Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE

13a-16

15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of September, 2023

Commission File Number:

001-38452

MEREO BIOPHARMA GROUP PLC

(Translation of registrant’s name into English)

4th Floor, One Cavendish Place,

London, W1G 0QF, United Kingdom

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form

20-F

or Form 40-F.

Form

20-F ☒ Form

40-F ☐

Indicate by check mark if the registrant is submitting the Form

6-K

in paper as permitted by Regulation

S-T

Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form

6-K

in paper as permitted by Regulation

S-T

Rule 101(b)(7): ☐

Other Events

On September 7, 2023, Mereo BioPharma Group plc (the “Company”) released its unaudited condensed consolidated financial statements as of June 30, 2023 and Management’s Discussion and Analysis of Financial Condition and Results of Operations. The Company’s unaudited condensed consolidated financial statements as of June 30, 2023 are attached as Exhibit 99.1 and are incorporated by reference herein. The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations is attached hereto as Exhibit 99.2, and is incorporated by reference herein.

As of June 30, 2023, the Company had cash and short-term deposits of £42.1 million ($53.1 million). Net cash burn during the second quarter of 2023 amounted to £6.1 million ($7.7 million). The Company expects its existing cash and short-term deposits will enable it to fund its currently committed clinical trials, operating expenses and capital expenditure requirements into 2026.

The contents of this Report on Form 6-K and the information in the attached Exhibits 99.1 and 99.2 shall be deemed to be incorporated by reference into the registration statements on Form F-3 (File Numbers 333-239708 and 333-258495) and Form S-8 (File Numbers 333-231636, 333-236498, 333-252147 333-262151 and 333-269388) and related prospectuses, as such registration statements and prospectuses may be amended from time to time, and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

Exhibit Index


Exhibits

99.1		Mereo BioPharma Group plc Unaudited Condensed Consolidated Financial Statements as of June 30, 2023.

99.2		Mereo BioPharma Group plc Management’s Discussion and Analysis of Financial Condition and Results of Operations.

99.3		Press release dated September 7, 2023

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: September 7, 2023


MEREO BIOPHARMA GROUP PLC

By:		/s/ Christine Fox
		Name: Christine Fox
		Title: Chief Financial Officer

Exhibit 99.1

MEREO BIOPHARMA GROUP PLC

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)


	Notes		Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000
Revenue		3		7,128			—
Cost of revenue		3		(2,455	)		352
Research and development expenses				(7,898	)		(13,322	)
Administrative expenses				(9,548	)		(8,840	)
Other operating income		3		2,864			—

Operating loss				(9,909	)		(21,810	)

Finance income		4		550			173
Finance costs		4		(1,498	)		(1,859	)
Changes in the fair value of financial instruments		4		365			1,210
Net foreign exchange (loss)/gain				(1,445	)		1,582
Other income		5		—			811

Loss before tax				(11,937	)		(19,893	)

Taxation				907			735

Loss for the period, attributable to equity holders of the parent				(11,030	)		(19,158	)

Items that may be reclassified subsequently to profit or loss:
Currency translation of foreign operations				1,493			(1,775	)

Total comprehensive loss for the period, attributable to equity holders of the parent				(9,537	)		(20,933	)

Basic loss per share for the period (in £)		6		(0.02	)		(0.03	)
Diluted loss per share for the period (in £)		6		(0.02	)		(0.03	)

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

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MEREO BIOPHARMA GROUP PLC

Condensed Consolidated Balance Sheets

(

unaudited)


	Notes		June 30, 2023 £’000			December 31, 2022 £’000
Assets
Non-current assets
Property, plant and equipment		7		1,565			1,831
Intangible assets		8		24,845			24,116
				26,410			25,947
Current assets
Prepayments				1,376			3,125
R&D tax credits				2,203			1,296
Other taxes receivable				643			614
Trade and other receivables		3		7,893			762
Cash and short-term deposits				42,113			56,334
				54,228			62,131

Total assets				80,638			88,078

Equity and liabilities
Non-current liabilities
Provisions		10		411			—
Convertible loan notes		11		3,665			—
Warrant liability		12		166			129
Lease liability				973			1,222
Other liabilities				220			182

				5,435			1,533

Current liabilities
Trade and other payables				1,911			3,078
Accruals				4,786			4,491
Provisions		10		4,701			4,822
Convertible loan notes		11		4,186			11,085
Warrant liability		12		—			402
Lease liability				488			466
Other liabilities		3		1,386			333

				17,458			24,677

Total liabilities				22,893			26,210

Net assets				57,745			61,868

Equity
Issued capital		9		1,930			1,875
Share premium		9		257,343			254,303
Other capital reserves		9		134,999			132,680
Employee Benefit Trust shares				(1,058	)		(1,058	)
Other reserves				7,401			7,401
Accumulated losses				(342,194	)		(331,164	)
Translation reserve				(676	)		(2,169	)

Total equity				57,745			61,868

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

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MEREO BIOPHARMA GROUP PLC

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Notes		Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000
Operating activities
Loss before tax				(11,937	)		(19,893	)
Adjustments to reconcile (loss)/profit to net cash flows:
Depreciation and impairment of property, plant and equipment		7		266			436
Amortization of intangible assets		8		138			—
Share-based payment expense		9		1,931			2,446
Net foreign exchange loss/(gain)				1,282			(2,100	)
Increase in provisions and other liabilities		10,3		1,130			307
Finance income		4		(550	)		(173	)
Finance costs		4		1,084			1,696
Fair value remeasurement on warrants		4		(365	)		(1,210	)
Other income and expenses		5		—			(811	)
Other non-cash movements		3		155			330
Working capital adjustments
(Increase)/decrease in receivables and prepayments				(5,521	)		331
(Decrease)/increase in trade and other payables and accruals				(846	)		1,364
Taxation				(29	)		(1,529	)

Net cash flows used in operating activities				(13,262	)		(18,806	)

Investing activities
Purchase of property, plant and equipment		7		—			(10	)
Proceeds from intangible asset (net of transaction costs)		5		—			1,484
Payments to CVR holders		5		—			(673	)
Interest earned		4		468			173
Payments to acquire intangible assets				(337	)		—

Net cash flows from investing activities				131			974

Financing activities
Proceeds from issuance of ordinary shares				2			—
Interest paid		4		(771	)		—
Payment of lease liabilities				(226	)		(445	)
Proceeds from TAP agreement				79			153

Net cash flows used in financing activities				(916	)		(292	)

Net decrease in cash and cash equivalents				(14,047	)		(18,124	)

Cash and cash equivalents at the beginning of the period				56,334			94,296
Effect of exchange rate changes on cash and cash equivalents				(174	)		243

Cash and cash equivalents at the end of the period				42,113			76,415

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

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MEREO BIOPHARMA GROUP PLC

Condensed Consolidated Statements of Changes in Equity

(unaudited)


	Notes		Issued capital £’000		Share premium £’000		Other capital reserves £’000			Employee Benefit Trust £’000			Other reserves £’000		Accumulated losses £’000			Translation reserve £’000			Total equity £’000

At December 31, 2021				1,755		247,460		129,835			(1,140	)		7,401		(296,968	)		(341	)		88,002

Loss for the period				—		—		—			—			—		(19,158	)		—			(19,158	)
Other comprehensive loss				—		—		—			—			—		—			(1,775	)		(1,775	)
Total comprehensive loss				—		—		—			—			—		(19,158	)		(1,775	)		(20,933	)
Share-based payments		9		—		—		2,446			—			—		—			—			2,446
Exercise of share options				—		—		(82	)		82			—		—			—			—
Issuance of warrants				—		—		70			—			—		—			—			70

At June 30, 2022				1,755		247,460		132,269			(1,058	)		7,401		(316,126	)		(2,116	)		69,585

At December 31, 2022				1,875		254,303		132,680			(1,058	)		7,401		(331,164	)		(2,169	)		61,868

Loss for the period				—		—		—			—			—		(11,030	)		—			(11,030	)
Other comprehensive income				—		—		—			—			—		—			1,493			1,493
Total comprehensive loss				—		—		—			—			—		(11,030	)		1,493			(9,537	)
Share-based payments		9		—		—		1,931			—			—		—			—			1,931
Exercise of share options				2		—		—			—			—		—			—			2
Issuance of shares		9		53		3,040		347			—			—		—			—			3,440
Issuance of warrants				—		—		41			—			—		—			—			41

At June 30, 2023				1,930		257,343		134,999			(1,058	)		7,401		(342,194	)		(676	)		57,745

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

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MEREO BIOPHARMA GROUP PLC

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1. Corporate information

Mereo BioPharma Group plc (the “Company” or “Mereo”) is a clinical-stage, United Kingdom (“UK”) based biopharmaceutical company focused on rare diseases and oncology.

The Company is a public limited company incorporated and domiciled in the UK, and registered in England, with shares publicly traded on the Nasdaq Capital Market via American Depositary Shares (“ADSs”) under the ticker symbol MREO. The Company’s registered office is located at Fourth Floor, 1 Cavendish Place, London, W1G 0QF, United Kingdom.

These financial statements are the unaudited condensed consolidated financial statements of Mereo BioPharma Group plc and its subsidiaries for the six months ended June 30, 2023. The principal activities of the Company are the development and commercialization of innovative therapeutic pharmaceutical products for rare diseases.

2. Significant accounting policies

Basis of preparation

The unaudited condensed consolidated financial statements for the six months ended June 30, 2023 have been prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting. These unaudited condensed consolidated financial statements do not include all information and disclosures required in the annual financial statements in accordance with International Financial Reporting Standards (IFRS) and should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on March 28, 2023.

The financial information is presented in pound sterling (“£”), which is the presentational currency of the Company. The functional currencies of consolidated subsidiaries are pound sterling and US dollars (“$”). All amounts disclosed in the condensed consolidated financial statements and notes have been rounded to the nearest thousand, unless otherwise stated.

The financial information for the year ended December 31, 2022 has been extracted from the Company’s audited financial statements for that year, filed with the SEC on March 28, 2023.

These condensed consolidated financial statements are unaudited and do not constitute statutory accounts of the Company as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for financial year ended December 31, 2022 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.

Segmental information

The Company has one operating segment. The Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The Company has a single portfolio of product candidates, with only direct research and development expenses monitored by product candidate. The CODM makes decisions over resource allocation at an overall portfolio level and the Company’s financing is managed and monitored on a consolidated basis.

Going concern

The going concern basis has been applied in these condensed consolidated financial statements as the Company has adequate resources to meet its liabilities as they fall due for the foreseeable future and at least 12 months from the issuance date of these condensed consolidated financial statements.

The Company expects to incur significant operating losses for the foreseeable future as it continues its research and development efforts, seeks to obtain regulatory approval of its product candidates and pursues any future product candidates the Company may develop.

Until such time as the Company can generate significant revenue from product sales, or other commercial revenues, if ever, or through licensing and/or collaboration agreements for its rare disease or oncology product candidates, the Company will seek to finance its operations through a combination of public or private equity or debt financings or other

non-dilutive

sources.

Summary of significant accounting policies

The accounting policies adopted in the preparation of the 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, 2022.

Significant accounting estimates and judgments

The preparation of these condensed consolidated 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 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, 2022.

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3. Revenue, Cost of revenue and Other operating income

The Company recognized milestone proceeds of $9 million (£

7.1

million) as revenue under the collaboration and license agreement with Ultragenyx for setrusumab following achievement of a development milestone in the six months ended June 30, 2023. The milestone proceeds w

ere

received in July 2023.

The variable consideration relating to future milestones and sales royalties will be recognized in the statement of comprehensive income when the milestones are achieved or the underlying commercial sales are made, in the event regulatory approval is obtained.

As a consequence of the milestone proceeds paid to the Company under the collaboration and license agreement with Ultragenyx and in accordance with the terms of the 2015 asset purchase agreement with Novartis, the Company also accrued for a payment to Novartis of £

1.7

million. The payment included a deduction for costs of £

1.4

million which was deferred to be recognized in the statement of comprehensive loss when the associated costs are incurred.

In the six month period ended June 30, 2023, £

0.6 million (six months ended June 30, 2022: £

0.4

million) of these deductions were recognized in the condensed consolidated statement of comprehensive loss. As of June 30, 2023, the remaining balance to be recognized of £

1.1

million (December 31, 2022: £

0.3

million) is included within “Other liabilities” in the condensed consolidated balance sheets.

In June 2023, the Company received a payment of £2.9 million from its depositary for reimbursement of certain expenses incurred by the Company in respect of its ADR program in the current and prior years pursuant to the agreement between both parties. The Company recognizes such amounts as “Other operating income” when it becomes entitled to them.

4. Finance income, finance costs and changes in the fair value of financial instruments

Finance income


	Six months ended June 30, 2023 £’000		Six months ended June 30, 2022 £’000

Interest income on short-term deposits		468		173
Modification of convertible loan notes		82		—

Total		550		173

Finance income includes a £0.1 million

(2022:

£nil) gain recognized on the modification of the Private Placement Loan Notes (see Note 11).

Finance costs


	Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000

Interest on convertible loan notes		(1,004	)		(1,567	)
Interest on lease liabilities		(79	)		(113	)
Discounting of provisions for deferred contingent cash consideration		(395	)		(163	)
Other		(20	)		(16	)

Total		(1,498	)		(1,859	)

Interest on convertible loan notes includes £0.7 million of accrued interest paid as part of the amendment of the Novartis convertible loan note (see Note 11).

Changes in the fair value of financial instruments


	Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000

Changes in the fair value of warrants – private placement		402			1,091
Changes in the fair value of warrants – bank loan		(37	)		119

Total		365			1,210

See Note 12 for additional information on the warrant liability.

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5. Other income and expenses

In February 2022, the Company received a milestone payment of $2.0 million (£1.5 million) under the Navi License Agreement with OncXerna. An associated payment was made to the former shareholders of Mereo BioPharma 5, Inc. under the Contingent Value Rights Agreement (“CVR”) of a total of $0.9 million (£0.7 million), after deductions of costs, charges and expenditures, which resulted in other income, net of £0.8 million.

6. Loss per share

Basic loss per share is calculated by dividing the loss attributable for the period to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share is based on dividing the loss attributable for the period, adjusted for the effect of dilutive ordinary shares, by ordinary share equivalents, which includes the weighted average number of ordinary shares outstanding and the effect of dilutive ordinary share equivalents.


	Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000

Numerator – Basic loss per share (£’000)
Loss attributable to equity holders of the parent		(11,030	)		(19,158	)
Denominator – Basic loss per share
Weighted average number of ordinary shares		627,087,752			583,892,445
Loss per share – basic (£)		(0.02	)		(0.03	)
Numerator – Diluted loss per share (£’000):
Loss attributable to equity holders of the parent		(11,030	)		(19,158	)
Effect of dilutive ordinary shares		—			—
Numerator – Diluted loss per share		(11,030	)		(19,158	)
Denominator – Diluted loss per share:
Number of ordinary shares used for basic loss per share		627,087,752			583,892,445
Weighted average effect of dilutive ordinary shares		—			—
Weighted average number of diluted ordinary shares outstanding		627,087,752			583,892,445
Loss per share – diluted (£)		(0.02	)		(0.03	)

For both periods, share options, convertible loan notes and warrants were considered to be anti-dilutive as they would have decreased the loss per share and were therefore excluded from the calculation of diluted loss per share. Therefore, the weighted average shares outstanding used to calculate both the basic and diluted loss per share was the same.

7. Property, plant and equipment


	Right-of-use asset (building) (£’000)			Leasehold improvements (£’000)			Office Equipment (£’000)			IT Equipment (£’000)			Total (£’000)

Cost or valuation at January 1, 2023 and June 30, 2023		2,465			557			164			173			3,359

Depreciation and impairment
At January 1, 2023		(1,088	)		(219	)		(76	)		(145	)		(1,528	)

Depreciation for the period		(199	)		(48	)		(11	)		(9	)		(266	)

At June 30, 2023		(1,287	)		(267	)		(87	)		(154	)		(1,794	)

Net book value
At January 1, 2023		1,377			338			88			28			1,831

At June 30, 2023		1,178			290			77			19			1,565

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8. Intangible assets


	Acquired development programs
Cost
At January 1, 2023		33,005

Additions		1,166

At June 30, 2023		34,172

Accumulated revision to estimated value
At January 1, 2023		(8,889	)
Revision to estimated value		(300	)

At June 30, 2023		(9,189	)

Accumulated amortization
At January 1, 2023		—
Amortization for the period		(138	)

At June 30, 2023		(138	)

Net book value
At January 1, 2023		24,116

At June 30, 2023		24,845

On February 3, 2023, the Company’s wholly-owned subsidiary Mereo BioPharma 3 Limited, Ultragenyx, UCB Pharma SA (“UCB”) and Amgen Inc. (“Amgen”) entered into a non-exclusive worldwide, royalty-free license (the “UCB/Amgen License”) to research, develop, and commercialize setrusumab in osteogenesis imperfecta (“OI”) under certain UCB/Amgen-owned patent rights related to anti-sclerostin compounds and their uses. An intangible asset of £

1.2

million was recognized in the period reflecting payments under the agreement that are not contingent. A corresponding liability of £

0.6

million and a provision of

£0.6

million for contingent consideration payable was also recognized (see Note 10). The license is amortized on a straight-line basis over its useful economic life. During the six months ended June 30, 2023, amortization expense of £

0.1 million (

2022:

£nil)

has been recorded within “Administrative expenses” in the condensed consolidated statement of comprehensive (loss)/income.

The present value of the provision for deferred contingent cash consideration relating to the agreement with AstraZeneca was reviewed as of June 30, 2023 (see Note 10). The decrease in the present value due to changes in timelines or probability of contractual milestones being achieved was £0.3

million (2022: £

0.4

million) and was recognized as a reduction of the intangible asset.

During the period the Company did

not revise the value of any other intangible assets (2022: £nil

). With the exception of the UCB/Amgen License which is amortized, the intangible assets remain under development and no amortization charge has been recognized.

9. Issued capital and reserves


	Number of ordinary shares		Ordinary Share Capital £’000		Share Premium £’000
At January 1, 2022 and June 30, 2022		584,908,239		1,755		247,460
At January 1, 2023		624,928,519		1,875		254,303
Issued during the period		18,276,275		55		3,040

At June 30, 2023		643,204,794		1,930		257,343

During the six months ended June 30, 2023, Private Placement Loan Notes with a carrying value of

£3.1 million were converted into 17,774,895 ordinary shares at a conversion price of £0.174

per ordinary share (see Note 11) and 501,380 ordinary shares were issued upon the vesting of equity awards.

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Other capital reserves


	Share-based payments £’000			Equity component of convertible loan £’000		Other warrants issued £’000		Merger reserve £’000		Other reserve £’000		Total £’000
At January 1, 2022		23,026			32,843		44		40,818		33,104		129,835

Share-based payments expense during the period		2,446			—		—		—		—		2,446
Share option exercise		(82	)		—		—		—		—		(82	)
Issuance of warrants		—			—		70		—		—		70

At June 30, 2022		25,390			32,843		114		40,818		33,104		132,269

At January 1, 2023		26,806			31,838		114		40,818		33,104		132,680

Share-based payments expense during the period		1,931			—		—		—		—		1,931
Extinguishment and issuance of Novartis Loan Note		—			347		—		—		—		347
Issue of warrants		—			—		41		—		—		41
At June 30, 2023		28,737			32,185		155		40,818		33,104		134,999

Equity component of convertible loan

The amendment of the Novartis Loan Note was treated as the extinguishment of the original instrument and the issuance of a new instrument (see Note 11). Accordingly, £

0.3

million was allocated to the equity components of the new Novartis Loan Note, representing the embedded conversion option and the new warrants.

Other warrants issued

Other warrants issued also relate to funding arrangements with The Alpha-1 Project which are a compound instrument consisting of a liability and an equity component. In 2023, the Company issued

408,730 warrants over ordinary shares and received funding of £0.1 million, of which less than £0.1 million was allocated to the equity component. The total value of the equity component (consideration received for the warrants) as

June 30, 2023 is £0.2 million (2022: £ 0.1 million).

Share-based payments

The Company has two principal share-based incentive schemes under which options at market value to subscribe for the Company’s shares, restricted stock units (“RSUs”) and performance share units (“PSUs”) have been granted to certain executives,

non-executive

directors (“NEDs”) and employees. The share-based payment reserve is used to recognize the value of equity settled share-based payments provided to employees, including key management personnel, as part of their remuneration.

The total charge for the six months ended June 30, 2023 in respect of all share-based incentive schemes was

£1.9 million (June 30, 2022: £2.4

million).

The following awards were granted during the six months ended June 30, 2023:


	Mereo 2019 Equity Incentive Plan						Mereo 2019 NED Equity Incentive Plan
	Awards (ADS)		Weighted average fair value ($) per share		Weighted average exercise price ($) per share		Awards (ADS)		Weighted average fair value ($) per share		Weighted average exercise price ($) per share
Options		4,617,000		0.91		1.01		440,000		0.84		0.94
RSU’s		617,750		1.01		—		479,813		0.94		—
PSU’s		1,543,150		0.61		—		—		—		—

Mereo 2019 Equity Incentive Plan

•

Options over ADSs granted during the six months ended June 30, 2023, were valued using the Black-Scholes model with the following weighted average inputs: expected volatility of

98.06%; risk free interest rate of 3.43%; expected life of 10 years; and market price per ADS of $1.01.

•

RSUs over ADSs granted during the six months ended June 30, 2023 vest over

three years with one third of the awards vesting after twelve months and the remainder vesting equally every six months thereafter. These awards were valued by reference to the value of the shares awarded.

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•

PSUs over ADSs

granted during the six months ended June 30, 2023 will only vest upon achievement of specified stretching share price performance targets. These awards were valued using a Monte Carlo model with the following key inputs: expected volatility of 105.6%; expected life of between 0.9 and 1.1 years; risk free interest rate of 4.14% and market price per ADS of $1.01.

Mereo 2019 NED Equity Incentive Plan

•

Options over ADSs granted under the Mereo 2019 NED Equity Incentive Plan to certain non-executive directors during the six months ended June 30, 2023 were valued using the Black-Scholes model with the following inputs: expected volatility of

97.94%; risk free interest rate of 3.36%; expected life of 10 years; and market price per ADS of $0.94.

•

Deferred RSU’s over ADSs were granted during the six months ended June 30, 2023 under the Mereo 2019 NED Equity Incentive Plan to certain non-executive directors who elected to receive restricted stock units in lieu of their cash fees for the year commencing February 1, 2023. These awards were valued by reference to the value of the shares awarded.

10. Provisions


	June 30, 2023 £’000		December 31, 2022 £’000

Social security contribution on vested share options		56		9
Provisions for deferred contingent cash consideration		5,056		4,634
Restructuring		—		179

Total		5,112		4,822

Current		4,701		4,822
Non-Current		411		—

Provisions for deferred contingent cash consideration is the estimate of the quantifiable but not certain future cash payment obligations due to AstraZeneca for the acquisition of certain intangible assets and to UCB/Amgen for the UCB/Amgen License.

The provision for amounts payable to AstraZeneca is calculated as the risk adjusted net present value of future cash payments to be made by the Company. 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 13).

The provision for deferred contingent cash consideration under the UCB/Amgen License is calculated as the present value of fees expected to be paid under the license which are dependent on the expected expiry date of certain intellectual property owned by UCB/Amgen and the outcome of clinical trials and regulatory consideration.

11. Convertible Notes


	June 30, 2023 £’000		December 31, 2022 £’000
Novartis Loan Note		3,665		4,449
Loan Notes – Private Placement		4,186		6,636

Total		7,851		11,085

Current		4,186		11,085
Non-Current		3,665		—

Novartis Loan Note

The Novartis Loan Note is convertible at a fixed price of £0.265 per ordinary share and originally bore interest at a rate of 6% per annum with a maturity date of February 2023. Effective 10 February 2023, the maturity date of the Novartis Loan Note was extended to February 10, 2025 and the interest rate amended to 9%. Interest accrued to the amendment date of £0.7 million was paid in cash, and

arrants to purchase 2,000,000 ordinary shares were issued (see Note 9).

The amendments to the Novartis Loan Note have been treated as the extinguishment of the original instrument and the issuance of a new instrument. Accordingly, on the extinguishment date, the carrying value of £4.5

million was derecognized. At the same time, a new liability of £

3.5

million was recognized which represents the fair value of the liability component of the new Novartis Loan Notes, net of fees. The remaining amount was allocated between the £0.7

million of interest paid in cash (see Note 4) and the residual £

0.3

million which was recorded in equity to reflect the warrants and the conversion option embedded in the new Novartis Loan Notes. No extinguishment gain or loss was recognized in the condensed consolidated statement of comprehensive loss.

Private Placement Loan Notes

Loan Notes from the June 2020 private placement are convertible at a fixed price of £0.174 per ordinary share and bears interest at a rate of 6% per annum with an original maturity date of June 3, 2023. On May 31, 2023, the maturity date of the Loan Notes was extended to August 3, 2023

with all other terms remaining unchanged. The maturity date extension was

treated as a modification with a modification gain of

0.1 million recognized within finance income (see Note 4).

During the six months ended June 30, 2023, the Company issued and allotted 17,774,895 ordinary shares (202

: nil) at a price of £0.174 per share on conversion of the Loan Notes.

A further conversion and subsequent redemption of the remaining Loan Notes took place in July and August 2023, respectively (see Note 15).

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12. Warrant liability


	June 30, 2023 £’000			June 30, 2022 £’000
At January 1		531			8,336
Fair Value changes during the period		(365	)		(1,210	)

At June 30		166			7,126


	June 30, 2023 £’000		December 31, 2022 £’000
Current		—		402
Non-current		166		129

Total		166		531

The change in fair value of the warrant liability represents an unrealized gain for the six months ended June 30, 2023 and for the six months ended June 30, 2022.

Warrants - private placement

As a part of the private placement transaction

n June 3, 2020, the participating investors received conditional warrants entitling them to subscribe for an aggregate of 161,048,366 ordinary shares in the Company. The warrants were conditional on certain resolutions being passed at the Company’s general meeting on June 30, 2020. On the passing of the resolutions, the warrants entitled the investors to subscribe for ordinary shares at an exercise price of £0.348 per warrant and were exercisable until June 2023 when they expired. The warrants were classified as liabilities as the Company did not have an unconditional right to avoid redeeming the instruments for cash. As

the warrants

expired during the period, the fair value of the warrant liability was £nil as of June 30, 2023 (£0.4 million as of December 31, 2022). The change in the fair value of £0.4

million was recognized as a gain in the condensed consolidated statement of comprehensive loss. In the six months ended June 30, 2023,

no warrants were exercised.

Warrants – bank loan

As of June 30, 2023 and December 31, 2022, the former lenders to the Company have warrants outstanding to purchase a total of 1,243,908 ordinary shares at an exercise price of £2.95 per share exercisable until August 2027 and a total of 1,243,908 ordinary shares at an exercise price of $0.4144 per share exercisable until October 2028.

s of

June 30, 2023, the fair value of these warrants were £0.2

million (December 31, 2022:

£0.1

million. There were

no warrants exercised during the six months ended June 30, 2023 (

2022:

nil).

Total outstanding warrants

s of

June 30, 2023, a total of 2,487,816

liability-classified warrants are outstanding. The warrants outstanding are equivalent to

0.4

% of the ordinary share capital of the Company.

The following table lists the weighted average inputs to the models used for the fair value of warrants:


	June 30, 2023 £’000		December 31, 2022 £’000
Expected volatility (%)		100		95
Risk-free interest rate (%)		3.45		3.99
Expected life of warrants (years)		4.70		0.5
Market price of ADS($)		1.32		0.75
Model used		Black-Scholes		Black-Scholes

Volatility was estimated by reference to the one-year historical volatility of the share price of the Company.

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13. Financial instruments fair value disclosures

The Company held the following financial instruments at fair value as of June 30, 2023. There are no

non-recurring

fair value measurements.


	Fair value measured using unadjusted quoted prices (Level 1)		Fair value measured using significant observable inputs (Level 2)		Fair value measured using significant unobservable inputs (Level 3)
Warrant liabilities		—		166		—
Provisions for deferred contingent cash consideration		—		—		5,056

Total		—		166		5,056

There were no transfers between any level during 2023.

The management of the Company 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.

The movements for level 3 instruments during the period are detailed in the table below:


	Provisions for deferred contingent cash consideration £’000			Warrant liability £’000

At January 1, 2023		4,634			402

Additions during the period		561			—
Revisions to estimate		(300	)		—
Movement during the period		161			(402	)

At June 30, 2023		5,056			—

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 and rates of interest at each reporting date.

The fair value of the provision for the AstraZeneca deferred contingent 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 contingent 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.

The fair value of the provision for the deferred contingent cash consideration under the UCB/Amgen License is estimated by discounting future cash flows using the Company’s Weighted Average Cost of Capital (“WACC”). In addition to being dependent on the discount rate, the fair value of the deferred contingent cash consideration is also sensitive to a reasonably possible change in the expectation of the timing of the outcome of clinical trials and regulatory approvals. A 10% change in either of these assumptions would not result in a material change in the provision amount.


	Valuation technique	Significant unobservable inputs	Input range	Sensitivity of the input to fair value
Provision for AstraZeneca deferred contingent cash consideration	Discounted cash flow	WACC	2023: 15%	1% increase/decrease would result in a decrease/increase in fair value by £ 21,000 .

		WACC	2022: 15%	1% increase/decrease would result in a decrease/increase in fair value by £31,000.

		Probability of success	2023: 40.6% - 81.2%	10% increase/decrease would result in an increase/decrease in fair value by £0.5 million.

		Probability of success	2022: 40.6% - 81.2%	10% increase/decrease would result in an increase/decrease in fair value by £0.5 million.

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14. 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.

Employee benefit trust

In 2016 the Company set up an Employee Benefit Trust (“EBT”). The EBT holds ADS’s to satisfy the exercise of options by employees under the Company’s share-based incentive schemes.

No funding was loaned to the EBT by the Company during the

six months ended

June 30, 2023 (June 30, 2022: nil).

The EBT did not purchase any ordinary shares during the

six months ended

June 30, 2023 (2022: nil).

ordinary shares owned by the EBT were used to satisfy exercise of options by employees under the Company’s share-based incentive schemes during the

six months ended

June 30, 2023 (June 30, 2022: 78,225). As of June 30, 2023

a cash balance of £17,241 was held by the EBT. As of December 31, 2022

a cash balance of £17,741 was held by the EBT.

15. Events after reporting period

Issuance of ordinary shares

In July 2023, the Company issued and allotted 9,645,200 ordinary shares of £0.003 in nominal value in the capital of the Company, equivalent to 1,929,040 ADSs, at an exercise price of £0.174

per ordinary share on conversion of convertible loan notes with a principal amount of £1,025,641 issued as part of the June 2020 private placement transaction.

In July 2023, 9,673,419

ADSs representing

48,367,095 ordinary shares were issued for aggregate gross proceeds of $12.0 million (£9.3

million) through an “at-the-market” offering pursuant to an Open Market Sale Agreement with Jefferies LLC.

Settlement of convertible loan notes

On the maturity date in August 2023, the Company paid £2.6 million to settle the outstanding principal and accrued interest balance on convertible loan notes issued as part of the June 2020 private placement transaction.

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included as Exhibit 99.1 to this Report on Form 6-K furnished to the Securities and Exchange Commission, or the SEC, on September 7, 2023 together with our audited consolidated financial statements and the notes thereto, and the section entitled “Risk Factors”, each of which appear in our annual report on Form 20-F for the year ended December 31, 2022 filed with the SEC on March 28, 2023 (the “Annual Report”).

The following discussion is based on our financial information prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” or IAS 34, which may differ in material respects from generally accepted accounting principles in other jurisdictions, including generally accepted accounting principles in the United States.

Unless otherwise indicated or the context otherwise requires, all references to “Mereo,” the “Company,” the “Group,” “we,” “our,” “ours,” “us” or similar terms refer to Mereo BioPharma Group plc, and its consolidated subsidiaries.

The following discussion includes forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described under “Item 3. Key Information—D. Risk Factors” and elsewhere in our Annual Report.

Overview

We are a biopharmaceutical company focused on the development of innovative therapeutics for rare diseases. We have developed a robust portfolio of clinical stage product candidates. Our two rare disease product candidates are setrusumab for the treatment of osteogenesis imperfecta (OI) and alvelestat primarily for the treatment of severe alpha-1-anti-trypsin deficiency (AATD-LD).

Our partner, Ultragenyx, announced successful completion of the Phase 2 portion of the pivotal Phase 2/3 ORBIT study in 24 pediatric and young adult patients (5 to <26 years old) for setrusumab in OI in June 2023 which compared two different doses of setrusumab. Across all patients evaluated at both doses, these data showed statistically significant increases in levels of serum P1NP, a sensitive marker of bone formation, and substantial and significant improvement in bone mineral density (“BMD”) by three months. An increase in lumbar spine BMD from baseline of 9.4% at 20 mg/kg was observed, which represents a substantial mean change in the Z-score of +0.65. There was no significant difference between the two doses tested. The changes observed in BMD in these younger patients at 3 months are equivalent to the changes following 12 months treatment with setrusumab in adult patients reported from the Phase 2 ASTEROID study. Following selection of the dose from this Phase 2 portion of the ORBIT study, in July 2023 Ultragenyx announced that the first patients have been dosed (“FPI”) in the Phase 3 portion of the pivotal study (5 to <26 years old) and also in the Phase 3 study in younger children (2 to <7 years old). The FPI event in the ORBIT study resulted in a one-time milestone payment of $9 million from Ultragenyx. The 24 patients from the Phase 2 portion of the ORBIT study will continue to receive setrusumab treatment in an open-label extension study.

We announced successful completion of a Phase 2 study for alvelestat in AATD-LD in May 2022 which demonstrated statistically significant changes in biomarkers of lung function at different time points up to 12 weeks. In October 2022, we also announced that Fast Track designation has been granted by the U.S. Food and Drug Administration (FDA) for alvelestat in AATD, along with additional program updates. In March 2023, we announced the outcome of the end-of-Phase 2 discussions with the FDA and the EMA (Scientific Advice) and based on clear recommendations from both Regulatory Agencies, we are designing a single, global, Phase 3 study evaluating the 240 mg dose of alvelestat versus placebo in patients with AATD-LD to support applications for full marketing approvals in both the U.S. and EU. Alvelestat is also in an ongoing Phase 2 investigator-led study in AATD, including in patients who are on augmentation therapy, with data expected in the third quarter of 2023. Following successful completion of a Phase 1b investigator-led study in BOS patients following allogenic stem cell transplant, an investigator-led Phase 2 study was initiated in the second half of 2022.

Our lead oncology product candidate, etigilimab (an anti-TIGIT antibody), 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. We have completed the Phase 1b portion of an open label Phase1b/2 basket study (the ACTIVATE study) evaluating etigilimab in combination with nivolumab in three rare tumors, sarcoma, uveal melanoma and germ cell cancer, three gynecological carcinomas, cervical, ovarian and endometrial carcinomas, and tumors with high mutation burden. Enrollment is continuing in an investigator led Phase 1b/2 study in clear cell ovarian cancer at The University of Texas MD Anderson Cancer Center, financed by Cancer Focus Fund.

We plan to develop our product candidates through the next key clinical milestone and then partner where it makes sense to do so strategically but also in select cases for our rare disease candidates, to develop through regulatory approval and potentially commercialization.

Our second oncology product, navicixizumab for the treatment of late line ovarian cancer has completed a Phase 1b study and was partnered in January 2020 for further development with OncXerna Inc. (“OncXerna”) on a global basis. In February 2022, we received a milestone payment of $2.0 million (£1.5 million) under the license agreement with OncXerna. An associated payment was made to the former shareholders of Mereo BioPharma 5, Inc. under the Contingent Value Rights Agreement (“CVR”) of a total of $0.9 million (£0.7 million), after deductions of costs, charges and expenditures. The milestone received and the associated CVR payment were recorded within “Other income and expense.”

We plan to partner or sell our other two product candidates, acumapimod for the treatment of acute exacerbation of chronic obstructive pulmonary disease (“AECOPD”) and leflutrozole for the treatment of infertility and hypogonadotropic hypogonadism (“HH”) in obese men, recognizing the need for greater resources to take these product candidates to market.

In 2022, we conducted a comprehensive strategic review of our portfolio and capital allocation strategy. This review included a detailed evaluation of current market conditions, the status of our ongoing programs, an analysis of emerging clinical data, our overall cost base and contractual commitments, consideration of obligations in our existing partnership agreements, and feedback from potential new partners and shareholders. The resulting changes in our operating plan included a targeted reduction in the employee base of up to 40% and a significant reduction in other costs. Our operating plan maintains the ability to progress our core programs, deliver on multiple near-term milestones and optimize value for shareholders. We retained the core capabilities and key personnel needed to advance our two core rare disease programs, setrusumab and alvelestat, and to generate value from our assets. Our cash runway continues to be into 2026.

We do not have any approved product candidates and, as a result, have not generated any revenue from product sales. Our ability to generate revenue sufficient to achieve profitability will depend on successful development and eventual commercialization of our product candidates either directly or with partners, if approved. Since our inception, we have incurred significant operating losses. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the clinical and manufacturing development of our product candidates and seek regulatory approval. If approved, we also expect to incur significant commercialization expenses related to product manufacturing, marketing, sales, and distribution.

We also expect to incur expenses in connection with the in-license or acquisition of additional rare disease product candidates and the potential clinical development of any such product candidates.

Additionally, we will transition from foreign private issuer to U.S. domestic filer status beginning in 2024 and expect to incur increased costs associated with being a U.S. domestic filer, including expenses related to more frequent financial reporting, preparation of financial statements in accordance with US GAAP, compliance with U.S. federal proxy rules, and additional resources and services we will require in order to comply with Nasdaq and SEC rules and requirements applicable to U.S. domestic filers.

We are organized into a single operating segment following management’s view of the business as a single portfolio of product candidates. Research and development expenses are monitored at a product level; however, decisions over resource allocation are made at an overall portfolio level. Our financing is managed and monitored on a consolidated basis.

Recent Developments

On May 3, 2023, the Company transferred the listing of its American Depositary Shares (“ADSs”) from the Nasdaq Global Market to the Nasdaq Capital Market. On May 8, 2023, the Company received notification from the Nasdaq Listings Qualifications Department that the ADSs had, for the last 10 consecutive business days, a closing bid price at $1.00 per share or greater, and accordingly had regained compliance with Nasdaq Listing Rules.

In July 2023, we issued 1,929,040 ADSs representing 9,645,200 ordinary shares on conversion of convertible loan notes issued as part of a private placement transaction in June 2020. The convertible loan notes matured on August 3, 2023, and on the maturity date we paid £2.6 million to settle the outstanding principal and accrued interest due to the maturity date. In July 2023 we also issued 9,673,419 ADSs representing 48,367,095 ordinary shares for aggregate gross proceeds of $12.0 million (£9.3 million) through an “at-the-market” offering pursuant to an Open Market Sale Agreement with Jefferies LLC which we entered into on August 5, 2021.

Significant Risks and Uncertainties

As a biopharmaceutical company, the Company faces a number of risks and uncertainties. These are common for the industry and relate to operations, intellectual property, research and development, commercial and financial activities. For further information about risks and uncertainties, which the Company faces, refer to the Annual Report. There have been no significant changes to the Company’s overall risk profile since the publication of the Annual Report.

Financial Operations Overview

Revenue

The Company’s ordinary business activities are the development of product candidates to key clinical milestones and either strategically partnering them or further developing such product candidates through regulatory approval and potentially commercialization. The Company may enter into a range of different agreements with third parties, including, but not limited to: (i) licensing agreements where the global rights to a product candidate are licensed to a partner; and (ii) collaboration agreements where rights to a product candidate are licensed to a partner but the Company retains certain rights, for example to further develop or commercialize the product candidate in specified geographical territories. Under both licensing and collaboration agreements, rights to product candidates are provided to a partner typically in exchange for consideration in the form of upfront payments and/or development, regulatory, commercial or other similar milestones, and royalties on commercial sales, should regulatory approval be obtained for the product candidates. Where the Company has performed significant development activities for its product candidates, income from agreements with third parties are considered to be proceeds derived from the Company’s ordinary activities and therefore represent revenue.

Revenue includes income from licensing and collaboration agreements. Consideration received up front is recognized at the point in time in which the right to use an intangible asset is transferred. Income from development, regulatory, commercial or similar milestones is recognized when considered highly probable that a significant reversal will not occur.

Intangible assets out-licensed under a license or collaboration agreement are recorded within “Cost of revenue” in the Company’s consolidated statement of comprehensive loss based on an allocation of cost or value of the rights that have been out-licensed. Payments to third parties arising as a direct consequence of the income recognized are also recorded within “Cost of revenue” in the Company’s consolidated statement of comprehensive loss. We do not currently have any approved product candidates. Accordingly, we have not generated any commercial sales revenue during the period. In the future, we expect to be able to generate revenues if we are able to obtain regulatory approval and commercialize one or more of our product candidates or through the recognition of milestones and other potential revenues from out-licensing or partnering arrangements for any of our product candidates.

Research and Development (“R&D”) Expenses

Research and development expenses include:

•

employee-related expenses, such as salaries, share-based compensation, and other benefits, for Mereo’s research and development personnel;

•

costs for production of drug substance and drug product and development of Mereo’s manufacturing processes by CMOs;

•

fees and other costs paid to CROs, consultants, and other suppliers to conduct Mereo’s clinical trials and pre-clinical and non-clinical studies; and

•

costs of facilities, materials, and equipment related to drug production and Mereo’s clinical trials and pre-clinical and non-clinical studies.

Our direct research and development expenses are allocated on a product-by-product basis. We allocate employee-related expenses for our research and development personnel and other related expenses to specific product candidate development programs.

Product candidates in a later stage of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later stage clinical trials as well as preparation for potential specific post-authorization evidence generation that might be demanded by regulatory authorities. As we advance the clinical development of our product candidates, we expect that our research and development expense will continue to include costs associated with laying the groundwork for price reimbursement and manufacturing in Europe, and input into development and regulatory plans with our partner, Ultragenyx, for setrusumab; activities associated with preparation of alvelestat for the Phase 3 study, including CMC and drug formulation, activities associated with validation of the patient reported outcome (PRO) and additional required FDA regulatory interactions; and the close-out of the Phase 1b portion of the Phase1b/2 basket study for etigilimab.

The successful development, approval, and commercialization of our product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, or the period, if any, in which material net cash inflows may commence from any of our product candidates. Our future expenditure on developing our product candidates is therefore highly uncertain. This is due to numerous risks and uncertainties associated with developing our product candidates, including the uncertainty of:

•

the scope, rate of progress, and expense of our research and development activities;

•

the progress and results of our clinical trials and our pre-clinical and non-clinical studies;

•

the terms and timing of regulatory approvals, if any;

•

establishment of arrangements with our third-party manufacturers to obtain manufacturing supply;

•

protection of our rights our intellectual property portfolio;

•

launch of commercial sales of any of our product candidates, if approved, whether alone or in collaboration with others;

•

third party strategic relationships for clinical development and/or commercialization of our non-core product candidates and performance of our strategic partners under these arrangements;

•

the sale, if any, of one or more of our non-core disease product candidates;

•

acceptance of any of our product candidates, if approved, by patients, the medical community and payors at our desired pricing levels;

•

competition with other therapies; and

•

continued acceptable safety profile of any of our product candidates following approval.

Any of these variables with respect to the development of our product candidates or any other future candidate that we may develop could result in a significant change in the costs and timing associated with their development. For example, if the FDA, the EMA, or another regulatory authority were to require us to conduct pre-clinical studies and clinical trials beyond those that we currently anticipate will be required for the completion of clinical development or if we experience significant delays in enrollment in any clinical trials, we could be required to expend significant additional financial resources and time on the completion of our clinical development programs. We may never succeed in obtaining regulatory approval for any of our product candidates.

Administrative Expenses

Our administrative expenses principally consist of salaries and related benefits, including share-based compensation, for personnel in our executive, finance and other administrative functions. Other general and administrative costs include facility-related costs and professional services fees for auditing, tax and general legal services, our requirements of being a public company listed on Nasdaq, and costs incurred relating to the issue of equity to the extent not capitalized.

Other Operating Income

Other operating income includes amounts received from our depositary for reimbursement of certain expenses incurred by us in respect of our ADR program in the current and prior years pursuant to the agreement between both parties.

Finance Income

Finance income principally consist of interest earned on short-term cash deposits.

Finance Costs

Finance costs comprise interest on convertible loan notes, finance charges on lease liabilities and discounting on provisions for deferred contingent cash consideration. For further information on the terms of our convertible loan notes see “—Liquidity and Capital Resources—Indebtedness” which appear in our Annual Report.

Changes in Fair Value of Financial Instruments

The fair value changes in financial instruments are recognized in the statement of comprehensive loss.

Net Foreign Exchange Gain/(Loss)

Our condensed consolidated financial statements are presented in pound sterling. We initially record transactions in foreign currencies at the rate prevailing on the date the transaction first qualifies for recognition. Net foreign exchange gain/(loss) consists of the difference arising on settlement or translation of transactions denominated in foreign currencies, which are primarily held in U.S. dollars.

Taxation

As a U.K. resident trading entity, we are subject to U.K. corporate taxation. Due to the nature of our business, we have generated operating losses since formation. Our cumulative carry-forward tax losses are expected to increase throughout 2023. Subject to any relevant restrictions, we expect these to be available to carry forward and offset against future operating profits. As a company that carries out extensive research and development activities, we benefit from the U.K. R&D small or medium-sized enterprise tax credit regime and are able to surrender some of our trading losses that arise from our research and development activities for a cash rebate. To date, a cash rebate of up to 33.35% of eligible R&D expenditure has been available, but the cash rebate has reduced to a maximum of 27% for R&D intensive companies where at least 40% of their total expenditure is on qualifying R&D, or 18.6% of eligible R&D expenditure for other companies with effect from April 1, 2023 pursuant to changes made by the Finance Act 2023. Certain subcontracted qualifying research expenditures are eligible for a cash rebate, though the rate of the cash rebate has reduced with effect from April 1, 2023 from up to 21.67% of the subcontracted expenditures to 17.53% for R&D intensive companies or 12.09% for other companies. Qualifying expenditures largely comprise employment costs for research staff, subcontracted CRO and CMO costs, consumables and certain internal overhead cost incurred as part of research projects. We may not be able to continue to claim payable R&D tax credits in the future because we may no longer qualify as a small or medium-sized company.

In the event we generate revenues in the future, we may benefit from the U.K. “patent box” regime that allows profits attributable to revenues from patents or patented product candidates to be taxed at an effective rate of 10%. This relief applies to profits earned following election into the regime. When taken in combination with the enhanced relief available on our R&D expenditures, we expect a long-term lower rate of corporation tax to apply to us. If, however, there are unexpected adverse changes to the U.K. R&D tax credit regime or the “patent box” regime, or for any reason we are unable to qualify for such advantageous tax legislation, or we are unable to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments, our business, results of operations, and financial condition may be adversely affected.

Critical Accounting Judgments and Estimates

The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the revenues and expenses incurred during the reported periods. We base our estimates on historical experience and on various other factors that we believe are relevant under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting policies considered to be critical to the judgments and estimates used in the preparation of our financial statements are disclosed in the Operating And Financial Review And Prospects included in our Annual Report.

Controls and Procedures

In connection with the preparation of our unaudited interim condensed consolidated financial statements as of and for the six-month period ended June 30, 2023, a material weakness in our internal control over financial reporting was identified. The material weakness related to the operating effectiveness of a control over determining the presentation of a significant or non-routine transaction in the unaudited condensed consolidated statement of comprehensive loss in accordance with IFRS. Management is in the process of remediating the material weakness set forth above and the transaction has been presented appropriately in the unaudited condensed consolidated financial statements for the six-month period ended June 30, 2023.

Operating Results

The following table sets forth Mereo’s results of operations for the six months ended June 30, 2023 and 2022.


	Six months ended June 30,						Change
	2023			2022
	£’000			£’000			£’000			%
Revenue		7,128			—			7,128			*
Cost of revenue		(2,455	)		352			(2,807	)		*
Research and development expenses		(7,898	)		(13,322	)		5,424			(41	)%
Administrative expenses		(9,548	)		(8,840	)		708			8	%
Other operating income		2,864			—			2,864			*

Operating loss		(9,909	)		(21,810	)		11,901			(55	)%

Finance income		550			173			377			*
Finance costs		(1,498	)		(1,859	)		361			(19	)%
Changes in fair value of financial instruments		365			1,210			(845	)		(70	)%
Net foreign exchange (loss)/gain		(1,445	)		1,582			(3,027	)		*
Other income and expenses		—			811			(811	)		*

Loss before tax		(11,937	)		(19,893	)		7,956			(40	)%

Taxation		907			735			172			23	%

Loss attributable to equity holders of the parent		(11,030	)		(19,158	)		8,128			(42	)%

*	Percentage change not meaningful

Comparison of the six months ended June 30, 2023 and 2022

Revenue

Revenue was £7.1 million for the six months ended June 30, 2023 compared to nil for the six months ended June 30, 2022.

In June 2023, the first patients were dosed in both of the Phase 3 clinical trials evaluating setrusumab in pediatric and young adult patients with osteogenesis imperfecta (“OI”). Upon dosing of the first patient in the Phase 3 portion of the ORBIT study in patients aged five to under 26, the Company became eligible to receive a one-time milestone payment of $9 million (£7.1 million) from Ultragenyx under the collaboration and license agreement between the two parties. This payment was received in July 2023.

Cost of revenue

Cost of revenue for the six months ended June 30, 2023 was £2.5 million of expense compared to a credit of £0.4 million for the six months ended June 30, 2022.

Cost of revenue for the six months ended June 30, 2023 principally comprised an accrued payment of £1.7 million in relation to our 2015 agreement with Novartis, under which the Company pays a percentage of proceeds, subject to certain exceptions, and deductions for cost of £1.4 million which was deferred to be recognized in the statement of comprehensive loss when the associated costs are incurred. In the six-month period ended June 30, 2023, £0.6 million of these deductions were recognized in cost of revenue compared to £0.4 million in the six month period ended June 30, 2022.

Research and development (“R&D”) Expenses

The following table sets forth our R&D expenses by product development program for the six months ended June 30, 2023 and 2022.


	Six months ended June 30,				Change
	2023		2022
	£’000		£’000		£’000			%
Setrusumab (BPS-804)		1,401		1,764		(363	)		(21	)%
Alvelestat (MPH-966)		2,700		3,561		(861	)		(24	)%
Etigilimab		3,236		7,641		(4,405	)		(58	)%
Leflutrozole (BGS-649)		112		24		88			*
Acumapimod (BCT-197)		12		23		(11	)		*
Unallocated costs		386		277		109			39	%
Other		51		32		19			*

Total R&D expenses		7,898		13,322		(5,424	)		(41	)%

*	Percentage change not meaningful

Total R&D expenses decreased by £5.4 million, or 41%, from £13.3 million for the six months ended June 30, 2022 to £7.9 million for the six months ended June 30, 2023.

R&D expenses relating to etigilimab decreased by £4.4 million. The decrease was primarily due to the winding down of the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types. R&D expenses relating to alvelestat decreased by £0.9 million. R&D expenses for the six-month periods ended June 30, 2023 and 2022 were primarily related to activities associated with the preparation for the Phase 3 study of
alvelestat, including CMC and drug formulation activities, and costs associated with the completion of the Phase 2 proof-of-concept study in AATD-LD, respectively. R&D expenses relating to setrusumab decreased by £0.4 million due to timing of activities.

Administrative expenses

Administrative expenses increased by £0.7 million, or 8%, from £8.8 million for the six months ended June 30, 2022 to £9.5 million for the six months ended June 30, 2023. This increase was principally due to professional fees associated with various corporate transactions in the period.

Other operating income

In the six months ended June 30, 2023, the Company received a payment of £2.9 million from its depositary for reimbursement of certain expenses incurred by the Company in respect of its ADR program in the current and prior years pursuant to the agreement between both parties.

Finance income and costs

Total finance costs decreased by £0.4 million, or 20%, from £1.9 million for the six months ended June 30, 2022 to £1.5 million for the six months ended June 30, 2023. This decrease was principally due to the lower balance in the period of the loan notes issued as part of the June 2020 private placement transaction as a result of the conversion of a portion of these notes in July 2022.

Finance income increased by £0.4 million from £0.2 million for the six months ended June 30, 2022 to £0.6 million for the six months ended June 30, 2023. This increase was principally due to higher interest rates on short-term deposits.

Changes in fair value of financial instruments

The total change in fair value of financial instruments for the six months ended June 30, 2023 was an unrealized gain of £0.4 million, a decrease of £0.8 million, or 70%, compared to a gain of £1.2 million for the six months ended June 30, 2022. The unrealized gain in both periods was primarily related to the June 2020 Private Placement warrants, which expired on June 30, 2023.

Net foreign exchange (loss)/gain

The net foreign exchange amount for the six months ended June 30, 2023 was a loss of £1.4 million, a decrease of £3.0 million from a gain of £1.6 million for the six months ended June 30, 2022, primarily reflecting the impact of the strengthening of the pound sterling when translating non-functional currency balances, primarily denominated in U.S. dollars.

Taxation

The income tax benefit for the six months ended June 30, 2023 was £0.9 million, an increase of £0.2 million, or 23%, from £0.7 million for the six months ended June 30, 2022. The income tax benefit represents qualifying cash rebates receivable from the tax authorities in the jurisdictions within which we operate for eligible types of research and development activities and associated expenditure (the “R&D tax credit”).

Liquidity and Capital Resources

Overview

Under the current business plan and cash flow forecasts, and in consideration of our ongoing research and development efforts and our general corporate funding requirements, we anticipate that our current on-hand cash resources will extend into 2026. However, we will need additional external funding to complete our development plans and potentially commercialize selected rare disease products. We plan to fund our operations through cash on hand and a combination of non-dilutive funding sources, public or private equity or debt financings or other sources.

We do not currently have any approved product candidates and have never generated any revenue from product sales. As a result, to date, we have financed our operations primarily through the issuances of our equity securities, convertible debt and warrants. Through these offerings, we raised $183 million (£137.9 million). We also received an upfront payment of $50 million under the license and collaboration agreement with Ultragenyx for setrusumab in 2021 and a further milestone payment of $9 million from Ultragenyx in July 2023. Additionally in July 2023, we raised a further $12 million through an “at-the-market” offering pursuant to our Open Market Sale Agreement with Jefferies LLC.

Cash Flows

Comparison of the six months ended June 30, 2023 and 2022

The table below summarizes our cash flows (used in)/from operating, investing and financing activities for the six months ended June 30, 2023 and June 30, 2022.


	Six months ended June 30,
	2023			2022
	£’000			£’000
Net cash flows used in operating activities		(13,262	)		(18,806	)
Net cash flows from investing activities		131			974
Net cash flows used in financing activities		(916	)		(292	)

Net decrease in cash and cash equivalents		(14,047	)		(18,124	)

Operating Activities

Net cash used in operating activities for the six months ended June 30, 2023 was £13.3 million, a decrease of £5.5 million compared to £18.8 million in 2022. This difference is principally due to expenses in the six months ended June 30, 2023 net of movements in working capital.

Investing Activities

Net cash from investing activities for the six months ended June 30, 2023 was £0.1 million, a decrease of £0.8 million compared to £1.0 million in 2022. The decrease was due to the non-recurrence in 2023 of milestone payments from OncXerna following the global licensing arrangement for navicixizumab and associated payments to CVR holders in 2022, which more than offset an increase in interest earned on cash and short-term deposits, net of payments to acquire intangible assets.

Financing Activities

Net cash used in financing activities for the six months ended June 30, 2023 was £0.9 million, an increase of £0.6 million compared to £0.3 million in 2022. The increase was principally due to the payment of £0.7 million of accrued interest on the Novartis Convertible Loan Notes.

Operating and Capital Expenditure Requirements

As of June 30, 2023, we had an accumulated loss of £342.2 million. We expect to continue to report significant operating losses for the foreseeable future as we continue our research and development efforts and potentially seek regulatory approval of our product candidates and any future product we develop. See also “Risk Factors—Risks Related to Our Business and Industry” in our Annual Report.

We expect to continue to incur our expenses in connection with our ongoing development activities related to our product candidates, our outsourced manufacturing activities and other associated costs including the management of our intellectual property portfolio. We also expect to continue to incur costs associated with operating as a U.S. public company listed on Nasdaq. These costs will increase further if or when we:

•

seek to develop additional product candidates;

•

seek regulatory approvals for any of our product candidates that successfully completes clinical trials;

•

potentially establish a sales, marketing, and distribution infrastructure and scale-up manufacturing capabilities to commercialize or co-commercialize any product candidates for which we may obtain regulatory approval and chose to commercialize directly;

•

expand our intellectual property portfolio;

•

add further central clinical, scientific, operational, financial and management information systems, and personnel, including personnel to support our development and to support our operations as a U.S. public company listed on Nasdaq;

•

lose our foreign private issuer status in the future; or

•

experience any delays or encounter any issues from any of the above, including but not limited to failed studies, complex results, safety issues, or other regulatory challenges.

We expect that our existing cash and short-term deposits will enable us to fund our currently committed clinical trials, operating expenses and capital expenditure requirements into 2026. We have based these estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development of our product candidates and any future product candidates and because the extent to which we may enter into collaborations with third parties for development of any of our product candidates is unknown, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future capital requirements will depend on many factors, including:

•

The costs for our activities related to our ongoing collaboration with Ultragenyx for setrusumab for the treatment of adults and children with OI; and potential future clinical trials for alvelestat in AATD and other potential indications;

•

the costs and timing of manufacturing clinical supplies of our product candidates;

•

the costs, timing, and outcome of regulatory review of our product candidates, including post-marketing studies that could be required by regulatory authorities;

•

the costs, timing, and outcome of potential future commercialization activities, including manufacturing, marketing, sales and distribution, for our product candidates that we commercialize directly;

•

the timing and amount of revenue, if any, received from commercial sales of our product candidates;

•

the costs and timing of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights; and defending any intellectual property-related claims, including any claims by third parties that we are infringing, misappropriating or otherwise violating their intellectual property rights;

•

the sales price and availability of adequate third-party coverage and reimbursement for our product candidates;

•

the effect of competitors and market developments;

•

the performance of our collaborators and partners under the existing agreements on setrusumab and navicixizumab;

•

the extent to which we are able to acquire new product candidates or enter into licensing or collaboration arrangements for our product candidates, although we currently have no commitments or agreements to complete any such transactions;

•

milestone and deferred payments under Mereo’s license and option agreement with AstraZeneca; and

•

tax liabilities or other assessments and our ability to claim R&D tax credits or other reliefs.

Our revenues, if any, will be derived from development, regulatory or other milestones, or sales of any product candidates that we are able to successfully develop, receive regulatory approval for, and commercialize in future years. In the meantime, we will need to obtain substantial additional funds to achieve our business objective.

Adequate additional funds may not be available to us on acceptable terms, or at all. If we raised additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

Any future debt financing or preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially dilute your ownership interests.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. If we are unable to raise additional funds through partnerships, debt or equity financings when needed, we may be required to delay, limit, reduce, or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Exhibit 99.3

Mereo BioPharma Reports Interim Financial Results for the Six Months Ended June 30, 2023 and Provides Corporate Update

London, September 7, 2023 - Mereo BioPharma Group plc (NASDAQ: MREO) (“Mereo” or the “Company”), a clinical-stage biopharmaceutical company focused on rare diseases, today announced its unaudited interim financial results for the six months ended June 30, 2023 and provided an update on recent corporate highlights.

“The first half of 2023 was highlighted by significant updates on each of our lead rare disease programs, as we announced, alongside our partner Ultragenyx, positive data from the dose-selection Phase 2 portion of the Phase 2/3 Orbit study of setrusumab in osteogenesis imperfecta (OI), and we received regulatory guidance around the pivotal study design for alvelestat in Alpha-1 Antitrypsin Deficiency-Associated Lung Disease (AATD-LD),” said Dr. Denise Scots-Knight, Chief Executive Officer of Mereo. “With the two Phase 3 setrusumab studies underway, which triggered a $9 million milestone payment from Ultragenyx, and with continued progress being made on the alvelestat program, we believe we are well positioned with several important potentially value creating inflection points expected in the coming quarters. With cash and short-term deposits of $53.1 million (£42.1 million) as of June 30, 2023, and with the subsequent milestone payment from our partner Ultragenyx, plus the sale of common stock under our at-the-market offering program, we continue to expect that we have sufficient runway to fund operations into 2026.”

First Half 2023 Highlights, Recent Developments and Anticipated Milestones

Setrusumab (UX143)

•

With our partner Ultragenyx, we reported positive data from the Phase 2 portion of the Phase 2/3 Orbit study of setrusumab in OI patients aged five to <26 years old. Setrusumab demonstrated statistically significant increases in levels of serum P1NP, a sensitive marker of bone formation, and a substantial and significant improvement in bone mineral density (BMD) by 3 months in these pediatric patients. All 24 patients are now enrolled in a Phase 2 open-label extension study, with additional data expected to be shared by Ultragenyx in mid-October 2023.

•

Ultragenyx dosed the first patients in both registrational trials evaluating setrusumab in pediatric and young adult patients with OI – the Phase 3 portion of the Orbit study in patients aged 5 to <26 years old and the Phase 3 Cosmic study in patients aged 2 to <7 years old.

•

The IMPACT Survey, a research initiative led by the Osteogenesis Imperfecta Federation Europe (OIFE), the OI Foundation and Mereo exploring the impact of OI on people’s lives, will publish additional data over the next several months. The survey was designed to capture data supporting the availability of potential future treatments for OI.

Alvelestat (MPH-966)

•

We received clear guidance from the U.S. Food and Drug Administration (FDA) and European Medicines Agency (EMA) that a single, global, 12-18 month placebo-controlled Phase 3 study in approximately 200 patients, if successful, could be sufficient to support full marketing approvals of alvelestat for AATD-LD in both the United States (U.S.) and European Union (EU).

•

The independent primary endpoints of the proposed Phase 3 study are the change in a Patient-Reported Outcome (PRO) as guided by the FDA, which is proposed to be the St. George’s Respiratory Questionnaire (SGRQ) Activity domain, and change in lung density measured by CT scan, as guided by the EMA.

•

Two abstracts were presented in an oral and a poster session, respectively, at the American Thoracic Society (ATS) 2023 annual meeting in May 2023.

•

Data from the ongoing placebo-controlled Phase 2 investigator-led study in AATD-LD (ATALANTa), studying the 120mg dose of alvelestat including in patients who may be on augmentation therapy, is expected in the coming weeks.

Etigilimab (MPH-313)

•

The Phase 1b portion of the ACTIVATE open-label trial investigating etigilimab (anti-TIGIT) in combination with nivolumab has been completed. The basket study enrolled 76 patients in a range of tumor types not typically responsive to anti-PD(L)-1 monotherapy including gynecologic and rare tumors. Preliminary efficacy data, showing that some patients achieved clinical benefit associated with prolonged duration on study, supports continued evaluation in tumor types not typically responsive to anti-PD(L)1 monotherapy.

•

An abstract entitled “Safety and efficacy of etigilimab with nivolumab in select recurrent/advanced solid tumors” has been accepted for a mini-oral presentation at the upcoming European Society for Medical Oncology (ESMO) Annual Meeting, being held October 20-24, 2023 in Madrid, Spain.

•

Etigilimab, in combination with nivolumab, is also being studied in an ongoing investigator-led single-arm, two-stage, open-label Phase 1b/2 trial in a subtype of platinum-resistant recurrent ovarian cancer (clear cell ovarian cancer) at The MD Anderson Cancer Center, financed by the Cancer Focus Fund with the next stage being the expected expansion of enrollment from the initial 10 patients to 20 patients.

First Half 2023 Financial Results

Revenue was £7.1 million ($9.0 million) for the six months ended June 30, 2023, representing a one-time milestone payment upon dosing of the first patient in the Phase 3 portion of the Orbit study in patients aged five to under 26 in accordance with the collaboration and license agreement with Ultragenyx. This payment was received in July 2023.

Total research and development expenses decreased by £5.4 million, or 41%, from £13.3 million for the six months ended June 30, 2022 to £7.9 million for the six months ended June 30, 2023. R&D expenses relating to etigilimab decreased by £4.4 million. The decrease was primarily due to the winding down of the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types. R&D expenses relating to alvelestat decreased by £0.9 million. R&D expenses for the six-month periods ended June 30, 2023 and 2022 were primarily related to activities associated with the preparation for the Phase 3 study of alvelestat including CMC and drug formulation activities, and costs associated with the completion of the Phase 2 proof-of-concept study in AATD-LD, respectively. R&D expenses relating to setrusumab decreased by £0.4 million due to timing of activities.

Net loss attributable to equity holders for the six months ended June 30, 2023 was £11.0 million, compared to £19.2 million during the comparable period in 2022, primarily reflecting an operating loss of £9.9 million and net foreign exchange loss of £1.4 million.

As of June 30, 2023, the Company had cash and short-term deposits of £42.1 million ($53.1 million). In July 2023, the Company received a $9.0 million (£7.1 million) milestone payment from its partner, Ultragenyx and gross proceeds of $12.0 million (£9.3 million) through an “at-the-market” offering pursuant to an Open Market Sale Agreement with Jefferies LLC.

The Company’s guidance remains unchanged at this point, and it continues to expect that its existing cash and short-term deposits will enable it to fund its currently committed clinical trials, operating expenses and capital expenditure requirements into 2026.

Total ordinary shares outstanding at August 31, 2023 were 701,217,089. Total ADS equivalents at August 31, 2023 were 140,176,617, with each ADS representing five ordinary shares of the Company.

About Mereo BioPharma

Mereo BioPharma is a biopharmaceutical company focused on the development of innovative therapeutics for rare diseases. The Company has two rare disease product candidates, setrusumab for the treatment of osteogenesis imperfecta (OI) and alvelestat primarily for the treatment of severe alpha-1-antitrypsin deficiency-associated lung disease (AATD-LD). The Company’s partner, Ultragenyx Pharmaceutical, Inc., has initiated a pivotal Phase 2/3 pediatric study in young adults (5 to <26 years old) for setrusumab in OI and a Phase 3 study in pediatric patients (2 to <7 years old) in the first half of 2023. The partnership with Ultragenyx includes potential milestone payments of up to $245 million (following the recent $9 million milestone) and royalties to Mereo on commercial sales in Ultragenyx territories. Mereo has retained EU and UK commercial rights and will pay Ultragenyx royalties on commercial sales in those territories. Setrusumab has received orphan designation for osteogenesis imperfecta from the EMA and FDA, PRIME designation from the EMA and has pediatric disease designation from the FDA. Alvelestat has received U.S. Orphan Drug Designation for the treatment of AATD, Fast Track designation from the FDA, and positive data were reported from a Phase 2 proof-of-concept study in North America, Europe and the UK. In addition to the rare disease programs, Mereo has two oncology product candidates in clinical development. Etigilimab (anti-TIGIT) has completed a Phase 1b/2 basket study evaluating its safety and efficacy in combination with an anti-PD-1 in a range of tumor types including three rare tumors and three gynecological carcinomas—cervical, ovarian, and endometrial and is an ongoing Phase 1b/2 investigator led study at the MD Anderson Cancer Center in clear cell ovarian cancer; Navicixizumab, for the treatment of late line ovarian cancer, has completed a Phase 1 study and has been partnered with OncXerna Therapeutics, Inc. in a global licensing agreement that includes payments of up to $300 million in milestones and royalties.

Forward-Looking Statements

This press release contains “forward-looking statements,” including the Company’s expectations regarding its proposed Phase 3 study evaluating a single dose of alvelestat versus placebo, the expectations regarding a study in pediatric patients evaluating setrusumab, and the Company’s pipeline of product candidates. All statements other than statements of historical fact contained in this press release are forward-looking statements within the meaning of Section 27A of the U.S Securities Act of 1933, as amended, and Section 21E of the U.S 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. Such risks and uncertainties include, among others, the uncertainties inherent in the clinical development process; the Company’s reliance on third parties to conduct and provide funding for its clinical trials; the Company’s dependence on enrolment of patients in its clinical trials; and the Company’s dependence on its key executives. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the Company’s business, including those described in the “Risk Factors” section of its latest Annual Report on Form 20-F, reports on Form 6-K and other documents furnished or filed from time to time by the Company with the 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

Christine Fox, Chief Financial Officer

Burns McClellan (Investor Relations Adviser to Mereo)		+01 646 930 4406

Lee Roth

Investors		investors@mereobiopharma.com

Consolidated Statements of Comprehensive Loss


	Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000
Revenue		7,128			—
Cost of revenue		(2,455	)		352
Research and development expenses		(7,898	)		(13,322	)
Administrative expenses		(9,548	)		(8,840	)
Other operating income		2,864			—

Operating loss		(9,909	)		(21,810	)

Finance income		550			173
Finance costs		(1,498	)		(1,859	)
Changes in the fair value of financial instruments		365			1,210
Net foreign exchange (loss)/gain		(1,445	)		1,582
Other income		—			811

Loss before tax		(11,937	)		(19,893	)

Taxation		907			735

Loss for the period, attributable to equity holders of the parent		(11,030	)		(19,158	)

Items that may be reclassified subsequently to profit or loss:
Currency translation of foreign operations		1,493			(1,775	)

Total comprehensive loss for the period, attributable to equity holders of the parent		(9,537	)		(20,933	)

Basic loss per share for the period (in £)		(0.02	)		(0.03	)
Diluted loss per share for the period (in £)		(0.02	)		(0.03	)

Consolidated Balance Sheets


	June 30, 2023 £’000			December 31, 2022 £’000
Assets
Non-current assets
Property, plant and equipment		1,565			1,831
Intangible assets		24,845			24,116

		26,410			25,947

Current assets
Prepayments		1,376			3,125
R&D tax credits		2,203			1,296
Other taxes receivable		643			614
Trade and other receivables		7,893			762
Cash and short-term deposits		42,113			56,334

		54,228			62,131

Total assets		80,638			88,078

Equity and liabilities
Non-current liabilities
Provisions		411			—
Convertible loan notes		3,665			—
Warrant liability		166			129
Lease liability		973			1,222
Other liabilities		220			182

		5,435			1,533

Current liabilities
Trade and other payables		1,911			3,078
Accruals		4,786			4,491
Provisions		4,701			4,822
Convertible loan notes		4,186			11,085
Warrant liability		—			402
Lease liability		488			466
Other liabilities		1,386			333

		17,458			24,677

Total liabilities		22,893			26,210

Net assets		57,745			61,868

Equity
Issued capital		1,930			1,875
Share premium		257,343			254,303
Other capital reserves		134,999			132,680
Employee Benefit Trust shares		(1,058	)		(1,058	)
Other reserves		7,401			7,401
Accumulated losses		(342,194	)		(331,164	)
Translation reserve		(676	)		(2,169	)

Total equity		57,745			61,868

Cover Page	6 Months Ended
Cover Page	Jun. 30, 2023
Cover [Abstract]
Document Type	6-K
Amendment Flag	false
Document Period End Date	Jun. 30, 2023
Entity Registrant Name	MEREO BIOPHARMA GROUP PLC
Entity Central Index Key	0001719714
Current Fiscal Year End Date	--12-31
Entity File Number	001-38452

Condensed Consolidated Statements of Comprehensive Loss - GBP (£) £ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Statement of comprehensive income [abstract]
Revenue	£ 7,128
Cost of revenue	(2,455)	£ 352
Research and development expenses	(7,898)	(13,322)
Administrative expenses	(9,548)	(8,840)
Other operating income	2,864	0
Operating loss	(9,909)	(21,810)
Finance income	550	173
Finance costs	(1,498)	(1,859)
Changes in the fair value of financial instruments	365	1,210
Net foreign exchange (loss)/gain	(1,445)	1,582
Other income	0	811
Loss before tax	(11,937)	(19,893)
Taxation	907	735
Loss for the period, attributable to equity holders of the parent	(11,030)	(19,158)
Items that may be reclassified subsequently to profit or loss:
Currency translation of foreign operations	1,493	(1,775)
Total comprehensive loss for the period, attributable to equity holders of the parent	£ (9,537)	£ (20,933)
Basic loss per share for the period (in £)	£ (0.02)	£ (0.03)
Diluted loss per share for the period (in £)	£ (0.02)	£ (0.03)

Condensed Consolidated Balance Sheets - GBP (£) £ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Non-current assets
Property, plant and equipment	£ 1,565	£ 1,831
Intangible assets	24,845	24,116
Total non-current assets	26,410	25,947
Current assets
Prepayments	1,376	3,125
R&D tax credits	2,203	1,296
Other taxes receivable	643	614
Trade and other receivables	7,893	762
Cash and short-term deposits	42,113	56,334
Total current assets	54,228	62,131
Total assets	80,638	88,078
Non-current liabilities
Provisions	411	0
Convertible loan notes	3,665	0
Warrant liability	166	129
Lease liability	973	1,222
Other liabilities	220	182
Total non-current liabilities	5,435	1,533
Current liabilities
Trade and other payables	1,911	3,078
Accruals	4,786	4,491
Provisions	4,701	4,822
Convertible loan notes	4,186	11,085
Warrant liability	0	402
Lease liability	488	466
Other liabilities	1,386	333
Total current liabilities	17,458	24,677
Total liabilities	22,893	26,210
Net assets	57,745	61,868
Equity
Issued capital	1,930	1,875
Share premium	257,343	254,303
Other capital reserves	134,999	132,680
Employee Benefit Trust shares	(1,058)	(1,058)
Other reserves	7,401	7,401
Accumulated losses	(342,194)	(331,164)
Translation reserve	(676)	(2,169)
Total equity	£ 57,745	£ 61,868

Condensed Consolidated Statements of Cash Flows - GBP (£) £ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Operating activities
Loss before tax	£ (11,937)	£ (19,893)
Adjustments to reconcile (loss)/profit to net cash flows:
Depreciation and impairment of property, plant and equipment	266	436
Amortization of intangible assets	138
Share-based payment expense	1,931	2,446
Net foreign exchange loss/(gain)	1,282	(2,100)
Increase in provisions and other liabilities	1,130	307
Finance income	(550)	(173)
Finance costs	1,084	1,696
Fair value remeasurement on warrants	(365)	(1,210)
Other income and expenses	0	(811)
Other non-cash movements	155	330
Working capital adjustments
(Increase)/decrease in receivables and prepayments	(5,521)	331
(Decrease)/increase in trade and other payables and accruals	(846)	1,364
Taxation	(29)	(1,529)
Net cash flows used in operating activities	(13,262)	(18,806)
Investing activities
Purchase of property, plant and equipment	0	(10)
Proceeds from intangible asset (net of transaction costs)	0	1,484
Payments to CVR holders	0	(673)
Interest earned	468	173
Payments to acquire intangible assets	(337)	0
Net cash flows from investing activities	131	974
Financing activities
Proceeds from issuance of ordinary shares	2
Interest paid	(771)
Payment of lease liabilities	(226)	(445)
Proceeds from TAP agreement	79	153
Net cash flows used in financing activities	(916)	(292)
Net decrease in cash and cash equivalents	(14,047)	(18,124)
Cash and cash equivalents at the beginning of the period	56,334	94,296
Effect of exchange rate changes on cash and cash equivalents	(174)	243
Cash and cash equivalents at the end of the period	£ 42,113	£ 76,415

Condensed Consolidated Statements of Changes in Equity - GBP (£) £ in Thousands	Total	Issued capital [member]	Share premium [member]	Other capital reserves [member]	Employee benefit trust [member]	Other reserves [member]	Accumulated losses [member]	Translated reserve
Beginning balance at Dec. 31, 2021	£ 88,002	£ 1,755	£ 247,460	£ 129,835	£ (1,140)	£ 7,401	£ (296,968)	£ (341)
Loss for the period	(19,158)						(19,158)
Other comprehensive income (loss)	(1,775)							(1,775)
Total comprehensive loss	(20,933)						(19,158)	(1,775)
Share-based payments	2,446			2,446
Exercise of share options				(82)	82
Issuance of warrants	70			70
Ending balance at Jun. 30, 2022	69,585	1,755	247,460	132,269	(1,058)	7,401	(316,126)	(2,116)
Beginning balance at Dec. 31, 2022	61,868	1,875	254,303	132,680	(1,058)	7,401	(331,164)	(2,169)
Loss for the period	(11,030)						(11,030)
Other comprehensive income (loss)	1,493							1,493
Total comprehensive loss	(9,537)						(11,030)	1,493
Share-based payments	1,931			1,931
Issuance of shares	3,440	53	3,040	347
Exercise of share options	2	2
Issuance of warrants	41			41
Ending balance at Jun. 30, 2023	£ 57,745	£ 1,930	£ 257,343	£ 134,999	£ (1,058)	£ 7,401	£ (342,194)	£ (676)

Corporate information	6 Months Ended
Corporate information	Jun. 30, 2023
Text block [abstract]
Corporate information	1. Corporate information Mereo BioPharma Group plc (the “Company” or “Mereo”) is a clinical-stage, United Kingdom (“UK”) based biopharmaceutical company focused on rare diseases and oncology. The Company is a public limited company incorporated and domiciled in the UK, and registered in England, with shares publicly traded on the Nasdaq Capital Market via American Depositary Shares (“ADSs”) under the ticker symbol MREO. The Company’s registered office is located at Fourth Floor, 1 Cavendish Place, London, W1G 0QF, United Kingdom. These financial statements are the unaudited condensed consolidated financial statements of Mereo BioPharma Group plc and its subsidiaries for the six months ended June 30, 2023. The principal activities of the Company are the development and commercialization of innovative therapeutic pharmaceutical products for rare diseases.

Significant accounting policies	6 Months Ended
Significant accounting policies	Jun. 30, 2023
Text block [abstract]
Significant accounting policies	2. Significant accounting policies Basis of preparation The unaudited condensed consolidated financial statements for the six months ended June 30, 2023 have been prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting. These unaudited condensed consolidated financial statements do not include all information and disclosures required in the annual financial statements in accordance with International Financial Reporting Standards (IFRS) and should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on March 28, 2023. The financial information is presented in pound sterling (“£”), which is the presentational currency of the Company. The functional currencies of consolidated subsidiaries are pound sterling and US dollars (“$”). All amounts disclosed in the condensed consolidated financial statements and notes have been rounded to the nearest thousand, unless otherwise stated. The financial information for the year ended December 31, 2022 has been extracted from the Company’s audited financial statements for that year, filed with the SEC on March 28, 2023. These condensed consolidated financial statements are unaudited and do not constitute statutory accounts of the Company as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for financial year ended December 31, 2022 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. Segmental information The Company has one operating segment. The Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The Company has a single portfolio of product candidates, with only direct research and development expenses monitored by product candidate. The CODM makes decisions over resource allocation at an overall portfolio level and the Company’s financing is managed and monitored on a consolidated basis. Going concern The going concern basis has been applied in these condensed consolidated financial statements as the Company has adequate resources to meet its liabilities as they fall due for the foreseeable future and at least 12 months from the issuance date of these condensed consolidated financial statements. The Company expects to incur significant operating losses for the foreseeable future as it continues its research and development efforts, seeks to obtain regulatory approval of its product candidates and pursues any future product candidates the Company may develop. Until such time as the Company can generate significant revenue from product sales, or other commercial revenues, if ever, or through licensing and/or collaboration agreements for its rare disease or oncology product candidates, the Company will seek to finance its operations through a combination of public or private equity or debt financings or other non-dilutive sources. Summary of significant accounting policies The accounting policies adopted in the preparation of the 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, 2022. Significant accounting estimates and judgments The preparation of these condensed consolidated 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 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, 2022.

Revenue, Cost of revenue and Other operating income	6 Months Ended
Revenue, Cost of revenue and Other operating income	Jun. 30, 2023
Disclosure Of Revenue From Contracts With Customers [Abstract]
Revenue, Cost of revenue and Other operating income	3. Revenue, Cost of revenue and Other operating income The Company recognized milestone proceeds of $9 million (£ 7.1 million) as revenue under the collaboration and license agreement with Ultragenyx for setrusumab following achievement of a development milestone in the six months ended June 30, 2023. The milestone proceeds w ere received in July 2023. The variable consideration relating to future milestones and sales royalties will be recognized in the statement of comprehensive income when the milestones are achieved or the underlying commercial sales are made, in the event regulatory approval is obtained. As a consequence of the milestone proceeds paid to the Company under the collaboration and license agreement with Ultragenyx and in accordance with the terms of the 2015 asset purchase agreement with Novartis, the Company also accrued for a payment to Novartis of £ 1.7 million. The payment included a deduction for costs of £ 1.4 million which was deferred to be recognized in the statement of comprehensive loss when the associated costs are incurred. In the six month period ended June 30, 2023, £ 0.6 million (six months ended June 30, 2022: £ 0.4 million) of these deductions were recognized in the condensed consolidated statement of comprehensive loss. As of June 30, 2023, the remaining balance to be recognized of £ 1.1 million (December 31, 2022: £ 0.3 million) is included within “Other liabilities” in the condensed consolidated balance sheets. In June 2023, the Company received a payment of £2.9 million from its depositary for reimbursement of certain expenses incurred by the Company in respect of its ADR program in the current and prior years pursuant to the agreement between both parties. The Company recognizes such amounts as “Other operating income” when it becomes entitled to them.

Finance income, finance costs and changes in the fair value of financial instruments

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Finance income, finance costs and changes in the fair value of financial instruments

4. Finance income, finance costs and changes in the fair value of financial instruments

Finance income


	Six months ended June 30, 2023 £’000		Six months ended June 30, 2022 £’000

Interest income on short-term deposits		468		173
Modification of convertible loan notes		82		—

Total		550		173

Finance income includes a £0.1 million

(2022:

£nil) gain recognized on the modification of the Private Placement Loan Notes (see Note 11).

Finance costs


	Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000

Interest on convertible loan notes		(1,004	)		(1,567	)
Interest on lease liabilities		(79	)		(113	)
Discounting of provisions for deferred contingent cash consideration		(395	)		(163	)
Other		(20	)		(16	)

Total		(1,498	)		(1,859	)

Interest on convertible loan notes includes £0.7 million of accrued interest paid as part of the amendment of the Novartis convertible loan note (see Note 11).

Changes in the fair value of financial instruments


	Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000

Changes in the fair value of warrants – private placement		402			1,091
Changes in the fair value of warrants – bank loan		(37	)		119

Total		365			1,210

See Note 12 for additional information on the warrant liability.

Other income and expenses	6 Months Ended
Other income and expenses	Jun. 30, 2023
Text block [abstract]
Other income and expenses	5. Other income and expenses In February 2022, the Company received a milestone payment of $2.0 million (£1.5 million) under the Navi License Agreement with OncXerna. An associated payment was made to the former shareholders of Mereo BioPharma 5, Inc. under the Contingent Value Rights Agreement (“CVR”) of a total of $0.9 million (£0.7 million), after deductions of costs, charges and expenditures, which resulted in other income, net of £0.8 million.

Loss per share

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Loss per share

6. Loss per share


	Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000

Numerator – Basic loss per share (£’000)
Loss attributable to equity holders of the parent		(11,030	)		(19,158	)
Denominator – Basic loss per share
Weighted average number of ordinary shares		627,087,752			583,892,445
Loss per share – basic (£)		(0.02	)		(0.03	)
Numerator – Diluted loss per share (£’000):
Loss attributable to equity holders of the parent		(11,030	)		(19,158	)
Effect of dilutive ordinary shares		—			—
Numerator – Diluted loss per share		(11,030	)		(19,158	)
Denominator – Diluted loss per share:
Number of ordinary shares used for basic loss per share		627,087,752			583,892,445
Weighted average effect of dilutive ordinary shares		—			—
Weighted average number of diluted ordinary shares outstanding		627,087,752			583,892,445
Loss per share – diluted (£)		(0.02	)		(0.03	)

Property, plant and equipment

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Property, plant and equipment

7. Property, plant and equipment


	Right-of-use asset (building) (£’000)			Leasehold improvements (£’000)			Office Equipment (£’000)			IT Equipment (£’000)			Total (£’000)

Cost or valuation at January 1, 2023 and June 30, 2023		2,465			557			164			173			3,359

Depreciation and impairment
At January 1, 2023		(1,088	)		(219	)		(76	)		(145	)		(1,528	)

Depreciation for the period		(199	)		(48	)		(11	)		(9	)		(266	)

At June 30, 2023		(1,287	)		(267	)		(87	)		(154	)		(1,794	)

Net book value
At January 1, 2023		1,377			338			88			28			1,831

At June 30, 2023		1,178			290			77			19			1,565

Intangible assets

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Intangible assets

8. Intangible assets


	Acquired development programs
Cost
At January 1, 2023		33,005

Additions		1,166

At June 30, 2023		34,172

Accumulated revision to estimated value
At January 1, 2023		(8,889	)
Revision to estimated value		(300	)

At June 30, 2023		(9,189	)

Accumulated amortization
At January 1, 2023		—
Amortization for the period		(138	)

At June 30, 2023		(138	)

Net book value
At January 1, 2023		24,116

At June 30, 2023		24,845

1.2

million was recognized in the period reflecting payments under the agreement that are not contingent. A corresponding liability of £

0.6

million and a provision of

£0.6

0.1 million (

2022:

£nil)

has been recorded within “Administrative expenses” in the condensed consolidated statement of comprehensive (loss)/income.

million (2022: £

0.4

million) and was recognized as a reduction of the intangible asset.

During the period the Company did

not revise the value of any other intangible assets (2022: £nil

). With the exception of the UCB/Amgen License which is amortized, the intangible assets remain under development and no amortization charge has been recognized.

Issued capital and reserves

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Issued capital and reserves

9. Issued capital and reserves


	Number of ordinary shares		Ordinary Share Capital £’000		Share Premium £’000
At January 1, 2022 and June 30, 2022		584,908,239		1,755		247,460
At January 1, 2023		624,928,519		1,875		254,303
Issued during the period		18,276,275		55		3,040

At June 30, 2023		643,204,794		1,930		257,343

During the six months ended June 30, 2023, Private Placement Loan Notes with a carrying value of

£3.1 million were converted into 17,774,895 ordinary shares at a conversion price of £0.174

per ordinary share (see Note 11) and 501,380 ordinary shares were issued upon the vesting of equity awards.

Other capital reserves


	Share-based payments £’000			Equity component of convertible loan £’000		Other warrants issued £’000		Merger reserve £’000		Other reserve £’000		Total £’000
At January 1, 2022		23,026			32,843		44		40,818		33,104		129,835

Share-based payments expense during the period		2,446			—		—		—		—		2,446
Share option exercise		(82	)		—		—		—		—		(82	)
Issuance of warrants		—			—		70		—		—		70

At June 30, 2022		25,390			32,843		114		40,818		33,104		132,269

At January 1, 2023		26,806			31,838		114		40,818		33,104		132,680

Share-based payments expense during the period		1,931			—		—		—		—		1,931
Extinguishment and issuance of Novartis Loan Note		—			347		—		—		—		347
Issue of warrants		—			—		41		—		—		41
At June 30, 2023		28,737			32,185		155		40,818		33,104		134,999

Equity component of convertible loan

The amendment of the Novartis Loan Note was treated as the extinguishment of the original instrument and the issuance of a new instrument (see Note 11). Accordingly, £

0.3

million was allocated to the equity components of the new Novartis Loan Note, representing the embedded conversion option and the new warrants.

Other warrants issued

Other warrants issued also relate to funding arrangements with The Alpha-1 Project which are a compound instrument consisting of a liability and an equity component. In 2023, the Company issued

June 30, 2023 is £0.2 million (2022: £ 0.1 million).

Share-based payments

non-executive

The total charge for the six months ended June 30, 2023 in respect of all share-based incentive schemes was

£1.9 million (June 30, 2022: £2.4

million).

The following awards were granted during the six months ended June 30, 2023:


	Mereo 2019 Equity Incentive Plan						Mereo 2019 NED Equity Incentive Plan
	Awards (ADS)		Weighted average fair value ($) per share		Weighted average exercise price ($) per share		Awards (ADS)		Weighted average fair value ($) per share		Weighted average exercise price ($) per share
Options		4,617,000		0.91		1.01		440,000		0.84		0.94
RSU’s		617,750		1.01		—		479,813		0.94		—
PSU’s		1,543,150		0.61		—		—		—		—

Mereo 2019 Equity Incentive Plan

•

Options over ADSs granted during the six months ended June 30, 2023, were valued using the Black-Scholes model with the following weighted average inputs: expected volatility of

98.06%; risk free interest rate of 3.43%; expected life of 10 years; and market price per ADS of $1.01.

•

RSUs over ADSs granted during the six months ended June 30, 2023 vest over

•

PSUs over ADSs

Mereo 2019 NED Equity Incentive Plan

•

97.94%; risk free interest rate of 3.36%; expected life of 10 years; and market price per ADS of $0.94.

•

Provisions

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Provisions

10. Provisions


	June 30, 2023 £’000		December 31, 2022 £’000

Social security contribution on vested share options		56		9
Provisions for deferred contingent cash consideration		5,056		4,634
Restructuring		—		179

Total		5,112		4,822

Current		4,701		4,822
Non-Current		411		—

Convertible Notes

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Convertible Notes

11. Convertible Notes


	June 30, 2023 £’000		December 31, 2022 £’000
Novartis Loan Note		3,665		4,449
Loan Notes – Private Placement		4,186		6,636

Total		7,851		11,085

Current		4,186		11,085
Non-Current		3,665		—

Novartis Loan Note

arrants to purchase 2,000,000 ordinary shares were issued (see Note 9).

million was derecognized. At the same time, a new liability of £

3.5

million was recognized which represents the fair value of the liability component of the new Novartis Loan Notes, net of fees. The remaining amount was allocated between the £0.7

million of interest paid in cash (see Note 4) and the residual £

0.3

Private Placement Loan Notes

with all other terms remaining unchanged. The maturity date extension was

treated as a modification with a modification gain of

0.1 million recognized within finance income (see Note 4).

During the six months ended June 30, 2023, the Company issued and allotted 17,774,895 ordinary shares (202

: nil) at a price of £0.174 per share on conversion of the Loan Notes.

A further conversion and subsequent redemption of the remaining Loan Notes took place in July and August 2023, respectively (see Note 15).

Warrant liability

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Warrant liability

12. Warrant liability


	June 30, 2023 £’000			June 30, 2022 £’000
At January 1		531			8,336
Fair Value changes during the period		(365	)		(1,210	)

At June 30		166			7,126


	June 30, 2023 £’000		December 31, 2022 £’000
Current		—		402
Non-current		166		129

Total		166		531

The change in fair value of the warrant liability represents an unrealized gain for the six months ended June 30, 2023 and for the six months ended June 30, 2022.

Warrants - private placement

As a part of the private placement transaction

the warrants

expired during the period, the fair value of the warrant liability was £nil as of June 30, 2023 (£0.4 million as of December 31, 2022). The change in the fair value of £0.4

million was recognized as a gain in the condensed consolidated statement of comprehensive loss. In the six months ended June 30, 2023,

no warrants were exercised.

Warrants – bank loan

s of

June 30, 2023, the fair value of these warrants were £0.2

million (December 31, 2022:

£0.1

million. There were

no warrants exercised during the six months ended June 30, 2023 (

2022:

nil).

Total outstanding warrants

s of

June 30, 2023, a total of 2,487,816

liability-classified warrants are outstanding. The warrants outstanding are equivalent to

0.4

% of the ordinary share capital of the Company.

The following table lists the weighted average inputs to the models used for the fair value of warrants:


	June 30, 2023 £’000		December 31, 2022 £’000
Expected volatility (%)		100		95
Risk-free interest rate (%)		3.45		3.99
Expected life of warrants (years)		4.70		0.5
Market price of ADS($)		1.32		0.75
Model used		Black-Scholes		Black-Scholes

Volatility was estimated by reference to the one-year historical volatility of the share price of the Company.

Financial instruments fair value disclosures

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Financial instruments fair value disclosures

13. Financial instruments fair value disclosures

The Company held the following financial instruments at fair value as of June 30, 2023. There are no

non-recurring

fair value measurements.


	Fair value measured using unadjusted quoted prices (Level 1)		Fair value measured using significant observable inputs (Level 2)		Fair value measured using significant unobservable inputs (Level 3)
Warrant liabilities		—		166		—
Provisions for deferred contingent cash consideration		—		—		5,056

Total		—		166		5,056

There were no transfers between any level during 2023.

The movements for level 3 instruments during the period are detailed in the table below:


	Provisions for deferred contingent cash consideration £’000			Warrant liability £’000

At January 1, 2023		4,634			402

Additions during the period		561			—
Revisions to estimate		(300	)		—
Movement during the period		161			(402	)

At June 30, 2023		5,056			—


	Valuation technique	Significant unobservable inputs	Input range	Sensitivity of the input to fair value
Provision for AstraZeneca deferred contingent cash consideration	Discounted cash flow	WACC	2023: 15%	1% increase/decrease would result in a decrease/increase in fair value by £ 21,000 .

		WACC	2022: 15%	1% increase/decrease would result in a decrease/increase in fair value by £31,000.

		Probability of success	2023: 40.6% - 81.2%	10% increase/decrease would result in an increase/decrease in fair value by £0.5 million.

		Probability of success	2022: 40.6% - 81.2%	10% increase/decrease would result in an increase/decrease in fair value by £0.5 million.

Related party disclosures	6 Months Ended
Related party disclosures	Jun. 30, 2023
Text block [abstract]
Related party disclosures	14. 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. Employee benefit trust In 2016 the Company set up an Employee Benefit Trust (“EBT”). The EBT holds ADS’s to satisfy the exercise of options by employees under the Company’s share-based incentive schemes. No funding was loaned to the EBT by the Company during the six months ended June 30, 2023 (June 30, 2022: nil). The EBT did not purchase any ordinary shares during the six months ended June 30, 2023 (2022: nil). No ordinary shares owned by the EBT were used to satisfy exercise of options by employees under the Company’s share-based incentive schemes during the six months ended June 30, 2023 (June 30, 2022: 78,225). As of June 30, 2023 , a cash balance of £17,241 was held by the EBT. As of December 31, 2022 , a cash balance of £17,741 was held by the EBT.

Events after reporting period	6 Months Ended
Events after reporting period	Jun. 30, 2023
Text block [abstract]
Events after reporting period	15. Events after reporting period Issuance of ordinary shares In July 2023, the Company issued and allotted 9,645,200 ordinary shares of £0.003 in nominal value in the capital of the Company, equivalent to 1,929,040 ADSs, at an exercise price of £0.174 per ordinary share on conversion of convertible loan notes with a principal amount of £1,025,641 issued as part of the June 2020 private placement transaction. In July 2023, 9,673,419 ADSs representing 48,367,095 ordinary shares were issued for aggregate gross proceeds of $12.0 million (£9.3 million) through an “at-the-market” offering pursuant to an Open Market Sale Agreement with Jefferies LLC. Settlement of convertible loan notes On the maturity date in August 2023, the Company paid £2.6 million to settle the outstanding principal and accrued interest balance on convertible loan notes issued as part of the June 2020 private placement transaction.

Significant accounting policies (Policies)	6 Months Ended
Significant accounting policies (Policies)	Jun. 30, 2023
Text block [abstract]
Basis of preparation	Basis of preparation The unaudited condensed consolidated financial statements for the six months ended June 30, 2023 have been prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting. These unaudited condensed consolidated financial statements do not include all information and disclosures required in the annual financial statements in accordance with International Financial Reporting Standards (IFRS) and should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on March 28, 2023. The financial information is presented in pound sterling (“£”), which is the presentational currency of the Company. The functional currencies of consolidated subsidiaries are pound sterling and US dollars (“$”). All amounts disclosed in the condensed consolidated financial statements and notes have been rounded to the nearest thousand, unless otherwise stated. The financial information for the year ended December 31, 2022 has been extracted from the Company’s audited financial statements for that year, filed with the SEC on March 28, 2023. These condensed consolidated financial statements are unaudited and do not constitute statutory accounts of the Company as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for financial year ended December 31, 2022 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.
Segmental information	Segmental information The Company has one operating segment. The Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The Company has a single portfolio of product candidates, with only direct research and development expenses monitored by product candidate. The CODM makes decisions over resource allocation at an overall portfolio level and the Company’s financing is managed and monitored on a consolidated basis.
Going concern	Going concern The going concern basis has been applied in these condensed consolidated financial statements as the Company has adequate resources to meet its liabilities as they fall due for the foreseeable future and at least 12 months from the issuance date of these condensed consolidated financial statements. The Company expects to incur significant operating losses for the foreseeable future as it continues its research and development efforts, seeks to obtain regulatory approval of its product candidates and pursues any future product candidates the Company may develop. Until such time as the Company can generate significant revenue from product sales, or other commercial revenues, if ever, or through licensing and/or collaboration agreements for its rare disease or oncology product candidates, the Company will seek to finance its operations through a combination of public or private equity or debt financings or other non-dilutive sources.
Summary of significant accounting policies	Summary of significant accounting policies The accounting policies adopted in the preparation of the 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, 2022.
Significant accounting estimates and judgments	Significant accounting estimates and judgments The preparation of these condensed consolidated 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 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, 2022.

Finance income, finance costs and changes in the fair value of financial instruments (Tables)

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Summary of Finance Income

Finance income


	Six months ended June 30, 2023 £’000		Six months ended June 30, 2022 £’000

Interest income on short-term deposits		468		173
Modification of convertible loan notes		82		—

Total		550		173

Summary of Finance Costs

Finance costs


	Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000

Interest on convertible loan notes		(1,004	)		(1,567	)
Interest on lease liabilities		(79	)		(113	)
Discounting of provisions for deferred contingent cash consideration		(395	)		(163	)
Other		(20	)		(16	)

Total		(1,498	)		(1,859	)

Summary of Changes In The Fair Value Of Financial Instruments

Changes in the fair value of financial instruments


	Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000

Changes in the fair value of warrants – private placement		402			1,091
Changes in the fair value of warrants – bank loan		(37	)		119

Total		365			1,210

Loss per share (Tables)

6 Months Ended

Jun. 30, 2023

Loss per share [abstract]

Summary Of Loss Per Share


	Six months ended June 30, 2023 £’000			Six months ended June 30, 2022 £’000

Numerator – Basic loss per share (£’000)
Loss attributable to equity holders of the parent		(11,030	)		(19,158	)
Denominator – Basic loss per share
Weighted average number of ordinary shares		627,087,752			583,892,445
Loss per share – basic (£)		(0.02	)		(0.03	)
Numerator – Diluted loss per share (£’000):
Loss attributable to equity holders of the parent		(11,030	)		(19,158	)
Effect of dilutive ordinary shares		—			—
Numerator – Diluted loss per share		(11,030	)		(19,158	)
Denominator – Diluted loss per share:
Number of ordinary shares used for basic loss per share		627,087,752			583,892,445
Weighted average effect of dilutive ordinary shares		—			—
Weighted average number of diluted ordinary shares outstanding		627,087,752			583,892,445
Loss per share – diluted (£)		(0.02	)		(0.03	)

Property, plant and equipment (Tables)

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Summary of Property, Plant and Equipment


	Right-of-use asset (building) (£’000)			Leasehold improvements (£’000)			Office Equipment (£’000)			IT Equipment (£’000)			Total (£’000)

Cost or valuation at January 1, 2023 and June 30, 2023		2,465			557			164			173			3,359

Depreciation and impairment
At January 1, 2023		(1,088	)		(219	)		(76	)		(145	)		(1,528	)

Depreciation for the period		(199	)		(48	)		(11	)		(9	)		(266	)

At June 30, 2023		(1,287	)		(267	)		(87	)		(154	)		(1,794	)

Net book value
At January 1, 2023		1,377			338			88			28			1,831

At June 30, 2023		1,178			290			77			19			1,565

Intangible assets (Tables)

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Summary of Detailed Information about Intangible Assets


	Acquired development programs
Cost
At January 1, 2023		33,005

Additions		1,166

At June 30, 2023		34,172

Accumulated revision to estimated value
At January 1, 2023		(8,889	)
Revision to estimated value		(300	)

At June 30, 2023		(9,189	)

Accumulated amortization
At January 1, 2023		—
Amortization for the period		(138	)

At June 30, 2023		(138	)

Net book value
At January 1, 2023		24,116

At June 30, 2023		24,845

Issued capital and reserves (Tables)

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Summary of Detailed Information of Ordinary Share Capital


	Number of ordinary shares		Ordinary Share Capital £’000		Share Premium £’000
At January 1, 2022 and June 30, 2022		584,908,239		1,755		247,460
At January 1, 2023		624,928,519		1,875		254,303
Issued during the period		18,276,275		55		3,040

At June 30, 2023		643,204,794		1,930		257,343

Summary of Other Capital Reserves

Other capital reserves


	Share-based payments £’000			Equity component of convertible loan £’000		Other warrants issued £’000		Merger reserve £’000		Other reserve £’000		Total £’000
At January 1, 2022		23,026			32,843		44		40,818		33,104		129,835

Share-based payments expense during the period		2,446			—		—		—		—		2,446
Share option exercise		(82	)		—		—		—		—		(82	)
Issuance of warrants		—			—		70		—		—		70

At June 30, 2022		25,390			32,843		114		40,818		33,104		132,269

At January 1, 2023		26,806			31,838		114		40,818		33,104		132,680

Share-based payments expense during the period		1,931			—		—		—		—		1,931
Extinguishment and issuance of Novartis Loan Note		—			347		—		—		—		347
Issue of warrants		—			—		41		—		—		41
At June 30, 2023		28,737			32,185		155		40,818		33,104		134,999

Summary of Equity Awards Granted

The following awards were granted during the six months ended June 30, 2023:


	Mereo 2019 Equity Incentive Plan						Mereo 2019 NED Equity Incentive Plan
	Awards (ADS)		Weighted average fair value ($) per share		Weighted average exercise price ($) per share		Awards (ADS)		Weighted average fair value ($) per share		Weighted average exercise price ($) per share
Options		4,617,000		0.91		1.01		440,000		0.84		0.94
RSU’s		617,750		1.01		—		479,813		0.94		—
PSU’s		1,543,150		0.61		—		—		—		—

Provisions (Tables)

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Summary of Provisions


	June 30, 2023 £’000		December 31, 2022 £’000

Social security contribution on vested share options		56		9
Provisions for deferred contingent cash consideration		5,056		4,634
Restructuring		—		179

Total		5,112		4,822

Current		4,701		4,822
Non-Current		411		—

Convertible Notes (Tables)

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Summary of Interest-bearing Loans and Borrowings


	June 30, 2023 £’000		December 31, 2022 £’000
Novartis Loan Note		3,665		4,449
Loan Notes – Private Placement		4,186		6,636

Total		7,851		11,085

Current		4,186		11,085
Non-Current		3,665		—

Warrant liability (Tables)

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Summary of Warrant Liability


	June 30, 2023 £’000			June 30, 2022 £’000
At January 1		531			8,336
Fair Value changes during the period		(365	)		(1,210	)

At June 30		166			7,126


	June 30, 2023 £’000		December 31, 2022 £’000
Current		—		402
Non-current		166		129

Total		166		531

Summary of Weighted Average Inputs to the Models Used for the Fair Value of Warrants Granted

The following table lists the weighted average inputs to the models used for the fair value of warrants:


	June 30, 2023 £’000		December 31, 2022 £’000
Expected volatility (%)		100		95
Risk-free interest rate (%)		3.45		3.99
Expected life of warrants (years)		4.70		0.5
Market price of ADS($)		1.32		0.75
Model used		Black-Scholes		Black-Scholes

Financial instruments fair value disclosures (Tables)

6 Months Ended

Jun. 30, 2023

Text block [abstract]

Summary of Fair Value Hierarchy

The Company held the following financial instruments at fair value as of June 30, 2023. There are no

non-recurring

fair value measurements.


	Fair value measured using unadjusted quoted prices (Level 1)		Fair value measured using significant observable inputs (Level 2)		Fair value measured using significant unobservable inputs (Level 3)
Warrant liabilities		—		166		—
Provisions for deferred contingent cash consideration		—		—		5,056

Total		—		166		5,056

Summary of Changes in Level 3

The movements for level 3 instruments during the period are detailed in the table below:


	Provisions for deferred contingent cash consideration £’000			Warrant liability £’000

At January 1, 2023		4,634			402

Additions during the period		561			—
Revisions to estimate		(300	)		—
Movement during the period		161			(402	)

At June 30, 2023		5,056			—

Summary of Changes in Significant Unobservable Inputs Under Valuation Model Used In Level Fair Value Measurement


	Valuation technique	Significant unobservable inputs	Input range	Sensitivity of the input to fair value
Provision for AstraZeneca deferred contingent cash consideration	Discounted cash flow	WACC	2023: 15%	1% increase/decrease would result in a decrease/increase in fair value by £ 21,000 .

		WACC	2022: 15%	1% increase/decrease would result in a decrease/increase in fair value by £31,000.

		Probability of success	2023: 40.6% - 81.2%	10% increase/decrease would result in an increase/decrease in fair value by £0.5 million.

		Probability of success	2022: 40.6% - 81.2%	10% increase/decrease would result in an increase/decrease in fair value by £0.5 million.

Revenue, Cost of revenue and Other operating income - Additional Information (Detail) £ in Millions, $ in Millions	1 Months Ended	6 Months Ended
	Jun. 30, 2023 GBP (£)	Jun. 30, 2023 USD ($)	Jun. 30, 2023 GBP (£)	Jun. 30, 2022 GBP (£)	Dec. 31, 2022 GBP (£)
Disclosure Of Revenue From Contracts With Customers [Line Items]
Milestone payment to ultragenyx collaboration agreement deductions costs			£ 1.4
Payment of depository for reimbursement of expenses	£ 2.9
Ultragenyx Collaboration And Licensing Agreement [Member]
Disclosure Of Revenue From Contracts With Customers [Line Items]
Milestone payment to ultragenyx collaboraation agreement deductions costs recognised			0.6	£ 0.4
Milestone payment to ultragenyx collaboration agreement deductions costs yet to be recogised	1.1		1.1		£ 0.3
Revenue from contract with customers excluding assessed tax		$ 9	7.1
Two Thousand And Fifteen Asset Purchase Agreement And Ultragenyx Collaboration And Licensing Agreement [Member]
Disclosure Of Revenue From Contracts With Customers [Line Items]
Accrued milestone payment current	£ 1.7		£ 1.7

Finance income, finance costs and changes in the fair value of financial instruments - Summary of Finance income (Detail) - GBP (£) £ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Disclosure of Other Income Expenses And Adjustment [Line Items]
Interest income on short-term deposits	£ 468	£ 173
Modification of convertible loan notes	82
Total	£ 550	£ 173

Finance income, finance costs and changes in the fair value of financial instruments - Summary of Finance income (Parenthetical) (Detail) - GBP (£) £ in Thousands		6 Months Ended
	May 31, 2023	Jun. 30, 2023	Jun. 30, 2022
Disclosure of Other Income Expenses And Adjustment [Line Items]
Interest on convertible loan notes		£ 1,004	£ 1,567
Convertible loan [member]
Disclosure of Other Income Expenses And Adjustment [Line Items]
Interest on convertible loan notes		700
Finance Income [Member] \| Private Placement Loan Notes [Member]
Disclosure of Other Income Expenses And Adjustment [Line Items]
Gain loss recognized on the modification of loan	£ 100	£ 100	£ 0

Finance income, finance costs and changes in the fair value of financial instruments - Summary of Finance Costs (Detail) - GBP (£) £ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Disclosure of Other Income Expenses And Adjustment [Line Items]
Interest on convertible loan notes	£ (1,004)	£ (1,567)
Interest on lease liabilities	(79)	(113)
Discounting of provisions for deferred contingent cash consideration	(395)	(163)
Other	(20)	(16)
Total	£ (1,498)	£ (1,859)

Finance income, finance costs and changes in the fair value of financial instruments - Summary of Changes in the Fair Value of Financial Instruments (Detail) - GBP (£) £ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Disclosure of Changes in the fair value of financial instruments [Line Items]
Gain (Loss) on change in fair value of warrants	£ 365	£ 1,210
Private placement [Member]
Disclosure of Changes in the fair value of financial instruments [Line Items]
Gain (Loss) on change in fair value of warrants	402	1,091
Bank Loan [member]
Disclosure of Changes in the fair value of financial instruments [Line Items]
Gain (Loss) on change in fair value of warrants	£ (37)	£ 119

Other income and expenses - Additional Information (Detail) - Navi License Agreement [Member] - Mile Stone Achievement [Member] £ in Millions, $ in Millions		1 Months Ended
	Feb. 28, 2022 GBP (£)	Feb. 28, 2022 USD ($)	Feb. 28, 2022 GBP (£)
Statement [Line Items]
Upfront Payment Received		$ 2.0	£ 1.5
Milestone payment for regulatory and commercial achievements		$ 0.9	£ 0.7
Other Income	£ 0.8

Loss per share - Summary of earning per share (Detail) - GBP (£) £ / shares in Units, £ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Loss per share [line items]
Loss attributable to equity holders of the parent	£ (11,030)	£ (19,158)
Weighted average number of ordinary shares	627,087,752	583,892,445
Loss per share – basic (£)	£ (0.02)	£ (0.03)
Effect of dilutive ordinary shares	£ 0	£ 0
Numerator – Diluted loss per share	£ (11,030)	£ (19,158)
Number of ordinary shares used for basic loss per share	627,087,752	583,892,445
Weighted average effect of dilutive ordinary shares	0	0
Weighted average number of diluted ordinary shares outstanding	627,087,752	583,892,445
Loss per share – diluted (£)	£ (0.02)	£ (0.03)

Property, Plant and Equipment - Summary of Property, Plant and Equipment (Detail) £ in Thousands	6 Months Ended
	Jun. 30, 2023 GBP (£)
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	£ 1,831
Ending balance	1,565
Cost or valuation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	3,359
Ending balance	3,359
Depreciation/Amortization and impairment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	(1,528)
Depreciation for the period	(266)
Ending balance	(1,794)
Leasehold improvements [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	338
Ending balance	290
Leasehold improvements [member] \| Cost or valuation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	557
Ending balance	557
Leasehold improvements [member] \| Depreciation/Amortization and impairment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	(219)
Depreciation for the period	(48)
Ending balance	(267)
Office equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	88
Ending balance	77
Office equipment [member] \| Cost or valuation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	164
Ending balance	164
Office equipment [member] \| Depreciation/Amortization and impairment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	(76)
Depreciation for the period	(11)
Ending balance	(87)
IT equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	28
Ending balance	19
IT equipment [member] \| Cost or valuation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	173
Ending balance	173
IT equipment [member] \| Depreciation/Amortization and impairment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	(145)
Depreciation for the period	(9)
Ending balance	(154)
Right-of-use asset (building) [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	1,377
Ending balance	1,178
Right-of-use asset (building) [member] \| Cost or valuation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	2,465
Ending balance	2,465
Right-of-use asset (building) [member] \| Depreciation/Amortization and impairment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Beginning balance	(1,088)
Depreciation for the period	(199)
Ending balance	£ (1,287)

Intangible Assets - Summary of Detailed Information about Intangible Assets (Detail) £ in Thousands	6 Months Ended
	Jun. 30, 2023 GBP (£)
Disclosure of detailed information about intangible assets [line items]
Beginning balance	£ 24,116
Amortization for the period	138
Ending balance	24,845
Cost or valuation [member]
Disclosure of detailed information about intangible assets [line items]
Beginning balance	33,005
Additions	1,166
Ending balance	34,172
Accumulated revision to estimated value [member]
Disclosure of detailed information about intangible assets [line items]
Beginning balance	(8,889)
Revision to estimated value	(300)
Ending balance	(9,189)
Accumulated amortization [member]
Disclosure of detailed information about intangible assets [line items]
Beginning balance	0
Amortization for the period	(138)
Ending balance	£ (138)

Intangible Assets - Additional Information (Detail) - GBP (£) £ in Thousands		6 Months Ended	12 Months Ended
	Feb. 03, 2023	Jun. 30, 2023	Dec. 31, 2022
Disclosure of detailed information about intangible assets [line items]
Amortisation charge recognised on intangible assets		£ 138
Mereo Bio Pharma Three Limited Ultrageny x And Amgen [Member] \| Non Exclusive Worldwide Royalty Free Agreement [Member]
Disclosure of detailed information about intangible assets [line items]
Loss due to changes in the timelines and probabilty of milestones achieved		300	£ 400
Company Ultragenyx UCB Pharma And Amgen Inc [Member] \| Non Exclusive Worldwide Royalty Free Agreement [Member]
Disclosure of detailed information about intangible assets [line items]
Addition to intangible assets excluding goodwill other than through business combination	£ 1,200
Amortisation charge recognised on intangible assets			0
Company Ultragenyx UCB Pharma And Amgen Inc [Member] \| Non Exclusive Worldwide Royalty Free Agreement [Member] \| Administrative [member]
Disclosure of detailed information about intangible assets [line items]
Amortisation charge recognised on intangible assets		100
Contingent consideration recognized during the period for intangible assets acquired	600
Other provisions [member] \| Company Ultragenyx UCB Pharma And Amgen Inc [Member] \| Non Exclusive Worldwide Royalty Free Agreement [Member]
Disclosure of detailed information about intangible assets [line items]
New provisions other provisions	£ 600
Other intangible assets [member]
Disclosure of detailed information about intangible assets [line items]
Revision in the value of any other intangible assets		£ 0	£ 0

Issued Capital and Reserves - Summary of Detailed Information of Ordinary Share Capital (Detail) - GBP (£) £ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Disclosure of classes of share capital [line items]
Beginning balance	£ 61,868	£ 88,002
Issued during the year	3,440
Ending balance	57,745	69,585
Beginning balance	254,303
Ending balance	257,343
Share premium [member]
Disclosure of classes of share capital [line items]
Beginning balance	254,303	247,460
Issued during the year	3,040
Ending balance	257,343	247,460
Beginning balance	254,303	247,460
Issued for public offering	3,040
Ending balance	£ 257,343	£ 247,460
Ordinary shares [member]
Disclosure of classes of share capital [line items]
Ordinary shares issued and fully paid, Beginning balance	624,928,519	584,908,239
Issued	18,276,275
Ordinary shares issued and fully paid, Ending balance	643,204,794	584,908,239
Ordinary share capital [member]
Disclosure of classes of share capital [line items]
Beginning balance	£ 1,875	£ 1,755
Issued during the year	55
Ending balance	£ 1,930	£ 1,755

Issued Capital and Reserves - Additional Information (Detail) £ / shares in Units, £ in Thousands	6 Months Ended
	Jun. 30, 2023 GBP (£) shares	Jun. 30, 2023 GBP (£) shares	Jun. 30, 2023 GBP (£) shares	Jun. 30, 2023 GBP (£) $ / shares shares	Jun. 30, 2023 GBP (£) shares	Jun. 30, 2023 GBP (£) yr shares	Jun. 30, 2023 GBP (£) £ / shares shares	Jun. 30, 2022 GBP (£) shares	Dec. 31, 2022 GBP (£)	Dec. 31, 2021 GBP (£)
Disclosure of classes of share capital [line items]
Equity component (consideration received for the warrants)	£ 200	£ 200	£ 200	£ 200	£ 200	£ 200	£ 200		£ 100
Share-based payments		1,900						£ 2,400
Number of warrants issued in exchange for funds \| shares			408,730
Proceeds from exercise Of warrants		100
Equity	£ 57,745	£ 57,745	£ 57,745	£ 57,745	£ 57,745	£ 57,745	£ 57,745	£ 69,585	£ 61,868	£ 88,002
Restricted stock units [Member]
Disclosure of classes of share capital [line items]
Share based compensation by share based award equity instruments other than options vesting period	3 years
Private Placement Loan Notes [Member]
Disclosure of classes of share capital [line items]
Ordinary shares issued and allotted \| shares	17,774,895	17,774,895	17,774,895	17,774,895	17,774,895	17,774,895	17,774,895	0
Share conversion price per share \| (per share)				£ 0.174			£ 0.174
Number of converted loans converted to ordinary shares \| shares			17,774,895
Debt instrument converted into equity carrying value	£ 3,100	£ 3,100	£ 3,100	£ 3,100	£ 3,100	£ 3,100	£ 3,100
Warrants [Member]
Disclosure of classes of share capital [line items]
Equity	£ 100	100	£ 100	£ 100	£ 100	£ 100	£ 100
2019 Equity Incentive Plan [member]
Disclosure of classes of share capital [line items]
Exercise price, share options granted \| £ / shares \| $ / shares				£ 1.01
Expected life of share options					3.43	10
Expected volatility (%)					98.06%
2019 Equity Incentive Plan [member] \| Performance Share Units [Member]
Disclosure of classes of share capital [line items]
Weighted average share price equity instruments other than options granted \| $ / shares				1.01
Risk-free interest rate equity instruments other than options					4.14%
Expected volatility percentage equity instruments other than options granted					105.60%
2019 Equity Incentive Plan [member] \| Top of range [member] \| Performance Share Units [Member]
Disclosure of classes of share capital [line items]
Expected life of equity instruments other than options granted	1 year 1 month 6 days
2019 Equity Incentive Plan [member] \| Bottom of range [member] \| Performance Share Units [Member]
Disclosure of classes of share capital [line items]
Expected life of equity instruments other than options granted	10 months 24 days
2019 NED Equity Incentive Plan [member]
Disclosure of classes of share capital [line items]
Exercise price, share options granted \| £ / shares \| $ / shares				£ 0.94
Expected life of share options \| yr						10
Risk-free interest rate					3.36%
Expected volatility (%)					97.94%
Novartis [member] \| Amendment Agreement [Member]
Disclosure of classes of share capital [line items]
Conversion of loan notes into ordinary shares amount		£ 300
Ordinary shares [member]
Disclosure of classes of share capital [line items]
Ordinary shares issued and allotted \| shares	501,380	501,380	501,380	501,380	501,380	501,380	501,380

Issued Capital and Reserves - Summary of Other Capital Reserves (Detail) - GBP (£) £ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Disclosure of classes of share capital [line items]
Beginning balance	£ 7,401
Share-based payments expense during the year	1,931	£ 2,446
Issuance of warrants	41	70
Ending balance	7,401
Capital reserve [member]
Disclosure of classes of share capital [line items]
Beginning balance	132,680	129,835
Share-based payments expense during the year	1,931	2,446
Share options exercise		(82)
Extinguishment and issuance of Novartis Loan Note	347
Issuance of warrants	41	70
Ending balance	134,999	132,269
Share-based payments [member] \| Capital reserve [member]
Disclosure of classes of share capital [line items]
Beginning balance	26,806	23,026
Share-based payments expense during the year	1,931	2,446
Share options exercise		(82)
Ending balance	28,737	25,390
Equity component of convertible loan [member] \| Capital reserve [member]
Disclosure of classes of share capital [line items]
Beginning balance	31,838	32,843
Extinguishment and issuance of Novartis Loan Note	347
Ending balance	32,185	32,843
Other Warrents Issued [Member] \| Capital reserve [member]
Disclosure of classes of share capital [line items]
Beginning balance	114	44
Issuance of warrants	41	70
Ending balance	155	114
Merger reserve [member] \| Capital reserve [member]
Disclosure of classes of share capital [line items]
Beginning balance	40,818	40,818
Ending balance	40,818	40,818
Other Reserve [Member] \| Capital reserve [member]
Disclosure of classes of share capital [line items]
Beginning balance	33,104	33,104
Ending balance	£ 33,104	£ 33,104

Issued Capital and Reserves - Summary of Equity Awards Granted (Detail)	6 Months Ended
	Jun. 30, 2023 ADS $ / shares
2019 Equity Incentive Plan [member] \| Options [Member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Awards \| ADS	4,617,000
Weighted average fair value	$ 0.91
Weighted average exercise price	$ 1.01
2019 Equity Incentive Plan [member] \| Restricted stock units [Member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Awards \| ADS	617,750
Weighted average fair value	$ 1.01
Weighted average exercise price	$ 0
2019 Equity Incentive Plan [member] \| Performance Share Units [Member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Awards \| ADS	1,543,150
Weighted average fair value	$ 0.61
Weighted average exercise price	$ 0
2019 NED Equity Incentive Plan [member] \| Options [Member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Awards \| ADS	440,000
Weighted average fair value	$ 0.84
Weighted average exercise price	$ 0.94
2019 NED Equity Incentive Plan [member] \| Restricted stock units [Member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Awards \| ADS	479,813
Weighted average fair value	$ 0.94
Weighted average exercise price	$ 0
2019 NED Equity Incentive Plan [member] \| Performance Share Units [Member]
Disclosure of terms and conditions of share-based payment arrangement [line items]
Awards \| ADS	0
Weighted average fair value	$ 0
Weighted average exercise price	$ 0

Provisions - Summary of Provisions (Detail) - GBP (£) £ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Disclosure provisions [line items]
Provisions	£ 5,112	£ 4,822
Current	4,701	4,822
Non-Current	411	0
Social security contributions on share options [member]
Disclosure provisions [line items]
Provisions	56	9
Provisions for deferred contingent cash consideration [member]
Disclosure provisions [line items]
Provisions	5,056	4,634
Restructuring [member]
Disclosure provisions [line items]
Provisions	£ 0	£ 179

Convertible Notes - Summary of Interest-bearing Loans and Borrowings (Detail) - GBP (£) £ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Disclosure of detailed information about borrowings [abstract]
Novartis Loan Note	£ 3,665	£ 4,449
Loan Notes – private placement	4,186	6,636
Total	7,851	11,085
Current	4,186	11,085
Non-current	£ 3,665	£ 0

Convertible Notes - Additional Information (Detail) £ / shares in Units, £ in Thousands			6 Months Ended
	May 31, 2023 GBP (£)	Feb. 10, 2023 GBP (£) shares	Jun. 30, 2023 GBP (£) £ / shares shares	Jun. 30, 2023 £ / shares $ / shares shares	Jun. 30, 2022 GBP (£) shares
Disclosure of detailed information about borrowings [line items]
Payment of interest financing activities			£ 771
Private Placement Loan Notes [Member]
Disclosure of detailed information about borrowings [line items]
Borrowing interest rate			6.00%	6.00%
Conversion price per share \| £ / shares			£ 0.174	£ 0.174
Borrowings extended maturity date	Aug. 03, 2023
Expiry date of warrants			Jun. 03, 2023
Share conversion price per share \| (per share)			£ 0.174	£ 0.174
Number of shares issued \| shares			17,774,895	17,774,895	0
Private Placement Loan Notes [Member] \| Finance Income [Member]
Disclosure of detailed information about borrowings [line items]
Gain loss recognized on the modification of loan	£ 100		£ 100		£ 0
Novartis [member]
Disclosure of detailed information about borrowings [line items]
Borrowing interest rate		9.00%	6.00%	6.00%
Conversion price per share \| £ / shares			£ 0.265	£ 0.265
Number of securities covered by warrants \| shares		2,000,000
Borrowings extended maturity date		Feb. 10, 2025
Expiry date of warrants			Feb. 28, 2023
Interest paid		£ 700
Novartis [member] \| Amendement Agreement [Member]
Disclosure of detailed information about borrowings [line items]
Issuance of unsecured convertible loan notes \| shares		300,000
Payment of interest financing activities			£ 700
Reduction in fair value of liabilities due to extinguishment of loans			£ 4,500
Additions to fair value liability due to replacement of the original instrument with a new one		£ 3,500

Warrant Liability - Summary of Warrant Liability (Detail) - GBP (£) £ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Warrant Liability [Abstract]
Beginning balance	£ 531	£ 8,336
Fair Value changes during the period	(365)	(1,210)
Ending balance	166	7,126
Current	0		£ 402
Non-current	166		129
Total	£ 166	£ 7,126	£ 531

Warrant Liability - Additional Information (Detail) £ / shares in Units, £ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2023 GBP (£) £ / Warrant £ / shares shares	Jun. 30, 2022 GBP (£) £ / Warrant	Dec. 31, 2022 GBP (£) £ / shares shares	Jun. 30, 2023 $ / shares	Dec. 31, 2022 $ / shares	Dec. 31, 2021 GBP (£)	Jun. 30, 2020 £ / shares shares
Disclosure of classes of share capital [line items]
Percentage of ordinary share capital	0.40%
Warrant liability \| £	£ 166	£ 7,126	£ 531			£ 8,336
Fair value of the warrant liability \| £	0		400
Private placement [Member]
Disclosure of classes of share capital [line items]
Warrants issued							161,048,366
Fair Value Adjustments Of Warrants \| £	£ 400
Exercise price per warrants \| £ / shares							£ 0.348
Number of warrants exercised during period	0
Bank loan [member]
Disclosure of classes of share capital [line items]
Warrant liability \| £	£ 200		£ 100
Bank loan [member] \| Ordinary shares [member] \| Warrants Subscribed [Member]
Disclosure of classes of share capital [line items]
Exercise price per warrants \| £ / shares	£ 2.95		£ 2.95
Class of warrant number of securities called by warrants	1,243,908		1,243,908
Warrants and rights outstanding term	2027-08		2027-08
Bank loan [member] \| Ordinary shares [member] \| Two Thousand And Twenty Warrants [Member]
Disclosure of classes of share capital [line items]
Exercise price per warrants \| $ / shares				$ 0.4144	$ 0.4144
Class of warrant number of securities called by warrants	1,243,908		1,243,908
Warrants and rights outstanding term	2028-10		2028-10
Warrant [Member]
Disclosure of classes of share capital [line items]
Number of warrants outstanding	2,487,816
Number of warrants exercised \| £ / Warrant	0	0

Warrant Liability - Summary of Weighted Average Inputs to the Models Used for the Fair Value of Warrants Granted (Detail) - Warrant liability [member] - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Disclosure of classes of share capital [line items]
Expected volatility	100.00%	95.00%
Risk-free interest rate	3.45%	3.99%
Expected life of warrants (years)	4 years 8 months 12 days	6 months
Market price of ADS	$ 1.32	$ 0.75
Model used	Black-Scholes	Black-Scholes

Financial instruments fair value disclosures - Summary of Fair Value Hierarchy (Detail) £ in Thousands	Jun. 30, 2023 GBP (£)
Fair value measured using unadjusted quoted prices (Level 1) [member] \| Not measured at fair value in statement of financial position but for which fair value is disclosed [member]
Disclosure of fair value measurement of liabilities [line items]
Financial liabilities	£ 0
Fair value measured using unadjusted quoted prices (Level 1) [member] \| Provisions for deferred contingent cash consideration [member]
Disclosure of fair value measurement of liabilities [line items]
Financial liabilities at fair value	0
Fair value measured using unadjusted quoted prices (Level 1) [member] \| Warrant liability [member]
Disclosure of fair value measurement of liabilities [line items]
Financial liabilities at fair value	0
Fair value measured using significant observable inputs (Level 2) [member] \| Not measured at fair value in statement of financial position but for which fair value is disclosed [member]
Disclosure of fair value measurement of liabilities [line items]
Financial liabilities	166
Fair value measured using significant observable inputs (Level 2) [member] \| Provisions for deferred contingent cash consideration [member]
Disclosure of fair value measurement of liabilities [line items]
Financial liabilities at fair value	0
Fair value measured using significant observable inputs (Level 2) [member] \| Warrant liability [member]
Disclosure of fair value measurement of liabilities [line items]
Financial liabilities at fair value	166
Fair value measured using significant unobservable inputs (Level 3) [member] \| Not measured at fair value in statement of financial position but for which fair value is disclosed [member]
Disclosure of fair value measurement of liabilities [line items]
Financial liabilities	5,056
Fair value measured using significant unobservable inputs (Level 3) [member] \| Provisions for deferred contingent cash consideration [member]
Disclosure of fair value measurement of liabilities [line items]
Financial liabilities at fair value	5,056
Fair value measured using significant unobservable inputs (Level 3) [member] \| Warrant liability [member]
Disclosure of fair value measurement of liabilities [line items]
Financial liabilities at fair value	£ 0

Financial instruments fair value disclosures - Summary of Changes in Level 3 (Detail) £ in Thousands	6 Months Ended
	Jun. 30, 2023 GBP (£)
Summary of changes in level 3 of fair value of hierarchy [Line Items]
Beginning balance	£ 4,822
Ending balance	5,112
Provisions for deferred contingent cash consideration [member]
Summary of changes in level 3 of fair value of hierarchy [Line Items]
Beginning balance	4,634
Ending balance	5,056
Provisions for deferred contingent cash consideration [member] \| Level 3 of fair value hierarchy [member]
Summary of changes in level 3 of fair value of hierarchy [Line Items]
Beginning balance	4,634
Additions during the period	561
Revisions to estimate	(300)
Movement during the period	161
Ending balance	5,056
Warrant liability [member] \| Level 3 of fair value hierarchy [member]
Summary of changes in level 3 of fair value of hierarchy [Line Items]
Beginning balance	402
Additions during the period	0
Revisions to estimate	0
Movement during the period	(402)
Ending balance	£ 0

Financial instruments fair value disclosures- Summary of Changes In Significant Unobservable Inputs Under Valuation Model Used In Level Fair Value Measurement (Detail) - Provision for Astra Zeneca deferred contingent cash consideration [member] - Discounted cash flow model [member] - GBP (£)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Weighted average cost of capital [member]
Disclosure of significant unobservable inputs used in fair value measurement [line items]
Weighted average cost of capital	15.00%	15.00%
Percentage of increase decrease in sensitivity analysis affecting input to fair value	1.00%	1.00%
Increase decrease in sensitivity analysis affecting input to fair value	£ 21,000	£ 31,000
Probability of success [member]
Disclosure of significant unobservable inputs used in fair value measurement [line items]
Percentage of increase decrease in sensitivity analysis affecting input to fair value	10.00%	10.00%
Increase decrease in sensitivity analysis affecting input to fair value	£ 500,000	£ 500,000
Bottom of range [member] \| Probability of success [member]
Disclosure of significant unobservable inputs used in fair value measurement [line items]
Probability of success	40.60%	40.60%
Top of range [member] \| Probability of success [member]
Disclosure of significant unobservable inputs used in fair value measurement [line items]
Probability of success	81.20%	81.20%

Related Party Disclosures - Additional Information (Detail) - GBP (£)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Disclosure of transactions between related parties [line items]
Amount paid to trust by the company	£ 0	£ 0
Shares purchased by the EBT	0	0
Cash held by employee benefit trust	£ 17,241		£ 17,741
Ordinary Shares [member]
Disclosure of transactions between related parties [line items]
Stock held by employee benefit trust	0	78,225

Events after reporting period - Additional Information (Detail) £ / shares in Units, $ / shares in Units, $ in Millions			1 Months Ended	6 Months Ended
	Jul. 31, 2023 GBP (£) £ / shares shares	Jul. 31, 2023 USD ($) shares	Aug. 31, 2023 GBP (£)	Jun. 30, 2023 $ / shares shares	Jun. 30, 2023 £ / shares shares	Jun. 30, 2022 shares
Private Placement Loan Notes [member]
Statement [line items]
Share conversion price per share \| (per share)				$ 0.174	£ 0.174
Number of shares issued				17,774,895	17,774,895	0
Repayment Of Convertible Loan [member] \| Private Placement Loan Notes [member]
Statement [line items]
Repayment of convertible loan \| £			£ 2,600,000
Conversion of debt into equity [member] \| Private Placement Loan Notes [member]
Statement [line items]
Value of debt converted into equity \| £	£ 1,025,641
ADS [member] \| Major ordinary share transactions [member]
Statement [line items]
Par value per share \| £ / shares	£ 0.003
ADS [member] \| Major ordinary share transactions [member] \| Jefferies LLC [member] \| Open Market Sale Agreement [member]
Statement [line items]
Number of warrants converted	9,673,419	9,673,419
Ordinary shares [member]
Statement [line items]
Number of shares issued				501,380	501,380
Ordinary shares [member] \| Major ordinary share transactions [member]
Statement [line items]
Share conversion price per share \| £ / shares	£ 0.174
Proceeds from issue of ordinary shares	1,929,040
Number of shares issued	9,645,200
Ordinary shares [member] \| Major ordinary share transactions [member] \| Jefferies LLC [member] \| Open Market Sale Agreement [member]
Statement [line items]
Proceeds from issue of ordinary shares	£ 9,300,000	$ 12.0
Number of shares issued	48,367,095