Mereo BioPharma Group plc
For the period ended Jun 30, 2026. Filed Aug 11, 2026.
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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.
Jun 30, 2026 · Filed Aug 11, 2026
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Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| June 30, | December 31, | |
|---|---|---|
| 2026 | 2025 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $30,118 | $40,992 |
| Prepaid expenses and other current assets | 1,600 | 2,531 |
| Research and development incentives receivables | 1,683 | 1,497 |
| Total current assets | 33,401 | 45,020 |
| Property and equipment, net | 54 | 137 |
| Operating lease right-of-use assets, net | 1,003 | 244 |
| Intangible assets, net | 256 | 516 |
| Total assets | $34,714 | $45,917 |
| Liabilities | ||
| Current liabilities: | ||
| Accounts payable | $1,121 | $1,333 |
| Accrued expenses | 2,455 | 2,026 |
| Operating lease liabilities – current | 1,030 | 202 |
| Other current liabilities | 1,071 | 741 |
| Total current liabilities | 5,677 | 4,302 |
| Warrant liabilities – non-current | 15 | 38 |
| Other non-current liabilities | 370 | 661 |
| Total liabilities | $6,062 | $5,001 |
| Commitments and contingencies (Note 15) | ||
| Shareholders’ Equity | ||
| Ordinary shares, par value £0.003 per share; 798,093,044 shares issued at June 30, 2026 (December 31, 2025: 795,658,504) | $3,145 | $3,135 |
| Additional paid-in capital | 552,335 | 549,622 |
| Accumulated deficit | (514,543) | (501,018) |
| Accumulated other comprehensive loss | (12,285) | (10,823) |
| Total shareholders’ equity | $28,652 | $40,916 |
| Total liabilities and shareholders’ equity | $34,714 | $45,917 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share amounts)
| Three Months EndedJune 30, | Six Months EndedJune 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Revenue | $— | $500 | $— | $500 |
| Operating expenses | ||||
| Cost of revenue | — | (132) | — | (132) |
| Research and development | (1,808) | (5,373) | (6,555) | (9,303) |
| General and administrative | (5,222) | (5,494) | (9,241) | (12,766) |
| Loss from operations | (7,030) | (10,499) | (15,796) | (21,701) |
| Other income/(expenses) | ||||
| Interest income | 278 | 589 | 605 | 1,248 |
| Interest expense | (16) | (24) | (37) | (204) |
| Changes in the fair value of warrants | 6 | (101) | 23 | 315 |
| Foreign currency transaction (loss)/gain, net | (362) | (5,326) | 1,267 | (8,091) |
| Benefit from research and development tax credit | 119 | 745 | 214 | 930 |
| Net loss before income tax | (7,005) | (14,616) | (13,724) | (27,503) |
| Income tax benefit | — | — | — | — |
| Net loss | $(7,005) | $(14,616) | $(13,724) | $(27,503) |
| Loss per share – basic and diluted | $(0.01) | $(0.02) | $(0.02) | $(0.03) |
| Weighted average shares outstanding – basic and diluted | 803,562,708 | 799,435,329 | 802,688,993 | 794,022,295 |
| Net loss | $(7,005) | $(14,616) | $(13,724) | $(27,503) |
| Other comprehensive income/(loss) – Foreign currency translation adjustments, net of tax | 286 | 6,647 | (1,462) | 10,206 |
| Total comprehensive loss | $(6,719) | $(7,969) | $(15,186) | $(17,297) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Six Months Ended June 30, | ||
|---|---|---|
| 2026 | 2025 | |
| Cash flows from operating activities | ||
| Net loss | $(13,724) | $(27,503) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Share-based compensation | 2,922 | 4,343 |
| Depreciation | 82 | 82 |
| Amortization of intangible assets | 254 | 224 |
| Amortization of operating lease right-of-use assets | 268 | 262 |
| Change in fair value of warrants | (23) | (315) |
| Non-cash interest income | (50) | — |
| Non-cash interest expense | 19 | 193 |
| Foreign currency transaction gain/(loss) | (1,267) | 8,091 |
| Changes in operating assets and liabilities: | ||
| Prepaid expenses and other current assets | 952 | (155) |
| Research and development incentives receivable | (214) | 208 |
| Accounts payable | (180) | (1,589) |
| Accrued expenses and other liabilities | 806 | 540 |
| Operating lease liabilities | (200) | (361) |
| Net cash used in operating activities | (10,355) | (15,980) |
| Cash flows from investing activities | ||
| Payments for intangible assets | (300) | (300) |
| Purchase of property and equipment | — | (20) |
| Net cash used in investing activities | (300) | (320) |
| Cash flows from financing activities | ||
| Proceeds from exercise of warrants | — | 487 |
| Transaction costs on issuance of ordinary shares | — | (199) |
| Net cash provided by financing activities | — | 288 |
| Decrease in cash and cash equivalents | (10,655) | (16,012) |
| Cash and cash equivalents at January 1, | 40,992 | 69,802 |
| Effect of exchange rate changes | (219) | 2,335 |
| Cash and cash equivalents at June 30, | $30,118 | $56,125 |
| Supplemental disclosure | ||
| Cash paid for interest | 15 | 14 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except share amounts)
| Ordinary shares · Additional · Accumulatedother · Total | ||||||
|---|---|---|---|---|---|---|
| Shares | Par value | paid-in capital | comprehensiveloss | Accumulated deficit | shareholders’ equity | |
| Balance, December 31, 2025 | 795,658,504 | $3,135 | $549,622 | $(10,823) | $(501,018) | $40,916 |
| Net loss | — | — | — | — | (6,719) | (6,719) |
| Foreign currency translation adjustments | — | — | — | (1,748) | — | (1,748) |
| Share-based compensation | — | — | 1,605 | — | — | 1,605 |
| Delivery of shares on vesting of restricted stock units | 868,630 | 4 | (4) | — | — | — |
| Exercise of warrants | 1,551,695 | 6 | (6) | — | — | — |
| Transfer between reserves | — | — | (199) | — | 199 | — |
| Balance, March 31, 2026 | 798,078,829 | $3,145 | $551,018 | $(12,571) | $(507,538) | $34,054 |
| Net loss | — | — | — | — | (7,005) | (7,005) |
| Foreign currency translation adjustments | — | — | — | 286 | — | 286 |
| Share-based compensation | — | — | 1,317 | — | — | 1,317 |
| Delivery of shares on vesting of restricted stock units | 14,215 | — | — | — | — | — |
| Balance, June 30, 2026 | 798,093,044 | $3,145 | $552,335 | $(12,285) | $(514,543) | $28,652 |
| Balance, December 31, 2024 | 775,728,034 | $3,059 | $539,642 | $(18,849) | $(462,883) | $60,969 |
| Net loss | — | — | — | — | (12,887) | (12,887) |
| Foreign currency translation adjustments | — | — | — | 3,559 | — | 3,559 |
| Share-based compensation | — | — | 2,278 | — | — | 2,278 |
| Delivery of shares on vesting of restricted stock units | 718,350 | 3 | (3) | — | — | — |
| Transaction costs on issuance of shares | — | — | (65) | — | — | (65) |
| Conversion of convertible loan notes | 17,105,450 | 64 | 5,676 | — | — | 5,740 |
| Exercise of warrants | 1,449,610 | 6 | 481 | — | — | 487 |
| Transfer between reserves | — | — | (3,743) | — | 3,743 | — |
| Balance, March 31, 2025 | 795,001,444 | $3,132 | $544,266 | $(15,290) | $(472,027) | $60,081 |
| Net loss | — | — | — | — | (14,616) | (14,616) |
| Foreign currency translation adjustments | — | — | — | 6,647 | — | 6,647 |
| Share-based compensation | — | — | 2,065 | — | — | 2,065 |
| Balance, June 30, 2025 | 795,001,444 | $3,132 | $546,331 | $(8,643) | $(486,643) | $54,177 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- Natureof business
Mereo BioPharma Group plc (the “Company” or “Mereo”) is a United Kingdom (“U.K.”) based biopharmaceutical company focused on the development of innovative therapeutics for rare diseases. The Company has developed a portfolio of late-stage clinical product candidates, and its two late-stage 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”). The Company also has an early-stage rare disease program, vantictumab, for the treatment of autosomal dominant osteopetrosis Type 2 (“ADO2”).
The Company is a public limited company incorporated and domiciled in the U.K., and registered in England, with shares publicly traded on the Nasdaq Capital Market via American Depositary Shares (“ADSs”) under the ticker symbol “MREO”. The Company’s registered office is located at 4th Floor, One Cavendish Place, London, W1G 0QF, United Kingdom.
- Basis of presentation and summary of significant accounting policies
Basis of presentation
The condensed consolidated financial statements of the Company and its subsidiaries and other financial information included in this quarterly report on Form 10-Q (“Quarterly Report”) are unaudited, have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars. All intercompany balances and transactions between the Company and its subsidiaries have been eliminated on consolidation.
The unaudited condensed consolidated financial statements presented in this Quarterly Report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 19, 2026 (the “2025 Annual Report”). The condensed consolidated balance sheet as of December 31, 2025 was derived from audited consolidated financial statements included in the 2025 Annual Report but does not include all disclosures required by U.S. GAAP. The Company’s significant accounting policies are described in Note 2 to those consolidated financial statements.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments which are, in the opinion of management, necessary to fairly state the Company's financial position as of June 30, 2026, the results of operations for the three and six months ended June 30, 2026 and 2025 and cash flows for the six months ended June 30, 2026 and 2025. The interim results are not necessarily indicative of results to be expected for the full year.
Going concern
The Company has prepared its condensed consolidated financial statements on the basis that it will continue as a going concern. The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of delays in initiating or continuing research programs and clinical trials, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, if approved, dependence on key personnel and collaboration partners, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations, and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including pre-clinical and clinical testing and regulatory approval prior to commercialization. Even if the Company’s research and development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.
The Company has historically been loss making, anticipates that it will continue to incur losses for the foreseeable future, and had an accumulated deficit of $514.5 million as of June 30, 2026. The Company has funded these losses through a combination of public equity financings, private equity and debt financings and various license and collaboration agreements, and it expects it will continue to do so until such time as it can generate significant revenue from product sales, or other commercial revenues, if ever, or through licensing and/or collaboration agreements for its rare disease or other product candidates. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.
As of June 30, 2026, the Company had cash and cash equivalents of $30.1 million. The Company expects that its cash and cash equivalents as of June 30, 2026 will be sufficient to fund its operations and capital expenditure requirements for at least twelve months from the date of filing of this Quarterly Report. In the longer term, the Company will need additional funding to support its continuing operations and pursue its business strategy.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. There are no estimates and assumptions made in the condensed consolidated financial statements that are considered to be critical. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
- Recent accounting pronouncements
There have been no recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance, other than those previously included in the 2025 Annual Report that are of significance or potential significance to the Company. The Company is continuing to evaluate the impact of the recently issued pronouncements that are effective in future periods and were discussed in its 2025 Annual Report.
- Fair value measurement
The Company’s financial instruments consist of cash and cash equivalents, accounts payable, accrued expenses, deferred consideration and warrant liabilities. Cash, cash equivalents (except for investments in money market funds), accounts payable and accrued expenses are initially recorded and subsequently measured at cost, which is considered to approximate their fair value due to the short-term nature of such financial instruments.
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy:
| Total | Level 1 | Level 2 | Level 3 | |
|---|---|---|---|---|
| ($'000) | ($'000) | ($'000) | ($'000) | |
| Financial assets | ||||
| Cash equivalents (investments in money market funds) | 17,232 | — | 17,232 | — |
| Financial liabilities | ||||
| Warrant liabilities | 15 | — | 15 | — |
| Total | Level 1 | Level 2 | Level 3 | |
|---|---|---|---|---|
| ($'000) | ($'000) | ($'000) | ($'000) | |
| Financial assets | ||||
| Cash equivalents (investments in money market funds) | 22,749 | — | 22,749 | — |
| Financial liabilities | ||||
| Warrant liabilities | 38 | — | 38 | — |
There wereno transfers between any levels of the fair value hierarchy during thethree and six months ended June 30, 2026 and 2025.
Fair values of the investments in money market funds are determined based on the net asset value per share of each fund stated in the fund manager's statement.
As of June 30, 2026 and December 31, 2025, warrant liabilities solely related to those warrants outstanding to the former lenders of the Company as described in Note 10.
- Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following:
| June 30, | December 31, | |
|---|---|---|
| 2026 | 2025 | |
| ($'000) | ($'000) | |
| VAT receivable | $241 | $486 |
| Prepaid research and development expenses | 138 | 161 |
| Security deposits | 388 | 395 |
| Prepaid insurance premiums | 147 | 1,126 |
| Prepaid general and administrative expenses | 631 | 222 |
| Other assets | 55 | 141 |
| Total | $1,600 | $2,531 |
- Property and equipment, net
Property and equipment, net consists of the following:
| June 30, | December 31, | |
|---|---|---|
| 2026 | 2025 | |
| ($'000) | ($'000) | |
| Leasehold improvements | $751 | $764 |
| Office equipment | 196 | 210 |
| IT equipment | 125 | 248 |
| Property and equipment, at cost | 1,072 | 1,222 |
| Less: accumulated depreciation | (1,018) | (1,085) |
| Property and equipment, net | $54 | $137 |
Depreciation expense was less than$0.1 million for both thethree months ended June 30, 2026 and 2025. Depreciation expense was$0.1 million for both thesix months ended June 30, 2026 and 2025.
- Leases
In August 2015, the Company entered into a lease agreement under which it leased office space located on the fourth floor of One Cavendish Place, London, with a lease term ending in August 2025. In June 2021, the Company entered into a new lease agreement to lease additional office space located on the fifth floor of that building for a lease period ending in June 2026. At the same time, the Company entered into a reversionary lease to extend the term for the original fourth floor lease to be coterminous with the fifth floor, ending in June 2026. In June 2026, the Company entered into reversionary leases to extend the term of both the fourth and the fifth floor leases to June 2027.
The total lease expense included in the statements of operations and comprehensive loss was $0.2 million and $0.4 million for the three and six months ended June 30, 2026, respectively and $0.2 million and $0.3 million for the three and six months ended June 30, 2025, respectively. There were no material variable lease costs.
| June 30, | December 31, | |
|---|---|---|
| 2026 | 2025 | |
| Operating leases | ||
| Weighted-average remaining contractual lease term (years) | 1.0 | 0.5 |
| Weighted average discount rate | 10.0% | 10.0% |
| Three Months EndedJune 30, | Six Months EndedJune 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| ($'000) | ($'000) | ($'000) | ($'000) | |
| Cash paid for amounts included in the measurement of lease liabilities: | ||||
| Operating cash flows from operating leases | $— | $210 | $206 | $402 |
The following table summarizes the maturities of the Company’s operating lease liabilities as of June 30, 2026:
| ($'000) | |
|---|---|
| Maturity analysis of the operating lease liabilities for the years ending December 31, | |
| 2026 | $774 |
| 2027 | 301 |
| Total undiscounted payments | 1,075 |
| Less: Present value discount | (45) |
| Lease liability | $1,030 |
| Lease liability – current | $1,030 |
| Lease liability – non-current | $— |
- Other current liabilities
Other current liabilities consist of the following:
| June 30, | December 31, | |
|---|---|---|
| 2026 | 2025 | |
| ($'000) | ($'000) | |
| Social security and other taxes | $600 | $320 |
| Deferred consideration liability | 300 | 296 |
| Equity issuance costs payable | 92 | 95 |
| Other current liabilities | 79 | 30 |
| Total | $1,071 | $741 |
- Accrued expenses
Accrued expenses consist of the following:
| June 30, | December 31, | |
|---|---|---|
| 2026 | 2025 | |
| ($'000) | ($'000) | |
| Accrued research and development costs | $320 | $789 |
| Accrued legal and professional fees | 497 | 788 |
| Accrued bonus | 1,220 | 228 |
| Accrued local taxes | 186 | 33 |
| Other accrued expenses | 232 | 188 |
| Total | $2,455 | $2,026 |
- Warrant liability
| Warrant liabilities | ||
|---|---|---|
| 2026 | 2025 | |
| ($'000) | ($'000) | |
| At January 1 | $38 | $821 |
| Changes in fair value during the period | (17) | (416) |
| Foreign exchange | — | 14 |
| At March 31 | $21 | $419 |
| Changes in fair value during the period | (6) | 101 |
| Foreign exchange | — | 25 |
| At June 30 | $15 | $545 |
As of June 30, 2026, the former lenders of the Company have warrants outstanding to purchase a total of 1,243,908 ordinary shares at an exercise price of £2.95 per share, exercisable until August 2027 and a total of 1,243,908 ordinary shares at an exercise price of$0.4144 per share, exercisable until dates between August 2027 and October 2028. These warrants outstanding are equivalent to 0.3% and 0.3% of the issued ordinary share capital of the Company as of June 30, 2026 and December 31, 2025, respectively. There were no warrants classified as liabilities exercised during the three and six months ended June 30, 2026 and 2025.
The fair value of each warrant is estimated using the Black-Scholes option pricing model using the following weighted average assumptions:
| June 30, | December 31, | |
|---|---|---|
| 2026 | 2025 | |
| Market value of ADSs ($) | $0.32 | $0.42 |
| Risk-free interest rate (%) | 4.28% | 3.93% |
| Expected life (years) | 1.3 | 1.8 |
| Expected volatility (%) | 128.06% | 129.58% |
| Expected dividends (%) | 0.00% | 0.00% |
- Shareholders’ Equity
Ordinary Shares
| Number ofordinary shares | Par value($'000) | |
|---|---|---|
| At January 1, 2025 | 775,728,034 | $3,059 |
| Vesting of RSUs | 718,350 | 3 |
| Conversion of convertible loan notes | 17,105,450 | 64 |
| Exercise of warrants | 1,449,610 | 6 |
| At March 31 and June 30, 2025 | 795,001,444 | $3,132 |
| At January 1, 2026 | 795,658,504 | $3,135 |
| Vesting of RSUs | 868,630 | 4 |
| Exercise of warrants | 1,551,695 | 6 |
| At March 31, 2026 | 798,078,829 | $3,145 |
| Vesting of RSUs | 14,215 | — |
| At June 30, 2026 | 798,093,044 | $3,145 |
In February 2026, the Company received an exercise notice from The Alpha-1 Project and subsequently issued and allotted 1,551,695 shares (equivalent to 310,339 ADSs) on the non-cash exercise of the warrants. In addition, additional paid-in capital of $0.2 million was transferred to accumulated deficit, which represents the surplus of amounts previously recognized in excess of the par value of ordinary shares delivered on exercise of the warrants.
During the three and six months ended June 30, 2026,14,215 and 882,845 ordinary shares were issued due to the vesting of RSUs, respectively.
- Revenue and cost of revenue
ReproNovo Partnership
In December 2023, the Company and ReproNovo SA. (“ReproNovo”) entered into a global licensing agreement for the development and commercialization of leflutrozole (the “ReproNovo Licensing Agreement”). Under the terms of the ReproNovo Licensing Agreement, ReproNovo received an exclusive worldwide license to develop and commercialize leflutrozole.
No revenue or cost of revenue was recognized during thethree and six months ended June 30, 2026 in respect of this agreement. However, during the three and six months ended June 30, 2025, the Company recognized a milestone payment receivable of $0.5 million as revenue under the terms ofthe ReproNovo Licensing Agreement following confirmation by ReproNovo that the first participant had been included in a Phase 2 trial of leflutrozole. As a consequence, and in accordance with the terms of the 2015 asset purchase agreement with Novartis, the Company also accrued for a payment to Novartis of $0.1 million as cost of revenue.
- Share based compensation
The Company currently grants equity awards under the Mereo 2019 Equity Incentive Plan (the “2019 EIP”) and the 2019 Non-Employee Equity Incentive Plan (the “2019 NED EIP”). There are also outstanding awards under two previous plans, the Mereo BioPharma Group Limited Share Option Plan and the Mereo Share Option Plan (together the “Previous Share Option Plans”). However, no further grants are envisioned from these plans.
The total number of ADSs available for issue under the 2019 EIP and 2019 NED EIP was 15.0 million as of June 30, 2026.
The expense for share-based compensation arises solely in respect of awards made under the two active plans as follows:
| Three Months EndedJune 30, | Six Months EndedJune 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| ($'000) | ($'000) | ($'000) | ($'000) | |
| 2019 EIP | $1,174 | $1,617 | $2,644 | $3,214 |
| 2019 NED EIP | 143 | 448 | 278 | 1,129 |
| Total | $1,317 | $2,065 | $2,922 | $4,343 |
As of June 30, 2026, the total unrecognized compensation cost related to outstanding share awards was $4.0 million, which the Company expects to recognize over a weighted-average period of 1.5 years.
2019 EIP
The Company has awarded the following instruments under the 2019 EIP:
Share Options (“Options”)
Options issued under the EIP have a contractual term of 10 years. Options generally permit the recipient to purchase ADSs at an exercise price equal to the market price of the underlying ADSs on the date of grant, however certain awards granted in thesix months ended June 30, 2026 had an exercise price higher than the market price of the underlying ADSs on the date of grant.
Options generally vest over four years, with one-fourth of the award vesting on the first anniversary of the grant date and the remainder vesting in equal monthly installments over the three-year period thereafter, however in the six months ended June 30, 2026, certain options were granted that vest in equal monthly installments over a one year period from the grant date. No performance conditions apply to Options granted.
A summary of the Company’s Options activity and related information under the 2019 EIP for thesix months ended June 30, 2026 is as follows:
| Number ofoptions(ADSs) | WeightedAverageExercisePrice ($) | Aggregateintrinsicvalue($'000) | |
|---|---|---|---|
| At December 31, 2025 | 13,477,883 | $2.17 | $— |
| Granted | 6,463,000 | 0.53 | — |
| Forfeited | (105,946) | 2.28 | — |
| Expired | (3,292) | 4.69 | — |
| At June 30, 2026 | 19,831,645 | $1.63 | $— |
| Vested | 11,092,881 | $1.91 | $— |
The weighted average fair value per ADS of Options granted during the six months ended June 30, 2026 and 2025 was $0.39 and $2.42, respectively.
The weighted average contractual life of Options outstanding as of June 30, 2026 and December 31, 2025 was 7.4 years and 7.0 years, respectively. The weighted average contractual life for vested Options as of June 30, 2026 and December 31, 2025 was 6.2 years and 6.3 years, respectively.
Where presented, the aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted market price of the Company’s ADSs for the Options that were in-the-money.
The fair value of each Option is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions:
| Six Months EndedJune 30, | ||
|---|---|---|
| 2026 | 2025 | |
| Risk-free interest rate (%) | 3.89% | 4.49% |
| Expected life (years) | 5.9 | 6.3 |
| Expected volatility (%) | 131.75% | 103.08% |
| Expected dividends (%) | 0.00% | 0.00% |
Expected volatility is calculated by reference to the historical volatility of the Company's ADSs. The grant date fair value is recognized over the requisite service period using the accelerated graded-vesting attribution method.
Restricted Stock Units (“RSUs”)
A summary of the Company’s RSU activity and related information under the 2019 EIP for thesix months ended June 30, 2026 is as follows:
| Number ofRSUs(ADSs) | WeightedAverageGrantDate FairValue ($) | |
|---|---|---|
| At December 31, 2025 | 458,375 | $2.57 |
| Vested | (176,569) | 2.28 |
| Forfeited | (35,847) | 3.05 |
| At June 30, 2026 | 245,959 | $2.71 |
As of June 30, 2026 and December 31, 2025, the weighted average remaining vesting period of RSUs outstanding was 1.7 and 2.0 years, respectively. The total fair value of RSUs vested and delivered during thesix months ended June 30, 2026 and 2025 was $0.1 million and $0.4 million, respectively.
The fair value of each RSU was calculated by reference to the value of the shares awarded. The grant date fair value is recognized over the vesting period using the accelerated graded-vesting attribution method.
2019 NED EIP
The Company has awarded the following instruments under the 2019 NED EIP:
Options
A summary of the Company’s Options activity and related information under the 2019 NED EIP for thesix months ended June 30, 2026 is as follows:
| Number ofoptions(ADSs) | WeightedAverageExercisePrice ($) | Aggregateintrinsicvalue($'000) | |
|---|---|---|---|
| At December 31, 2025 | 1,982,087 | $2.38 | $— |
| Granted | 528,000 | 0.39 | — |
| Forfeited | (55,000) | 0.39 | — |
| At June 30, 2026 | 2,455,087 | $2.00 | $— |
| Vested | 2,147,087 | $2.23 | $— |
The weighted average fair value per ADS of Options granted during the six months ended June 30, 2026 and 2025 was $0.34 and $2.51, respectively.
The weighted average contractual life of Options outstanding as of June 30, 2026 and December 31, 2025 was 7.2 years and 7.0 years, respectively. The weighted average contractual life for vested Options as of June 30, 2026 and December 31, 2025 was 6.8 years and 7.0 years, respectively.
Where presented, the aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted market price of the Company’s ADSs for the Options that were in-the-money.
The fair value of each Option is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions:
| Six Months EndedJune 30, | ||
|---|---|---|
| 2026 | 2025 | |
| Risk-free interest rate (%) | 3.60% | 4.25% |
| Expected life (years) | 5.3 | 5.3 |
| Expected volatility (%) | 129.95% | 104.31% |
| Expected dividends (%) | 0.00% | 0.00% |
Expected volatility is calculated by reference to the historical volatility of the Company's ADSs. The grant date fair value is recognized over the vesting period using the accelerated graded-vesting attribution method.
Deferred Restricted Stock Units (“DRSUs”)
A summary of the Company’s DRSUs activity and related information under the 2019 NED EIP for thesix months ended June 30, 2026 is as follows:
| Number ofDRSUs(ADSs) | WeightedAverageGrantDate FairValue ($) | |
|---|---|---|
| At December 31, 2025 | 979,608 | $1.65 |
| Granted | 657,115 | 0.39 |
| Forfeited | (89,040) | 0.39 |
| At June 30, 2026 | 1,547,683 | $1.12 |
| Vested | 1,180,840 | $1.44 |
| Unvested | 366,843 | 0.39 |
As of December 31, 2025, there were 10,350 DRSUs unvested with a weighted average grant date fair value of $3.16 per DRSU. The total fair value of DRSUs vested during the six months ended June 30, 2026 and 2025 was$0.1 million and $0.2 million, respectively.
The fair value of each DRSU was calculated by reference to the value of the shares awarded. The grant date fair value is recognized over the vesting period using the accelerated graded-vesting attribution method.
Previous Share Option Plans
Mereo previously granted Options to employees under the Previous Share Options Plans. No awards have been granted under either of these plans following the introduction of the 2019 EIP and the 2019 NED EIP and no further awards are envisioned.
A summary of the Company’s Options activity and related information under the Previous Share Options Plans for thesix months ended June 30, 2026 is as follows; all outstanding Options are vested:
| Number ofoptions(ADSs) | WeightedAverageExercisePrice ($) | Aggregateintrinsicvalue($'000) | |
|---|---|---|---|
| At December 31, 2025 | 107,608 | $16.68 | $— |
| Expired | (57,394) | 12.75 | — |
| At June 30, 2026 | 50,214 | $21.17 | $— |
| Vested | 50,214 | $21.17 | $— |
The weighted average contractual life of Options outstanding and vested at June 30, 2026 and December 31, 2025 was 1.4 years and 1.1 years, respectively.
- Loss per share
Basic loss per share is calculated by dividing the loss attributable to ordinary equity holders of the Company for the period by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share is based on dividing the loss attributable for the period, adjusted for the effect of dilutive ordinary shares, by ordinary share equivalents, which includes the weighted average number of ordinary shares outstanding and the effect of dilutive ordinary share equivalents.
| Three Months EndedJune 30, | Six Months EndedJune 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| ($'000, except share and per shareamounts) | ($'000, except share and per shareamounts) | ($'000, except share and per shareamounts) | ($'000, except share and per shareamounts) | |
| Net loss | $(7,005) | $(14,616) | $(13,724) | $(27,503) |
| Net loss per share – basic and diluted | $(0.01) | $(0.02) | $(0.02) | $(0.03) |
| Weighted-average number of shares used in computing loss per share – basic and diluted | 803,562,708 | 799,435,329 | 802,688,993 | 794,022,295 |
The Company’s potentially dilutive securities in the table below have been excluded from the computation of diluted loss per share as the effect for the three and six months ended June 30, 2026 and 2025 would be to reduce the loss per share. Therefore, the weighted average number of ordinary shares outstanding used to calculate both basic and diluted loss per share is the same.
| Six Months EndedJune 30, | ||
|---|---|---|
| 2026 | 2025 | |
| Ordinary shares issuable for: | ||
| Share-based compensation awards | 114,748,740 | 87,454,220 |
| Warrant liabilities | 2,487,816 | 2,487,816 |
| Warrants classified in equity | 2,000,000 | 3,551,699 |
- Commitments and contingencies
Indemnification agreements
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations. In accordance with the Articles of Association, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. There have been no claims to date, and the Company has director and officer insurance that may enable it to recover a portion of any amounts paid for future potential claims.
Novartis Asset Purchase Agreements
The Company has agreed to make future payments to Novartis comprising amounts equal to ascending specified percentages of tiered annual worldwide net sales (beginning at high single digits and reaching into double digits at higher sales) of products that include the assets acquired. The levels of ascending percentages of tiered annual worldwide net sales are stipulated under the respective Purchase Agreements.
The Company further agreed that in the event it transfers, licenses, assigns or leases all or substantially all of its assets, it will pay Novartis a percentage of the proceeds of such transaction, subject to certain deductions. The payment of a percentage of proceeds is not payable with respect to any transaction involving equity interests of Mereo BioPharma Group plc, a merger or consolidation of Mereo BioPharma Group plc, or a sale of any assets of Mereo BioPharma Group plc.
License agreement with AstraZeneca
In October 2017, the Company entered into an exclusive license and option agreement (the “AstraZeneca License Agreement”) and subscription deed (the “AstraZeneca Subscription Deed”), together (the “Original Agreements”) with AstraZeneca AB (“AstraZeneca”). Each of these were amended on November 8, 2024, when the Company entered into an amendment and restatement agreement related to the AstraZeneca License Agreement (the “Amended AstraZeneca License Agreement”) and a Deed of Amendment and Restatement related to the AstraZeneca Subscription Deed (the “Amended AstraZeneca Subscription Deed”) together (the “Amended AstraZeneca Agreements”).
Under the terms of the Original Agreements, the Company obtained from AstraZeneca an exclusive worldwide, sub-licensable license under AstraZeneca’s intellectual property rights relating to alvelestat, with an option to acquire such intellectual property rights following commencement of a pivotal trial and payment of related milestone payments, together with the acquisition of certain related assets. Upon entering into the Original Agreements, the Company made a payment of $3.0 million and issued 490,798 ordinary shares (equivalent to 98,159 ADSs) to AstraZeneca, for an aggregate upfront payment equal to $5.0 million. Upon execution of the Amended AstraZeneca License Agreement, the Company issued 2,044,390 ordinary shares and paid $0.5 million to AstraZeneca in respect of an agreed milestone.
Under the terms of the Amended AstraZeneca Agreements, the Company has agreed, in connection with certain further development and regulatory milestones, to make potential future payments both in cash and through the issue of a variable number of additional ADSs to AstraZeneca of up to $114.3 million in the aggregate for products included in the Amended AstraZeneca License Agreement.
The number of ADSs to be issued to satisfy each equity milestone is determined by dividing a monetary amount by a defined subscription price based on the weighted average trading price of the Company's ADSs, and the obligation is presented as a liability under ASC Topic 480, Distinguishing Liabilities from Equity. The Company continues to reassess the fair value of such instruments in each reporting period until the milestones are achieved, if ever, and the issuance of shares occurs. As of June 30, 2026 and December 31, 2025, the Company has determined the fair value of the equity milestones to be paid in a variable number of shares pursuant to its Amended AstraZeneca License Agreement to be negligible and therefore assigned a nil value to the instrument. This is due to the pervasive uncertainty involved in establishing the amounts, timing and likelihood of the future cash flows, including the Company’s ability to secure either a partnership or alternative forms of non-dilutive financing, the possible terms and rate of such a partnership or financing, the clinical and regulatory performance of the product candidate and the lack of comparable recent transactions.
In addition to the development and regulatory milestones, the Company has agreed to make payments to AstraZeneca based on specified commercial milestones of the product. The Company has also agreed to pay a specified percentage of sub-licensing revenue to AstraZeneca and to make royalty payments to AstraZeneca equal to ascending specified percentages of tiered annual worldwide net sales by the Company of licensed products (subject to certain reductions), ranging from the high single digits to low double digits. Royalties will be payable on a licensed-product-by-licensed-product and country-by-country basis until the later of ten years after the first commercial sale of such licensed product in such country and expiration of the last patent covering such licensed product in such country that would be sufficient to prevent generic entry. The Company has agreed to use commercially reasonable efforts to develop and commercialize at least one licensed product.
The Amended AstraZeneca License Agreement will expire on the expiration of the last-to-expire royalty term with respect to all licensed products. Upon the expiration of the royalty term for a licensed product in a particular country, the licenses to the Company for such product in such country will become fully paid and irrevocable. Prior to exercise of the Option, if at all, the Company may terminate the Amended AstraZeneca License Agreement upon prior written notice. Either party may terminate the agreement upon prior written notice for the other party’s material breach that remains uncured for a specified period of time or insolvency.
Research and development activities
The Company enters into contracts in the normal course of business with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”) and other third parties to assist in the performance of 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 cancellable contracts and not included herein. The Company hadno manufacturing commitments with CMOs as of June 30, 2026 and December 31, 2025.
Manufacturing and supply agreement with Ultragenyx
In December 2024, the Company entered into a manufacturing and supply agreement with Ultragenyx Pharmaceutical Inc. (“Ultragenyx”) under which Ultragenyx is responsible for the manufacture and supply of setrusumab to the Company in its territories. The Company is also required to reimburse Ultragenyx for a portion of the manufacturing process development costs, future commercial supply costs as well as a portion of costs in the event of cancellation of certain manufacturing slots. Pursuant to this agreement, the Company has recognized $2.3 million for its share of the costs related to cancellation of certain manufacturing slots by Ultragenyx in thesix months ended June 30, 2026. Any additional payments are subject to our agreement and cannot currently be estimated.
Legal proceedings
Putative Securities Class Action
On February 4, 2026, a putative class action complaint was filed in the United States District Court for the Southern District of New York against the Company, its Chief Executive Officer, Denise Scots-Knight, and its Chief Scientific Officer, John Lewicki (the “Defendants”). This action, captioned Dodge v. Mereo Biopharma Group PLC (No. 1:26-cv-988), alleges that the Defendants violated federal securities law by making false and misleading statements regarding the Company's business and operations. The Plaintiff seeks the payment of damages allegedly sustained by her and the putative class by reason of the allegations set forth in the complaint, plus interest, and legal and other costs and fees. On April 29, 2026, the court appointed a lead plaintiff and lead counsel. The Lead Plaintiff filed an amended complaint on July 13, 2026. No responsive pleadings have been filed to date. The Company intends to vigorously defend against this action, but at this early stage, the Company can neither predict the ultimate outcome, nor estimate any range of possible losses.
From time to time, the Company may be a party to litigation or subject to claims incident to the ordinary course of business. Except for the abovementioned putative securities class action, the Company was not a party to any material litigation and did not have any material contingency reserves established for any liabilities as of June 30, 2026 and December 31, 2025.
- Related party disclosures
In the three and six months ended June 30, 2026 and 2025, there wereno reportable related party transactions.
- Segment information
The Company has one operating segment focused on the business of developing rare disease therapies. The chief operating decision maker, its Chief Executive Officer, assesses performance for the entity and decides how to allocate resources based on consolidated net loss before income tax, which is reported on the condensed consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the condensed consolidated balance sheet as total consolidated assets.
The chief operating decision maker uses consolidated net loss before income tax and budget-to-actual variances for consolidated net loss before income tax to assess the performance of the operating segment.
The following table presents certain financial data for the Company’s reportable segment, including significant segment expenses regularly provided to the chief operating decision maker to assess performance of the Company.
| Three Months EndedJune 30, | Six Months EndedJune 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| ($'000) | ($'000) | ($'000) | ($'000) | |
| Revenue | $— | $500 | $— | $500 |
| Cost of revenue | — | (132) | — | (132) |
| Research and development expenses | ||||
| Setrusumab (BPS-804/UX143) | (1,112) | (3,687) | (5,164) | (5,930) |
| Alvelestat (MPH-966) | (426) | (1,396) | (869) | (2,761) |
| Etigilimab (MPH-313) | (220) | (224) | (414) | (431) |
| Other | (50) | (66) | (108) | (181) |
| General and administrative expenses | (5,222) | (5,494) | (9,241) | (12,766) |
| Other segment items | 25 | (4,117) | 2,072 | (5,802) |
| Net loss before income tax | $(7,005) | $(14,616) | $(13,724) | $(27,503) |
Other segment items consist of interest income, interest expense, change in fair value of warrants, foreign currency transaction (loss)/gain, net and benefit from research and development tax credit. These are disclosed in the condensed consolidated statements of operations and comprehensive loss.
- Subsequent events
On August 11, 2026, the Company entered into an Option and License Agreement (the “Sentynl Agreement”) with Sentynl Therapeutics, Inc. (“Sentynl”) for the U.S. commercial and global manufacturing rights to alvelestat for AATD-LD. Under the Sentynl Agreement, Mereo will receive a non-refundable option fee and, on option exercise, is eligible to receive $40 million in upfront and R&D payments, up to $435 million in potential milestones, and double-digit tiered royalties on U.S. sales of alvelestat. Mereo will lead the global Phase 3 study and regulatory interactions until the study is completed. During the option period, the Company and Sentynl will collaborate to advance manufacturing and refine the Phase 3 study design.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.