PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and equity changes, with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 ($'000) | December 31, 2024 ($'000) | Change ($'000) | Change (%) | | :-------------------------------- | :--------------------- | :------------------------ | :------------- | :--------- | | Cash and cash equivalents | 56,125 | 69,802 | (13,677) | -19.59% | | Total current assets | 61,421 | 74,763 | (13,342) | -17.85% | | Total assets | 62,631 | 76,390 | (13,759) | -18.01% | | Total current liabilities | 7,557 | 13,848 | (6,291) | -45.43% | | Total liabilities | 8,454 | 15,421 | (6,967) | -45.18% | | Total shareholders' equity | 54,177 | 60,969 | (6,792) | -11.14% | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share) | Metric (3 Months Ended June 30) | 2025 ($'000) | 2024 ($'000) | Change ($'000) | Change (%) | | :------------------------------ | :----------- | :----------- | :------------- | :--------- | | Revenue | 500 | — | 500 | N/A | | Cost of revenue | (132) | — | (132) | N/A | | Research and development | (5,373) | (4,946) | (427) | 8.63% | | General and administrative | (5,494) | (7,868) | 2,374 | -30.17% | | Loss from operations | (10,499) | (12,814) | 2,315 | -18.07% | | Net loss | (14,616) | (12,255) | (2,361) | 19.27% | | Loss per share – basic and diluted | (0.02) | (0.02) | 0.00 | 0.00% | | Metric (6 Months Ended June 30) | 2025 ($'000) | 2024 ($'000) | Change ($'000) | Change (%) | | :------------------------------ | :----------- | :----------- | :------------- | :--------- | | Revenue | 500 | — | 500 | N/A | | Cost of revenue | (132) | — | (132) | N/A | | Research and development | (9,303) | (8,939) | (364) | 4.07% | | General and administrative | (12,766) | (13,777) | 1,011 | -7.34% | | Loss from operations | (21,701) | (22,716) | 1,015 | -4.47% | | Net loss | (27,503) | (21,208) | (6,295) | 29.68% | | Loss per share – basic and diluted | (0.03) | (0.03) | 0.00 | 0.00% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (Six Months Ended June 30) | 2025 ($'000) | 2024 ($'000) | Change ($'000) | Change (%) | | :-------------------------------------------- | :----------- | :----------- | :------------- | :--------- | | Net loss | (27,503) | (21,208) | (6,295) | 29.68% | | Net cash used in operating activities | (15,980) | (15,895) | (85) | 0.54% | | Net cash used in investing activities | (320) | (699) | 379 | -54.22% | | Net cash provided by financing activities | 288 | 46,781 | (46,493) | -99.38% | | (Decrease)/increase in cash and cash equivalents | (16,012) | 30,187 | (46,199) | -153.05% | | Cash and cash equivalents at June 30 | 56,125 | 87,431 | (31,306) | -35.81% | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) - As of June 30, 2025, the number of ordinary shares issued increased to **795,001,444** from **775,728,034** at December 31, 2024, primarily due to the non-cash conversion of the Novartis Loan Note (**17,105,450 shares**), the exercise of 2020 Novartis Warrants (**1,449,610 shares**), and the vesting of RSUs (**718,350 shares**)[23](index=23&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Nature of business](index=8&type=section&id=1.%20Nature%20of%20business) - **Mereo BioPharma Group plc** is a U.K.-based biopharmaceutical company focused on developing innovative therapeutics for rare diseases, with primary late-stage clinical product candidates **setrusumab** for **osteogenesis imperfecta (OI)** and **alvelestat** for **severe alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD)**[26](index=26&type=chunk) [2. Basis of presentation and summary of significant accounting policies](index=8&type=section&id=2.%20Basis%20of%20presentation%20and%20summary%20of%20significant%20accounting%20policies) - The unaudited condensed consolidated financial statements are prepared in **U.S. GAAP** and presented in **U.S. dollars**; the company, historically **loss-making** with an **accumulated deficit of $486.6 million** as of June 30, 2025, expects its **cash and cash equivalents of $56.1 million** to fund operations for **at least twelve months**[28](index=28&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) [3. Recent accounting pronouncements](index=9&type=section&id=3.%20Recent%20accounting%20pronouncements) - There have been **no recent accounting pronouncements or changes** in accounting guidance of significance to the Company beyond those previously disclosed in the **2024 Annual Report**[36](index=36&type=chunk) [4. Fair value measurement](index=9&type=section&id=4.%20Fair%20value%20measurement) Financial Assets and Liabilities Measured at Fair Value (in thousands) | Item | As of June 30, 2025 ($'000) | As of December 31, 2024 ($'000) | | :---------------------------------- | :-------------------------- | :----------------------------- | | Cash equivalents (money market funds) | 13,457 | N/A | | Warrant liabilities | 545 | 821 | [5. Prepaid expenses and other current assets](index=10&type=section&id=5.%20Prepaid%20expenses%20and%20other%20current%20assets) Prepaid Expenses and Other Current Assets (in thousands) | Item | June 30, 2025 ($'000) | December 31, 2024 ($'000) | | :--------------------------------- | :-------------------- | :------------------------ | | VAT receivable | 496 | 464 | | Prepaid research and development | 139 | 201 | | Milestone payment receivable | 500 | — | | Security deposits | 402 | 378 | | Prepaid insurance premiums | 185 | 1,003 | | Prepaid general and administrative | 823 | 129 | | **Total** | **2,545** | **2,175** | [6. Property and equipment, net](index=10&type=section&id=6.%20Property%20and%20equipment,%20net) Property and Equipment, Net (in thousands) | Item | June 30, 2025 ($'000) | December 31, 2024 ($'000) | | :--------------------------------- | :-------------------- | :------------------------ | | Property and equipment, at cost | 1,328 | 1,206 | | Less: accumulated depreciation | (1,110) | (949) | | **Property and equipment, net** | **218** | **257** | - Depreciation expense was **less than $0.1 million** for the three months ended June 30, 2025, and **$0.1 million** for the six months ended June 30, 2025[42](index=42&type=chunk) [7. Leases](index=10&type=section&id=7.%20Leases) - The Company leases office space in London, with lease terms for both the fourth and fifth floors ending in **June 2026**; total lease expense was **$0.2 million** for the three months and **$0.3 million** for the six months ended June 30, 2025[43](index=43&type=chunk)[44](index=44&type=chunk) Operating Lease Liabilities Maturity Analysis (in thousands) | Year Ending December 31 | As of June 30, 2025 ($'000) | | :---------------------- | :-------------------------- | | 2025 | 418 | | 2026 | 209 | | Total undiscounted payments | 627 | | Less: Present value discount | (26) | | **Lease liability** | **601** | [8. Other current liabilities](index=11&type=section&id=8.%20Other%20current%20liabilities) Other Current Liabilities (in thousands) | Item | June 30, 2025 ($'000) | December 31, 2024 ($'000) | | :---------------------------- | :-------------------- | :------------------------ | | Social security and other taxes | 296 | 503 | | Deferred consideration liability | 276 | 296 | | Equity issuance costs payable | 94 | 235 | | Other current liabilities | 111 | 61 | | **Total** | **777** | **1,095** | [9. Accrued expenses](index=11&type=section&id=9.%20Accrued%20expenses) Accrued Expenses (in thousands) | Item | June 30, 2025 ($'000) | December 31, 2024 ($'000) | | :------------------------------ | :-------------------- | :------------------------ | | Accrued research and development | 2,512 | 948 | | Accrued legal and professional fees | 608 | 727 | | Accrued bonus | 1,257 | 2,001 | | Accrued cost of revenue | 132 | — | | Accrued local taxes | 189 | 267 | | Other accrued expenses | 343 | 128 | | **Total** | **5,041** | **4,071** | [10. Convertible loan notes and equity classified warrants](index=12&type=section&id=10.%20Convertible%20loan%20notes%20and%20equity%20classified%20warrants) - On **February 7, 2025**, the **Novartis Loan Note**, with a net carrying amount of **$5.5 million** as of December 31, 2024, was converted into **17,105,450 ordinary shares**; additionally, **1,449,610 ordinary shares** were issued upon the exercise of the **2020 Novartis Warrants**, generating **$0.5 million**[52](index=52&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk) - Interest expense related to the Novartis Loan Note **decreased significantly** to **$0.2 million** for the three and six months ended June 30, 2025, from **$0.3 million** and **$0.6 million** respectively in 2024, due to its conversion[54](index=54&type=chunk) [11. Warrant liability](index=12&type=section&id=11.%20Warrant%20liability) Warrant Liabilities (in thousands) | Metric | 2025 ($'000) | 2024 ($'000) | | :--------------- | :----------- | :----------- | | At January 1 | 821 | 412 | | At June 30 | 545 | 925 | - As of **June 30, 2025**, former lenders hold warrants to purchase **1,243,908 ordinary shares** at **£2.95 per share** (exercisable until **August 2027**) and **1,243,908 ordinary shares** at **$0.4144 per share** (exercisable until **August 2027-October 2028**), with fair value estimated using the **Black-Scholes option pricing model**[56](index=56&type=chunk)[57](index=57&type=chunk) [12. Shareholders' Equity](index=13&type=section&id=12.%20Shareholders'%20Equity) Ordinary Shares Activity (Number of Shares) | Event | Number of ordinary shares | | :---------------------------------- | :------------------------ | | At January 1, 2025 | 775,728,034 | | Vesting of RSUs | 718,350 | | Conversion of convertible loan notes | 17,105,450 | | Exercise of warrants | 1,449,610 | | **At June 30, 2025** | **795,001,444** | [13. Revenue and cost of revenue](index=13&type=section&id=13.%20Revenue%20and%20cost%20of%20revenue) - The Company recognized **$0.5 million** in revenue for the three and six months ended **June 30, 2025**, from a milestone payment under the **ReproNovo Licensing Agreement** for **leflutrozole** following a **Phase 2 trial** initiation, resulting in a corresponding **cost of revenue of $0.1 million** payable to **Novartis**[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) [14. Share based compensation](index=14&type=section&id=14.%20Share%20based%20compensation) Share-Based Compensation Expense (in thousands) | Plan (3 Months Ended June 30) | 2025 ($'000) | 2024 ($'000) | | :---------------------------- | :----------- | :----------- | | 2019 EIP | 1,617 | 1,568 | | 2019 NED EIP | 448 | 520 | | **Total** | **2,065** | **2,088** | | Plan (6 Months Ended June 30) | 2025 ($'000) | 2024 ($'000) | | :---------------------------- | :----------- | :----------- | | 2019 EIP | 3,214 | 3,027 | | 2019 NED EIP | 1,129 | 1,111 | | **Total** | **4,343** | **4,138** | - As of **June 30, 2025**, the total unrecognized compensation cost related to outstanding share awards was **$6.9 million**, expected to be recognized over a weighted-average period of **1.7 years**[66](index=66&type=chunk) [15. Loss per share](index=17&type=section&id=15.%20Loss%20per%20share) Loss Per Share (in thousands, except per share amounts) | Metric (3 Months Ended June 30) | 2025 ($'000) | 2024 ($'000) | | :------------------------------ | :----------- | :----------- | | Net loss | (14,616) | (12,255) | | Net loss per share - basic and diluted | (0.02) | (0.02) | | Weighted-average shares outstanding | 799,435,329 | 711,770,804 | | Metric (6 Months Ended June 30) | 2025 ($'000) | 2024 ($'000) | | :------------------------------ | :----------- | :----------- | | Net loss | (27,503) | (21,208) | | Net loss per share - basic and diluted | (0.03) | (0.03) | | Weighted-average shares outstanding | 794,022,295 | 706,407,371 | - **Potentially dilutive securities**, including share-based compensation awards, convertible loan notes (in 2024), and warrants, were excluded from diluted net loss per share calculations as their effect would be **anti-dilutive**[81](index=81&type=chunk)[82](index=82&type=chunk) [16. Commitments and contingencies](index=17&type=section&id=16.%20Commitments%20and%20contingencies) - The Company has agreed to future payments to **Novartis** based on **tiered annual worldwide net sales** of acquired assets and a percentage of proceeds from certain transactions; under the **Amended AstraZeneca Agreements**, potential future payments of **up to $114.3 million** in **cash and variable ADSs** are tied to milestones for **alvelestat**[84](index=84&type=chunk)[85](index=85&type=chunk)[88](index=88&type=chunk)[90](index=90&type=chunk) - Manufacturing commitments with CMOs totaled **$0.7 million** as of **June 30, 2025**, an **increase from $0.5 million** at **December 31, 2024**; the Company also has a manufacturing and supply agreement with **Ultragenyx** for **setrusumab**[92](index=92&type=chunk)[94](index=94&type=chunk) - As of **June 30, 2025**, the Company was **not a party to any material litigation** and had **no material contingency reserves**[95](index=95&type=chunk) [17. Related party disclosures](index=19&type=section&id=17.%20Related%20party%20disclosures) - There were **no reportable related party transactions** during the three and six months ended June 30, 2025 and 2024[96](index=96&type=chunk) [18. Segment information](index=19&type=section&id=18.%20Segment%20information) - The Company operates as a **single segment** focused on developing **rare disease therapies**, with performance assessed based on **consolidated net loss before income tax**[97](index=97&type=chunk)[98](index=98&type=chunk) R&D Expenses by Product Development Program (in thousands) | Program (3 Months Ended June 30) | 2025 ($'000) | 2024 ($'000) | Change ($'000) | Change (%) | | :------------------------------- | :----------- | :----------- | :------------- | :--------- | | Setrusumab (BPS-804/UX143) | (3,687) | (1,448) | (2,239) | 154.63% | | Alvelestat (MPH-966) | (1,396) | (2,902) | 1,506 | -51.90% | | Etigilimab (MPH-313) | (224) | (468) | 244 | -52.14% | | Other | (66) | (128) | 62 | -48.44% | | **Total R&D expenses** | **(5,373)** | **(4,946)** | **(427)** | **8.63%** | | Program (6 Months Ended June 30) | 2025 ($'000) | 2024 ($'000) | Change ($'000) | Change (%) | | :------------------------------- | :----------- | :----------- | :------------- | :--------- | | Setrusumab (BPS-804/UX143) | (5,930) | (2,357) | (3,573) | 151.59% | | Alvelestat (MPH-966) | (2,761) | (5,515) | 2,754 | -49.94% | | Etigilimab (MPH-313) | (431) | (818) | 387 | -47.31% | | Other | (181) | (249) | 68 | -27.31% | | **Total R&D expenses** | **(9,303)** | **(8,939)** | **(364)** | **4.07%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations for the three and six months ended June 30, 2025, covering business overview, recent developments, performance, liquidity, and critical accounting estimates [Overview](index=20&type=section&id=Overview) - **Mereo BioPharma** is a biopharmaceutical company focused on **rare diseases**, with late-stage clinical product candidates **setrusumab (for OI)** and **alvelestat (for AATD-LD)**, leveraging prior investment and regulatory pathways[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) [Recent Developments](index=20&type=section&id=Recent%20Developments) - On **July 9, 2025**, **Mereo** and **Ultragenyx** announced the **Phase 3 Orbit study** for **setrusumab** in OI patients is progressing towards **final analysis by the end of 2025** with an **acceptable safety profile**, with the **Cosmic study** also proceeding to final analysis concurrently[105](index=105&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) [Comparison of three months ended June 30, 2025 and 2024](index=21&type=section&id=Comparison%20of%20three%20months%20ended%20June%2030,%202025%20and%202024) - **Revenue increased to $0.5 million** in **Q2 2025** from zero in Q2 2024, driven by a **milestone payment from ReproNovo for leflutrozole**, which also led to a new **cost of revenue of $0.1 million**[108](index=108&type=chunk)[109](index=109&type=chunk) - **Total R&D expenses increased by $0.4 million (8.6%) to $5.4 million**, primarily due to a **$2.2 million increase in setrusumab expenses** for manufacturing and real-world evidence activities, partially offset by decreases in alvelestat and etigilimab expenses[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - **General and administrative expenses decreased by $2.4 million (30.2%) to $5.5 million**, mainly due to a **$1.9 million reimbursement** for ADR program expenses and lower professional fees, with pre-commercial activities for setrusumab in Europe accounting for **$1.2 million of G&A expenses**[115](index=115&type=chunk)[116](index=116&type=chunk) - **Interest expense decreased by $0.3 million** due to the **conversion of convertible loan notes** in **February 2025**; a **net foreign exchange loss of $5.3 million** was recorded, compared to a **gain of less than $0.1 million** in Q2 2024, primarily due to a weakening U.S. dollar[118](index=118&type=chunk)[120](index=120&type=chunk) [Comparison of six months ended June 30, 2025 and 2024](index=23&type=section&id=Comparison%20of%20six%20months%20ended%20June%2030,%202025%20and%202024) - Revenue for the six months ended June 30, 2025, was **$0.5 million**, a new recognition from a **ReproNovo milestone payment**, with a corresponding **cost of revenue of $0.1 million**[126](index=126&type=chunk)[127](index=127&type=chunk) - **Total R&D expenses increased by $0.4 million (4.1%) to $9.3 million**, driven by a **$3.6 million increase for setrusumab**, partially offset by decreases for alvelestat and etigilimab due to completed manufacturing activities for alvelestat's Phase 3 study[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - **General and administrative expenses decreased by $1.0 million (7.3%) to $12.8 million**, primarily due to lower professional fees, with pre-commercial activities for setrusumab in Europe amounting to **$2.3 million**[133](index=133&type=chunk)[134](index=134&type=chunk) - **Interest expense decreased by $0.4 million** due to the **conversion of convertible loan notes**; a **net foreign exchange loss of $8.1 million** was recorded, compared to a **gain of $0.6 million** in the prior year, primarily due to a weakening U.S. dollar[136](index=136&type=chunk)[138](index=138&type=chunk) - The benefit from **R&D tax credit increased by $0.1 million to $0.9 million**, reflecting a higher level of qualifying expenditure[139](index=139&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company anticipates its current cash resources will **fund operations and capital expenditures into 2027**, though **additional external funding will be required** to complete development and commercialization plans, potentially from non-dilutive sources, equity/debt financing, or collaborations[141](index=141&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - Historically, operations have been financed through **equity issuances, convertible debt, warrants, and license/collaboration agreements**, raising approximately **$259.0 million in gross proceeds**[142](index=142&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 ($'000) | 2024 ($'000) | Change ($'000) | | :----------------- | :----------- | :----------- | :------------- | | Operating | (15,980) | (15,895) | (85) | | Investing | (320) | (699) | 379 | | Financing | 288 | 46,781 | (46,493) | - **Net cash used in operating activities increased slightly by $0.1 million**, primarily due to the **absence of a $2.0 million D&O insurance claim reimbursement** received in 2024; **Net cash provided by financing activities decreased by $46.5 million** due to the **absence of a significant registered direct offering** in 2025, which provided **$46.2 million in 2024**[148](index=148&type=chunk)[150](index=150&type=chunk) - Future capital requirements depend on factors such as **setrusumab collaboration costs, manufacturing, regulatory approvals, commercialization activities, intellectual property, and potential new acquisitions or partnerships**[155](index=155&type=chunk) [Critical Accounting Estimates](index=28&type=section&id=Critical%20Accounting%20Estimates) - Management believes there are **no estimates and assumptions** in the unaudited condensed consolidated financial statements that rise to the level of **critical accounting estimates**, with **no significant changes** from those described in the **2024 Annual Report**[161](index=161&type=chunk)[162](index=162&type=chunk) [Recent accounting pronouncements](index=28&type=section&id=Recent%20accounting%20pronouncements) - **No recent accounting pronouncements or changes** in accounting guidance of significance to the Company have occurred beyond those previously included in the **2024 Annual Report**[163](index=163&type=chunk) [Safe Harbor](index=28&type=section&id=Safe%20Harbor) - This section refers to the **'Information Regarding Forward-Looking Statements'** at the beginning of the Quarterly Report, highlighting **risks and uncertainties** associated with forward-looking statements[164](index=164&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Mereo BioPharma Group PLC is not required to provide the information typically mandated by this item regarding market risk disclosures - The Company is **exempt** from providing quantitative and qualitative disclosures about market risk as it qualifies as a **'smaller reporting company'**[165](index=165&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective; no material changes to internal control over financial reporting occurred during the period - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were **effective** as of June 30, 2025[166](index=166&type=chunk)[167](index=167&type=chunk) - **No changes in internal control over financial reporting** occurred during the three months ended June 30, 2025, that materially affected or are reasonably likely to materially affect internal control over financial reporting[168](index=168&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) As of June 30, 2025, Mereo BioPharma Group PLC was not involved in any material legal proceedings - As of June 30, 2025, the Company was **not a party to any material legal proceedings**[170](index=170&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's 2024 Annual Report - **No material changes** have occurred from the risk factors previously disclosed in the Company's **2024 Annual Report**[171](index=171&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - There were **no unregistered sales of equity securities or use of proceeds** to report[172](index=172&type=chunk) [Item 3. Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - This item is **not applicable**[173](index=173&type=chunk) [Item 4. Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - This item is **not applicable**[174](index=174&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three-month period ended June 30, 2025 - **No directors or officers** adopted, modified, or terminated **Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** during the three-month period ended June 30, 2025[175](index=175&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, and Inline XBRL documents - The report includes **certifications from the Chief Executive Officer and Chief Financial Officer** (Exhibits 31.1, 31.2, 32.1, 32.2) and **Inline XBRL documents** (Exhibits 101.INS, 101.SCH, 104)[177](index=177&type=chunk) Signatures [Signatures](index=32&type=section&id=Signatures) The report was duly signed on August 12, 2025, by Denise Scots-Knight, Chief Executive Officer, and Christine Fox, Chief Financial Officer, on behalf of Mereo BioPharma Group PLC - The report was signed on **August 12, 2025**, by **Denise Scots-Knight (Chief Executive Officer)** and **Christine Fox (Chief Financial Officer)**[180](index=180&type=chunk)[182](index=182&type=chunk)

Exhibit 99.1 Mereo BioPharma Reports Second Quarter 2025 Financial Results and Provides Corporate Highlights Data from Phase 3 Orbit and Cosmic studies of setrusumab in osteogenesis imperfecta expected around year-end 2025 Cash of $56.1 million as of June 30, 2025, expected to support operations into 2027 London, August 12, 2025 – 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 ...

Core Viewpoint - Mereo BioPharma is advancing its clinical programs for setrusumab and alvelestat, with significant financial results and operational updates provided for the second quarter of 2025, indicating a focus on rare diseases and a strong cash position to support operations into 2027 [1][2][9]. Group 1: Clinical Development - Data from the Phase 3 Orbit and Cosmic studies for setrusumab in osteogenesis imperfecta (OI) is expected by the end of 2025, with ongoing patient dosing and a focus on reducing fractures and improving functional parameters [2][5]. - The Phase 3 studies are being conducted in partnership with Ultragenyx, which has confirmed an acceptable safety profile for setrusumab during an interim analysis [5]. - Pre-commercial efforts for setrusumab are ongoing in Europe, including the SATURN program to understand the natural history of OI and generate data for health economic models [5]. Group 2: Financial Performance - For the second quarter of 2025, total research and development expenses increased to $5.4 million, up from $4.9 million in the same period of 2024, primarily due to increased costs associated with setrusumab [4]. - General and administrative expenses decreased to $5.5 million from $7.9 million in the second quarter of 2024, attributed to reimbursements and lower professional fees [7]. - The net loss for the second quarter of 2025 was $14.6 million, compared to $12.3 million in the same period of 2024, influenced by a foreign currency transaction loss of $5.4 million [8]. Group 3: Cash Position and Guidance - As of June 30, 2025, the company had cash and cash equivalents of $56.1 million, down from $69.8 million at the end of 2024, but sufficient to fund operations into 2027 [9]. - The company maintains its guidance that existing cash will support committed clinical trials and operational expenses, excluding potential partnership payments for alvelestat [9]. Group 4: Shareholder Information - Total ordinary shares issued as of June 30, 2025, were 795,001,444, with total ADS equivalents of 159,000,288 [10].

Group 1 - Pomerantz LLP is investigating claims on behalf of investors of Mereo BioPharma Group plc regarding potential securities fraud or unlawful business practices by the company and its officers or directors [1] - On July 9, 2025, Mereo and Ultragenyx Pharmaceutical Inc. announced the progress of the Phase 3 Orbit study for UX143 (setrusumab) in patients with osteogenesis imperfecta, with a final analysis expected by the end of the year [2] - Following the announcement, Mereo's ADR price dropped by $1.25, or 42.52%, closing at $1.69 per share on July 10, 2025 [2] Group 2 - The Pomerantz Firm is recognized for its expertise in corporate, securities, and antitrust class litigation, having pioneered the field of securities class actions over 80 years ago [3] - The firm has a history of recovering multimillion-dollar damages for victims of securities fraud and corporate misconduct [3]

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices involving Mereo BioPharma Group plc and its officers or directors [1] Group 1: Company Developments - On July 9, 2025, Mereo and Ultragenyx Pharmaceutical Inc. announced progress in the Phase 3 Orbit study for UX143 (setrusumab) in treating osteogenesis imperfecta, with a final analysis expected by the end of the year [3] - Following this announcement, Mereo's ADR price dropped by $1.25, or 42.52%, closing at $1.69 per share on July 10, 2025 [3] Group 2: Legal Context - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, having a long history of fighting for victims of securities fraud and corporate misconduct [4] - The firm has successfully recovered numerous multimillion-dollar damages for class members over its 80-year history [4]

Group 1 - Mereo BioPharma Group plc and Ultragenyx Pharmaceutical are set to continue their phase 3 ORBIT study as planned, with final analysis expected by the end of 2025 [2] - The Biotech Analysis Central service offers a comprehensive analysis of various pharmaceutical companies, including a library of over 600 articles and a model portfolio of small and mid-cap stocks [2] - The service is available for $49 per month, with a discounted yearly plan at $399, providing a 33.50% savings [1] Group 2 - The article emphasizes the importance of informed decision-making for healthcare investors through detailed analysis and news reports [2] - The author has no current stock or derivative positions in the companies mentioned, ensuring an unbiased perspective [3] - Seeking Alpha provides a platform for various analysts, including both professional and individual investors, to share their insights [4]

Core Insights - Ultragenyx Pharmaceutical (RARE) and Mereo BioPharma (MREO) have provided an update on the mid-to-late-stage Orbit study for UX143 (setrusumab) aimed at treating osteogenesis imperfecta (OI) in pediatric and young adult patients, with final analysis expected by the end of 2025 [1][5] - The shares of both companies experienced a significant decline in premarket trading following the announcement of the delay in new data from the Orbit study [2][5] - UX143 is a fully human monoclonal antibody that inhibits sclerostin, and interim safety data has shown an acceptable safety profile, allowing the study to proceed as planned [2][5] Study Details - The Orbit study is assessing the impact of UX143 on fracture rates in patients aged 5 to 25 with OI, with a pivotal phase III portion enrolling 159 additional patients [7] - The primary efficacy endpoint of the Orbit study is to reduce the annualized clinical fracture rate, with participants moving into an open-label extension period after the primary analysis [7] - The Cosmic study targets a younger population aged two to under seven years, comparing UX143 to intravenous bisphosphonates for fracture reduction, with 69 patients enrolled [8] Partnership and Market Context - Ultragenyx Pharmaceuticals and Mereo BioPharma entered a licensing agreement in 2020 for the joint development of UX143, with RARE holding exclusive rights in several regions [9] - The partnership was expanded in 2024 through a manufacturing and supply agreement, with RARE responsible for supplying setrusumab to MREO [9] - OI affects approximately 60,000 individuals in commercially accessible geographies, and there are currently no approved treatments available [11]

Core Viewpoint - Ultragenyx Pharmaceutical Inc. and Mereo BioPharma Group plc stocks are experiencing significant declines following the update on the Phase 3 Orbit study for UX143 (setrusumab) in patients with osteogenesis imperfecta (OI) [1][2]. Group 1: Study Progress and Analysis - The Phase 3 portion of the Orbit study is progressing towards a final analysis expected by the end of the year, in line with the original plan [2]. - The second interim analysis did not meet the minimal p-value threshold of p<0.01, which would have allowed the study to conclude early [3]. - The Data Monitoring Committee confirmed that UX143 has an acceptable safety profile, recommending the continuation of the study [3][4]. Group 2: Future Expectations - The final analyses for the Orbit and Cosmic studies will occur after patients have been on therapy for at least 18 months, with thresholds set at p<0.04 for Orbit and p<0.05 for Cosmic [5]. - Analysts express optimism regarding the final analysis, anticipating a positive outcome due to longer follow-up duration and a lower statistical significance threshold [6]. Group 3: Market Reaction - Following the update, RARE stock has dropped by 26.2% to $30.60, while MREO stock has decreased by 34.7% to $1.919 [7].

Core Insights - The Phase 3 Orbit study for UX143 (setrusumab) in pediatric and young adult patients with osteogenesis imperfecta (OI) is on track for final analysis by the end of the year [1][3] - The Data Monitoring Committee has confirmed an acceptable safety profile for UX143, allowing the study to proceed [2] - Ultragenyx and Mereo BioPharma are collaborating on the development of setrusumab, targeting OI sub-types I, III, and IV [5][12] Study Details - The Phase 3 Orbit study has enrolled 159 patients across 45 sites in 11 countries, with a primary efficacy endpoint focused on annualized clinical fracture rate [7] - The Cosmic study, which is also in Phase 3, has enrolled 69 patients aged 2 to <7 years, comparing setrusumab to intravenous bisphosphonates [8] - Both studies will conduct final analyses after patients have been on therapy for at least 18 months, with specific statistical thresholds set for each study [4] Background on Osteogenesis Imperfecta - OI is a genetic disorder affecting bone metabolism, primarily caused by mutations in the COL1A1 or COL1A2 genes, leading to increased bone brittleness and a high rate of fractures [9] - Approximately 60,000 individuals are affected by OI in commercially accessible regions, with no globally approved treatments available [9] Mechanism of Setrusumab - Setrusumab is a fully human monoclonal antibody that inhibits sclerostin, which negatively regulates bone formation, potentially increasing bone mass and strength [10] - Previous studies have shown that anti-sclerostin antibodies can significantly improve bone formation and density in OI models [11] Company Profiles - Ultragenyx is focused on developing therapies for rare genetic diseases, with a portfolio aimed at addressing high unmet medical needs [13] - Mereo BioPharma is also dedicated to innovative therapeutics for rare diseases, with setrusumab as one of its key candidates [15]

Financial Performance - Total operating expenses for Q1 2025 were $11.2 million, an increase of $1.3 million from $9.9 million in Q1 2024[104] - Net loss before income tax for Q1 2025 was $12.9 million, compared to $9.0 million in Q1 2024, reflecting a $4.2 million increase[104] - The accumulated deficit as of March 31, 2025, was $472.0 million, with expectations of continued significant operating losses[128] - Cash used in operating activities increased to $8.3 million in Q1 2025 from $8.0 million in Q1 2024[123] - The net foreign exchange loss for Q1 2025 was $2.8 million, compared to a gain of $0.6 million in Q1 2024, due to currency fluctuations[113] Expenses - Research and development (R&D) expenses decreased by $0.1 million to $3.9 million in Q1 2025, primarily due to a $1.2 million decrease in expenses for alvelestat[106][107] - General and administrative expenses increased by $1.4 million to $7.3 million in Q1 2025, mainly due to a prior reimbursement reduction[109] Funding and Capital Requirements - The company anticipates needing additional external funding to complete development plans and potentially commercialize selected rare disease products[116][117] - The company expects existing cash and cash equivalents to fund clinical trials, operating expenses, and capital expenditures into 2027[130] - Future capital requirements will depend on factors such as developing additional product candidates and seeking regulatory approvals[131] - The company may need to obtain substantial additional funds to achieve business objectives, which may not be available on acceptable terms[133] - Future debt or preferred equity financing may involve agreements that limit the company's actions and could dilute shareholder ownership[134] Revenue and Business Objectives - Revenues will be derived from development milestones or sales of successfully developed and approved product candidates[132] Regulatory and Accounting Considerations - The costs and timing of regulatory reviews and potential commercialization activities are uncertain and could impact financial performance[138] - The company currently has no commitments or agreements for acquiring new product candidates or entering into licensing arrangements[138] - The company has no critical accounting estimates that significantly affect its financial statements[137] - There have been no significant changes to critical accounting estimates from the previous annual report[139] - The company is classified as a "smaller reporting company" and is not required to provide certain market risk information[141] Interest and Other Income - Interest income increased to $0.7 million in Q1 2025 from $0.6 million in Q1 2024, attributed to a higher cash balance[110] - Net cash provided by financing activities was $0.4 million in Q1 2025, compared to less than $0.1 million in Q1 2024, mainly from warrant exercises[127]