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: 223.04% 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

Drug Development

Setrusumab has already demonstrated a differentiated safety profile and compelling efficacy in Phase 2b that was maintained through approximately 16 months.

Financial Strategy

Mereo is currently evaluating non-dilutive financing options for the alvelestat program, which is viewed as another possible upside lever.

Market Opportunity

Low competition risk for setrusumab in osteogenesis imperfecta seems underappreciated.

Negative Factors

Execution Risk

The company is actively seeking strategic partners to advance clinical development of alvelestat in AATD.

Valuation Concerns

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

Mereo Biopharma Group Plc Business Overview & Revenue Model

Company Description

Mereo BioPharma Group Plc (MREO) is a biopharmaceutical company focused on the development and commercialization of innovative therapeutics for the treatment of rare and specialty diseases. The company's pipeline includes multiple clinical-stage programs across various therapeutic areas such as oncology, respiratory, and rare diseases. Mereo BioPharma aims to address unmet medical needs through its proprietary drug candidates, leveraging strategic partnerships and collaborations to advance its research and development efforts.

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 is experiencing significant revenue growth but struggles with profitability and cash flow generation. The balance sheet shows a strong equity position with low leverage, but negative cash flows and profitability pose substantial risks. The company needs to address its operational efficiency to improve financial sustainability.

Income Statement

The company's revenue showed significant growth from $1.5 million in 2022 to $10 million in 2023, which is a positive trend. However, the net profit margin remains negative due to substantial losses, and both EBIT and EBITDA margins are also negative, indicating challenges in achieving profitability. Despite recent revenue growth, profitability remains a major concern.

Balance Sheet

The company has a strong equity position with a debt-to-equity ratio of 0.12, indicating low leverage. However, the return on equity (ROE) is negative due to the net losses, which impacts the overall financial stability. The equity ratio is healthy, suggesting that assets are primarily financed by equity rather than debt.

Cash Flow

Operating cash flow remains negative, indicating cash outflows from operations, although there is a slight improvement compared to the previous year. Free cash flow is also negative, reflecting ongoing financial stress in funding operations and investments. The operating cash flow to net income ratio indicates that the company is not generating sufficient cash relative to its net losses.

Breakdown
TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
361.10K	10.00M	1.51M	36.46M	393.00K	-122.00K
	Gross Profit
-387.95K	7.43M	571.00K	18.56M	-15.95M	-23.73M
	EBIT
-37.78M	-28.42M	-43.57M	-20.94M	-37.57M	-39.52M
	EBITDA
-42.27M	-26.06M	-42.06M	-5.00M	-37.52M	-37.56M
	Net Income Common Stockholders
-42.25M	-29.47M	-34.20M	12.72M	-163.63M	-34.84M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
56.33M	57.42M	56.33M	94.30M	23.47M	16.35M
	Total Assets
88.08M	66.50M	88.08M	126.42M	62.95M	86.45M
	Total Debt
12.77M	5.95M	12.77M	16.76M	17.94M	32.42M
	Net Debt
-43.56M	-51.47M	-43.56M	-77.54M	-5.53M	16.07M
	Total Liabilities
26.21M	15.96M	26.21M	38.41M	77.92M	46.19M
	Stockholders Equity
61.87M	50.54M	61.87M	88.00M	-14.97M	40.26M
Cash Flow		Free Cash Flow
-25.81M	-21.55M	-38.83M	-5.77M	-28.36M	-45.95M
	Operating Cash Flow
-25.53M	-21.13M	-38.82M	-5.24M	-28.34M	-45.93M
	Investing Cash Flow
-991.53K	-419.00K	1.50M	-421.00K	1.50M	43.30M
	Financing Cash Flow
50.76M	7.97M	-784.00K	77.65M	34.74M	-5.71M

Mereo Biopharma Group Plc Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2.30
• 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 2.3 is below the 20-day moving average (MA) of 2.48, below the 50-day MA of 2.72, and below the 200-day MA of 3.67, indicating a bearish trend. The MACD of -0.10 indicates Positive momentum. The RSI at 36.52 is Neutral, neither overbought nor oversold. The STOCH value of 28.42 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 *	49 Neutral	$6.85B	0.81	-52.91%	2.50%	17.48%	1.17%
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.