Mereo Biopharma Group Plc (MREO) AI Stock Analysis

• Market Cap: $276.66M
• Dividend Yield: N/A
• Average Volume (3M): 3.29M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.96
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: US
• Employees: 36
• Sector: Healthcare
• Sector Strength: 37
• Industry: Biotechnology
• EPS (TTM): -0.02
• Shares Outstanding: 159,000,290
• 10 Day Avg. Volume: 7,010,803
• 30 Day Avg. Volume: 3,293,242
• PEG Ratio: -0.22
• Price to Book (P/B): 4.37
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -8.02
• Enterprise Value/Market Cap: 0.76
• Enterprise Value/Revenue: 167.37
• Enterprise Value/Gross Profit: -816.80
• Enterprise Value/Ebitda: -1.28
• 1Y Price Target: $7.20
• Price Target Upside: 313.79% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 43 Neutral
• Price Target: ―

Mereo Biopharma Group's overall stock score reflects significant financial and operational challenges typical of an early-stage biotech firm. The lack of revenue and ongoing cash flow issues weigh heavily on its financial performance. Technical indicators suggest some bearish momentum, although not excessively so. The valuation remains unattractive with a negative P/E ratio and no dividends, indicating limited immediate returns for investors.

Positive Factors

Drug Development

There is optimism about the potential for Orbit to meet its primary endpoint on the final analysis.

Market Opportunity

Setrusumab is expected to address a significant unmet need in OI as an active and safe treatment, corresponding to a large market opportunity.

Safety Profile

Setrusumab has demonstrated an acceptable safety profile in Orbit and Cosmic.

Negative Factors

Financial Constraints

Years of cash left is approximately 1.3, indicating potential financial constraints for Mereo Biopharma.

Stock Performance

MREO shares are down approximately 35% on the news.

Uncertainty and Timing

The target price is being lowered to $5 due to increased uncertainty and adjusted potential launch timing.

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's financial statements reflect a typical early-stage biotech profile with high R&D expenses and no revenue generation, leading to significant losses. The balance sheet shows some financial prudence with moderate leverage, and the strong cash position is essential for ongoing operations. However, persistent cash flow issues and negative profit margins pose challenges to long-term sustainability and profitability.

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
EBITDA	-47.36M	-26.06M	-42.06M	-5.00M	-37.52M
Net Income	-43.25M	-29.47M	-34.20M	12.72M	-163.63M
Balance Sheet
Total Assets	76.39M	66.50M	88.08M	126.42M	62.95M
Cash, Cash Equivalents and Short-Term Investments	69.80M	57.42M	56.33M	94.30M	23.47M
Total Debt	6.43M	5.95M	12.77M	16.76M	17.94M
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	-33.53M	-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: 1.74
• 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 1.74 is below the 20-day moving average (MA) of 2.17, below the 50-day MA of 2.38, and below the 200-day MA of 2.96, indicating a bearish trend. The MACD of -0.24 indicates Positive momentum. The RSI at 35.27 is Neutral, neither overbought nor oversold. The STOCH value of 65.08 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
Sector *	65 Neutral	¥355.44B	11.35	-2.99%	2.49%	11.76%	-10.21%
HRTX	57 Neutral	$289.87M	―	40.36%	―	12.43%	91.67%
RGNX	54 Neutral	$460.05M	―	-47.44%	―	80.70%	46.66%
VERV	52 Neutral	$992.16M	―	-34.26%	―	271.44%	26.65%
RNAC	48 Neutral	$349.34M	―	-938.38%	―	38.82%	-645.78%
MREO	43 Neutral	$276.66M	―	-92.00%	―	―	―
IVA	42 Neutral	$447.31M	―	344.74%	―	-47.32%	-26.67%

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.