Mereo BioPharma(MREO) - 2024 Q2 - Quarterly Results

Overview and Key Highlights Mereo BioPharma reported its Q2 2024 financial results, highlighting significant progress in its clinical programs and a strengthened cash position extending into 2027 - As of June 30, 2024, the company held $87.4 million in cash and cash equivalents, which is expected to fund operations into 2027[1] - Completed a $50 million registered direct offering in June 2024, bolstering the company's financial position[1] - CEO Dr. Denise Scots-Knight highlighted that new data for setrusumab showed a maintained 67% reduction in annualized fracture rates, demonstrating long-term clinical benefit[2] Pipeline Updates The company provided updates on its two lead rare disease candidates, setrusumab and alvelestat, with setrusumab's Phase 3 studies fully enrolled and alvelestat advancing towards Phase 3 readiness Setrusumab (UX143) for Osteogenesis Imperfecta (OI) Phase 3 Orbit and Cosmic studies for setrusumab are fully enrolled, with positive long-term Phase 2 data showing sustained efficacy and safety in OI - The Phase 3 Orbit (ages 5-25) and Cosmic (ages 2-<7) studies were fully enrolled as of April 30, 2024[3] - Long-term follow-up data (mean duration of 16 months) showed a sustained 67% reduction in the median annualized fracture rate (p=0.0014)[3] - At 12 months, treatment resulted in a mean increase in lumbar spine Bone Mineral Density (BMD) of 22% from baseline (p<0.0001), with no evidence of plateau[4] - No treatment-related serious adverse events or hypersensitivity reactions related to setrusumab were reported in the study[4] Alvelestat (MPH-966) for AATD Mereo is actively seeking partners for alvelestat and has submitted regulatory packages to the FDA to prepare for a potential Phase 3 study by year-end 2024 - The company is in ongoing discussions with multiple potential partners for the development and commercialization of alvelestat[5] - Submitted the initial validation work for the SGRQ and the detailed Phase 3 package to the FDA, aiming for Phase 3 readiness by year-end 2024[5] Second Quarter 2024 Financial Results Mereo reported a net loss of $12.3 million in Q2 2024, a significant increase from Q2 2023, primarily due to the absence of milestone revenue and higher operating expenses Second Quarter 2024 Financial Highlights | Financial Metric | Q2 2024 ($M) | Q2 2023 ($M) | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | R&D Expenses | $4.9 | $3.7 | +33% | Increased spending on alvelestat Phase 3 prep and setrusumab activities | | G&A Expenses | $7.9 | $2.7 | +193% | Absence of a 2023 ADR reimbursement credit and increased pre-commercial activities for setrusumab | | Net Loss | $12.3 | $1.8 | +583% | Absence of a $9.0M milestone revenue in Q2 2023 and higher operating expenses in Q2 2024 | Financial Position and Outlook As of June 30, 2024, Mereo's cash and cash equivalents totaled $87.4 million, projected to fund operations into 2027, bolstered by a recent $50 million financing - Cash and cash equivalents were $87.4 million as of June 30, 2024[9] - The current cash balance is expected to fund operations and capital requirements into 2027[9] - The cash position includes net proceeds from a $50 million registered direct offering completed in June 2024[1][9] Financial Statements The unaudited condensed consolidated financial statements detail the company's financial position as of June 30, 2024, and operational results for the three and six months then ended Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2024, shows total assets of $96.1 million and total shareholders' equity of $78.7 million, primarily driven by recent financing Condensed Consolidated Balance Sheets (in thousands) | Balance Sheet (in thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $87,431 | $57,421 | | Total current assets | $93,940 | $63,760 | | Total assets | $96,129 | $66,499 | | Total current liabilities | $15,466 | $9,486 | | Total liabilities | $17,479 | $15,962 | | Total shareholders' equity | $78,650 | $50,537 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q2 2024, the company reported no revenue and a net loss of $12.3 million, contrasting with Q2 2023's $9.0 million revenue and $1.8 million net loss Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Statement of Operations (in thousands) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Revenue | $0 | $9,000 | | Research and development | $(4,946) | $(3,712) | | General and administrative | $(7,868) | $(2,669) | | Loss from operations | $(12,814) | $(811) | | Net loss | $(12,255) | $(1,751) | | Loss per share – basic and diluted | $(0.02) | $(0.00) | About Mereo BioPharma Mereo BioPharma is a clinical-stage biopharmaceutical company focused on rare disease therapeutics, with lead candidates setrusumab and alvelestat, and a retained interest in setrusumab's European and UK commercial rights - The company's two lead product candidates are setrusumab for osteogenesis imperfecta (OI) and alvelestat for severe alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD)[10] - Setrusumab is being developed in partnership with Ultragenyx, which is funding the global development program; Mereo has retained EU and UK commercial rights and is eligible for up to $245 million in additional milestones plus royalties[10] - For alvelestat, the company has aligned with the FDA and EMA on primary endpoints for a pivotal Phase 3 study[10] Forward-Looking Statements This section contains standard legal disclaimers regarding forward-looking statements, cautioning readers about inherent risks and uncertainties and directing them to SEC filings for detailed risk discussions - The press release contains forward-looking statements concerning future events, clinical development, and financial performance, which involve substantial risks and uncertainties[11] - Readers are cautioned not to place undue reliance on these statements and are referred to the 'Risk Factors' section of the Company's Annual Report on Form 10-K and other SEC filings[12]