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Mereo Biopharma Group Plc (MREO)
NASDAQ:MREO
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Mereo Biopharma Group Plc (MREO) AI Stock Analysis

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MREO

Mereo Biopharma Group Plc

(NASDAQ:MREO)

Rating:43Neutral
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 (MREO) vs. SPDR S&P 500 ETF (SPY)

Mereo Biopharma Group Plc Business Overview & Revenue Model

Company DescriptionMereo 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 MoneyMereo 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
20
Very Negative
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
45
Neutral
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
30
Negative
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue0.0010.00M1.51M36.46M393.00K
Gross Profit0.007.43M571.00K18.56M-15.95M
EBITDA-47.36M-26.06M-42.06M-5.00M-37.52M
Net Income-43.25M-29.47M-34.20M12.72M-163.63M
Balance Sheet
Total Assets76.39M66.50M88.08M126.42M62.95M
Cash, Cash Equivalents and Short-Term Investments69.80M57.42M56.33M94.30M23.47M
Total Debt6.43M5.95M12.77M16.76M17.94M
Total Liabilities15.42M15.96M26.21M38.41M77.92M
Stockholders Equity60.97M50.54M61.87M88.00M-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-419.00K1.50M-421.00K1.50M
Financing Cash Flow46.15M7.97M-784.00K77.65M34.74M

Mereo Biopharma Group Plc Technical Analysis

Technical Analysis Sentiment
Negative
Last Price1.74
Price Trends
50DMA
2.38
Negative
100DMA
2.37
Negative
200DMA
2.96
Negative
Market Momentum
MACD
-0.24
Positive
RSI
35.27
Neutral
STOCH
65.08
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 Risk Analysis

Mereo Biopharma Group Plc disclosed 67 risk factors in its most recent earnings report. Mereo Biopharma Group Plc reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Mereo Biopharma Group Plc Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
65
Neutral
¥355.44B11.35-2.99%2.49%11.76%-10.21%
57
Neutral
$289.87M40.36%12.43%91.67%
54
Neutral
$460.05M-47.44%80.70%46.66%
52
Neutral
$992.16M-34.26%271.44%26.65%
48
Neutral
$349.34M-938.38%38.82%-645.78%
43
Neutral
$276.66M-92.00%
42
Neutral
$447.31M344.74%-47.32%-26.67%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MREO
Mereo Biopharma Group Plc
1.76
-2.40
-57.69%
HRTX
Heron Therapeutics
1.91
-1.14
-37.38%
RGNX
RegenXBio
8.96
-5.37
-37.47%
RNAC
Cartesian Therapeutics
13.33
-4.16
-23.79%
IVA
Inventiva
3.17
0.89
39.04%
VERV
Verve Therapeutics
11.13
3.73
50.41%

Mereo Biopharma Group Plc Corporate Events

Product-Related AnnouncementsBusiness Operations and Strategy
Mereo Biopharma Advances with Key Clinical Updates
Positive
Jan 13, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Apr 20, 2025