Mereo BioPharma Group plc
For the period ended Dec 31, 2025. Filed Mar 19, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 19, 2026
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-K
Period ended 2024-12-31; filed 2025-03-26.
0000950170-25-044787
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-19.
0001193125-26-115226
Item 7. 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 149 previous paragraphs and 155 current paragraphs.
89 unchanged; 37 reworded; 27 added; 22 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 3 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 (27)
Current report
On December 29, 2025, we announced the results from the Phase 3 Orbit and Cosmic studies evaluating setrusumab in pediatric and young adult patients with OI. For further information see “Item 1. Business—Core Rare Disease Product Candidates—Setrusumab (BPS-804/UX143) for the Treatment of Osteogenesis Imperfecta—Top-line Data from Setrusumab Phase 3 Orbit and Cosmic Studies.”
Current report
Revenue and Cost of revenue
Current report
Research and development expenses (“R&D expenses”)
Current report
Year ended December 31, 2025
Current report
Pursuant to changes made by the Finance Act 2024, for accounting periods starting on or after April 1, 2024, the Merged Scheme came into effect for all companies, other than loss making R&D intensive SMEs.
Current report
Under the Merged Scheme, a headline credit rate of 20% on eligible R&D expenditure is available, and the credit is taxable at the applicable corporation tax rate. The amount of R&D tax credit that a business can receive in any one year is capped at £20,000 plus three times the Company’s total PAYE and NIC liability. Subcontracted expenditure in most cases is expected to be a qualifying cost (unless it relates to non-qualifying costs subcontracted overseas).
Current report
The U.K. R&D tax credit may either be offset against corporation tax liabilities, or paid net of tax as a cash credit where there is no liability in the future. As a result, the Company has recorded the entire benefit from the U.K. R&D tax credit as a benefit which is included in net loss before income tax and therefore it is not reflected as part of the income tax provision. If, in the future, any U.K. R&D tax credits generated are needed to offset a corporate income tax liability in the U.K., the relevant portion would be recorded as a benefit within the income tax provision and any refundable portion not dependent on taxable income would continue to be recorded within the benefit from research and development tax credit in the consolidated statements of operations and comprehensive loss.
Current report
For loss making R&D intensive SMEs, the ERIS regime will be available (for companies where at least 30% of their total expenditure including any connected companies is on qualifying R&D). We did not qualify as an R&D intensive company for 2025, nor do we expect to in the future, and therefore we expect to claim under the Merged Scheme from 2025 onward.
Current report
Year ended December 31, 2024
Current report
U.K. "patent box" regime
Current report
R&D expenses
Current report
The reductions in program expenses for alvelestat was primarily due to the completion of the activities undertaken in preparation for the potential Phase 3 study, including drug formulation and manufacturing, in the year ended December 31, 2024.
Current report
General and administrative expenses decreased by $3.4 million, from $26.4 million in the year ended December 31, 2024 to $23.0 million in the year ended December 31, 2025. The decrease was due to a lower accrual for annual cash bonuses of $1.2 million, along with a reduction in professional fees.
Current report
Other income
Current report
Other income of $0.3 million for the year ended December 31, 2025 comprised amounts received from āshibio in connection with the out-licensing of vantictumab, which was acquired in connection with the merger between the Company and Mereo BioPharma 5, Inc (formerly OncoMed).
Current report
The benefit from research and development tax credit increased by $0.2 million, from $1.6 million in the year ended December 31, 2024 to $1.9 million in the year ended December 31, 2025. This increase reflects a higher level of qualifying expenditure in the year ended December 31, 2025.
Current report
a)
Current report
receipt of $3.3 million in the year ended December 31, 2025 reflecting R&D tax credits received in respect of both the 2023 and 2024 financial years; and
Current report
b)
Current report
receipt of a $0.5 million one-time milestone payment resulting from the achievement of a clinical milestone on leflutrozole, net of $0.1 million paid to Novartis pursuant to the 2015 asset purchase agreement for leflutrozole in the year ended December 31, 2025.
Current report
These decreases were offset by:
Current report
c)
Current report
d)
Current report
lower net cash operating payments of approximately $0.1 million.
Current report
Warrants Related to Former Credit Facility
Current report
Novartis Loan Note and Warrants
Current report
On February 7, 2025, Novartis exercised the 2020 Novartis Warrants and the Company subsequently issued and allotted 1,449,610 ordinary shares (equivalent to 289,922 ADSs) upon receipt of $0.5 million in satisfaction of the subscription price of £0.265 per ordinary share.
Removed paragraphs (22)
Previous report
Research and development (“R&D”) expenses
Previous report
Revenue
Previous report
Research and development (“R&D”) Expenses
Previous report
The increase in program expenses for alvelestat is due to the preparatory work for the Phase 3 study. This principally comprised drug formulation and manufacturing activities, SGRQ validation activities and regulatory interactions. In addition to these activities, a payment of $0.5 million in cash and $1.8 million in shares was made to AstraZeneca in connection with an agreed milestone following amendment of the original license agreement and subscription deed. See also "Item 1—Material Agreements— Licensing Agreement with AstraZeneca."
Previous report
The reduction in etigilimab expenses was primarily due to the winding down and completion 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 $8.0 million, from $18.4 million in 2023 to $26.4 million in 2024.
Previous report
The increase was primarily due to:
Previous report
(i)
Previous report
(ii)
Previous report
net increases in other general and administrative expenses of approximately $1.6 million, including employee-related costs, and legal and professional fees in respect of compliance with the U.S. domestic reporting regime;
Previous report
(iii)
Previous report
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 year ended December 31, 2024 compared to the year ended December 31, 2023; and
Previous report
(iv)
Previous report
The benefit from research and development tax credit increased by $0.4 million, from $1.3 million in the year ended December 31, 2023 to $1.6 million in the year ended December 31, 2024. 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. The increase was due to a higher amount of eligible research and development activities.
Previous report
Income tax benefit
Previous report
The income tax benefit for the year ended December 31, 2023 represents income taxes paid in prior years for which a carryback claim was made to offset against taxable income in the prior year. No such claim was made in the year ended December 31, 2024.
Previous report
(i) an increase of $8.5 million resulting from the receipt of $10.0 million in milestone and up-front payments from Ultragenyx and ReproNovo in the year ended December 31, 2023, net of associated costs of revenue.
Previous report
(ii) receipt of $1.8 million in research and development tax creditsin the year ended December 31, 2023 with no similar amounts received inin the year ended December 31, 2024;
Previous report
(iii) receipt of $1.7 million less from our depository to reimburse certain expenses incurred by us in respect of our ADR program in theyear ended December 31, 2024 than in theyear ended December 31, 2023; and
Previous report
(iv) approximately $3.6 million higher other net cash operating expenses.
Previous report
Former Credit Facility
Previous report
Novartis Notes
Reworded paragraphs (37)
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 for the treatment of severe alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD).Setrusumab has received orphan designation for OI from the EC and the FDA, PRIME designation from the 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.
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 late-stage rare disease product candidates are setrusumab for the treatment of osteogenesis imperfecta (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 EC and the FDA, PRIME designation from the 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. We also have an early-stage rare disease program, vantictumab, for the treatment of a second bone disease, autosomal dominant osteopetrosis Type 2 (ADO2). The global development of vantictumab is being funded and led by our partner, āshibio, and we retain the European commercial rights.
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 this strategy by acquiring all of our clinical-stage product candidates of which three were in rare diseases. 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, and we and our partner Ultragenyx recently announced the results from two Phase 3 studies for our lead program setrusumab in OI.
Previous wording
No revenue was recognized in the year ended December 31, 2024, however in previous years revenue has included income from licensing and collaboration agreements. Consideration received up front is recognized at the point in time in which the right to use a license or intellectual property is transferred. Income from development, regulatory, commercial or similar milestones is recognized when considered probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the milestone is subsequently resolved.
Current wording
Revenue has included income from licensing and collaboration agreements. Consideration received up front is recognized at the point in time in which the right to use a license or intellectual property is transferred. Income from development, regulatory, commercial or similar milestones is recognized when considered probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the milestone is subsequently resolved.
Previous wording
We do not currently have any approved product candidates. Accordingly, we have not generated any commercial sales revenue during the period. In the future, we expect to be able to generate revenues if we are able to obtain regulatory approval and commercialize one or more of our product candidates.
Current wording
We do not currently have any approved product candidates. Accordingly, we have not generated any commercial sales revenue during the period. In the future, we expect to be able to generate commercial sales revenue if we are able to obtain regulatory approval and commercialize one or more of our product candidates.
Previous wording
Payments to third parties arising as a direct consequence of the revenue recognized are recorded within cost of revenue in the Company’s consolidated statements of operations and comprehensive loss. No cost of revenue was recognized in the year ended December 31, 2024, however for the year ended December 31, 2023, cost of revenue included amounts that we were obligated to pay to Novartis under the 2015 asset purchase agreements. In 2015, when we purchased acumapimod, leflutrozole and setrusumab from Novartis, we agreed to pay Novartis if certain events occurred in relation to these compounds. The events that warrant a payment to Novartis are sales related or when a change in control occurs. When it is probable that either of these events will occur, revenue is recognized, and the corresponding payment obligation to Novartis is recognized within cost of revenue.
Current wording
Payments to third parties arising as a direct consequence of the revenue recognized are recorded within cost of revenue in the Company’s consolidated statements of operations and comprehensive loss. For the year ended December 31, 2025, cost of revenue included amounts that we were obligated to pay to Novartis under the 2015 asset purchase agreements. In 2015, when we purchased acumapimod, leflutrozole and setrusumab from Novartis, we agreed to pay Novartis if certain events occurred in relation to these compounds. The events that warrant a payment to Novartis are sales related or when a change in control occurs. When it is probable that either of these events will occur, revenue is recognized, and the corresponding payment obligation to Novartis is recognized within cost of revenue.
Previous wording
Interest income comprises interest received on cash and short term deposits.
Current wording
Interest income comprises interest received on cash and cash equivalents.
Previous wording
Interest expense principally comprises interest on convertible loan notes, deferred consideration and bank charges. For further information on the terms of our convertible loan notes see “—Liquidity and Capital Resources—Indebtedness.”
Current wording
Interest expense principally comprises interest on convertible loan notes prior to their conversion in February 2025, deferred consideration and bank charges. For further information on the terms of our convertible loan notes see “—Liquidity and Capital Resources—Indebtedness.”
Previous wording
Our consolidated financial statements are presented in U.S. dollars. We initially record transactions in foreign currencies at the rate prevailing on the date the transaction first qualifies for recognition. Foreign currency transaction gain/(loss) consists of the difference arising on settlement or translation of transactions denominated in currencies other than the functional currency of the transacting foreign entity, which are primarily held in U.S. dollars and British pound sterling.
Current wording
Our consolidated financial statements are presented in U.S. dollars. We initially record transactions in foreign currencies at the rate prevailing on the date the transaction first qualifies for recognition. Foreign currency transaction gain/(loss) consists of the difference arising on settlement or translation of transactions denominated in currencies other than the functional currency of the transacting foreign entity, which are primarily between U.S. dollars and British pound sterling.
Previous wording
As a U.K. resident trading entity, we are subject to U.K. corporate taxation. Due to the nature of our business, we have generated operating losses since formation. As of December 31, 2024 and 2023, we had cumulative carry-forward U.K. tax losses of $36.6 million and $30.6 million, respectively. Subject to any relevant restrictions, we expect these to be available to carry forward and offset against future operating profits. As a company that carries out extensive R&D activities, we benefit from the U.K. R&D small or medium-sized enterprise tax credit regime, or SME R&D Relief, and are able to surrender some of our trading losses that arise from our research and development activities for a cash rebate (the "R&D tax credit"). Pursuant to changes made by the Finance Act 2023, from April 1, 2023, a cash rebate of up to 27% of eligible R&D expenditure is available for R&D intensive companies where at least 40% of their total expenditure is on qualifying R&D, or for non-R&D intensive companies, a cash rebate of up to 18.6% of eligible R&D expenditure is available. From April 1, 2023, certain subcontracted qualifying research expenditures are eligible for a cash rebate of up to 17.53% for R&D intensive companies or 12.09% for other companies. The difference in cash rebate for qualifying subcontracted expenditure versus other qualifying expenditure is due to a statutory restriction of 65% being applied to unconnected qualifying subcontracted expenditure, thus restricting the benefit available. Qualifying expenditures largely comprise employment costs for R&D staff, subcontracted CRO and CMO costs, consumables and certain internal overhead cost incurred as part of research projects. We do not currently expect to qualify as an R&D intensive company.
Current wording
We historically benefited from the U.K. SME R&D Relief, which provided relief against U.K. corporation tax and enabled us to surrender some of our trading losses that arose from our R&D activities for a cash credit. Pursuant to changes made by the Finance Act 2023, for expenditure incurred on or after April 1, 2023, a cash credit of up to 27% for R&D intensive companies where at least 40% of their total expenditure is on qualifying R&D, or for non-R&D intensive companies, a cash credit of up to 18.6% of eligible R&D expenditure is available. From April 1, 2023, certain subcontracted qualifying research expenditures were eligible for a cash credit of up to 17.53% for R&D intensive companies or 12.09% for other companies. The difference in cash credit for qualifying subcontracted expenditure vs. other qualifying expenditure is due to a statutory restriction of 65% being applied to unconnected qualifying subcontracted expenditure, thus restricting the benefit available.
Previous wording
We operate in the U.K. and in the U.S. and are subject to corporate taxation in those countries. We have generated losses since inception and have therefore not paid U.K. corporation tax except in 2021. The income tax benefit included in the consolidated statements of operations and comprehensive loss in the year ended December 31, 2023 represents tax refunds in respect of income taxes paid in 2021.
Current wording
We operate in the U.K. and in the U.S. and are subject to corporate taxation in those countries. We have generated losses since inception and have therefore not paid U.K. corporation tax, except in 2021.
Previous wording
The U.K. corporation tax rate applied for 2024 was 25% (2023: 23.5%). The U.K. corporation tax for 2023 resulted from applying the enacted statutory rate of 19% from January 1, 2023 through April 1, 2023, and 25% for the remainder of 2023. U.K. deferred tax assets and liabilities have been measured at a rate of 25%. The U.S federal income tax rate is 21%.
Current wording
The U.K. corporation tax rate applied for 2025 was 25% (2024: 25%). U.K. deferred tax assets and liabilities have been measured at a rate of 25%. The U.S federal income tax rate is 21%.
Previous wording
As of December 31, 2024, the Company had U.K. net operating loss carryforwards of $36.6 million, that can be carried forward indefinitely. The Company had U.S. federal tax losses to be carried forward of approximately $66.3 million of which $19.5 million can be carried forward indefinitely and $46.8 million which will begin to expire in 2025. The Company also had $13.9 million of U.S. federal R&D tax credits that begin to expire in 2025 and U.S. state tax losses to be carried forward of less than $0.1 million which begin to expire in 2027. The Company also had less than $0.1 million of state R&D tax credits that do not have an expiration date.
Current wording
Company also had $13.7 million of U.S. federal R&D tax credits that begin to expire in 2027 and U.S. state tax losses to be carried forward of less than $0.1 million which begin to expire in 2027. The Company also had less than $0.1 million of state R&D tax credits that do not have an expiration date.
Previous wording
No revenue was recognized in the year ended December 31, 2024. Revenue of $10.0 million for the year ended December 31, 2023 comprised a one-time milestone payment of $9.0 million resulting from the achievement of a clinical milestone on setrusumab by Ultragenyx and a $1.0 million up-front payment from our global license agreement with ReproNovo for the development and commercialization of leflutrozole.
Current wording
Revenue of $0.5 million was recognized in the year ended December 31, 2025, which comprised a one-time milestone payment of $0.5 million resulting from the achievement of a clinical milestone on leflutrozole received from ReproNovo pursuant to the ReproNovo licensing Agreement. No revenue was recognized in the year ended December 31, 2024.
Previous wording
No cost of revenue was recognized in the year ended December 31, 2024. Cost of revenue of $2.6 million for the year ended December 31, 2023 primarily represented 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.
Current wording
Cost of revenue of $0.1 million was recognized in the year ended December 31, 2025, which comprised amounts paid pursuant to the 2015 asset purchase agreement with Novartis for leflutrozole, under which the Company pays a percentage of proceeds resulting from milestone revenue received, subject to certain deductions and other amounts. No cost of revenue was recognized in the year ended December 31, 2024.
Previous wording
Total R&D expenses increased by $3.5 million, from $17.4 million in 2023 to $20.9 million in 2024.
Current wording
Total R&D expenses decreased by $3.2 million, from $20.9 million in the year ended December 31, 2024 to $17.8 million in the year ended December 31, 2025.
Previous wording
The increase was primarily due to a $6.2 million and $2.6 million increase in R&D expenses for alvelestat and setrusumab, respectively, partially offset by a $5.5 million decrease in R&D expenses for etigilimab.
Current wording
The decrease was primarily due to reductions in R&D expenses for alvelestat and etigilimab of $7.7 million and $1.0 million, respectively, partially offset by an increase of $5.7 million in R&D expenses for setrusumab.
Previous wording
The increase in program expenses for setrusumab was primarily due to higher levels of ongoing activities in Europe, including real-world evidence programs and medical affairs activities, and amounts under the manufacturing and supply agreement with our partner, Ultragenyx, along with input into development, regulatory and manufacturing plans with Ultragenyx, who fund the global development of the program 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, as well as ongoing activities we undertake related to real-world evidence programs and medical affairs activities in Europe. These are in addition to costs we incur in relation to our collaboration with Ultragenyx, who fund the global development of the program, including input into development, regulatory and manufacturing plans.
Previous wording
an increase of approximately $2.7 million in certain pre-commercial activities to lay the foundation for the commercial launch of setrusumab in Europe, including activities to support pricing and reimbursement by HTA authorities and payor decision-makers in Europe, from $2.7 million in the year ended December 31, 2023 to $5.4 million in the year ended December 31, 2024;
Current wording
General and administrative expenses also includes $3.8 million in the year ended December 31, 2025 of pre-commercial activities to lay the foundation for the potential commercial launch of setrusumab in Europe, if approved, including those to support pricing and reimbursement by HTA authorities and payor decision-makers in Europe.
Previous wording
Interest income increased by $0.9 million from $2.1 million in 2023 to $3.0 million in December 31, 2024, 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.
Current wording
Interest income decreased by $0.9 million, from $3.0 million in the year ended December 31, 2024 to $2.2 million in the year ended December 31, 2025, principally due to a combination of lower interest rates earned and lower average cash and cash equivalents balances in the year ended December 31, 2025 compared to the year ended December 31, 2024. These lower balances were the result of the utilization of the net proceeds of $46.2 million received from the underwritten registered direct offering in June 2024.
Previous wording
Interest expense decreased by $1.5 million from $2.9 million in 2023 to $1.4 million in 2024. The decrease was principally due to the lower balance in the year of convertible loan notes as the private placement loan notes were fully converted and redeemed in August 2023.
Current wording
Interest expense decreased by $1.1 million, from $1.4 million in the year ended December 31, 2024 to $0.3 million in the year ended December 31, 2025. The decrease was principally due to the conversion of convertible loan notes in February 2025, following which the Company had no significant remaining interest-bearing liabilities.
Previous wording
The total change in fair value of warrants for 2024 was an unrealized loss of $0.4 million, compared to an unrealized gain of $0.2 million in 2023. The unrealized loss in the year ended December 31, 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 year ended December 31, 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 in the year ended December 31, 2025 was an unrealized gain of $0.8 million, compared to an unrealized loss of $0.4 million in the year ended December 31, 2024. The unrealized gain in the year ended December 31, 2025 was primarily due to the impact of decreases in the price of the Company’s ADSs on the value of the warrant liabilities, while the unrealized loss in the year ended December 31, 2024 was primarily due to increases in the price of the Company's ADSs.
Previous wording
The net foreign exchange gain for the year ended December 31, 2024 was $1.2 million, compared to a loss of $2.3 million in the year ended December 31, 2023. This change primarily reflects (i) the impact of a strengthening in the value of U.S. dollars when translating U.S. dollar balances into our functional currency of pound sterling in the year ended December 31, 2024, compared to a weakening of U.S. dollars in the year ended December 31, 2023, and (ii) higher U.S. dollar cash and cash equivalent balances following the underwritten registered direct offering in June 2024.
Current wording
The net foreign exchange loss for the year ended December 31, 2025 was $6.3 million, compared to a gain of $1.2 million in the year ended December 31, 2024. This change primarily reflects 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 year ended December 31, 2025, compared to a strengthening of U.S. dollars in the year ended December 31, 2024.
Previous wording
The foreign currency translation adjustment for the year ended December 31, 2024 was a loss of $1.4 million, compared to a gain of $4.2 million in the year ended December 31, 2023. This change primarily reflects the impact of a strengthening in the value of U.S. dollars when translating U.S. dollar balances into our functional currency of pound sterling in the year ended December 31, 2024, compared to a weakening of U.S. dollars in the year ended December 31, 2023.
Current wording
The foreign currency translation adjustment for the year ended December 31, 2025 was a gain of $8.0 million, compared to a loss of $1.4 million in the year ended December 31, 2024. This change primarily reflects the impact of a weakening in the value of U.S. dollars when translating pound sterling functional currency balances into our presentational currency of U.S. dollars in the year ended December 31, 2025, compared to a strengthening of U.S. dollars in the year ended December 31, 2024.
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 mid-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.
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 $259.0 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).
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 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
$4.0 million under the license and collaboration agreement with Feng Biosciences for navicixizumab in 2020 and a further milestone payment of $2.0 million in 2022; and
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
$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 and a further milestone payment of $0.5 million in 2025.
Previous wording
In addition, Mereo enters into contracts in the ordinary course of business with CROs, CMOs, and other vendors, including with Ultragenyx for the manufacture of setrusumab as described 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 $0.5 million as of December 31, 2024 (2023: $4.2 million).
Current wording
In addition, Mereo enters into contracts in the ordinary course of business with CROs, CMOs, and other vendors, including with Ultragenyx for the manufacture of setrusumab as described 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 $0.0 million and $0.5 million as of December 31, 2025 and 2024, respectively.
Previous wording
Net cash used in operating activities for the year ended December 31, 2024 was $32.8 million, an increase of $11.7 million from $21.1 million in the year ended December 31, 2023. The most significant drivers of the increase were:
Current wording
Net cash used in operating activities for the year ended December 31, 2025 was $31.0 million, a decrease of $1.9 million from $32.8 million in the year ended December 31, 2024. This decrease is principally due to:
Previous wording
recognition in the year ended December 31, 2023 of $2.0 million from the settlement of a claim on our Directors and Officers insurance policy to reimburse us for certain legal and professional costs incurred in prior years.
Current wording
a receipt of $2.0 million in the year ended December 31, 2024 from a claim on our Directors and Officers insurance policy to reimburse us for certain legal and professional costs incurred in prior years with no similar amounts recognized in the year ended December 31, 2025; and
Previous wording
Net cash used in investing activities for the year ended December 31, 2024 was $0.7 million, an increase of $0.3 million from $0.4 million in the year ended December 31, 2023. The increaseis due to additional payments to acquire intangible assets in the year ended December 31, 2024.
Current wording
Net cash used in investing activities for the year ended December 31, 2025 was less than $0.1 million, a decrease of $0.7 million from $0.7 million in the year ended December 31, 2024. The decrease is principally due to lower payments to acquire intangible assets and proceeds from out-licensing of vantictumab in the year ended December 31, 2025.
Previous wording
Net cash provided by financing activities for the year ended December 31, 2024 was $46.1 million, an increase of $38.2 million from $8.0 million in the year ended December 31, 2023. The increase represents the difference between the net proceeds received from the underwritten registered direct offering of $46.2 million in the year ended December 31, 2024 and the net proceeds of an “at-the-market” offering of $11.1 million, partially offset by $3.2 million paid to redeem the Private Placement loan notes in year ended December 31, 2023.
Current wording
Net cash provided by financing activities for the year ended December 31, 2025 was $0.3 million, a decrease of $45.8 million from $46.1 million in the year ended December 31, 2024. The decrease primarily represents the net proceeds of $46.2 million from the underwritten registered direct offering in the year ended December 31, 2024 with no similar financing activities in the year ended December 31, 2025.
Previous wording
As of December 31, 2024, we had an accumulated deficit of $462.9 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. See also “Item 1A. Risk Factors—Risks Related to Our Business and Industry—We will need additional funding to complete the development of our current product candidates; to license, acquire, and develop future product candidates; and to commercialize our product candidates, if approved."
Current wording
As of December 31, 2025, we had an accumulated deficit of $501.0 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 candidates we develop. See also “Item 1A. Risk Factors—Risks Related to Our Business and Industry—We will need additional funding to complete the development of our current product candidates; to license, acquire, and develop future product candidates; and to commercialize our product candidates, if approved."
Previous wording
We expect that our existing cash and cash equivalents will enable us to fund our currently committed clinical trials, operating expenses and capital expenditure requirements into 2027. We have based these estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development of our product candidates and any future product candidates and because the extent to which we may enter into collaborations with third parties for development of any of our product candidates is unknown, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future capital requirements will depend on many factors, including:
Current wording
We expect that our existing cash and cash equivalents will enable us to fund our currently committed clinical trials, operating expenses and capital expenditure requirements into mid-2027. We have based these estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development of our product candidates and any future product candidates and because the extent to which we may enter into collaborations with third parties for development of any of our product candidates is unknown, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future capital requirements will depend on many factors, including:
Previous wording
the performance of our collaborators and partners under the existing agreements on setrusumab, navicixizumab and, leflutrozole;
Current wording
the performance of our collaborators and partners under the existing agreements on setrusumab, vantictumab, leflutrozole and navicixizumab;
Previous wording
On February 10, 2020, we entered into a $4.9 million (£3.8 million) convertible loan note instrument relating to the issue of 3,841,479 Novartis Loan Note. The Novartis Loan Note was convertible at any time at a fixed price of £0.265 per ordinary share until February 10, 2023. In addition, on February 10, 2020, in connection with the Novartis Loan Note, we entered into a warrant instrument with Novartis to issue 1,449,614 ordinary shares at an exercise price of £0.265 per ordinary share. These warrants are exercisable until February 10, 2025.
Current wording
On February 10, 2020, we entered into a $4.9 million (£3.8 million) convertible loan note instrument relating to the issue of 3,841,479 Novartis Loan Note. The Novartis Loan Note was convertible at any time at a fixed price of £0.265 per ordinary share until February 10, 2023. In addition, on February 10, 2020, in connection with the Novartis Loan Note, we entered into a warrant instrument with Novartis to issue 1,449,614 ordinary shares at an exercise price of £0.265 per ordinary share (the "2020 Novartis Warrants"). These warrants were exercisable until February 10, 2025.
Previous wording
On February 10, 2023, we amended the Novartis Loan Note, extending the maturity date to February 10, 2025 and increasing the interest rate to 9%, with all other terms remaining unchanged. Pursuant to the amendment and a new warrant instrument, interest accrued to the amendment date was paid in cash, and warrants to purchase 2,000,000 ordinary shares at an exercise price of £0.150 per ordinary share were issued and are exercisable until February 10, 2028.
Current wording
On February 10, 2023, we amended the Novartis Loan Note, extending the maturity date to February 10, 2025 and increasing the interest rate to 9%, with all other terms remaining unchanged. Pursuant to the amendment, interest accrued to the amendment date was paid in cash, and additional warrants to purchase 2,000,000 ordinary shares at an exercise price of £0.150 per ordinary share were issued and are exercisable until February 10, 2028.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
As a U.K. resident trading entity, we are subject to U.K. corporate taxation. Due to the nature of our business, we have generated operating losses since formation. As of December 31, 2025 and 2024, we had cumulative carry-forward U.K. tax losses of $64.1 million and $36.6 million, respectively. Subject to any relevant restrictions, we expect these to be available to carry forward and offset against future operating profits. The benefit from R&D tax credits represents R&D tax credits recoverable in the U.K. and recognized under the following schemes:
Current report — wording carried from elsewhere
As of December 31, 2025, the Company had U.K. net tax losses carried forward of $64.1 million, that can be carried forward indefinitely, subject to certain restrictions in usage. The Company had U.S. federal tax losses to be carried forward of approximately $67.0 million of which $20.5 million can be carried forward indefinitely and $46.5 million which will begin to expire in 2026. The
Rearranged previous paragraphs (1)
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 $1.9 million higher net interest inflows.