Mereo Biopharma Group Plc (MREO) AI Stock Analysis

• Market Cap: $356.83M
• Dividend Yield: N/A
• Average Volume (3M): 1.37M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.05
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: US
• Employees: 36
• Sector: Healthcare
• Sector Strength: 72
• Industry: Biotechnology
• EPS (TTM): -0.29
• Shares Outstanding: 159,000,290
• 10 Day Avg. Volume: 1,031,283
• 30 Day Avg. Volume: 1,366,284
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 36.04
• Price to Cash Flow (P/CF): -32.70
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $7.43
• Price Target Upside: 230.22% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7

Mereo Biopharma's overall score reflects its position as a high-risk, high-reward investment typical of early-stage biotech companies. The company's financial performance is characterized by significant losses and cash flow challenges, counterbalanced by a strong cash position and moderate leverage. Technical analysis indicates a bearish trend, but recent positive clinical updates provide a brighter outlook, potentially supporting future growth and valuation improvement.

Positive Factors

Earnings Potential

The shares are trading at a market cap of less than 1.0x gross peak sales estimates for setrusumab in the EU, presenting a favorable valuation ahead of upcoming data.

Product Development

Setrusumab continues to show life-changing potential in osteogenesis imperfecta and MREO retains significant economics.

Strategic Partnerships

The company is in discussions with multiple potential partners for the development and commercialization of alvelestat.

Negative Factors

Market Risks

Recent stock weakness could represent a buying opportunity ahead of topline results from the ongoing Phase 3 ORBIT in osteogenesis imperfecta.

Statistical Challenges

Management commentary suggests a strong probability of success for the second interim analysis despite a high statistical threshold.

Mereo Biopharma Group Plc Business Overview & Revenue Model

Company Description

Mereo BioPharma Group plc, a biopharmaceutical company, develops and commercializes therapeutics for the treatment of oncology and rare diseases in the United Kingdom and internationally. Its lead product candidate, etigilimab (OMP-313M32), an antibody T-cell immunoreceptor with Ig and ITIM domains, which is in Phase 1b clinical trial for the treatment of tumor. The company is also developing Navicixizumab (OMP-305B83), which has completed Phase 1b clinical trials for the treatment of the late line ovarian cancer; Acumapimod (BCT-197), a p38 MAP kinase inhibitor that is in Phase II clinical trials to treat acute exacerbations of chronic obstructive pulmonary disease; and Leflutrozole (BGS-649), an oral aromatase inhibitor for the treatment of hypogonadotropic hypogonadism. In addition, it develops rare disease product candidates, including Setrusumab (BPS-804), a novel antibody for the treatment of osteogenesis imperfecta; and Alvelestat (MPH-966), an oral small molecule that is in Phase II clinical trial to treat Alpha-1 antitrypsin deficiency. The company has a collaboration with The University of Texas MD Anderson Cancer Center to evaluate anti-TIGIT therapeutic antibody candidate, etigilimab. Mereo BioPharma Group plc was incorporated in 2015 and is based in London, the United Kingdom.

How the Company Makes Money

Mereo BioPharma Group Plc primarily generates revenue through partnerships and collaborations with other pharmaceutical and biotechnology companies. These partnerships often involve licensing agreements, milestone payments, and royalties related to the development and commercialization of its drug candidates. Additionally, the company may receive funding from grants and research collaborations to support its R&D initiatives. By advancing its clinical-stage programs and successfully bringing its therapeutics to market, Mereo aims to create revenue streams through product sales and continued licensing arrangements.

Mereo Biopharma Group Plc Financial Statement Overview

Summary

Mereo Biopharma Group Plc exhibits financial characteristics typical of early-stage biotech firms, with substantial R&D expenses leading to no revenue generation and significant losses. Despite a moderate leverage and a strong cash position, persistent cash flow issues and negative profit margins challenge long-term sustainability.

Income Statement

The income statement shows significant challenges with negative revenue growth, declining EBIT and EBITDA margins, and consistent net losses over the years. The gross profit margin is non-existent due to zero revenue in the latest year. The company faces substantial hurdles to profitability, which is common in early-stage biotech firms focusing on research and development.

Balance Sheet

The balance sheet indicates a reasonable equity position with a positive equity ratio and manageable debt levels. However, the debt-to-equity ratio has improved over the past year, suggesting cautious leverage management. The company's total assets decreased, which may affect its capacity to invest in future growth. Nonetheless, the financial stability offers a moderate foundation amidst operational challenges.

Cash Flow

Cash flow analysis reveals a negative free cash flow trend, indicating high cash burn typical for biotech firms in development phases. Operating cash flow remains negative, but there is a strong cash position due to past financing activities. The consistency in raising funds is a positive sign for liquidity, yet the dependency on external financing highlights operational sustainability concerns.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
0.00	10.00M	1.51M	36.46M	393.00K
	Gross Profit
0.00	7.43M	571.00K	18.56M	-15.95M
	EBIT
-47.36M	-28.42M	-43.57M	-20.94M	-37.57M
	EBITDA
-47.36M	-26.06M	-42.06M	-5.00M	-37.52M
	Net Income Common Stockholders
-43.25M	-29.47M	-34.20M	12.72M	-163.63M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
69.80M	57.42M	56.33M	94.30M	23.47M
	Total Assets
76.39M	66.50M	88.08M	126.42M	62.95M
	Total Debt
894.00K	5.95M	12.77M	16.76M	17.94M
	Net Debt
-68.91M	-51.47M	-43.56M	-77.54M	-5.53M
	Total Liabilities
15.42M	15.96M	26.21M	38.41M	77.92M
	Stockholders Equity
60.97M	50.54M	61.87M	88.00M	-14.97M
Cash Flow		Free Cash Flow
-32.83M	-21.55M	-38.83M	-5.77M	-28.36M
	Operating Cash Flow
-32.83M	-21.13M	-38.82M	-5.24M	-28.34M
	Investing Cash Flow
-699.00K	-419.00K	1.50M	-421.00K	1.50M
	Financing Cash Flow
46.15M	7.97M	-784.00K	77.65M	34.74M

Mereo Biopharma Group Plc Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2.25
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MREO, the sentiment is Negative. The current price of 2.25 is below the 20-day moving average (MA) of 2.47, below the 50-day MA of 2.71, and below the 200-day MA of 3.66, indicating a bearish trend. The MACD of -0.11 indicates Positive momentum. The RSI at 34.69 is Neutral, neither overbought nor oversold. The STOCH value of 22.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MREO.

Mereo Biopharma Group Plc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARDX	60 Neutral	$1.18B	―	-23.01%	―	168.06%	44.66%
ANAB	57 Neutral	$581.14M	―	-182.71%	―	432.03%	14.41%
Sector *	48 Neutral	$6.84B	1.02	-53.11%	2.50%	16.84%	0.92%
MREO	46 Neutral	$356.83M	―	-58.31%	―	―	―
CARA	44 Neutral	$23.55M	―	-270.01%	―	-65.96%	40.80%
VKTX	42 Neutral	$2.88B	―	-17.90%	―	―	-10.27%

Mereo Biopharma Group Plc Corporate Events

Mereo Biopharma Advances with Key Clinical Updates

Mereo BioPharma has announced updates on its lead clinical programs, including the ongoing Phase 3 study of setrusumab for osteogenesis imperfecta and the positive EMA opinion on alvelestat for alpha-1 antitrypsin deficiency-associated lung disease. The company is confident in the potential of setrusumab to become the standard-of-care and is prepared for key milestones through 2027, leveraging its cash runway and strategic partnerships. The Orphan Designation for alvelestat is a significant step towards its commercialization in Europe, promising benefits for patients with rare conditions.