TIDMMPH
RNS Number : 4494A
Mereo BioPharma Group plc
29 September 2020
Mereo BioPharma Announces Interim Financial Results for the Six
Months Ended June 30, 2020 and Provides Corporate Update
On track to initiate Phase 1b/2 etigilimab (Anti-TIGIT)
combination study in Q4 2020
Enrolment resumed in Phase 2 study of alvelestat in Alpha-1
Antitrypsin Deficiency and initiated placebo-controlled Phase 1b/2
clinical trial in COVID-19 respiratory disease
Partnering discussions continue for portfolio of clinical-stage
programs including setrusumab for osteogenesis imperfecta
PIPE Financing of $70 million (GBP56 million) completed in June
2020, cash runway into 2022
Conference Call Today at 8:00 a.m. EDT / 1:00 p.m. BST
London and Redwood City, Calif., September 29, 2020 - Mereo
BioPharma Group plc (NASDAQ: MREO, AIM: MPH), "Mereo" or "the
Company", a clinical stage biopharmaceutical company focused on
oncology and rare diseases, today announces unaudited interim
financial results for the six months ended June 30, 2020 and
provides a corporate update.
Denise Scots-Knight, Chief Executive of Mereo, said: "Following
the closing of our $70 million financing in the first half of 2020
we have focussed on executing our strategy, advancing etigilimab
("Anti-TIGIT") for the treatment of solid tumors alongside
developing our rare disease portfolio. We remain on track to
initiate a Phase 1b/2 study of etigilimab (Anti-TIGIT) in
combination with an anti-PD-1 in a range of solid tumor types in Q4
2020. Our rare disease portfolio includes setrusumab for
osteogenesis imperfecta which we plan to partner prior to the
initiation of a pivotal Phase 3 study, and alvelestat which is
being investigated in an ongoing Phase 2 proof-of-concept study for
alpha-1 anti-trypsin deficiency. We were also pleased to have
recently announced the initiation of a Phase 1b/2
placebo-controlled study of alvelestat in COVID-19 infected
patients following the scientific publications demonstrating the
involvement of neutrophil elastase in COVID-19 infection pathways.
We also continue to advance other discussions with potential
partners to optimize the value of our broader product
portfolio."
Recent Highlights and Upcoming Milestones
Etigilimab (Anti-TIGIT) for Solid Tumors
-- On track to initiate a Phase 1b/2 study of etigilimab in
combination with an anti-PD-1 in a range of solid tumor types in Q4
2020.
Setrusumab for Osteogenesis Imperfecta (OI)
-- Receipt of FDA Rare Pediatric Disease Designation on September 23, 2020.
-- Following regulatory discussions in 1H 2020, both the FDA and
EMA have agreed on the principles of a design of a single Phase 3
pediatric pivotal study in OI.
-- Intend to partner setrusumab prior to conducting a pivotal
trial of setrusumab in children with severe OI. Partnering
discussions are well underway with a range of potential structures
including options for Mereo to retain commercial rights in certain
regions.
Alvelestat for Severe Alpha-1 Antitrypsin Deficiency (AATD)
-- Topline data from an ongoing Phase 2 proof of concept study remains on track for 2H 2021.
-- Announced the initiation of a Phase 1b/2 placebo-controlled
clinical trial to evaluate the safety and efficacy of alvelestat in
hospitalized, adult patients with moderate to severe COVID-19
respiratory disease.
-- Investigator-sponsored studies underway in AATD and in the
orphan disease, bronchiolitis obliterans syndrome (BOS).
Partnering Discussions Continue for Portfolio of Other
Clinical-Stage Programs
-- Leflutrozole for hypogonadotropic hypogonadism (HH)
o Partnering discussions continuing based on development in male
infertility.
-- Acumapimod for Acute Exacerbations of Chronic Obstructive Pulmonary Disease (AECOPD)
o Discussions continuing on separate financing for the Phase 3
study agreed with the FDA and EMA.
Corporate
-- Appointment of Dr. Brian Schwartz and Dr. Jeremy Bender as
Non-Executive Directors and departure of Mr Paul Blackburn as
Non-Executive Director effective October 1, 2020
-- Dr John Lewicki appointed as Chief Scientific Officer and Dr.
Ann Kapoun appointed as Head Translational R&D in July
2020.
Financial Highlights
-- Cash resources of GBP56.8 million as at June 30, 2020 (June 30, 2019 GBP36.1 million ).
-- GBP11.8 million raised in equity and debt in Q1 2020.
-- Additional $70 million (GBP56 million) raised in PIPE in Q2 2020.
-- Cash runway to early 2022.
Conference Call Information
Mereo will host a live conference call and webcast today at 8:00
a.m. EDT / 1:00 p.m. BST to discuss the Company's financial results
and provide a corporate update.
Dial-in numbers: (866) 688-2942 (U.S.) or +1 (561) 569-9224
(U.K./International)
Conference ID number: 9572439
A live and archived webcast may be accessed by visiting the
Investors sections of the Company's website at
https://www.mereobiopharma.com/investors/results-reports-and-presentations/.
The archived webcast will remain available on the Company's website
following the live call.
About Mereo BioPharma
Mereo BioPharma is a biopharmaceutical company focused on the
development and commercialization of innovative therapeutics that
aim to improve outcomes for oncology and rare diseases. Mereo's
lead oncology product candidate, etigilimab ("Anti-TIGIT"), has
completed a Phase 1a dose escalation clinical trial in patients
with advanced solid tumors and has been evaluated in a Phase 1b
study in combination with nivolumab in select tumor types. Mereo's
rare disease product portfolio consists of setrusumab, which has
completed a Phase 2b dose-ranging study in adults with osteogenesis
imperfecta ("OI"), as well as alvelestat, which is being
investigated in a Phase 2 proof-of-concept clinical trial in
patients with alpha-1 antitrypsin deficiency ("AATD") and in a
Phase 1b/2 clinical trial in COVID-19 respiratory disease.
Additional Information
The person responsible for arranging the release of this
information on behalf of the Company is Charles Sermon, General
Counsel.
Forward-Looking Statements
This Announcement contains "forward-looking statements." All
statements other than statements of historical fact contained in
this Announcement are forward-looking statements within the meaning
of Section 27A of the United States Securities Act of 1933, as
amended and Section 21E of the United States Securities Exchange
Act of 1934, as amended. Forward-looking statements usually relate
to future events and anticipated revenues, earnings, cash flows or
other aspects of our operations or operating results.
Forward-looking statements are often identified by the words
"believe," "expect," "anticipate," "plan," "intend," "foresee,"
"should," "would," "could," "may," "estimate," "outlook" and
similar expressions, including the negative thereof. The absence of
these words, however, does not mean that the statements are not
forward-looking. These forward-looking statements are based on the
Company's current expectations, beliefs and assumptions concerning
future developments and business conditions and their potential
effect on the Company. While management believes that these
forward-looking statements are reasonable as and when made, there
can be no assurance that future developments affecting the Company
will be those that it anticipates.
All of the Company's forward-looking statements involve known
and unknown risks and uncertainties (some of which are significant
or beyond its control) and assumptions that could cause actual
results to differ materially from the Company's historical
experience and its present expectations or projections. The
foregoing factors and the other risks and uncertainties that affect
the Company's business, including those described in its Annual
Report on Form 20-F, Reports on Form 6-K and other documents filed
from time to time by the Company with the United States Securities
and Exchange Commission. The Company wishes to caution you not to
place undue reliance on any forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to
publicly update or revise any of our forward-looking statements
after the date they are made, whether as a result of new
information, future events or otherwise, except to the extent
required by law.
Mereo BioPharma Contacts:
Mereo +44 (0)333 023 7300
Denise Scots-Knight, Chief Executive Officer
N+1 Singer (Nominated Adviser and Broker to Mereo ) +44 (0)20 7496 3081
Phil Davies
Will Goode
Burns McClellan (US Investor Relations Adviser to Mereo ) + 01 212 213 0006
Lisa Burns
Steve Klass
FTI Consulting (UK Public Relations Adviser to Mereo ) +44 (0)20 3727 1000
Simon Conway
Ciara Martin
Investors investors@ mereo biopharma.com
Chairman and CEO's statement
Introduction
The Company's strategy is to build a portfolio of oncology and
rare disease products acquired from pharmaceutical and
biotechnology companies and to develop these through regulatory
approval and subsequent commercialization in certain indications
and regions and to work alongside partners as appropriate for the
broader therapeutic indications and regions where more substantial
resources are required.
Products for use in oncology and rare (including orphan)
indications represent an attractive development and
commercialization opportunity for the Company, since the target
patient population typically has a high unmet medical need, the
compounds require more targeted clinical trials and these
programmes can often utilise regulatory pathways that facilitate
acceleration to the potential market. Development of oncology and
rare disease therapies generally involves close co-ordination with
regulators, healthcare authorities, patient organizations, key
opinion leaders (KOLs) and a limited number of specialized
treatment sites, which helps identification of the patient
population and allows for a smaller, more targeted sales
infrastructure for commercialization in key markets.
For our two speciality programs, leflutrozole and acumapimod,
the Company plans to partner or sell the products recognising the
need for a larger sales infrastructure and greater resources to
take these products successfully to market.
We have made significant progress across all our programs in the
first half of 2020 and were pleased to announce the GBP56 million
($70 million) financing with a group of US investors in June 2020.
We are funded into early 2022 providing the Company sufficient
balance sheet strength and runway to deliver on our clinical and
business development milestones.
Business Overview
Oncology Product Candidate
-- Etigilimab (MPH-313): Etigilimab is an antibody against TIGIT
(T-cell immunoreceptor with Ig and ITIM domains). TIGIT is a next
generation checkpoint receptor shown to block T-cell activation and
the body's natural anti-cancer immune response. Etigilimab is an
IgG1 monoclonal antibody which binds to the human TIGIT receptor on
immune cells with a goal of improving the activation and
effectiveness of T-cell and NK cell anti-tumor activity. Mereo
completed a Phase 1a dose escalation clinical trial with etigilimab
in patients with advanced solid tumors and enrolled patients in a
Phase 1b study in combination with nivolumab in selected tumor
types.
23 patients were treated in the Phase 1a dose escalation study
with doses up to 20mg/kg Q2W. Tumor types included colorectal
cancer, endometrial cancer, pancreatic cancer and other tumor
types. No dose limiting toxicities were observed. In the Phase 1b
combination study, a total of ten patients, nine of whom had
progressed on prior anti-PD1/PD-L1 therapies were enrolled at doses
of 3, 10, and 20 mg/kg. Tumor types included gastric cancer and six
other tumor types. Eight patients were evaluable for tumor growth
assessment, and all of these patients had progressed on PD1/PD-L1
therapies with best responses including two patients with a partial
response and stable disease. Patients remained on study for up to
224 days. No dose limiting toxicities (DLTs) were observed.
The only treatment-related adverse event in the Phase 1a portion
of the study with an incidence rate greater than 20 per cent. was
rash (35 per cent.), and the most common treatment-related adverse
events in the Phase 1b portion of the study were rash (40 per
cent.), fatigue (30 per cent.) and pruritus (20 per cent.) There
was only one treatment-related serious adverse event in the Phase
1a portion (autoimmune hepatitis) and there were no
treatment-related serious adverse events in the Phase 1b portion of
the study. The Phase 1b study has now completed.
We are on track to initiate a Phase 1b/2 combination study of
etigilimab in combination with a anti-PD-1 in a range of tumor
types in 75-100 patients in Q4 2020.
Rare Disease Product Candidates
-- Setrusumab (BPS-804): Setrusumab is a novel antibody we are
developing as a treatment for osteogenesis imperfecta ("OI"), a
rare genetic disease that results in bones that can break easily
and is commonly known as brittle bone disease. OI is a debilitating
orphan disease for which there are no treatments approved by the
FDA or EMA. It is estimated that OI affects a minimum of 25,000
people in the United States and approximately 32,000 people in
Germany, Spain, France, Italy, and the United Kingdom. Setrusumab
is designed to inhibit sclerostin, a protein that inhibits the
activity of bone-forming cells. We believe setrusumab's mechanism
of action is well suited for the treatment of OI and has the
potential to become a novel treatment option for patients that
could reduce fractures and improve patient quality of life.
In 2016, we obtained orphan drug designation in OI for
setrusumab in the United States and the EU and, in November 2017,
it was accepted into the Priority Medicines scheme ("PRIME") of the
EMA. Prior to our acquisition of setrusumab, Novartis conducted
four clinical trials in 106 patients and healthy volunteers. A
Phase 2 clinical trial of setrusumab in OI showed statistically
significant improvements in bone formation biomarkers and bone
mineral density. In April 2017, we initiated a Phase 2b clinical
trial for setrusumab in adults in the United States, Europe and
Canada. The trial was randomized with three blinded arms at high,
medium and low doses to establish the dose response curve and an
open label arm at the top dose. We reported top-line data on the
three blinded dose ranging arms in November 2019 with the results
supporting progression of setrusumab into a pediatric pivotal study
in OI.
Following the completion of the dosing part of the study,
patients are continuing to be followed for a further twelve months
to examine the off-effects of setrusumab. We have agreed a PIP for
setrusumab with the EMA and in February 2020, we announced the
successful completion of a Type B End-of-Phase 2 meeting with the
FDA to discuss the development of setrusumab for the treatment of
children with OI in the United States. We intend to partner
setrusumab prior to conducting a pivotal trial of setrusumab in
children with severe OI with fracture rate as the primary endpoint.
We believe that the results from this trial, if favorable, will be
sufficient to support the submission of an MAA to the EMA for
setrusumab for the treatment of children with severe OI and a CMA
for the treatment of OI in adults in the EU. The partnering
discussions are well underway with a range of potential structures
including options for Mereo to retain commercial rights in certain
regions.
On September 23 2020 we announced that the FDA has granted Rare
Pediatric Disease designation to setrusumab for the treatment of
osteogenesis imperfecta (OI). The FDA grants Rare Pediatric Disease
Designation for serious and life-threatening diseases that
primarily affect children ages 18 years or younger and fewer than
200,000 people in the United States. If a Biologics License
Application ("BLA") in the United States for setrusumab is
approved, Mereo may be eligible to receive a priority review
voucher from the FDA, which can be redeemed to obtain priority
review for any subsequent marketing application and may be sold or
transferred to other companies for their programs, such as has
recently been done by other voucher recipients.
We continue to develop, build and maintain close relationships
with OI patient representative groups in the EU and US,
systematically involving them in our interactions with authorities.
We maintain close relationships with the OI Federation (OIF),
representing the OI community in North America and also remain
close to the KOLs and treating community in the USA, as in the EU.
We recently participated in the ASBMR conference (American Society
for Bone and Mineral Research).
-- Alvelestat (MPH-966): Alvelestat is a novel, oral small
molecule we are developing for the treatment of severe AATD, a
potentially life-threatening, rare, genetic condition caused by a
lack of effective alpha-1 antitrypsin ("AAT"), a protein that
protects the lungs from enzymatic degradation. This degradation
leads to severe debilitating diseases, including early-onset
pulmonar y emphysema, a disease that irreversibly destroys the
tissues that support lung function. There are an estimated 50,000
patients in North America and 60,000 patients in Europe with severe
AATD. Alvelestat is designed to inhibit NE, a neutrophil protease,
which is a key enzyme involved in the destruction of lung tissue.
We believe the inhibition of NE has the potential to protect AATD
patients from further lung damage.
Prior to our license of alvelestat, AstraZeneca conducted 12
clinical trials involving 1,776 subjects, including trials in
bronchiectasis and CF. Although these trials were conducted in
diseases other than AATD, we believe the data demonstrated
potential clinical benefit and biomarker evidence of treatment
effect for AATD patients. We have initiated a Phase 2
proof-of-concept clinical trial in patients with severe AATD in the
United States and the EU and as previously announced, currently
expect to report top-line data from this trial in the second half
of 2021.
We continue to develop, build and maintain close relationships
with the KOLs, treating community and the AATD patient
representative organisations in both the EU and North America. The
Company participated in the recent International Research
Conference on Alpha-1 Antitrypsin and Alpha-1 Global Patient
Congress in April as part of advancing these efforts. Close
collaboration continues with the treating and diagnosing community
in support of the alvelestat development program.
We recently announced the initiation of a Phase 1b/2
placebo-controlled clinical trial to evaluate the safety and
efficacy of alvelestat in hospitalized, adult patients with
moderate to severe COVID-19 respiratory disease.
Acute Lung Injury (ALI) is a manifestation of systemic
inflammation in the lungs that can result from SARS-CoV-2
infection. Neutrophil extracellular traps (NETs), involving the
enzyme neutrophil elastase (NE), may contribute to the pathogenesis
of ALI via cytokine and neutrophil activation. NET formation
(NETosis) also plays an important role in arterial and venous
thrombosis, which have been shown to be common complications of
COVID-19. By inhibiting NE, alvelestat demonstrated efficacy in
preclinical models of treating ALI driven by NETosis.
The Phase 1b/2 trial is a randomized, double-blind,
placebo-controlled study to assess the safety and efficacy of
alvelestat in adult patients hospitalized with moderate to severe
COVID-19 respiratory disease not yet receiving mechanical
ventilation. The trial is led by Dr. J. Michael Wells and will be
conducted at the University of Alabama. Approximately 15 patients
will be randomized (2:1) to receive either alvelestat plus standard
of care or placebo plus standard of care for 10 days. The primary
endpoint of the trial is safety and tolerability of alvelestat at
day 10, with a safety follow up to day 90. Additional endpoints
include blood biomarkers (NETosis, inflammation and
hypercoagulation) and oxygen deficit (as measured by the ratio of
oxygen saturation to the fraction of inspired oxygen, SaO2/FiO2) at
day 10. The trial will also assess clinical outcomes, including
effect on disease progression measured by need for respiratory
support and disease severity using the WHO 9-point ordinal scale at
day 29.
As part of our development plans for alvelestat we are
continuing to support certain investigator-led studies including
the ATALANTA study into AATD led by Mark T. Dransfield and his
team, supported, as previously announced, by an NCATS grant and
also a study into bronchiolitis obliterans syndrome (BOS)
associated with graft-versus-host disease (GvHD) in patients
receiving hematopoietic stem cell transplantation (HSCT) led by
Steven Z Pavletic at the NIH.
Other Product Candidates for Partnering
Our portfolio of products also consists of the following product
candidates:
-- Acumapimod (BCT-197): Acumapimod is a p38 MAP kinase
inhibitor being developed as an oral first-line acute therapy for
patients with AECOPD. COPD is a non-reversible, progressive lung
disease in which inflammation plays a central role. There are an
estimated 16 million people in the United States diagnosed with
COPD. Of all hospital admissions in the United States related to
COPD, approximately 63 per cent. are for AECOPD patients. We
believe acumapimod offers a potential new treatment for controlling
inflammation by targeting pathways that drive the pathological
mechanism b ehind AECOPD. We are seeking separate funding for
Acumapimod.
-- Leflutrozole (BGS-649): Leflutrozole is a once-weekly oral
therapy being developed for the treatment of HH in obese men. HH is
a clinical syndrome that results from inadequate levels of
testosterone. Based on WHO estimates and scientific data, we
estimate there are approximately seven million cases of HH in obese
men in the United States. In these men, a decline in testosterone
is exacerbated by high levels of the aromatase enzyme, which is
present in fat tissue and leads to a reduction in testosterone.
Leflutrozole is designed to inhibit the aromatase enzyme and is
being developed to restore normal levels of testosterone without
causing excessively high testosterone levels or reducing the levels
of LH or FSH. Both LH and FSH play key roles in sperm formation and
LH plays a key role in endogenous testosterone formation. In
contrast to current therapies for HH, which involve the exogenous
administration of testosterone and lead to further down regulation
of LH and FSH, we believe that leflutrozole, by preserving sperm
formation through LH and FSH production, may present a benefit to
patients. We continue to make progress in discussions with global
licensing partners for leflutrozole focused on the potential of
leflutrozole for male infertility.
-- Navicixizumab (OMP-305B83): Navi is a bispecific antibody
that inhibits delta-like ligand 4 (DLL4) and vascular endothelial
growth factor VEGF). We acquired this therapeutic product in the
merger with OncoMed. This antibody is intended to have
anti-angiogenic and anticancer stem cell activity. In a Phase 1a
clinical trial, Navi demonstrated single agent activity. Following
this we conducted a Phase 1b clinical trial in ovarian cancer, in
combination with paclitaxel, in platinum-resistant ovarian cancer.
In January of 2020, the Company entered a global license agreement
with OncXerna (formerly Oncologie) for the development and
commercialization of Navi. Under the agreement, OncXerna is solely
responsible for the future development, manufacturing and
commercialization of the program while Mereo received an upfront
payment and is eligible to receive up to $302million in milestones
and royalties.
Organizational Change and Changes to the Board of Directors
On March 27, 2020, we announced that Michael Wyzga who, at the
time, served as a Non-Executive Director, would become the Interim
Chief Financial Officer following the announced departure of
Richard Jones, the Company's previous Chief Financial Officer
("CFO"). Richard Jones left the Company on 31 July 2020 and Michael
Wyzga currently serves as the Interim Chief Financial Officer as we
continue the search for a new full time CFO.
On September 28, 2020, we announced that Dr. Brian Schwartz,
former Chief Medical Officer of Arqule, Inc. and Dr. Jeremy Bender,
former Vice President of Corporate Development at Gilead Sciences,
Inc. and recently appointed Chief Executive Officer of Day One
BioPharmacueticals, Inc. will join Mereo's Board of Directors. Drs.
Schwartz and Bender, respectively, bring significant oncology and
rare disease drug development and corporate development experience
to Mereo. In order to maintain the number of board members at a
maximum of nine, Paul Blackburn will be leaving Mereo's Board of
Directors after a five year tenure as a Non-Executive Director. The
changes to the Mereo Board will be effective from October 1,
2020.
Update on impact of COVID-19
Coronavirus disease 2019 ("COVID-19") is an infectious
respiratory disease that was first identified in 2019 in Wuhan,
China and has since spread globally. The impact COVID-19 is
evolving rapidly and its future effects are uncertain.
We are actively monitoring how the effects and risks of COVID-19
impact our day-to-day operations, including our ongoing clinical
trial activities:
-- Our current activities on setrusumab for potential treatment
of OI are focussed on completion of the ASTEROID Phase 2b extension
study in adults with OI and preparations for the Phase 3 pediatric
trial, which we intend to start following a partnership. Our Phase
2b ASTEROID study in OI is fully recruited with top-line results
announced in November 2019. Patients who enrolled in this study are
in a one-year follow up post treatment extension phase to monitor
the off-effect of setrusumab.
-- Our Phase 2 alvelestat trial recruits individuals with
alpha-1 antitrypsin deficiency-related lung disease, who are
potentially at greater risk from COVID-19 exposure. As a result,
and as we announced in March 2020, completion of enrolment into our
Phase 2 alpta-1 antitrypsin study will be delayed, with topline
data now currently expected in the second half of 2021.
-- As a business, we have taken necessary measures across our
sites in the U.K. and U.S. to ensure that our employees and other
key stakeholders best adhere to the advice set out by the relevant
authorities. Such measures have included the introduction of remote
working arrangements, reduced face to face contact by encouraging
the use of teleconferencing, a ban on domestic and international
travel as well as other measures considered necessary by our
recently formed COVID-19 committee which is responsible for
business continuity planning during this challenging time.
Financial Review
During the period, the Company completed multiple transactions
to allow for the continued development of our product candidates as
well to meet its liabilities . On 3 June 2020 the Company completed
a $70 million (GBP56 million) private placement. The transaction
comprised of the issue of 89.1 million new ordinary shares of
GBP0.003 each in the Company at a price of 17.4 pence per share for
total proceeds of $19.4 million (GBP15.5 million) and the issue of
convertible notes (the "Loan Notes") for total proceeds of $50.6
million (GBP40.5 million). The investors also received conditional
warrants to subscribe for further ordinary shares (the "Warrants").
The terms of the Loan Notes and Warrants, and, in particular, their
ability to be converted into ordinary shares was conditional on the
passing of certain resolutions (the "Resolutions") at a general
meeting of shareholders on June 30, 2020 (the "General
Meeting").
O n February 10, 2020, the Company entered into a Securities
Purchase Agreement (the "Agreement") to issue up to $28 million of
the Company's ordinary shares exchangeable for American Depositary
Shares ("ADSs"), with Aspire Capital Fund, LLC ("Aspire Capital"),
a Chicago-based institutional investor. Under the terms of the
Agreement, Aspire Capital made an initial investment of $3 million
to purchase 11,4 32 ,925 of the Company's ordinary shares
(equivalent to 2,286,585 ADSs) at a price equivalent to $1.31 per
ADS, which represents a 16% discount over Mereo's ADS closing stock
price of $1.56 on February 8, 2020.
On February 10, 2020, the Company entered into a GBP3.8 million
convertible equity financing with Novartis Pharma (AG)
("Novartis"). Under the terms of the convertible equity financing,
Novartis purchased GBP3.8 million in a convertible loan note ("Loan
Note"). The maturity of the Loan Note is three years from issuance,
and it bears an interest rate of 6% per annum.
On January 13, 2020, the Company entered into a License
Agreement with OncXerna Therapeutics, Inc. ("OncXerna") (formerly
Oncologie Inc.) for the development and commercialisation of Navi.
Under the terms of the License Agreement, with OncXerna the Company
received an upfront payment of GBP3.2 million ($4 million).
Additionally, the Company will be eligible to receive up to $302
million in future milestones and royalties.
During the period, R&D expenditures fell by GBP3.4 million
to GBP8.5 million from GBP11.9 million in the period to June 30,
2019. We are on track to initiate a Phase 1b/2 combination study of
etigilimab in combination with an anti-PD-1 in a range of tumor
types in Q4 2020. We continued the development of our two rare
disease assets setrusumab and alvelestat with R&D expenditure
relating to the adult Phase 2b study with less manufacturing costs
for setrusumab and the Proof of Concept Phase 2 study in
alvelestat. In the same period last year our R&D spend was
focused again on the setrusumab adult Phase 2b study and the
completion of the Phase 2 studies for our specialty products
Acumapimod and Leflutrozole.
Our administrative expenses increased by GBP1.3 million to
GBP8.2 million from GBP6.9 million in 2019. This increase was
predominantly due to one-off legal and professional fees which
increased by GBP0.9 million to GBP2.4 million. Excluding these
amounts administrative expenses in the period were GBP4.9 million
compared to GBP5.3 million in 2019.
Finance charges of GBP97.6 million mainly relate to changes in
fair value of embedded derivatives of GBP63.2 million due to the
re-measurement of the conversion feature of the loan notes issued
as part of the private placement, changes in the fair value of
warrants in connection to private placement GBP31.5 million,
interest accrued and paid in respect of the bank debt of GBP1.3
million together with non-cash finance charges under IFRS 16 of
GBP0.9 million together with GBP0.4 million in respect of the
interest accrued on the loan instruments between issue and
conversion and GBP0.2 million interest on convertible loan
notes.
Income tax benefit represents the estimate of R&D tax credit
accrued during the period. Tax credits for the FY 2019 are expected
to be received in Q4 2020.
The weighted average loss per share for the six-month period was
105 pence (2019: 22 pence) due to a GBP94.6 million non-cash
accounting adjustment for fair value movement of financial
instrument.
Cashflow
We started the year with GBP16.3 million in cash and short-term
deposits. On June 4, 2020 the Company announced the completion of a
GBP56 million ($70 million) fundraising, or GBP51.4 million ($64.2
million) net from the issue of equity, loan notes and warrants to
new and existing shareholders. The net cash inflow in H1 2020 was
GBP40.6 million with cash and short-term deposits at the period end
of GBP56.8 million.
The loss before tax for the period was GBP126.1 million but
after adjusting for non-cash items (namely the fair value movement
on financial instruments of GBP94.7 million and loss on disposal of
intangible fixed assets of GBP11.3 million), net cash outflows from
operating activities were GBP11.2 million (2019: GBP27.6 million).
Net cash inflows from investing activities were GBP1.7 million in
the period (2019: GBP34.0m) reflecting the disposal of
Navicixizumab. Net cash inflows from financing activities were
GBP49.6 million (2019: GBP(3.4 million)), relating to various
transactions described further in the equity section below.
Significant transactions during the period
On January 13, 2020, the Company announced the License Agreement
with OncXerna for the development and commercialization of
Navicixizumab (or "Navi"). Under the terms of the License
Agreement, the Company received an upfront payment of GBP3.2
million ($4 million) with an additional payment of GBP1.6 million
($2 million) to be received conditional on a Chemistry,
Manufacturing and Controls ("CMC") milestone. Additionally, the
Company will be eligible to receive up to $302 million in future
milestones and royalties.
On February 10, 2020, the Company entered into a GBP3.8m million
convertible equity financing with Novartis Pharma AG ("Novartis").
Under the terms of the convertible equity financing, Novartis
purchased GBP3.8 million in a convertible loan note. The loan note
is convertible at any time at a fixed price of GBP0.265 per
ordinary share. In connection with the loan note, the Company
issued a warrant instrument to Novartis to purchase up to 1,449,614
of the Company's ordinary shares.
On February 10, 2020, the Company entered into a Securities
Purchase Agreement to issue up to GBP22.4 million ($28 million) of
the Company's ordinary shares exchangeable for American Depositary
Shares ("ADSs"), including a GBP2.4 million ($3 million) initial
purchase, with Aspire Capital Fund, LLC. In exchange for the GBP2.4
million ($3 million) initial purchase the Company issued 11,432,925
ordinary shares (equivalent to 2,286,585 ADSs). In addition, the
Company issued Aspire Capital Fund, LLC GBP0.2 million ($0.3
million) in the form of 2,862,595 commission ordinary shares
(equivalent to 572,519 ADSs).
On February 19, 2020, the Company entered into a Securities
Purchase Agreement with Boxer Capital, LLC to make an investment of
GBP2.4 million ($3 million) to purchase 12,252,715 of the Company's
ordinary shares (equivalent to 2,450,543 ADSs).
On June 4, 2020 the Company announced the completion of a GBP56
million ($70 million) financing, or approximately GBP51.4 million
($64.2 million) net from the issue of equity, loan notes and
warrants to new and existing shareholders. This is detailed further
in note 5.
In prior periods
In April 2019 the Company agreed an amendment to the terms of
its bank loan. The interest only-period was extended to December
31, 2019 followed by a 15-month capital and interest repayment
period. Also, in June 2019, shortly after completion of the merger,
the balance of the Novartis Loan Notes together with accumulated
interest plus the balance of bonus shares due under the Loan Note
agreement with Novartis were converted into ordinary shares in
Mereo.
Going Concern
As part of the going concern review, the Directors have
considered the funding requirements of the Company through
consideration of the Company's current business plan and the
preparation of detailed cash flow forecasts. The going concern
review prepared by the Directors extends through to 2022 from the
date of approval of these consolidated interim financial
statements.
Based on delivering the business plan objectives set out in the
strategic report of the 2019 Annual Report which include:
-- Commencement later in 2020 of a new Phase 1b/2 study for etigilimab "Anti-TIGIT";
-- Completion of the adult Phase 2b extension study for setrusumab;
-- Completion of the current Phase 2 study for alvelestat; and
-- Commencement and completion of a new Investigator sponsored
study in COVID-19 infected patients initiated at the University of
Alabama.
These forecasts indicate that the Company has a total cash
runway into early 2022 and will have sufficient funds to meet its
liabilities as they fall due for at least the next 12 months.
Further funding to continue to develop our rare disease products
is most likely to come from a mix of additional equity funding and
partnering transactions with third parties, where discussions are
in advanced stages with potential partners. The Directors remain
confident of raising additional funding through either or both of
these routes
In preparing these forecasts the Directors have considered the
impact of COVID-19 and in particular the
unprecedented burden on health systems in impacted countries
around the world. As a result, clinical centres have diverted
resources away from the performance of clinical trials and because
of that and the vulnerability of patients in the Company's
setrusumab clinical development program for osteogenesis imperfecta
(OI)and its Phase 2 alvelestat program for patients with alpha-1
antitrypsin deficiency (AATD), the Company's clinical activities
will face some delays. AATD patients, in particular, are at greater
risk from COVID-19 given that the condition is a respiratory and
lung condition, for this reason, our Phase 2 alvelestat trial will
be delayed with topline data now expected in the second half of
2021. We plan to initiate a Phase 3 study in children with OI
following completion of a partnership.
In conclusion, although the Group continues to make losses, the
Directors believe it is appropriate to prepare the financial
information on the going concern basis.
Outlook
The second half of 2020 is set to be a pivotal period for Mereo.
We are on track to initiate a Phase 1b/2 combination study of
etigilimab in combination with an anti-PD-1 in a range of tumor
types in 75-100 patients in Q4 2020 and look forward to partnering
our setrusumab program prior to initiating the pivotal pediatric
study in OI patients in the US, EU and Canada.
We have re-initiated enrolment in our Phase 2 proof-of-concept
clinical trial in patients with severe AATD in the United States
and the EU and now expect to report top-line data from this trial
in the second half of 2021. We recently announced the initiation of
a Phase 1b/2 placebo-controlled clinical trial to evaluate the
safety and efficacy of alvelestat in hospitalized, adult patients
with moderate to severe COVID-19 respiratory disease and look
forward to reporting data from this study in mid-2021.
Alongside these developments we continue to focus on partnering
opportunities for our broader product pipeline.
We are very pleased to have Dr Brian Schwartz and Dr Jeremy
Bender joining our board and the Company has sufficient balance
sheet strength and runway to deliver on our clinical and business
development milestones.
Consolidated statement of comprehensive loss
for the six months ended June 30, 2020
Six months Six months
ended ended Year ended
June 30, June 30, December
2020 2019 31, 2019
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
------------------------------------- ------- ----------- ----------- --------------
Research and development expenses (8,479) (11,918) (23,608)
Administrative expenses (8,212) (6,918) (15,909)
-------------------------------------------- ----------- ----------- --------------
Operating loss (16,691) (18,836) (39,517)
-------------------------------------------- ----------- ----------- --------------
Net income recognised on acquisition
of subsidiary - 1,035 1,035
Finance income 39 137 377
Finance charge 3 (97,628) (998) (3,496)
Loss on disposal of intangible assets 4 (11,302) - -
Net foreign exchange (loss)/gain (519) (20) 483
Loss before tax (126,101) (18,682) (41,118)
Taxation 1,482 2,459 6,274
-------------------------------------------- ----------- ----------- --------------
Loss for the period, attributable
to equity holders of the parent (124,619) (16,224) (34,844)
--------------------------------------------- ----------- ----------- --------------
Basic and diluted loss per share
for the period (1.05) (0.22) (0.39)
-------------------------------------------- ----------- ----------- --------------
Other comprehensive income / (loss)
Items that may be subsequently reclassified to the income statement
----------------------------------------------------------------------------------------
Fair value changes on investments
held at fair value through OCI 3 88 -
-------------------------------------------- ----------- ----------- --------------
Currency translation of foreign
operations 1,324 711 (499)
-------------------------------------------- ----------- ----------- --------------
Total comprehensive loss for
the period, attributable to equity
holders of the parent (123,292) (15,425) (35,343)
-------------------------------------------- ----------- ----------- --------------
Consolidated balance sheet
as at June 30, 2020
June 30, December 31,
2020 June 30, 2019 2019
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ----------- -------------- -------------
Assets
Non-current assets
Property, plant and equipment 11,225 13,100 11,558
Intangible assets 4 31,876 45,157 44,456
------------------------------- ------ ----------- -------------- -------------
43,101 58,257 56,014
------------------------------- ------ ----------- -------------- -------------
Current assets
Prepayments 1,400 3,068 2,111
R&D tax credits 6,624 7,745 10,426
Other taxes recoverable - - 979
Other receivables 1,836 1,953 572
Short-term investments - 7,828 -
Cash and short-term deposits 56,821 28,290 16,347
66,681 48,884 30,435
------------------------------- ------ ----------- -------------- -------------
Total assets 109,782 107,141 86,449
------------------------------- ------ ----------- -------------- -------------
Equity and liabilities
Equity
Issued capital 7 1,016 294 294
Share premium 7 161,785 121,684 121,684
Other capital reserves 7 127,727 58,004 59,147
Employee Benefit Trust shares 7 (1,305) (1,305) (1,305)
Other reserves 7 4,875 7,000 7,000
Accumulated losses 7 (270,681) (127,357) (146,065)
Translation reserve 7 825 711 (499)
------------------------------- ------ ----------- -------------- -------------
Total equity 24,242 59,031 40,256
------------------------------- ------ ----------- -------------- -------------
Non-current liabilities
Provisions 8 1,698 1,927 1,449
Interest-bearing loans and
borrowings 6 14,506 11,721 5,373
Other liabilities 44 34 44
Warrant liability 9 35,757 225 131
Lease liability 11,167 13,139 9,318
------------------------------- ------ ----------- -------------- -------------
63,172 27,046 16,315
------------------------------- ------ ----------- -------------- -------------
Current liabilities
Trade and other payables 5,489 6,758 6,352
Accruals 2,701 5,961 5,138
Provisions 8 31 334 309
Interest-bearing loans and
borrowings 6 13,254 8,011 15,139
Contingent consideration
liability - - 354
Lease liability 893 - 2,586
------------------------------- ------ ----------- -------------- -------------
22,298 21,064 29,878
------------------------------- ------ ----------- -------------- -------------
Total liabilities 85,540 48,110 46,193
------------------------------- ------ ----------- -------------- -------------
Total equity and liabilities 109,782 107,141 86,449
------------------------------- ------ ----------- -------------- -------------
Consolidated statement of cash flows
for the six months ended June 30, 2020
Six months Six months
ended ended Year ended
June 30, June 30, December
2020 2019 31, 2019
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ------ ----------- ----------- -----------
Operating activities
Loss before tax (126,101) (18,682) (41,118)
Adjustments to reconcile loss
before tax to net cash flows
from operating activities:
* Depreciation and impairment of property, plant and
equipment 1,018 724 1,577
- Share-based payment expense 911 493 1,636
- Net foreign exchange loss
/(gain) 519 20 (483)
* Provision for social security contributions on
employee share options (73) (723) (738)
* Provision for deferred cash consideration 8 111 179 221
* Interest earned (39) (137) (377)
* Finance charges 97,517 1,731 3,731
- Modification gain on bank
loan - (456) (456)
- Gain on bargain purchase - (3,680) (3,681)
- Fair value remeasurement
on contingent
consideration - - 354
- Loss on disposal of intangible - -
assets 11,302
- Transaction costs relating - -
to PIPE 1,349
- Gain on disposal of fixed - -
assets (53)
Working capital adjustments:
- (Increase) in trade and other
receivables (553) (1,483) (936)
- (Decrease) in trade and other
payables (3,329) (5,619) (6,730)
- Tax credits received 6,263 - 1,069
----------------------------------------------------------- ------ ----------- ----------- -----------
Net cash flows from operating
activities (11,158) (27,633) (45,931)
----------------------------------------------------------- ------ ----------- ----------- -----------
Investing activities
Purchase of property, plant
and equipment - - (21)
Proceeds from sale of property, - -
plant and equipment 59
Sale of intangible assets (net - -
of transaction costs) 1,965
Proceeds from sale of short-term
investments - 12,463 32,865
Conversion of short-term investments
into cash and cash equivalents - 11,429 -
Acquisition of subsidiary (354) 10,074 10,074
Interest earned 39 43 377
----------------------------------------------------------- ------ ----------- ----------- -----------
Net cash flows received in
investing activities 1,709 34,009 43,295
----------------------------------------------------------- ------ ----------- ----------- -----------
Financing activities
Proceeds from issue of ordinary
shares 7 20,136 - -
Transaction costs on issue
of shares (1,307) (761) (761)
Proceeds from issue of convertible
loan 44,375 - -
Transaction costs issue of
convertible loan (3,598) - -
Capital repayment of bank loan (8,011) - -
Purchase of treasury shares - (998) (998)
Interest paid on bank loan- (581) (865) (1,739)
Payment of lease liabilities (1,461) (775) (2,212)
----------------------------------------------------------- ------ ----------- ----------- -----------
Net cash generated from / (used
in) financing activities 49,553 (3,399) (5,710)
----------------------------------------------------------- ------ ----------- ----------- -----------
Net increase / (decrease) in
cash and cash equivalents 40,104 2,977 (8,346)
Cash and cash equivalents at
the beginning of the period 16,347 25,042 25,042
Effect of exchange rate changes
on cash and cash equivalents 370 271 (349)
----------------------------------------------------------- ------ ----------- ----------- -----------
Cash and cash equivalents at
the end of the period 56,821 28,290 16,347
----------------------------------------------------------- ------ ----------- ----------- -----------
Consolidated statement of changes in equity
for the six months ended June 30, 2020
Other Employee
Issued Share capital Other Benefit Accumulated Translation Total
capital premium reserves reserves Trust losses reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ -------- --------- --------- --------- ------------ ------------ ----------
At January 1,
2019 - Audited 214 118,492 18,593 7,000 (307) (111,221) - 32,771
Loss for the
period - - - - - (16,224) - (16,224)
Other
comprehensive
income - - - - - 88 711 799
Share-based
payments - share
options - - 354 - - - - 354
Share-based
payments - LTIPS - - 139 - - - - 139
Issue of share
capital on April
23, 2019 for
acquisition
of OncoMed
Pharmaceuticals
Inc 74 - 40,818 - - - - 40,892
Issue of share
capital on
conversion
of loan note 3 2,364 - - - - - 2,367
Issue of share
capital for
Novartis bonus
shares 3 1,589 (1,592) - - - - -
Transaction
costs on
issuance
of share capital - (761) - - - - - (761)
Equity element
of convertible
loan - - (308) - - - - (308)
Purchase of
treasury shares - - - - (998) - - (998)
------------------ ------------------ -------- --------- --------- --------- ------------ ------------ ----------
At June 30,
2019 - Unaudited 294 121,684 58,004 7,000 (1,305) (127,357) 711 59,031
------------------ ------------------ -------- --------- --------- --------- ------------ ------------ ----------
Loss for the
period - - - - - (18,620) - (18,620)
Other
comprehensive
income - - - - - (88) (1,210) (1,298)
Share-based
payments - share
options - - 1,189 - - - - 1,189
Share-based
payments - LTIPS - - (46) - - - - (46)
At December
31, 2019 -
Audited 294 121,684 59,147 7,000 (1,305) (146,065) (499) 40,256
------------------ ------------------ -------- --------- --------- --------- ------------ ------------ ----------
Loss for the
period - - - - - (124,619) - (124,619)
Other
comprehensive
income - - - - - 3 1,324 1,327
Share-based
payments - share
options - - 1,061 - - - - 1,061
Share-based
payments - LTIPS - - (150) - - - - (150)
Issued on
February
11, 2020 for
Securities
Purchase
Agreement with
Aspire Capital 34 2,287 - - - - - 2,321
Issued on
February
11, 2020 for
Securities
Purchase
Agreement with
Aspire Capital 9 224 - - - - - 233
Transaction
costs on
issuance
of share capital - (147) - - - - - (147)
Issued on
February
20, 2020 for
Securities
Purchase
Agreement with
Boxer Capital 37 2,267 - - - - - 2,304
Transaction
costs on
issuance
of share capital - (31) - - - - - (31)
Issued on June
4, 2020 private
placement of
ordinary shares 267 15,244 - (2,125) - - - 13,386
Transaction
costs on
issuance
of share capital - (1,129) - - - - - (1,129)
Issued on June
30, 2020 for
conversion of
loan notes 375 21,386 33,104 - - - - 54,865
Equity component
of Novartis
convertible
loan instrument
and related
warrants - - 1,084 - - - - 1,084
Reclassification
of the remaining
Loan Note
embedded
derivative
following
the Resolutions
passing - - 33,481 - - - - 33,481
At June 20,
2020 - Unaudited 1,016 161,785 127,727 4,875 (1,305) (270,681) 825 24,242
------------------ ------------------ -------- --------- --------- --------- ------------ ------------ ----------
Notes to the interim report
1. Corporate information
These financial statements are the unaudited condensed interim
consolidated financial statements of Mereo BioPharma Group plc and
its subsidiaries (collectively, the "Group") for the six months
ended June 30, 2020 were authorised for issue by the Directors on
September 28, 2020. Mereo BioPharma Group plc (the "Company" or the
"parent") is a public limited company incorporated and domiciled in
the United Kingdom and whose shares are publicly traded on the AIM
Market of the London Stock Exchange with a secondary listing of its
American Depositary Receipts (ADR's) on the Nasdaq Global
Market.
The registered office is located at Fourth Floor, 1 Cavendish
Place, London W1G 0QF.
The Group is principally engaged in the research and development
of novel pharmaceuticals.
2. Basis of preparation
The interim condensed consolidated financial statements for the
six-month period ended June 30, 2020 have been prepared in
accordance with International Accounting Standards (IAS) 34 Interim
Financial Reporting. They do not include all the information
required for a complete set of IFRS financial statements. However,
selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the
changes in the Group since the most recent annual financial
statements (December 31, 2019). For comparative purposes a
consolidated balance sheet as at June 30, 2019 has also been
presented. The financial information is presented in Sterling.
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's consolidated
financial statements for the year ended December 31, 2019. As a
result of a new transaction during the period additional accounting
policies have been applied and are disclosed below.
These condensed interim financial statements are unaudited and
do not constitute statutory accounts of the Group as defined in
section 434 of the Companies Act 2006.
The financial information for the year ended December 31, 2019
has been extracted from the Group's published financial statements
for that year, and a copy of the statutory accounts for that
financial year has been delivered to the Registrar of Companies.
The auditors reported on those accounts and their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
Classification as debt or equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangements and the definitions of a financial
liability and an equity instrument.
Embedded derivatives
An embedded derivative is a component of a hybrid contract that
also includes a non-derivative host with the effect that some of
the cash flows of the combined instrument vary in a way similar to
a stand-alone derivative. Derivatives embedded in hybrid contracts
with hosts that are not financial assets within the scope of IFRS 9
(e.g. financial liabilities) are treated as separate derivatives
when they meet the definition of a derivative, their risks and
characteristics are not closely related to those of the host
contracts and the host contracts are not measured at FVTPL.
Revision of previously issued financial statements
We have identified a classification error in our unaudited
interim statement of comprehensive loss for the period ended June
30, 2019 related to loan modification gain. In correcting the
error, administrative expenses increased by GBP0.5 million and
finance charges decreased by an equivalent amount. There was no
impact on net loss. We evaluated the materiality of the error
quantitatively and qualitatively and concluded it was not material
to our previously issued interim condensed consolidated financial
statements as a whole for the period ended and as of June 30, 2019.
Please refer to Financial statement note 6b.
Segmental information
Management views the business as a single portfolio of product
candidates. Only R&D expenses are monitored at a product
candidate level, however, the Chief Operating Decision Maker (CODM)
makes decisions over resource allocation at an overall portfolio
level. The Group's financing is managed and monitored on a
consolidated basis. All non-current assets held by the Group are
located in the U.K. and U.S.
The Group's CODM is the executive management team (comprised of
the Chief Executive Officer, Interim Chief Financial Officer, Chief
Medical Officer, General Counsel, the Head of Corporate Development
and the Head of Patient Access and Commercial Planning) which
manages the operating results of the business.
The operations of the Group are not prone to seasonal or
cyclical variations. The operations of the Group are mostly
influenced by the timing of progression on underlying clinical
development programmes across product candidates which remain under
development.
Going Concern
These consolidated condensed interim financial statements have
been prepared on a going concern basis, which contemplates the
realisation of assets and the payment of liabilities in the
ordinary course of business. The Group incurred net losses of
GBP124.6 million and GBP16.2 million for the six month period ended
30 June 2020 and 30 June 2019 respectively. As at 30 June 2020, the
Group had total cash resources of GBP56.8 million and net current
assets of GBP44.4 million.
As part of the going concern review, the Directors have
considered the funding requirements of the Group through
consideration of the Group's current business plan and the
preparation of detailed cash flow forecasts. The going concern
review prepared by the Directors extends through to 2022 from the
date of approval of these consolidated interim financial
statements.
In preparing these forecasts the Directors have considered the
impact of COVID-19 and in particular the unprecedented burden on
health systems in impacted countries around the world. As a result,
clinical centres have diverted resources away from the performance
of clinical trials and because of that and the vulnerability of
patients in the Company's setrusumab clinical development program
for osteogenesis imperfecta (OI) and its Phase 2 alvelestat program
for patients with alpha-1 antitrypsin deficiency (AATD), the
Company's clinical activities will face some delays. AATD patients,
in particular, are at greater risk from COVID-19 given that the
condition is a respiratory and lung condition, for this reason, our
Phase 2 alvelestat trial will be delayed with topline data now
expected in the second half of 2021. We are also currently planning
to initiate a Phase 3 study in children with OI once a partnership
has been concluded.
In addition, the Directors have considered a downside scenario
involving an increase in operating overheads, an increase in the
costs of setting up and running the planned Phase 1b study for
etiligimab when this study is contracted out to third parties and
increased investment in manufacturing development costs for
setrusumab. In addition, in this scenario the forecasts also
indicate that the Group will have sufficient funds to meet its
liabilities as they fall due for at least the next 12 months.
In both scenarios the Directors have not taken into account
potential income from partnering one or more of its assets which
would increase the cash resources available to the Group.
In conclusion, although the Group continues to make losses, the
directors believe it is appropriate to prepare the financial
information on the going concern basis. This is because the Group's
development into new products continues to progress according to
plan and the funding secured to date will allow it to meet its
liabilities as they fall due for at least 12 months from the date
of authorization for the issue of these consolidated condensed
interim financial statements.
Significant accounting estimates and judgments
The preparation of these financial statements requires the
management of the Company to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and
expenses. The Company bases its estimates and judgments on
historical experience and on various other assumptions that it
considers to be reasonable. Actual results may differ from these
estimates under different assumptions or conditions.
The significant accounting estimates and judgments adopted in
the preparation of the interim condensed consolidated financial
statements are consistent with those followed in the preparation of
the Company's consolidated financial statements for the year ended
December 31, 2019, with the addition of those disclosed below as a
result of the private placement detailed in Note 5.
Judgments
Identification and classification of financial instruments from
the private placement
On June 3, 2020 (the transaction date), the Company completed a
private placement (Note 5) which comprised the issue of Ordinary
Shares, Loan Notes and Warrants. Judgment is applied under IAS 32
(Financial instruments: Presentation) in determining the features
of the identified financial instruments on both the transaction
date and the date of the General Meeting at which Resolutions
relating to the private placement were voted on by the
Shareholders, to determine the appropriate recognition in
accordance with IAS 32. In applying this judgment, Management
considered the probability of passing the Resolutions at the
General Meeting and the likelihood of a change of control prior to
the passing of the Resolutions, which impact the settlement terms
of the financial instruments, and the classification of the
financial instruments as liabilities or equity. Management
concluded that a change of control event is uncertain and outside
of the Company's control, and therefore the conversion feature on
the Loan Notes at transaction date represents a financial liability
with an embedded derivative for the conversion option. On the
passing of the Resolutions, judgment was applied to determine that
the effective terms of the Loans Notes changed, and Management
elected to reclassify the embedded derivative financial liability
representing the conversion option to equity at its fair value,
with no gain or loss in profit or loss at the date of
reclassification.
Estimates
Fair value of private placement financial instruments
As part of the private placement (Note 5) the Group performed a
valuation of the fair value of the identified financial instruments
on the transaction date and the General Meeting date. For
qualifying instruments, the fair value is reassessed at each
balance sheet date. Specific consideration was applied to the
estimation of implied share price on the transaction date, the
volatility, credit spread and discount rate.
3. Finance charges and fair value movement on financial
instruments
Finance charges
Year ended
December
31,
Six months
to June
30, 2020
Unaudited 2019
GBP'000 Six months
to June
30, 2019
Unaudited Audited
GBP'000 GBP'000
-------------------------------------------- ------------ ----------- -----------
Interest on convertible loan (183) (20) (20)
Interest on private placement loan note (423) - -
Interest on TAP funding - - (10)
Interest on bank loan (581) (1,607) (1,739)
Interest on lease liabilities (873) (428) (1,314)
Accreted interest on bank loan (753) - (1,523)
Modification gain on bank loan - 456 456
Discounting of provision for deferred cash
consideration (111) (179) (221)
Change in warrant fair value (53) 780 875
Changes in the fair value of the embedded (63,158) - -
derivative
Changes in the fair value of warrants in (31,493) - -
connection to private placement
Total finance charge (97,628) (998) (3,496)
-------------------------------------------- ------------ ----------- -----------
4. Intangible assets
Acquired
development
programs
At December 31, 2019 - Audited GBP'000
----------------------------------------- -------------
Cost 45,527
Accumulated revision to estimated value (1,071)
Net book amount 44,456
----------------------------------------- -------------
Six months ended June 30, 2020 - Unaudited
-------------------------------------------- ---------
At January 1, 2020 44,456
Sale of Navi (13,386)
Revision to estimated value 806
-------------------------------------------- ---------
At June 30, 2020 31,876
-------------------------------------------- ---------
At June 30, 2020 - Unaudited
----------------------------------------- -------
Cost 32,141
Accumulated revision to estimated value (265)
Net book amount 31,876
----------------------------------------- -------
The present value of the provision for deferred cash
consideration relating to the agreement with AstraZeneca was
reviewed at June 30, 2020 (see Note 8). The decrease in present
value due to changes in timelines and probability of contractual
milestones being achieved was GBP67,000 (2019: GBP169,000) and is
recognized as a reduction of the intangible asset in line with our
accounting policies.
During the period the Group did not revise the value of any
other intangible assets (2019: GBPnil). As the intangible assets
remain under development, no amortisation charge has been
recognised (2019: GBPnil).
On January 13, 2020, the Company entered into a License
Agreement with OncXerna for the development and commercialisation
of Navi. Under the terms of the License Agreement, the Company
received an upfront gross payment of GBP3.2 million ($4 million).
Additionally, the Company will be eligible to receive up to $302
million in future milestones and royalties.
The Company's wholly owned subsidiary, Oncomed Pharmaceuticals,
Inc. has granted an exclusive worldwide licence to OncXerna in
respect of intellectual property rights for Navi ("IP"). The
transaction was recorded as a disposal and IP with a carrying value
of GBP13.4 million ($16.5 million) was derecognised as a result of
the License Agreement. Although pursuant to the License Agreement
Mereo is entitled to additional payments of up to $302 million as
at the current time no reliable estimate can be made of the future
amounts to be received as the amounts are contingent on future
events that are uncertain, the restrictive nature of IFRS 15
resulted in none of the milestone payments being recognised upfront
in the half year ended 30 June 2020. Consequently, Mereo recognised
a loss on disposal in the amount of GBP11.3 million ($13.9 million)
(net of transaction costs) in the half year ended 30 June 2020.
5. Private Placement and Securities Purchase Agreement
On June 3, 2020, the Company completed a GBP56 million ($70
million) private placement (the "Transaction"). The Transaction
comprised of the issue of 89.1 million new ordinary shares of
GBP0.003 each in the Company at a price of 17.4 pence per share for
total proceeds of GBP15.5 million ($19.4 million) and the issue of
convertible notes (the "Loan Notes") for total proceeds of GBP40.5
million ($50.6 million). The investors also received conditional
warrants to subscribe for further ordinary shares (the
"Warrants").
The terms of the Loan Notes and Warrants, and, in particular,
their ability to be converted into ordinary shares was conditional
on the passing of certain resolutions (the "Resolutions") at a
subsequent general meeting of shareholders (the "General Meeting")
held on 30 June 2020, and there being no change of control before
the Resolutions were passed. At that date the Resolutions were
passed and the Loan Notes became convertible into Ordinary Shares
at 17.4p. Had the Resolutions not passed on or before August 7,
2020, the Loan Notes would not convert into Ordinary Shares, the
Warrants would not have become capable of exercise and the holders
of the Loan Notes and Warrants would have become entitled to
certain additional amounts up to GBP137 million.
The Loan Notes are constituted by the Note Instrument, details
of which are set out below. The Warrants are constituted by the
Warrant Instrument, details of which are also set out below.
Note Instrument
The Note Instrument constitutes three potential tranches of Loan
Note:
-- an initial tranche of 40,533,671 Tranche 1 Notes (the Loan
Notes) representing GBP40.5 million ($50.6 million) issued to all
Purchasers;
-- a second tranche of up to GBP40.0 million Tranche 2 Notes
representing approximately 115,034,554 ordinary shares which may be
issued following the third anniversary of the date on which the
Resolutions are passed to certain holders of Tranche 1 Notes in
lieu of the holder exercising its subscription rights under the
Warrants and in return for payment by that holder of the aggregate
exercise price of the relevant Warrants; and
-- a third tranche of up to GBP56.0 million Tranche 3 Notes,
which was not issued as the Resolutions were passed at the General
Meeting.
The Loan Notes have a maturity date of June 2023 unless
otherwise extended, converted or accelerated. The Tranche 2 Notes
have a maturity date of three years from their date of issue (i.e.
such that they would be anticipated as becoming due in 2026) unless
otherwise extended, converted or accelerated. The Tranche 3 Notes
have a maturity date of August 2025 unless otherwise extended,
converted or accelerated. The Loan Notes and Tranche 2 Notes may be
extended by certain holders beyond the initial maturity date to
have a longstop maturity date of 10 years from the date of the Note
Instrument.
The Loan Notes initially bore interest at a xed rate of 10 per
cent. per annum, which was retroactively reduced to a rate of 6 per
cent. per annum to the date of issue as the Resolutions were
passed. If the Loan Notes are extended, they cease to bear interest
from that extension. Tranche 2 Notes do not accrue interest (unless
default interest applies). Following an event of default by the
Company, default interest will accrue on all Loan Notes at 2 per
cent. above the applicable interest rate in force at that time for
the relevant Loan Notes.
The Loan Notes are unsecured and were contractually subordinated
to the Company's existing senior debt facility pursuant to the
terms of a Subordination Agreement
If the Resolutions had not been passed before August 7, 2020 the
holders of Loan Notes would have been entitled to certain
additional fees and an original holder of the Warrants could have
elected without payment to convert its Warrants into fully paid
Tranche 3 Notes with a principal amount equal to the aggregate
exercise price (being 34.8 pence per Warrant Share) of those
Warrants, in compensation for the right to exercise those Warrants
not having arisen. If the Resolutions had not been passed at a time
when the Company underwent a change of control, each Noteholder
would have had certain right to further payments.
Until the Resolutions had passed, no Loan Notes were capable of
conversion.
The Loan Notes are required to be repaid on the earlier of (i)
the applicable maturity date; (ii) a change of control taking place
in respect of the Company, or (iii) if accelerated following an
event of default, and are otherwise not able to be prepaid other
than with the consent of a noteholder majority.
The Loan Notes are subject to customary events of default (for
example, insolvency events in respect of the Company and default
under the Company's material contracts, amongst others) and any
principal amount and interest outstanding is capable of being
accelerated following the occurrence of such an event of default
and the expiry of any cure periods applicable thereto.
Warrants
All the participants in the Fundraising received conditional
warrants to subscribe for further Ordinary Shares in an aggregate
number equal to 50 per cent. of both the Ordinary Shares purchased
in the Fundraising and the Ordinary Shares issuable upon conversion
of the Loan Notes. A total of 161,048,366 Warrants were issued.
The Warrants have an exercise price of 34.8 pence per Ordinary
Share, which is equal to 200 per cent. of the Fundraising issue
price and are capable of being exercised at any time from and after
the date the Resolutions were passed at the General Meeting and
ending on the third anniversary of the date of passing of the
Resolutions. The Warrants can be exercised for cash or on a
cashless basis.
If the Resolutions had not been passed at the General Meeting
(or at any subsequent general meeting), the Warrants would have
remained non-exercisable but would, until August 8, 2025, continue
to bene t from rights to participate in certain transactions.
The Warrant exercise price and the number of shares issuable
upon exercise of the Warrants will be adjusted in certain
circumstances, including if the Company effects a subdivision or
consolidation of its Ordinary Shares, declares a dividend or
distribution, or there is a reorganisation of its Ordinary
Shares.
The General Meeting was held on June 30, 2020, when the
Resolutions were passed. As a result, the Loan Notes in an
aggregate principal amount of GBP21,660,999 (together with accrued
interest) were automatically converted into 125,061,475 new
ordinary shares, and the Loan Notes in an aggregate principal
amount of GBP18,872,672 remain outstanding and convertible into new
ordinary shares in accordance with their terms. If not converted,
these will be redeemed in June 2023 at par and accrue interest at
6% until maturity, unless extended at the option of the holder.
For accounting purposes, the Company first assessed that the
Loan Notes and Warrants represented separate financial instruments.
Transaction costs directly attributable to the private placement
were apportioned across the Ordinary Shares, Loan Notes and
Warrants.
Initial recognition on Transaction Date
Under the terms of the Loan Notes, the Company had an obligation
to pay in cash a Change of Control Payment if a change of control
event happened prior to the Resolutions being passed. Given both
events (the Resolutions being passed and a change of control event)
were uncertain future events which were outside of the Company's
control, the Company would not always deliver a fixed amount of
equity for receipt of a fixed amount of cash. As a result,
management concluded that the Loan Notes represented a financial
liability in their entirety, i.e. it is a hybrid instrument with an
embedded derivative for the conversion option. The Loan Notes were
initially recognised at their fair value of GBP38.6 million (i.e.
debt host instrument in the amount of GBP26.7 million plus the
embedded derivative in the amount of GBP11.9 million, before
transaction costs).
As of the issuance date, the Company did not have an
unconditional right to avoid a cash settlement of the Warrants. As
a result, management concluded that the Warrants would be
classified as a financial liability. Given the Warrants met the
definition of a derivative, management concluded that the Warrants
would be accounted for at fair value through profit or loss on
issuance date. The initial fair value of the Warrants was GBP4.1
million.
Subsequent accounting for these financial instruments is
detailed in note 6C.
The issue of 89.1 million new ordinary shares at a price of 17.4
pence per share was recorded in share capital and share premium,
net of transaction costs, in accordance with UK Company law as
described in Note 6. From the valuation performed it was determined
that the ordinary shares in substance were issued at a discount to
the legal proceeds received, and the discount was recognised as an
unrealized loss in retained earnings.
Securities Purchase Agreements
Aspire Capital Fund, LLC
On February 10, 2020, the Company entered into a Securities
Purchase Agreement (the "Agreement") to issue up to $28 million of
the Company's ordinary shares exchangeable for American Depositary
Shares ("ADSs"), with Aspire Capital Fund, LLC ("Aspire Capital"),
a Chicago-based institutional investor.
Under the terms of the Agreement, Aspire Capital made an initial
investment of GBP2.3 million ($3 million) to purchase 11,432,925 of
the Company's ordinary shares (equivalent to 2,286,585 ADSs) at a
price equivalent to $1.31 per ADS, which represents a 16% discount
over Mereo's ADS closing stock price of $1.56 on February 8, 2020.
In addition, the Company issued Aspire Capital Fund, LLC GBP0.2
million ($0.3 million) in the form of 2,862,595 ordinary shares
(equivalent to 572,519 ADSs) to settle the commission payable.
Under the terms of the Agreement, Aspire Capital has also
committed to subscribe for up to an additional $25 million of
Mereo's ordinary shares exchangeable for ADSs from time to time
during a 30-month period at Mereo's request. In consideration for
Aspire Capital's commitment to funding, Mereo paid Aspire Capital a
commission satisfied wholly by the issue to Aspire Capital of a
further 2,862,595 of the Company's ordinary shares (equivalent to
572,519 ADSs).
To date, Mereo has not exercised its option to require Aspire
Capital to subscribe for additional shares. This option is
accounted for as a derivative financial instrument in accordance
with IFRS 9, which has been valued at GBPnil at the reporting
date.
Boxer Capital, LLC
On February 19, 2020, the Company entered into a Securities
Purchase Agreement with Boxer Capital, LLC to make an investment of
GBP2.3 million ($3 million) to purchase 12,252,715 of the Company's
ordinary shares (equivalent to 2,450,543 ADSs).
6. Interest bearing loans and borrowings
Six months Six months Year ended
ended ended December
June 30, June 30, 31, 2019
2020 Unaudited 2019 Unaudited Audited
GBP GBP GBP
---------------------------------- ---------------- ---------------- -----------
Convertible loan notes (see Note 2,941 - -
6a)
Bank loan (see Note 6b) 13,254 19,732 20,512
Debt host instrument (see Note 11,565 - -
6c)
---------------------------------- ---------------- ---------------- -----------
At end of year/period 27,760 19,732 20,512
---------------------------------- ---------------- ---------------- -----------
Current 13,254 8,011 15,139
Non-current 14,506 11,721 5,373
---------------------------------- ---------------- ---------------- -----------
6a. Novartis Convertible loan note
On February 10, 2020, the Company entered into a GBP3.8 million
convertible equity financing with Novartis Pharma (AG)
("Novartis"). Under the terms of the convertible equity financing,
Novartis will purchase GBP3.8 million in a convertible loan note
(the " Novartis Loan Note").
The Novartis Loan Note is convertible at any time at the option
of the holder, at a fixed price of GBP0.265 per ordinary share. The
maturity of the Novartis Loan Note is three years from issuance,
and it bears an interest rate of 6% per annum.
In connection with the Novartis Loan Note, the Group issued
1,449,614 warrants to Novartis (the "Novartis Warrants"). These
warrants will be capable of exercise until February 10, 2025 at an
exercise price of GBP0.265.
The fair value of the equity components of the Novartis Loan
Note at June 30, 2020 was calculated as GBP1.1 million which
includes the conversion feature and the warrants.
6b. Bank loan
On April 23, 2019, following completion of the acquisition of
OncoMed Pharmaceuticals, Inc. the Group agreed an amendment to the
terms of its bank loan with the lenders. The new terms extended the
interest-only period to December 31, 2019 followed by a 15-month
capital and interest repayment period. The Group has undertaken an
assessment under IFRS 9 and believe that the change in terms should
not be accounted for as a modification under IFRS 9, but instead as
a change in expected cash flows. The cash flows under the bank loan
were revised from May 1, 2019.
Management estimated the revised carrying value of the loan on
May 1, 2019 to be GBP19.9 million by discounting the revised cash
flows at the original discount rate of 18%. The difference between
the previous and revised carrying value of the loan on May 1, 2019
was GBP0.5 million. The gain as a result of the changes in
estimated cash flows is recognized as a true-up in total finance
cost (i.e. together with interest expense). Following the
re-estimation, the financial liability continues to be accounted
for at amortized cost using the original effective interest
rate
On May 3, 2019, under the terms of the loan agreement, the
Company issued 321,444 additional warrants (the "Bank Loan
Warrants") to its lenders giving them the right to subscribe for
ordinary shares at an exercise price of GBP2.95. The fair value of
the additional warrants as of their grant date (May 3, 2019) was
GBP131,150.
The total carrying value of the loan at June 30, 2020 was
GBP13,254,414 (2019: GBP19,732,236). The total carrying value of
the loan is a current liability. A total of GBP753,242 (2019:
GBP742,909) of non-cash interest has been charged to the statement
of comprehensive loss in the period.
6c. The Loan Notes
The Loan Notes were classified as a financial liability on
initial recognition. Non-closely related embedded derivatives
relating to the conversion feature, term-extension and change of
control features were bifurcated and accounted for at FVTPL, with
the debt host contract being measured at amortised cost.
The fair value of the embedded derivative liability was
GBP11,913,213 on initial recognition. During the period, changes in
the fair value of the embedded derivative totalling GBP63,157,926
were recognised as an expense in profit or loss. GBP422,528
non-cash interest has been charged to the statement of
comprehensive loss in the period. The fair value of the embedded
derivative relating to the term extension feature and change of
control feature is GBPNil at June 30, 2020.
The Loan Notes were not convertible until certain Resolutions
were passed at the Company's General Meeting dated June 30, 2020,
following which Loan Notes in an aggregate principal amount of
GBP21,660,999 (together with accrued interest) were automatically
converted into 125,061,475 new ordinary shares. This has been
recorded as a GBP13,274,129 reduction in interest bearing loans
together with the derecognition of the embedded derivative relating
to the conversion feature (GBP41,590,307). A corresponding entry
was made to equity with no gain or loss recognised on conversion.
The remaining portion of the embedded derivative relating to the
conversion feature attributable to the Loan Notes remaining in
issue was reclassified to equity to reflect the effective change in
the terms of the feature following the passing of the
Resolutions.
The movements in the carrying value of the liability component
of the Loan Notes is included in the table below:
Six months Six months Year ended
ended ended December
June 30, June 30, 31, 2019
2020 Unaudited 2019 Unaudited Audited
GBP GBP GBP
--------------------------------------- ---------------- ---------------- -----------
Liability component at date of 24,417 - -
issue (net of transaction costs)
Interest charged (using effective 422 - -
interest rate)
Reclassified to equity (13,274) - -
--------------------------------------- ---------------- ---------------- -----------
Carrying amount of liability component 11,565 - -
--------------------------------------- ---------------- ---------------- -----------
The movements in the carrying value of the embedded derivative
relating to the conversion feature is included in the table
below:
Six months Six months Year ended
ended ended December
June 30, June 30, 31, 2019
2020 Unaudited 2019 Unaudited Audited
GBP GBP GBP
------------------------------------ ---------------- ---------------- -----------
At the beginning of the year/period - - -
Arising during the year/period 11,913 - -
Movement during the year/period - - -
- Fair value movements recorded 63,158 - -
in profit or loss (recognised
within 'FV changes on derivative
financial instruments held
at FVTPL')
Reclassified to equity (75,071) - -
------------------------------------ ---------------- ---------------- -----------
At the end of the year/period - - -
------------------------------------ ---------------- ---------------- -----------
The change in fair value of the embedded derivative liability
above represents an unrealised loss.
The fair value of the embedded derivative was calculated by
comparing the fair value of the hybrid instrument and the fair
value of the host debt, which excludes the conversion features,
using a discounted cash flow model as well as Black Scholes model
for the hybrid contract.
The following table lists the inputs into the model used to fair
value the embedded derivative at inception and at the balance sheet
date:
June 3, June 30,
2020 Unaudited 2020 Unaudited
---------------------------------------- ----------------- -----------------
Expected volatility (%) 61 61
Risk-free interest rate (%) 0.27 0.19
Credit spread % 2014.5bps 1858.5bps
Expected life of share options (years) 3 3
Market price of ordinary shares (GBP) 0.19 0.46
Probability of resolutions passing (%) 90 100
Model used Discounted Discounted
Cash flow/Black Cash flow/Black
Scholes Scholes
model model
---------------------------------------- ----------------- -----------------
Volatility was estimated by reference to the 30-day historical
volatility of the share price of the company. Credit spread was
determined based on the estimate of an implied credit rating of the
Group between B and C. The volatility and credit spread are key
unobservable inputs that require significant judgment and,
therefore, the embedded derivatives were categorised within level 3
of the fair value hierarchy. If the volatility is increased to 66%,
while holding the credit spread constant, the carrying value of the
embedded derivative as of 30 June 2020 (immediately prior to the
reclassification to equity) would increase to GBP77,619,283. If the
credit spread is increased by 500bps to 2,358.50bps, while holding
the volatility constant, the carrying value of the embedded
derivative as of 30 June 2020 (immediately prior to the
reclassification to equity) would increase to GBP78,636,053.
7. Issued capital and reserves
Six months to June 30, Six months to June 30, Year ended December 31,
2020 2019 2019
Unaudited Unaudited Audited
---------------------------- --------------------------- --------------------------- ---------------------------
GBP'000 GBP'000 GBP'000
---------------------------- --------------------------- --------------------------- ---------------------------
Ordinary share capital
Balance at beginning of
year/period 294 214 214
Issuances in the period 722 80 80
----------------------------- --------------------------- --------------------------- ---------------------------
Nominal share capital at end
of year/period 1,016 294 294
----------------------------- --------------------------- --------------------------- ---------------------------
Ordinary shares issued and
fully paid
At January 1, 2020 97,959,622
Issued on February 11, 2020
for Securities Purchase
Agreement with Aspire
Capital 11,432,925
Issued on February 11, 2020
for Securities Purchase
Agreement with Aspire
Capital 2,862,595
Issued on February 20, 2020
for Securities Purchase
Agreement with Boxer
Capital 12,252,715
Issued on June 4, 2020 for
private placement of
ordinary shares 89,144,630
Issued on June 30, 2020 for
conversion of loan notes 125,061,475
At June 30, 2020 338,713,962
----------------------------- --------------------------- --------------------------- ---------------------------
Nominal value at June 30,
2020 (GBP) 0.003
Issued capital at June 30,
2020 (GBP) 1,016,142
----------------------------- --------------------------- --------------------------- ---------------------------
Ordinary shares issued and fully paid
At January 1, 2019 71,240,272
Issued on April 23, 2019 for OncoMed acquisition 24,783,320
Issued on June 21, 2019 for conversion of loan note 1,936,030
At June 30, 2019 97,959,622
----------------------------------------------------- ------------------
Nominal value at June 30, 2019 (GBP) 0.003
Issued capital at June 30, 2019 (GBP) 293,879
----------------------------------------------------- ------------------
Ordinary shares issued and fully paid
At July 1, 2019 97,959,622
At December 31, 2019 97,959,622
----------------------------------------------------- ------------------
Nominal value at December 31, 2019 (GBP) 0.003
Issued capital at December 31, 2019 (GBP) 293,879
----------------------------------------------------- ------------------
Since January 1, 2020, the following alterations to the
Company's share capital have been made:
i) On February 11, 2020 the Company issued and allotted
11,432,925 ordinary shares of GBP0.003 in nominal value in the
capital of the Company at a price of GBP0.20 per share to
investors. Gross cash received was GBP2,321,738;
ii) On February 11, 2020 the Company issued and allotted
2,862,595 ordinary shares of GBP0.003 in nominal value in the
capital of the Company at a price of GBP0.08 to settle the
commission on the Aspire fund raise.;
iii) On February 20, 2020 the Company issued and allotted
12,252,715 ordinary shares of GBP0.003 in nominal value in the
capital of the Company at a price of GBP0.19 per share to
investors. Gross cash received was GBP2,303,510;
iv) On June 4, 2020 the Company issued and allotted 89,144,630
ordinary shares of GBP0.003 in nominal value in the capital of the
Company at a price of GBP0.17 per share to investors. Gross cash
received was GBP15,511,166. The ordinary shares were in substance
issued at a discount to the Gross cash received. The fair value of
the consideration of the ordinary shares was determined to be
GBP13,385,976 and therefore the ordinary shares were in substance
issued at a discount of GBP2,125,190, which was recorded as a
reduction to other reserves (other reserves represent amounts that
relate to changes to the Company's paid up equity and which are not
capital reserves) in the Statement of changes in equity. The
incremental directly attributable transaction costs in relation to
the issue of the ordinary shares were included within share
premium;
v) On June 30, 2020 the Company issued and allotted 125,061,475
ordinary shares of GBP0.003 in nominal value in the capital of the
Company at a price of GBP0.17 per share to investors. On conversion
of the loan notes the legal proceeds were GBP21,760,697;
GBP'000
--------------------------------------------------------------- --------
Share premium
At January 1, 2020 - Audited 121,684
Issued on February 11, 2020 for Securities Purchase Agreement
with Aspire Capital 2,287
Issued on February 11, 2020 for Securities Purchase Agreement
with Aspire Capital 224
Transaction costs for issued share capital (147)
Issued on February 20, 2020 for Securities Purchase Agreement
with Boxer Capital 2,267
Transaction costs for issued share capital (31)
Issued on June 4, 2020 for private placement of ordinary
shares 15,244
Transaction costs for issued share capital (1,129)
Issued on June 30, 2020 for conversion of the Loan Notes 21,386
At June 30, 2020 - Unaudited 161,785
--------------------------------------------------------------- --------
Share premium
At January 1, 2019 - Audited 118,492
Issued on June 21, 2019 for conversion of Novartis loan
note 3,953
Transaction costs for issued share capital (761)
--------------------------------------------------------------- --------
At June 30, 2019 - Unaudited 121,684
--------------------------------------------------------------- --------
At December 31, 2019 - Audited 121,684
--------------------------------------------------------------- --------
Other capital reserves
Warrants
Equity issued
Other Share-based component for TAP Merger
Reserves payments of convertible funding reserve
GBP'000 GBP'000 loan GBP'00 GBP'000 GBP'000 Total GBP'000
---------------------- ---------- ------------ ---------------- --------- ---------- --------------
At January 1,
2020
Audited - 18,285 - 44 40,818 59,147
Share-based payments
expense during
the period - 1,061 - - - 1,061
Shares issued - (150) - - - (150)
Equity component
of the Novartis
convertible loan
instrument and
warrants - - 1,084 - - 1,084
Conversion of
the Loan Notes
following the
Resolutions passing
on 30 June 2020 33,104 - - - - 33,104
Reclassification
of the remaining
embedded derivative
following the
Resolutions passing - - 33,481 - - 33,481
At June 30, 2020
Unaudited 33,104 19,196 34,565 44 40,818 127,727
---------------------- ---------- ------------ ---------------- --------- ---------- --------------
Warrants
Equity issued
Shares Share-based component for TAP Merger
to be issued payments of convertible funding Reserve
GBP'000 GBP'000 loan GBP'000 GBP'000 GBP'000 Total GBP'000
-------------------- -------------- ------------ ---------------- --------- ---------- --------------
At January 1,
2019 Audited 1,590 16,649 310 44 - 18,593
Share-based
payments expense
during the period - 493 - - - 493
Shares issued (1,590) (1,590)
Equity component
of convertible
loan instrument - - (310) - - (310)
Issue of share
capital on April
23, 2019 for
acquisition
of OncoMed - - - - 40,818 40,818
-------------------- -------------- ------------ ---------------- --------- ---------- --------------
At June 30,
2019 Unaudited - 17,142 - 44 40,818 58,004
-------------------- -------------- ------------ ---------------- --------- ---------- --------------
Share-based
payments expense
during the period - 1,143 - - - 1,143
At December
31, 2019 Audited - 18,285 - 44 40,818 59,147
-------------------- -------------- ------------ ---------------- --------- ---------- --------------
Other reserves
On June 30, 2020 the Company issued and allotted 125,061,475
ordinary shares of GBP0.003 in nominal value in the capital of the
Company at a price of GBP0.17 per share to investors following the
partial conversion of the Loan Notes. The legal proceeds were
GBP21,760,697. This resulted in GBP33,103,739 recognised in other
reserves as a difference between the carrying value of the
financial liability extinguished and the legal proceeds.
Shares to be issued
At January 1, 2017, GBP2,674,477 representing a maximum of
1,453,520 shares at GBP1.84 were remaining to be issued to Novartis
pro rata to their percentage shareholding as and when the Company
issues further ordinary shares.
Of the 1,221,361 ordinary shares issued on April 26, 2017,
588,532 shares were issued to Novartis as fully paid up bonus
shares (for GBPnil consideration), the number of which was
calculated to maintain its shareholding at 19.5%. The fair value of
these shares was GBP1.84 per share. At December 31, 2018,
GBP1,591,578 representing a maximum of 864,988 shares at GBP1.84
were remaining to be issued to Novartis pro rata to their
percentage shareholding as and when the Company issues further
ordinary shares.
Of the 1,936,030 ordinary shares issued to Novartis on June 21,
2019, the remaining 864,988 shares were issued to Novartis as fully
paid up bonus shares (for GBPnil consideration). The fair value of
these shares was GBP1.84 per share.
Share-based payments
The Group has a share option scheme under which options to
subscribe for the Group's shares have been granted to certain
Executives, Non-Executive Directors and employees.
The share-based payment reserve is used to recognise:
i. the value of equity-settled share-based payments provided to
employees, including key management personnel, as part of their
remuneration; and
ii. deferred equity consideration.
The total charge for the six months to June 30, 2020 in respect
of all share option schemes was GBP0.9 million (June 30, 2019:
GBP0.5 million).
On February 20, 2020, the Company granted 962,836 market value
options over ADS under the Mereo 2019 Equity Incentive Plan to
certain executives and other employees. The weighted average fair
value of options granted was GBP0.21. The exercise price is $1.84.
On the same date, the Company granted 77,000 market value options
over ADS under the Mereo 2019 NED Equity Incentive Plan to certain
non-executives. The weighted average fair value of options granted
was GBP0.21. The exercise price is $1.84.
Equity component of convertible loan instruments
The convertible loan notes issued to Novartis are a compound
instrument consisting of a liability and an equity component. The
value of the equity component (cost of the conversion option) as at
June 30, 2020 is GBP1.1 million (June 30, 2019: GBPnil). The value
of the equity component (cost of the conversion option) as at
December 31, 2019 was GBPnil.
On 30 June 2020 the Loan Notes in an aggregate principal amount
of GBP21,660,999 (together with accrued interest) were
automatically converted into 125,061,475 new ordinary shares. This
resulted in GBP33,480,833 recognised in other reserves in equity as
a difference between the share capital and share premium recognised
on conversion and the carrying value of the financial liability
extinguished.
Merger reserve
The consideration paid to acquire OncoMed in 2019 was 24,783,320
ordinary shares with an acquisition date fair value of GBP40.9
million, based on the Group's quoted share price. The nominal value
of the issued capital was GBP0.1 million with the excess, GBP40.8
million, classified within other capital reserves as a 'Merger
reserve'.
8. Provisions
Six months Six months Year ended
to June to June December
30, 2020 30, 2019 31, 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- ----------- -----------
Social security contributions on share
options 31 120 104
Provision for deferred cash consideration 1,698 2,141 1,654
---------------------------------------------- ----------- ----------- -----------
At end of year/period 1,729 2,261 1,758
---------------------------------------------- ----------- ----------- -----------
Current 31 334 309
Non-current 1,698 1,927 1,449
---------------------------------------------- ----------- ----------- -----------
Year ended
December
31,
2019
Six months Six months
to June to June
30, 2020 30, 2019
Unaudited Unaudited Audited
Social security contributions on share options GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----------- ----------- -----------
At beginning of year/period 104 842 842
Released during the year/period (73) (722) (738)
At end of year/period 31 120 104
-------------------------------------------- ------------------ ----------- -----------
Current 31 - -
Non-current - 120 104
-------------------------------------------- ------------------ ----------- -----------
The provision for social security contributions on share options
is calculated based on the number of options outstanding at the
reporting date that are expected to be exercised. The provision is
based on the estimated gain arising on exercise of the share
options, using the best estimate of the market price at the balance
sheet date. Since the Directors assume the options will be held for
their full contractual life of ten years, the liability has been
classified as non-current. The provision has been discounted.
Year ended
December
31,
Six months
to June 30,
2020 Unaudited 2019
GBP'000 Six months
to June
30, 2019
Unaudited Audited
Provision for deferred cash consideration GBP'000 GBP'000
-------------------------------------------- ----------------- ----------- -----------
At beginning of year/period 1,654 2,131 2,131
Increase in provision due to the unwinding
of the time value of money 111 179 221
Decrease in provision due to a change
in estimates relating to timelines and
probabilities of contractual milestones
being achieved (see Note 10) (67) (169) (698)
At end of year/period 1,698 2,141 1,654
-------------------------------------------- ----------------- ----------- -----------
Current - 334 309
Non-current 1,698 1,807 1,345
-------------------------------------------- ----------------- ----------- -----------
The deferred cash consideration is the estimate of the
quantifiable but not certain future cash payment obligations due to
AstraZeneca for the acquisition of certain assets. This liability
is calculated as the risk adjusted net present value of future cash
payments to be made by the Group. The payments are dependent on
reaching certain milestones based on the commencement and outcome
of clinical trials. The likelihood of achieving such milestones is
reviewed at the balance sheet date and increased or decreased as
appropriate (see Note 4).
9. Warrant liability
Year ended
December
31,
Six months
to June
30, 2020
Unaudited 2019
GBP'000 Six months
to June
30, 2019
Unaudited Audited
GBP'000 GBP'000
--------------------------------- ------------ ----------- -----------
At beginning of year/period 131 1,006 1,006
Arising during the year/period 4,080 131 131
Movement during the year/period 31,546 (911) (1,006)
At end of year/period 35,757 226 131
--------------------------------- ------------ ----------- -----------
The change in fair value of the warrant liability disclosed
above represents an unrealised loss.
Warrants in connection to private placement
As a part of the private placement on 3 June 2020, the investors
also received the Warrants entitling them to subscribe for an
aggregate of 161,048,366 new Ordinary Shares. The Warrants were
conditional on the Resolutions being passed at the General Meeting,
which occurred on 30 June 2020. On the passing of the Resolutions,
the Warrants entitle the investors to subscribe for further
Ordinary Shares at an exercise price per Warrant Share of 34.8
pence, being 200 per cent of the share issue price. The Warrants
are capable of being exercised at any time from the date the
Resolutions are passed until the third anniversary of the date the
Resolutions are passed. The Warrants are classified as liabilities
as the Group does not have an unconditional right to avoid
redeeming the instruments for cash. The fair value of the warrant
liability was estimated to be GBP4,079,813 and GBP35,572,845 on
initial recognition and as of 30 June 2020, respectively. The
change in the fair value of GBP31,493,032 was recognised as an
expense in profit or loss. There were no warrants exercised as at
30 June 2020.
Warrants in connection to bank loan
Pursuant to the terms of its loan facility with SVB/Kreos
Capital, the Company issued Bank Loan Warrants to SVB and Kreos
Capital constituted by Warrant Instruments dated 21 August 2017 and
1 October 2018 (the "Warrant Instruments"). The Warrant Instruments
provide for 'adjustment' of the Warrants in the event that the
Company takes certain corporate actions, for example issuing
further equity securities or effecting a consolidation/subdivision
of its shares.
There have been several adjustments to the Bank Loan Warrants to
date to address issuances of shares by the Company, and in each
case the prior adjustment has taken the form of an issue of
additional Warrants to SVB and Kreos. In the context of the most
recent adjustment of the Warrants in response to the Company's
private placement and securities purchase agreements, SVB and Kreos
have yet to agree the calculation methodology of the adjustment
provision. As no agreement has yet been reached between the Company
and its Lenders as to the appropriate manner of adjustment, no
warrants have yet been issued and the adjustment remains
uncertain.
As at June 30, 2020 a total of 1,243,908 (June 30, 2019:
1,243,908) warrants are outstanding, held by lenders of the bank
loan facility, which is equivalent to 0.32% of the ordinary share
capital of the Company.
The fair value of the warrants at grant was GBP1,798,502. At
June 30, 2020 it was GBP184,531 (June 30, 2019: GBP225,473) and at
December 31, 2019 it was GBP131,069.
The terms of the Warrant Instrument allow for a cashless
exercise. In line with IAS 32 (Financial Instruments:
Presentation), the future number of shares to be issued to the
warrant-holder under a cashless exercise can only be determined at
that future date. At each balance sheet date, the fair value of the
warrants will be assessed using the Black-Scholes model considering
appropriate amendments to inputs in respect of volatility and
remaining expected life of the warrants.
The following table lists the weighted average inputs to the
models used for the fair value of warrants:
Year ended
December
31,
Six months
to June
30, 2020
Unaudited 2019
Six months
to June
30, 2019
Unaudited Audited
---------------------------------------- -------------- -------------- --------------
Expected volatility (%) 69 66 67
Risk-free interest rate (%) 0.21 1.26 1.26
Expected life of share options (years) 7.1-9.6 9.5 10.0
Market price of ordinary shares (GBP) 0.46 0.83 0.83
Model used Black Scholes Black Scholes Black Scholes
---------------------------------------- -------------- -------------- --------------
Since there is no historical data in relation to the expected
life of the warrants the contractual life of the options was used
in calculating the expense for the year.
Volatility was estimated by reference to the 30-day historical
volatility of the historical share price of the company.
10. Financial instruments fair value disclosures
The Group held the following financial instruments at fair value
at 30 June 2020. There are no non-recurring fair value
measurements.
Fair value Fair value Fair value
measurements measurements measurements
using prices using significant using significant
in active observable unobservable
markets (Level inputs (Level inputs (Level
Financial liabilities measured 1) 2) 3)
at fair value GBP'000 GBP'000 GBP'000
----------------------------------- ------------------ -------------------- --------------------
Warrant liabilities (note 9) - 184 35,573
Deferred consideration - - 1,698
Financial liabilities for which
fair values are disclosed - 13,254 -
Bank loan with SVB/Kreos Capital
Total - 13,438 37,271
----------------------------------- ------------------ -------------------- --------------------
There were no transfers between Level 1 and Level 2 during
2020.
Except for the loan notes in the table below, the management of
the Group assessed that the fair values of cash and short-term
deposits, other receivables, trade payables, and other current
liabilities approximate their carrying amounts largely due to the
short-term maturities of these instruments.
At Book At Fair
Value: Value:
Six months Six months Year ended Six months Six months Year ended
to June to June December to June to June December
30, 2020 30, 2019 31, 2019 30, 2020 30, 2019 31, 2019
Unaudited Unaudited Audited Unaudited Unaudited Audited
Financial liabilities GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------------- ----------- ----------- ------------- ----------- -----------
Loan Notes 11,565 - - 13,114
The movements for level 3 instruments during the period are
detailed in the table below:
Provision Provision
for contingent for deferred
consideration consideration Warrant
GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ---------------- ----------
At beginning of period 354 1654 -
Arising during the period - 44 4,080
Movement during the period (354) - 31,493
At end of year/period - 1,698 35,573
---------------------------- ----------------- ---------------- ----------
The Warrant liability is estimated using a Black Scholes model,
taking into account appropriate amendments to inputs in respect of
volatility, remaining expected life of the warrants, cost of
capital, probability of success and rates of interest at each
reporting date.
The fair value of the provision for deferred cash consideration
is estimated by discounting future cash flows using rates currently
available for debt on similar terms and credit risk. In addition to
being sensitive to a reasonably possible change in the forecast
cash flows or the discount rate, the fair value of the deferred
cash consideration is also sensitive to a reasonably possible
change in the probability of reaching certain milestones. The
valuation requires management to use unobservable inputs in the
model, of which the significant unobservable inputs are disclosed
in the tables below. Management regularly assesses a range of
reasonably possible alternatives for those significant unobservable
inputs and determines their impact on the total fair value.
At June 30, 2020, the Group estimates the fair value of the
contingent consideration liability to be GBPnil. An amount of
GBP354,000 was paid during the period relating to the Navi
milestone received. The estimated contingent consideration payable
is based on a risk-adjusted, probability-based scenario. Under this
approach the likelihood of future payments being made to the former
shareholders of OncoMed under the CVR arrangement is considered.
The estimate could materially change over time as the development
plan and subsequent commercialization of the Navi product
progresses.
Valuation Significant Input range Sensitivity of the input
technique unobservable (weighted to fair value
inputs average)
------------------- ---------- -------------------- --------------- -----------------------------------
Provision DCF WACC 2020: 15.3% 1% increase would result
for deferred in a decrease in fair value
cash consideration by GBP33,000.
WACC 2019: 15.3% 1% decrease would result
in an increase in fair value
by GBP38,000
Probability 2020: 15.8%-95% 10% increase would result
of success in an increase in fair value
by GBP0.3 million
Probability 2019: 15.8%-95% 10% decrease would result
of success in a decrease in fair value
by GBP0.4 million
------------------- ---------- -------------------- --------------- -----------------------------------
Contingent DCF Ongoing uncertainty Not applicable Total potential payments
consideration in the clinical future payments relating
liability development to the contingent consideration
of the Navi liability on a gross, undiscounted
product. basis are approximately $80.0
million.
Regulatory
approval and Sensitivity of the input
commercialisation to fair value is primarily
risks. driven by uncertainty in
the clinical development
of the Navi product. Future
potential payments under
the CVR arrangement are contingent
on i) future development
milestones and ii) future
sales of the Navi product,
Warrant Black- 2020: 61.5% following regulatory approval
Liability Scholes and commercialisation. In
related model Expected volatility January 2020 the company
to the PIPE entered into the licence
agreement as detailed in
note 4. Although pursuant
to the licence agreement
the company is entitled to
additional payments of up
to $302 million, there is
still significant uncertainty
that exist in respect of
any milestone and royalty
payments under the licence
agreement.
Volatility was estimated
by reference to the 30-day
historical volatility of
the historical share price
of the company.
If the volatility is increased
to 66%, the carrying value
of the warrants as of 30
June 2020 would increase
to GBP37,401,035.
------------------- ---------- -------------------- --------------- -----------------------------------
Valuation of level 3 items carried at fair value
The Company finance department perform the valuations of level
three fair values for the warrants and embedded derivative. This
team reports directly to the Interim Chief Financial Officer.
Discussions of valuation processes and results are held between the
Interim Chief Financial Officer and the valuation team at each
reporting date. As part of these discussions, the team presents
analysis to explain the reasons for changes in fair value
measurements. The Interim Chief Financial Officer reports key
changes in fair value to the Board in the monthly finance report
and any changes to the valuation methodology are reported to the
Audit Committee through update papers when any changes are
anticipated or have been made due to changes in the business.
The directors consider that the carrying value amounts of
financial assets and financial liabilities recorded at amortised
cost in the financial statements are approximately equal to their
fair values.
11. Related party disclosures
Transactions between the parent and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Novartis holds 15,703,871 shares in the Company at June 30, 2020
(June 30, 2019 and December 31, 2019: 15,703,871). Novartis held
GBP3,841,479 principal value of loan Notes at June 30, 2020 (June
30, 2019 and December 31, 2019: GBPnil).
On February 10, 2020, the Company entered into a GBP3.8 million
convertible equity financing with Novartis Pharma (AG)
("Novartis"). Under the terms of the convertible equity financing,
Novartis purchased GBP3.8 million in a convertible loan note ("Loan
Note").
The Loan Note is convertible at any time at the option of the
holder, at a fixed price of GBP0.265 per ordinary share. The
maturity of the Loan Note is three years from issuance, and it
bears an interest rate of 6% per annum.
In connection with the Loan Note issuance, the Company also
issued a warrant instrument to Novartis to purchase up to 1,449,614
of the Company's ordinary shares, which are exercisable at an
exercise price of GBP0.265 per ordinary share at any time before
the close of business on February 10, 2025.
Employee benefit trust
In 2016 the Company set up an Employee benefit trust for the
purposes of buying and selling shares on the employees' behalf.
A total of GBPnil of funding was paid into the Trust by the
Company during the period to June 30, 2020 (June 30, 2019:
1,000,000). A total of 1,000,000 of funding was paid into the Trust
by the Company during the year ended December 31, 2019.
A total of 7 shares were purchased by the Trust during the
period to June 30, 2020 (June 30, 2019: 1,074,274). A total of
1,074,274 shares were purchased by the Trust during the year ended
December 31, 2019.
As at June 30, 2020 a cash balance of GBP21,525 (June 30, 2019:
GBP21,762) was held by the Trust. As at December 31, 2019 a cash
balance of GBP21,762 was held by the Trust.
12. Events after the reporting period
On August 12, 2020, the Company granted 200,000 market value
options over ADS under the Mereo 2019 Equity Incentive Plan to
certain executives and other employees at an exercise price of
$2.77 per ADS.
On August 7, 2020, the Company cancelled an existing lease
agreement and then entered into a new lease agreement in the United
States of America. The Company incurred exit costs of GBP2.6
million ($3.3 million).
Independent review report to Mereo BioPharma Group plc
Introduction
We have been engaged by the Company to review the condensed set
of Financial Statements in the Interim Report for the 6-month
period ended 30 June 2020 which comprises the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Cash Flows and notes 1 to 12.
We have read the other information contained in the Interim Report
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of Financial Statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The Interim Report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the Interim Report in accordance with the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
As disclosed in note 1, the Annual Financial Statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of Financial Statements included
in this Interim Report has been prepared in accordance with
International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Interim Report
based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of Financial Statements
in the Interim Report for 6 month period ended 30 June 2020 is not
prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
Reading
September 29, 2020
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END
IR KZGZLLLRGGZG
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September 29, 2020 07:00 ET (11:00 GMT)
Mereo Biopharma (LSE:MPH)
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