UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37773 MERUS N.V. (Exact name of registrant as specified in its charter) The Netherlands Not Applicable (State or other jurisdiction of inco ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37773 MERUS N.V. (Exact name of registrant as specified in its charter) The Netherlands Not Applicable (State or other jurisdiction of incorp ...

• HNSCC (interim data presented at ENA) • Gastric/Esophageal (not yet presented) • Data cutoff date: 09-Aug-2021 • Enrollment: 10 patients, 7 evaluable for efficacy • Three patients recently enrolled excluded from interim analysis (first dose <8 weeks from data cutoff date) | --- | --- | --- | |-------|---------------------------------------|-------------------| | | | | | | HNSCC Patient Characteristics (N=10) | | | | Age (years), median (range) | 65 (50-77) | | | Male / female | 9 (90%) / 1 (10%) | | | ECO ...

PART I [Business](index=7&type=section&id=Item%201.%20Business) Merus N.V. develops multispecific antibody therapeutics using proprietary Biclonics® and Triclonics® platforms for oncology applications [Overview and Strategy](index=7&type=section&id=Overview%20and%20Strategy) Merus is a clinical-stage oncology company developing multispecific antibody therapeutics from its proprietary Biclonics® and Triclonics® platforms, focusing on advancing lead candidates and strategic collaborations - The company's core proprietary **Biclonics® and Triclonics® platforms** generate bispecific and trispecific antibodies to block tumor growth and mobilize the immune system[19](index=19&type=chunk) - Key strategic pillars include successful clinical development of four main candidates, pipeline expansion via technology platforms, and strategic collaborations for capital-efficient development[22](index=22&type=chunk)[23](index=23&type=chunk) [Technology Platforms](index=9&type=section&id=Technology%20Platforms) Merus's Biclonics® and Triclonics® platforms use patented technologies like MeMo® mouse and Spleen to Screen® to generate stable, full-length human multispecific antibodies with predictable manufacturing and low immunogenicity - The **Biclonics® platform** utilizes a patented MeMo® mouse and dimerization technology to generate diverse, pure bispecific antibodies in a standard IgG format[33](index=33&type=chunk) - The **Triclonics® platform** creates trispecific antibodies binding to three targets, enhancing tumor specificity and immune cell engagement for increased potency and a wider therapeutic window[36](index=36&type=chunk)[38](index=38&type=chunk) - A key advantage is the high-throughput functional screening of thousands of candidates to identify novel and potent therapeutic molecules[34](index=34&type=chunk) [Clinical Pipeline](index=14&type=section&id=Clinical%20Pipeline) Merus has four bispecific antibody candidates in clinical development: zenocutuzumab for NRG1+ cancers, petosemtamab for solid tumors, MCLA-129 for NSCLC, and MCLA-145 for T-cell activation - **Zenocutuzumab (Zeno)** demonstrated a **34% partial response rate** and a median duration of response of **9.1 months** in the eNRGy trial for NRG1+ cancers, with BLA filing discussions ongoing with the FDA[49](index=49&type=chunk)[52](index=52&type=chunk) - **Petosemtamab** showed partial responses in **3 of 7 evaluable patients** with advanced HNSCC in a Phase 1 trial, with tumor reduction observed in all seven, and a recommended Phase 2 dose of **1500 mg every two weeks**[60](index=60&type=chunk) - **MCLA-129** interim Phase 1/2 data showed antitumor activity, including **2 confirmed partial responses** in advanced solid tumors, with good tolerability and an initial recommended Phase 2 dose of **1500 mg every two weeks**[71](index=71&type=chunk)[75](index=75&type=chunk) - **MCLA-145** interim Phase 1 data showed preliminary antitumor activity at doses **≥25 mg biweekly** and robust T-cell activation, with a Keytruda combination cohort ongoing[80](index=80&type=chunk)[84](index=84&type=chunk) [Collaboration Agreements](index=23&type=section&id=Collaboration%20Agreements) Merus has strategic collaborations with Incyte, Eli Lilly, and Betta Pharmaceuticals to advance its pipeline and technology, securing funding and expanding market reach - **Incyte** collaboration for up to 10 programs included a **$120 million upfront payment** and an **$80 million equity investment**, with Merus eligible for milestones and **6-10% tiered royalties**; Incyte opted out of MCLA-145 ex-U.S. rights[87](index=87&type=chunk)[92](index=92&type=chunk)[89](index=89&type=chunk) - **Eli Lilly** collaboration for up to three T-cell re-directing bispecific antibody programs involved a **$40 million upfront fee** and a **$20 million equity investment**, with Merus eligible for up to **$1.6 billion in total potential milestones** plus tiered royalties[96](index=96&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk) - **Betta Pharmaceuticals** holds an exclusive license for MCLA-129 development and commercialization in China, while Merus retains all ex-China rights and shares manufacturing technology transfer costs[107](index=107&type=chunk)[108](index=108&type=chunk) [Intellectual Property](index=27&type=section&id=Intellectual%20Property) Merus protects its proprietary technologies, platforms, and antibody candidates through patents, trademarks, and trade secrets, with patent expiries extending to 2041 for some applications - The **zenocutuzumab** patent portfolio includes composition of matter claims expiring no earlier than **February 2035**, with method of use applications extending to at least **2038**[117](index=117&type=chunk) - Core technology platforms are protected by patents for the **MeMo® common light chain transgenic animal** (expiry no earlier than **June 2029**), **heavy chain dimerization** (expiry no earlier than **April 2033**), and the **Triclonics® format** (expiry no earlier than **March 2039**)[121](index=121&type=chunk) [Government Regulation](index=29&type=section&id=Government%20Regulation) Merus is subject to extensive regulation by the FDA and comparable authorities, involving preclinical testing, multi-phase clinical trials, BLA submission, and ongoing post-approval compliance with healthcare and data privacy laws - U.S. development and approval requires an IND submission, followed by **Phase 1, 2, and 3 clinical trials** to demonstrate safety and efficacy, culminating in a BLA submission to the FDA[123](index=123&type=chunk)[126](index=126&type=chunk)[130](index=130&type=chunk) - **Zenocutuzumab** received **Orphan Drug Designation** for pancreatic cancer and **Fast Track Designation** for metastatic solid tumors with NRG1 fusions, potentially expediting FDA review[139](index=139&type=chunk)[140](index=140&type=chunk) - EU clinical trials are governed by the new **Clinical Trials Regulation (CTR)**, centralizing applications, with marketing authorization typically sought via the EMA's compulsory centralized procedure for biotechnology products[165](index=165&type=chunk)[171](index=171&type=chunk) - The company is subject to healthcare laws like the U.S. **Anti-Kickback Statute** and **False Claims Act**, and data privacy laws such as **HIPAA** and **GDPR**, imposing stringent requirements on health and personal information handling[190](index=190&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) [Human Capital and Corporate Responsibility](index=42&type=section&id=Human%20Capital%20and%20Corporate%20Responsibility) Merus employed 221 people as of January 2023, emphasizing R&D, employee development, health and safety, and sustainability initiatives including a BREEAM Excellent certified headquarters - As of January 1, 2023, the company employed **164 full-time** and **57 part-time** individuals, with **157 primarily in R&D**[214](index=214&type=chunk) - The company implemented leadership and development programs under the **"Merus Academy"** to train and retain employees[220](index=220&type=chunk) - In December 2022, Merus moved into its new **"Accelerator" headquarters**, achieving **'BREEAM Excellent' certification** for high sustainability performance with solar panels, heat pumps, and a green lease[231](index=231&type=chunk)[232](index=232&type=chunk) [Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) Merus faces substantial risks including historical losses, significant funding needs, unproven technology platforms, clinical trial failures, reliance on third parties, intellectual property disputes, and intense competition - The company has a history of significant net losses, including **$131.2 million in 2022**, and an accumulated deficit of **$598.1 million** as of December 31, 2022, with continued losses expected[245](index=245&type=chunk) - Substantial additional funding is required for antibody candidate development and commercialization; failure to raise capital could lead to program delays or elimination[250](index=250&type=chunk) - The company's technology platforms are novel and unproven, and antibody candidates could fail clinical trials, exhibit unacceptable side effects, or not receive regulatory approval, materially harming the business[256](index=256&type=chunk)[279](index=279&type=chunk)[292](index=292&type=chunk) - Merus heavily relies on third parties, including CROs for clinical trials, CMOs for manufacturing, and collaborations with Incyte and Eli Lilly; non-performance would adversely affect development and commercialization[379](index=379&type=chunk)[384](index=384&type=chunk)[397](index=397&type=chunk) - The company faces risks of intellectual property litigation, patent challenges, and inadequate IP protection against competitors[403](index=403&type=chunk)[408](index=408&type=chunk) [Unresolved Staff Comments](index=91&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - None[473](index=473&type=chunk) [Properties](index=91&type=section&id=Item%202.%20Properties) Merus leases its corporate headquarters and central laboratory in Utrecht, Netherlands, and additional office space in Cambridge, Massachusetts - The company's new corporate headquarters and lab in Utrecht, Netherlands, is a leased space of approximately **4,957 square meters** with a **ten-year term** commencing April 2022[474](index=474&type=chunk) - Merus also leases **7,583 square feet** of office space in Cambridge, Massachusetts, under a **seven-year lease** that commenced April 1, 2019[474](index=474&type=chunk) [Legal Proceedings](index=92&type=section&id=Item%203.%20Legal%20Proceedings) Merus is not a party to any material legal proceedings, but is contesting a European patent opposition filed by Kymab Limited in August 2022 - Kymab Limited (Sanofi) filed an opposition against Merus's European patent **EP3456190**, "Antibody Producing Transgenic Murine Animal," in August 2022, which the company is contesting[712](index=712&type=chunk)[713](index=713&type=chunk) [Mine Safety Disclosures](index=92&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[476](index=476&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=93&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Merus common stock trades on Nasdaq under "MRUS"; the company has 152 holders of record, has never paid cash dividends, and did not repurchase equity securities in Q4 2022 - Common stock trades on The Nasdaq Global Market under the symbol **"MRUS"**[479](index=479&type=chunk) - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[480](index=480&type=chunk) [Reserved](index=93&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=94&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Merus reported a 15.3% revenue decrease to $41.6 million in 2022, while operating expenses increased 45.0% to $201.6 million, widening the net loss to $131.2 million, with $326.7 million cash expected to fund operations into H2 2025 Financial Performance Summary | Financial Metric | 2022 (in thousands) | 2021 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenue** | $41,586 | $49,107 | -15.3% | | **Research and Development Expense** | $149,424 | $98,187 | +52.2% | | **General and Administrative Expense** | $52,200 | $40,896 | +27.6% | | **Total Operating Expenses** | $201,624 | $139,083 | +45.0% | | **Operating Loss** | ($160,038) | ($89,976) | +77.9% | | **Net Loss** | ($131,194) | ($66,816) | +96.4% | | **Net Loss Per Share** | ($2.92) | ($1.73) | +68.8% | - The decrease in collaboration revenue was primarily due to a **$3.4 million decrease from Lilly** and a **$3.2 million decrease from Incyte**, driven by changes in upfront payment amortization and lower milestone revenue[510](index=510&type=chunk) - The **$51.2 million increase in R&D expense** was driven by **$34.3 million higher external clinical services and drug manufacturing costs** and **$11.3 million increased personnel-related expenses**[514](index=514&type=chunk) - As of December 31, 2022, the company held **$326.7 million in cash, cash equivalents, and marketable securities**, expected to fund operations into the **second half of 2025**[492](index=492&type=chunk)[525](index=525&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=103&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Merus faces market risks primarily from foreign currency exchange rates, with a hypothetical 15% USD weakening against EUR increasing 2022 net loss by $20.0 million, while interest rate risk is minimal - The main market risk is foreign currency exposure between the **U.S. dollar (revenue)** and the **euro (operating costs)**[552](index=552&type=chunk) - A hypothetical **15% weakening of the U.S. dollar versus the euro** in 2022 would have increased the net loss by approximately **$20.0 million**[552](index=552&type=chunk) - Interest rate risk on the company's marketable securities portfolio is considered minimal due to its conservative and short-term nature[551](index=551&type=chunk) [Financial Statements and Supplementary Data](index=103&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section indicates that the company's audited consolidated financial statements and supplementary data are included in Item 15 of the Annual Report on Form 10-K - The required financial statements are included in **Item 15** of the report[554](index=554&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=103&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure - None[555](index=555&type=chunk) [Controls and Procedures](index=103&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that Merus's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes identified in Q4 2022 - Management concluded that the company's disclosure controls and procedures were **effective** as of **December 31, 2022**[557](index=557&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of **December 31, 2022**, an assessment audited by KPMG Accountants N.V[558](index=558&type=chunk)[559](index=559&type=chunk) [Other Information](index=104&type=section&id=Item%209B.%20Other%20Information) Effective February 24, 2023, Chief Business Officer Hui Liu's new employment agreement increased his annual base salary to $437,750 and updated severance terms - A new employment agreement for Chief Business Officer **Hui Liu** became effective on **February 24, 2023**, increasing his base salary to **$437,750** and modifying severance terms[561](index=561&type=chunk)[562](index=562&type=chunk)[563](index=563&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=104&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) Not applicable - Not applicable[566](index=566&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=105&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides biographical information for Merus's directors and executive officers, highlighting their industry experience and confirming the adoption of a Code of Business Conduct and Ethics, with other details incorporated by reference from the 2023 Proxy Statement - The board and executive team comprise individuals with significant experience from companies including **Sofinnova, Trevena, Genentech, CRISPR Therapeutics, Array BioPharma, and Novartis**[569](index=569&type=chunk)[570](index=570&type=chunk)[573](index=573&type=chunk) - The company adopted a **Code of Business Conduct and Ethics** applicable to all directors, officers, and employees[581](index=581&type=chunk) - Most information for this item is incorporated by reference from the **2023 Proxy Statement**[582](index=582&type=chunk) [Executive Compensation](index=107&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's definitive Proxy Statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the **2023 Proxy Statement**[583](index=583&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=108&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the company's definitive Proxy Statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the **2023 Proxy Statement**[584](index=584&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=108&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's definitive Proxy Statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the **2023 Proxy Statement**[585](index=585&type=chunk) [Principal Accounting Fees and Services](index=108&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's definitive Proxy Statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the **2023 Proxy Statement**[586](index=586&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=109&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, including the Independent Registered Public Accounting Firm's Report and consolidated financial statements - This item contains the index to the **Consolidated Financial Statements** and a list of all exhibits filed with the **10-K**[588](index=588&type=chunk)[589](index=589&type=chunk) [Form 10-K Summary](index=112&type=section&id=Item%2016.%20Form%2010-K%20Summary) No summary is provided under this item - None[596](index=596&type=chunk)

2 Oncology-focused Company Developing Multispecific Antibody Therapies Bispecific and trispecific cancer therapeutic candidates in the human IgG format Common light chain format permits broad, high throughput evaluation of Biclonics® and Triclonics®, to develop clinical stage assets with potential for meaningful clinical activity in patients 1 Schram et al., ASCO 2022, efficacy data cutoff April 12, 2022 and safety data cutoff January 12, 2022 2 Hollebecque et al., AACR-NCI-EORTC 2021, data cutoff August 9, ...

Merus closing in on cancer Bill Lundberg, MD, MBA CHIEF EXECUTIVE OFFICER Cecile Geuijen, PhD CHIEF SCIENTIFIC OFFICER SPEAKERS Andrew Joe, MD CHIEF MEDICAL OFFICER Kathleen Farren IR/CORP COMMS October 26, 2022 MCLA-129 update EORTC-NCI-AACR Disclaimer 2 This presentation (including any oral commentary that accompanies this presentation) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not r ...

Corporate Presentation September 2022 Disclaimer 2 This presentation (including any oral commentary that accompanies this presentation) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding the impact our Biclonics® and Triclonics® platforms can have on cancer ...

Corporate Presentation September 2022 Disclaimer 2 This presentation (including any oral commentary that accompanies this presentation) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding the impact our Biclonics® and Triclonics® platforms can have on cancer ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37773 MERUS N.V. (Exact name of registrant as specified in its charter) The Netherlands Not Applicable (State or other jurisdiction of inco ...

Corporate Presentation May 2022 Disclaimer 2 This presentation (including any oral commentary that accompanies this presentation) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding the impact our Biclonics® and Triclonics® platforms can have on cancer, our ...