Full Press Release Details
Mereo BioPharma Reports Full Year 2023 Financial Results and Provides Corporate Update
Phase 2/3 Orbit Study
and Phase 3 Cosmic Study of setrusumab in Osteogenesis Imperfecta expected to complete enrollment around the end of first quarter and in the first half of 2024, respectively
Partnering discussions for alvelestat progressing with plans to initiate Phase 3 with a partner around the end of 2024
Cash of $57.4 million as of December 31, 2023 expected to fund operations into 2026
London, March 27, 2024 - Mereo BioPharma Group plc (NASDAQ: MREO) ( Mereo or the Company ), a clinical-stage
biopharmaceutical company focused on rare diseases, today announced its financial results for the full year ended December 31, 2023, and provided an update on recent corporate highlights.
We reached a number of important milestones in 2023, which have set the stage for a potentially transformative 2024, said Dr. Denise
Scots-Knight, Chief Executive Officer of Mereo. Both Orbit and Cosmic, the two Phase 3 studies of setrusumab in Osteogenesis Imperfecta (OI) being conducted by our partner Ultragenyx, are on-track to
complete enrollment shortly. Our pre-launch activities are continuing to progress well. We have gained a solid understanding of the patient journey and pathways to market in the five key European markets, as
well as a clear understanding of OI epidemiology in pediatrics and adults. We continue to believe that the European market for setrusumab in OI represents a significant opportunity.
Dr. Scots-Knight continued, In addition, with the clear regulatory guidance from the FDA and the EMA for alvelestat in Alpha-1 Antitrypsin Deficiency-associated Lung Disease (AATD-LD), we are continuing our partnering discussions in parallel with all the preparatory work needed to initiate the
Phase 3 global pivotal study with a partner by the end of the year. Alvelestat has the potential to become the first approved oral therapy for the treatment of AATD-LD and potentially the first to demonstrate
positive clinical outcomes, especially in earlier stage patients. We maintained a strong cash position through prudent financial management and believe that Mereo remains well positioned to deliver on multiple inflection points in the year
2023 Highlights, Recent Developments and 2024 Anticipated Milestones
Alvelestat (MPH-966)
Full Year 2023 Financial Results
Effective January 1, 2024, the Company began complying with and reporting under the SEC rules and Nasdaq listing requirements applicable to U.S. domestic
filers. Accordingly, the full year 2023 financial results are presented in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and in U.S. dollars.
Revenue of $10.0 million for the year ended December 31, 2023, comprised a one-time milestone payment upon
dosing of the first patient in the Phase 3 portion of the Orbit study in patients aged 5 to under 26 in accordance with the collaboration and license agreement with Ultragenyx and a $1.0 million up-front
payment from the global license agreement with ReproNovo for the development and commercialization of leflutrozole.
Cost of revenue for the year ended
December 31, 2023 was $2.6 million, representing 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.
Total research and development expenses decreased by $12.0 million, or 41%, from $29.5 million in 2022 to $17.4 million in 2023. The
decrease was primarily due to a $12.4 million reduction in R&D expenses for etigilimab, partially offset by an increase of $0.7 million in expenses for setrusumab. 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. Program expenses for setrusumab are
in relation to ongoing activities in Europe, and input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development of the program is funded by Ultragenyx pursuant to our license and collaboration
agreement. Program expenses for alvelestat primarily include the preparatory work for the Phase 3 study, including CMC and drug formulation activities, SGRQ validation activities and regulatory interactions.
General and administrative expenses decreased by $7.7 million, or 29%, from $26.1 million in 2022 to $18.4 million in 2023. The decrease is
primarily related to overall reductions in staff costs, professional fees and corporate costs of $7.1 million, in addition to $3.6 million received from our depositary to reimburse certain expenses incurred by us in respect of our ADR
program in the current and prior years and $2.0 million received under a claim on our Directors and Officers insurance policy to reimburse us for certain legal and professional costs incurred in prior years. General and administrative expenses
included $2.7 million in 2023 (2022: $2.6 million) related to pre-commercial activities, including those to support pricing and reimbursement by HTA authorities and payor decision-makers in Europe.
Net loss for the full year ended December 31, 2023 was $29.5 million, compared to $42.2 million during the comparable period in 2022, primarily
reflecting an operating loss of $28.4 million.
As of December 31, 2023, the Company had cash and cash equivalents of $57.4 million. Net
cash burn during the fourth quarter of 2023 amounted to $6.7 million. The Company s guidance remains unchanged, and it continues to expect, based on current operational plans, that its existing cash and cash equivalents balance will enable
it to fund its currently committed clinical trials, operating expenses, and capital expenditure requirements into 2026. This guidance does not include any potential upfront payments associated with a partnership for alvelestat or business
development activity around any of the Company s non-core programs.
Total ordinary shares issued as
of December 31, 2023 were 701,217,089. Total ADS equivalents as of December 31, 2023 were 140,243,417, with each ADS representing five ordinary shares of the Company.
About Mereo BioPharma
Mereo BioPharma is a biopharmaceutical company focused on the development of innovative therapeutics for rare diseases. The Company has two rare disease
product candidates, 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 s partner, Ultragenyx Pharmaceutical, Inc., has initiated the Phase 3 portion of a pivotal Phase 2/3 pediatric study in young adults (5 to <26
years old) for setrusumab in OI and a Phase 3 study in pediatric patients (2 to <7 years old) in the first half of 2023. The partnership with Ultragenyx includes potential milestone payments of up to $245 million (following the recent
$9 million milestone) and royalties to Mereo on commercial sales in Ultragenyx territories. Mereo has retained EU and UK commercial rights and will pay Ultragenyx royalties on commercial sales in those territories. Setrusumab has received
orphan designation for osteogenesis imperfecta from the EMA and FDA, PRIME designation from the EMA and has pediatric disease designation from the FDA. Alvelestat has received U.S. Orphan Drug Designation for the treatment of AATD, Fast Track
designation from the FDA. Following results from ASTRAEUS and ATALANTa in AATD-lung disease, the Company has aligned with the FDA and the EMA on the primary endpoints for a Phase 3 pivotal study which if successful could enable full approval in both
the US and Europe. In addition to the rare disease programs, Mereo has two oncology product candidates in clinical development. Etigilimab (anti-TIGIT) has completed a Phase 1b/2 basket study evaluating its safety and efficacy in combination with an
anti-PD-1 in a range of tumor types including three rare tumors and three gynecological carcinomas cervical, ovarian, and endometrial and is an ongoing Phase 1b/2
investigator led study at the MD Anderson Cancer Center in clear cell ovarian cancer; Navicixizumab, for the treatment of late line ovarian cancer, has completed a Phase 1 study and has been partnered with Feng Biosciences Inc. in a global licensing
agreement that includes milestone payments and royalties. Mereo has entered into an exclusive global license agreement with ReproNovo SA for the development and commercialization of leflutrozole, a
non-steroidal aromatase inhibitor. Under the terms of the agreement, ReproNovo, a reproductive medicine company, is responsible for all future development and commercialization of leflutrozole.
Forward-Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of
historical fact contained herein are forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended.
Forward-looking statements usually relate to future events and anticipated revenues, earnings, cash flows or other aspects of our operations or operating results. Forward-looking statements are often identified by the words believe,
expect, anticipate, plan, intend, foresee, should, would, could, may, estimate, outlook and similar expressions,
including the negative thereof. The absence of these words, however, does not mean that the statements are not forward-looking. These forward-looking statements are based on the Company s current expectations, beliefs and assumptions concerning
future developments and business conditions and their potential effect on the Company. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the
Company will be those that it anticipates.
All of the Company s forward-looking statements involve known and unknown risks and uncertainties some of
which are significant or beyond its control and assumptions that could cause actual results to differ materially from the Company s historical experience and its present expectations or projections. Such risks and uncertainties include, among
others, the uncertainties inherent in the clinical development process; the Company s reliance on third parties to conduct and provide funding for its clinical trials; the Company s dependence on enrollment of patients in its clinical
trials; and the Company s dependence on its key executives. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the Company s business, including those described in the Risk
Factors section of its Annual Report on Form 10-K, as well as discussions of potential risks, uncertainties, and other important factors in the Company s subsequent filings with the Securities and
Exchange Commission. The Company wishes to caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any of our
forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except to the extent required by law.
| Mereo BioPharma Contacts: | ||
| Mereo | +44 (0)333 023 7300 | |
| Denise Scots-Knight, Chief Executive Officer | ||
| Christine Fox, Chief Financial Officer | ||
| Burns McClellan (Investor Relations Adviser to Mereo) | +01 646 930 4406 | |
| Lee Roth | ||
| Investors | investors@mereobiopharma.com |
MEREO BIOPHARMA GROUP PLC
CONSOLIDATED BALANCE SHEETS
thousands, except per share amounts)
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 57,421 | $ | 68,182 | ||||
| Prepaid expenses and other current assets | 5,156 | 5,446 | ||||||
| Research and development incentives receivables | 1,183 | 1,569 | ||||||
| Total current assets | 63,760 | 75,197 | ||||||
| Property and equipment, net | 405 | 551 | ||||||
| Operating lease right-of-use assets | 1,245 | 1,665 | ||||||
| Intangible assets | 1,089 | |||||||
| Total assets | $ | 66,499 | $ | 77,413 | ||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,346 | $ | 3,492 | ||||
| Accrued expenses | 5,467 | 5,436 | ||||||
| Convertible loan notes current | 13,326 | |||||||
| Warrant liabilities current | 486 | |||||||
| Operating lease liabilities current | 652 | 564 | ||||||
| Other current liabilities | 1,021 | 1,071 | ||||||
| Total current liabilities | 9,486 | 24,375 | ||||||
| Convertible loan notes non current | 4,394 | |||||||
| Warrant liabilities non current | 412 | 157 | ||||||
| Operating lease liabilities non current | 906 | 1,479 | ||||||
| Other non-current liabilities | 764 | |||||||
| Total liabilities | 15,962 | 26,011 | ||||||
| Commitments and contingencies (note 19) | ||||||||
| Shareholders Equity | ||||||||
| Ordinary shares, par value 0.003 per share; 701,217,089 shares issued at December 31, 2023 (2022: 624,928,519). | 2,775 | 2,478 | ||||||
| Treasury shares | (1,230 | ) | (1,335 | ) | ||||
| Additional paid-in capital | 486,107 | 476,521 | ||||||
| Accumulated deficit | (419,630 | ) | (404,575 | ) | ||||
| Accumulated other comprehensive loss | (17,485 | ) | (21,687 | ) | ||||
| Total shareholders equity | 50,537 | 51,402 | ||||||
| Total liabilities and shareholders equity | $ | 66,499 | $ | 77,413 |
MEREO BIOPHARMA GROUP PLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share amounts)
| Year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | 10,000 | $ | |||||
| Operating expenses: | ||||||||
| Cost of revenue | (2,574 | ) | 1,146 | |||||
| Research and development | (17,418 | ) | (29,465 | ) | ||||
| General and administrative | (18,424 | ) | (26,107 | ) | ||||
| Loss from operations | (28,416 | ) | (54,426 | ) | ||||
| Other income/(expenses) | ||||||||
| Interest income | 2,131 | 840 | ||||||
| Interest expense | (2,881 | ) | (4,175 | ) | ||||
| Changes in the fair value of financial instruments | 245 | 9,286 | ||||||
| Foreign currency transaction (loss)/gain, net | (2,347 | ) | 2,723 | |||||
| Other (expenses)/income, net | (10 | ) | 1,086 | |||||
| Benefit from research and development tax credit | 1,280 | 1,728 | ||||||
| Net loss before income tax | (29,998 | ) | (42,938 | ) | ||||
| Income tax benefit | 532 | 718 | ||||||
| Net loss | $ | (29,466 | ) | $ | (42,220 | ) | ||
| Loss per share basic and diluted | $ | (0.04 | ) | $ | (0.07 | ) | ||
| Weighted average shares outstanding basic and diluted | 659,453,921 | 603,196,403 | ||||||
| Net loss | $ | (29,466 | ) | $ | (42,220 | ) | ||
| Other comprehensive income/(loss) Foreign currency transaction adjustments, net of tax | 4,202 | (10,660 | ) | |||||
| Total comprehensive loss | $ | (25,264 | ) | $ | (52,880 | ) |