Mereo BioPharma(MREO) - 2024 Q4 - Annual Report

Financial Performance - The company reported no revenue for the year ended December 31, 2024, a decrease of $10 million compared to $10 million in 2023[512][534] - Revenue for the year ended December 31, 2024 was $0, compared to $10.0 million in 2023, which included a one-time milestone payment of $9.0 million for setrusumab[535] - The net loss for the year ended December 31, 2024, was $43.25 million, compared to a net loss of $29.47 million in 2023, reflecting an increase of $13.79 million[534] - The accumulated deficit as of December 31, 2024 was $462.9 million, with expectations of continued significant operating losses due to ongoing R&D efforts[565] Research and Development - Research and development expenses increased by $3.5 million, totaling $20.93 million in 2024 compared to $17.42 million in 2023[534] - Total R&D expenses increased by $3.5 million, from $17.4 million in 2023 to $20.9 million in 2024, driven by increases in expenses for alvelestat and setrusumab[538] - The benefit from research and development tax credit increased to $1.6 million in 2024 from $1.3 million in 2023, due to higher eligible R&D activities[548] - The company is preparing for potential commercialization of setrusumab in Europe and the U.K., with associated costs for clinical trials and manufacturing supplies[568] - Future revenues will depend on successful development and commercialization of product candidates, necessitating substantial additional funding[569] Expenses - General and administrative expenses rose by $8.01 million, reaching $26.43 million in 2024, up from $18.42 million in 2023[534] - General and administrative expenses rose by $8.0 million, from $18.4 million in 2023 to $26.4 million in 2024, primarily due to pre-commercial activities for setrusumab and other operational costs[542] - Net cash used in operating activities for 2024 was $32.8 million, an increase of $11.7 million from $21.1 million in 2023, largely due to milestone payments received in 2023[559] Cash and Financing - As of December 31, 2024, the company had cash and cash equivalents of $69.8 million, with fixed interest payable on convertible loan notes[581] - Net cash provided by financing activities increased significantly to $46.1 million in 2024, up from $8.0 million in 2023, primarily due to proceeds from a registered direct offering[564] - The Novartis Loan Note was amended to extend the maturity date to February 10, 2025, with an increased interest rate of 9%[576] - The company issued 17,105,450 ordinary shares on the non-cash conversion of the Novartis Loan Note principal and accrued interest[577] Tax and Regulatory - The company had cumulative carry-forward U.K. tax losses of $36.6 million as of December 31, 2024, up from $30.6 million in 2023[526][532] - The U.K. corporation tax rate applied for 2024 was 25%, up from 23.5% in 2023[531] - The company has not generated any commercial sales revenue and expects to do so only upon obtaining regulatory approval for its product candidates[513] Foreign Exchange and Interest - Interest income increased to $3.04 million in 2024, compared to $2.13 million in 2023, an increase of $0.91 million[534] - The company recognized a foreign currency transaction gain of $1.21 million in 2024, compared to a loss of $2.35 million in 2023, resulting in a positive change of $3.56 million[534] - The net foreign exchange gain for 2024 was $1.2 million, compared to a loss of $2.3 million in 2023, reflecting changes in currency valuation[547] - For the year ended December 31, 2024, the company reported an unrealized loss of $1.4 million on foreign currency translation, compared to a gain of $4.2 million in 2023[582] Risks and Challenges - The company is subject to various risks and uncertainties in the development of its product candidates, which could significantly impact costs and timelines[520] - The company may face challenges in obtaining additional funds on acceptable terms, which could impact technology rights and revenue streams[570] - Inflation has led to increased operating expenses, although it has not materially affected the company's financial condition in 2024[584] Warrants and Contracts - The company has outstanding warrants for 1,243,908 ordinary shares at an exercise price of £2.95, expiring in August 2027[573] - The total change in fair value of warrants for 2024 was an unrealized loss of $0.4 million, contrasting with an unrealized gain of $0.2 million in 2023[546] - The company has not entered into foreign exchange contracts to hedge against fluctuations but maintains cash in U.S. dollars for anticipated commitments[583]