Mereo BioPharma(MREO) - 2022 Q4 - Annual Report

Executive Summary & Recent Highlights Company Overview and 2022 Progress Mereo BioPharma made significant 2022 progress in rare disease programs, with positive alvelestat Phase 2 data and funding secured into 2026 - In 2022, the company achieved significant progress in its core rare disease programs, particularly with encouraging Phase 2 ASTRAEUS study data for alvelestat in severe alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD), and clear guidance from US and EU regulatory bodies on the design of a potential pivotal study[3] - The company's partner Ultragenyx completed Phase 2 patient enrollment for setrusumab (UX143) in the Phase 2/3 Orbit study for osteogenesis imperfecta (OI), with data expected in mid-2023[3] Cash and Short-Term Deposits at Year-End 2022 | Metric | Amount (Millions) | | :--- | :--- | | Cash and Short-Term Deposits (GBP) | £56.3 | | Cash and Short-Term Deposits (USD) | $68.2 | | Funding Runway | Into 2026 | Alvelestat (MPH-966) Program Update Alvelestat received FDA Fast Track, showed positive Phase 2 data, secured Phase 3 guidance, and is seeking partners - Alvelestat received US FDA Fast Track designation[6] - The Phase 2 ASTRAEUS study reported positive topline biomarker data, with post-hoc analysis showing an association between biomarker reduction and clinical outcomes[6] - FDA and EMA provided clear guidance that a single 12-18 month, approximately 200-patient, placebo-controlled Phase 3 study would be sufficient to support full marketing approval in the US and EU[6] - The company is exploring potential partners to fund further development of alvelestat in AATD-LD[6] Setrusumab (UX143) Program Update Ultragenyx completed setrusumab Phase 2 enrollment for OI, with data expected mid-2023, and a pediatric study starting H1 2023 - Mereo's partner Ultragenyx completed Phase 2 patient enrollment for setrusumab in the Phase 2/3 Orbit study for OI patients aged 5 to 25 years[6] - Phase 2 study data is expected to be announced in mid-2023[6] - A study for younger pediatric patients (comparing with bisphosphonates) is expected to be initiated by Ultragenyx in the first half of 2023[6] Etigilimab (MPH-313) Program Update Etigilimab's ACTIVATE trial completed Phase 1b, with additional data expected late 2023, and an ovarian cancer trial is ongoing - The Phase 1b/2 ACTIVATE trial completed its Phase 1b portion, enrolling a total of 76 patients[12] - The company expects to report additional data from the ACTIVATE study later in 2023[12] - A Phase 1b/2 trial of etigilimab in combination with nivolumab for platinum-resistant recurrent ovarian cancer is ongoing at The University of Texas MD Anderson Cancer Center, with plans to expand the study from 10 to 20 patients[12] Navicixizumab (OMP305B83) Program Update OncXerna plans a Phase 3 trial for navicixizumab in advanced ovarian cancer and is conducting a Phase 2 basket study - Mereo's partner OncXerna has stated its intention to initiate a Phase 3 trial for navicixizumab in advanced ovarian cancer[12] - OncXerna is conducting a Phase 2 basket study evaluating navicixizumab alone or in combination with chemotherapy for specific advanced solid tumors[12] Full Year 2022 Financial Results Research and Development Expenses R&D expenses rose to £25.0 million in 2022, a 6% increase, driven by etigilimab costs R&D Expenses Comparison (2021 vs 2022) | Metric | 2022 (£ Millions) | 2021 (£ Millions) | Change (£ Millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total R&D Expenses | 25.0 | 23.6 | 1.4 | 6% | | Etigilimab-related Expenses | Increase | Increase | 2.3 | - | | Alvelestat-related Expenses | Increase | Increase | 0.1 | 2% | | Setrusumab-related Expenses | Decrease | Decrease | 0.2 | 7% | - The increase in etigilimab R&D expenses was due to costs associated with additional patients and treatment duration in the open-label Phase 1b/2 basket study in 2022[8] - Setrusumab R&D expenses decreased as its global development is funded by partner Ultragenyx[8] Administrative Expenses Administrative expenses increased to £19.5 million in 2022, a 23% rise, due to Rubric Capital costs and share-based payments Administrative Expenses Comparison (2021 vs 2022) | Metric | 2022 (£ Millions) | 2021 (£ Millions) | Change (£ Millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Administrative Expenses | 19.5 | 15.9 | 3.6 | 23% | - The increase in administrative expenses was primarily driven by additional costs related to Rubric Capital's Schedule 13D filing and subsequent cooperation agreement, as well as increased share-based payment expenses[9] Net Loss and Operating Performance The company reported a £34.2 million net loss in 2022, reversing a £12.7 million net profit from 2021 Net Profit/Loss Comparison (2021 vs 2022) | Metric | 2022 (£ Millions) | 2021 (£ Millions) | | :--- | :--- | :--- | | Net Loss/Profit Attributable to Equity Holders | (34.2) | 12.7 | | Operating Loss | (43.6) | - | | Gain from Fair Value Changes in Financial Instruments | 7.8 | - | Cash Position and Financial Runway As of December 31, 2022, the company held £56.3 million ($68.2 million) in cash, with funds projected until 2026 Cash and Short-Term Deposits (As of December 31, 2022) | Metric | Amount (£ Millions) | Amount ($ Millions) | | :--- | :--- | :--- | | Cash and Short-Term Deposits | 56.3 | 68.2 | | Q4 2022 Net Cash Burn | 11.2 | 13.5 | | Funding Runway | Into 2026 | Shares Outstanding As of December 31, 2022, the company had 625 million ordinary shares and 119 million ADSs outstanding Shares Outstanding (As of December 31, 2022) | Metric | Quantity (Millions) | | :--- | :--- | | Ordinary Shares | 625 | | ADSs | 119 | | ADS to Ordinary Share Ratio | 1 ADS = 5 Ordinary Shares | About Mereo BioPharma Mereo BioPharma is a clinical-stage biopharmaceutical company focused on developing innovative rare disease therapies - Mereo BioPharma is a clinical-stage biopharmaceutical company focused on developing innovative therapies for rare diseases[13] - The company has two rare disease product candidates: setrusumab (for osteogenesis imperfecta) and alvelestat (for severe alpha-1 antitrypsin deficiency-associated lung disease and bronchiolitis obliterans syndrome)[13] - The company's collaboration with Ultragenyx involves potential milestone payments of up to $254 million and royalties, with Mereo retaining commercial rights in the EU and UK; the global license agreement with OncXerna Therapeutics includes milestone payments of up to $300 million and royalties[13] Forward-Looking Statements This section contains forward-looking statements about the company's pipeline, subject to risks and uncertainties - This press release contains forward-looking statements regarding the alvelestat Phase 3 study, setrusumab pediatric study, and the company's product pipeline[14] - Forward-looking statements are based on the company's current expectations, beliefs, and assumptions, but involve known and unknown risks and uncertainties that could cause actual results to differ materially from historical experience or current predictions[14] - Investors are cautioned not to place undue reliance on any forward-looking statements, and the company undertakes no obligation to publicly update or revise any forward-looking statements after their release, except as required by law[14] Contacts This section provides contact information for Mereo BioPharma and its investor relations advisor Consolidated Financial Statements Consolidated Statements of Comprehensive (Loss)/Income In 2022, the company reported a £34.196 million net loss, reversing a £12.725 million net profit from 2021 Key Data from Consolidated Statements of Comprehensive (Loss)/Income | Metric | 2022 (£'000s) | 2021 (£'000s) | 2020 (£'000s) | | :--- | :--- | :--- | :--- | | Revenue | — | 36,464 | — | | Operating Loss | (43,569) | (20,936) | 37,569 | | Fair Value Changes in Financial Instruments | 7,805 | 40,039 | (109,849) | | Annual (Loss)/Profit Attributable to Equity Holders of the Parent | (34,196) | 12,725 | (163,628) | | Basic (Loss)/Profit Per Share (GBP) | (0.06) | 0.02 | (0.48) | Consolidated Balance Sheets As of December 31, 2022, total assets decreased to £88.078 million, with cash and short-term deposits at £56.334 million Key Data from Consolidated Balance Sheets (As of December 31) | Metric | 2022 (£'000s) | 2021 (£'000s) | | :--- | :--- | :--- | | Total Assets | 88,078 | 126,417 | | Cash and Short-Term Deposits | 56,334 | 94,296 | | Intangible Assets | 24,116 | 24,564 | | Total Liabilities | 26,210 | 38,415 | | Net Assets | 61,868 | 88,002 | | Accumulated Losses | (331,164) | (296,968) |