Current wording
add further clinical, scientific, operational, financial, legal and management information systems, and personnel, including personnel to support our development, potential commercialization and to support our operations as a U.S. public company listed on Nasdaq; or
Previous wording
the costs for our activities related to our ongoing collaboration with Ultragenyx for setrusumab for the treatment of adults and children with OI; and potential future clinical trials for alvelestat in AATD and other potential indications;
Current wording
the costs for our activities related to our ongoing collaboration with Ultragenyx for setrusumab for the treatment of children and adults with OI, including the costs for our preparation for the potential commercialization of setrusumab, if approved, in Europe and the U.K; and potential future costs for the alvelestat program in AATD;
Previous wording
the costs and timing of manufacturing clinical supplies of our product candidates;
Current wording
the costs and timing of manufacturing clinical or commercial supplies of our product candidates;
Previous wording
Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our accounting estimates based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The actual impact on our financial performance could differ from these estimates under different assumptions or conditions.
Current wording
Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our accounting estimates based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The actual impact on our financial performance could differ from these estimates under different assumptions or conditions.
Previous wording
An accounting estimate is considered critical if both (i) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (ii) the impact within a reasonable range of outcomes of the estimates and assumptions is material to our unaudited condensed consolidated financial statements. We believe that there are no estimates and assumptions made in our unaudited condensed consolidated financial statements that rise to this level. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting
Current wording
An accounting estimate is considered critical if both (i) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (ii) the impact within a reasonable range of outcomes of the estimates and assumptions is material to our unaudited condensed consolidated financial statements. We believe that there are no estimates and assumptions made in our unaudited condensed consolidated financial statements that rise to this level. Our significant accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
The following table sets forth Mereo’s results of operations for the nine months ended September 30, 2024 and 2023.
Previous report — wording carried elsewhere
The following table sets forth our R&D expenses by product development program for the nine months ended September 30, 2024 and 2023.
Previous report — wording carried elsewhere
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 report — wording carried 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.