On March 28, 2023 Mereo BioPharma Group plc (NASDAQ: MREO) ("Mereo" or the "Company"), a clinical-stage biopharmaceutical company focused on rare diseases, reported its financial results for the year ended December 31, 2022 and provided an update on recent corporate highlights (Press release, Mereo BioPharma, MAR 28, 2023, View Source [SID1234629444]).

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"In 2022, we made important progress in the ongoing advancement of our core rare disease programs. The data from our Phase 2 ASTRAEUS study of alvelestat in severe alpha-1-antitrypsin deficiency-associated lung disease (AATD-LD) were highly encouraging, and formed the basis for productive discussions with the regulatory agencies in both the U.S. and EU, culminating in our recent announcement of the details of our potential pivotal study design," said Dr. Denise Scots-Knight, Chief Executive Officer of Mereo. "We believe our discussions with the regulatory agencies reflect the major unmet need for improved therapeutic options for these patients, and we expect that having this clear path to potential full U.S. and EU approvals based on guidance from both the FDA and EMA will support our ongoing partnering efforts. For our lead rare disease program, our partner Ultragenyx has continued to advance the development of setrusumab (UX143) for the treatment of osteogenesis imperfecta (OI), with completion of enrollment in the Phase 2 portion of the Phase 2/3 Orbit study in pediatric and adult patients and data is expected in mid-2023. Further, a study in younger pediatric patients is expected to initiate during the first half of 2023. We concluded 2022 with cash and short-term deposits of $68.2 million (£56.3 million) and maintain our expectation that we have sufficient runway to fund operations into 2026."

Highlights from 2022, Recent Developments and Anticipated Milestones

Alvelestat (MPH-966)

Received Fast Track Designation from the U.S. Food and Drug Administration (FDA).

Reported positive top-line biomarker data and a post-hoc analysis demonstrating an association between biomarker reductions and clinical outcomes in the Phase 2 ASTRAEUS study.

Received clear guidance from the FDA and European Medicines Agency (EMA) that a single 12-18 month placebo-controlled Phase 3 study in approximately 200 patients would be sufficient to support full marketing approvals in both the United States (U.S) and European Union (EU).

The independent primary endpoints of the proposed Phase 3 study are change in the St. George’s Respiratory Questionnaire (SGRQ) Activity domain, as guided by the FDA and change in lung density measured by CT scan, as guided by the EMA.

The Company is exploring potential partnerships to fund further development of alvelestat in AATD-LD.

Two abstracts were accepted to the American Thoracic Society (ATS) 2023 annual meeting, being held May 19-24.

Professor Robert Stockley, Chief Investigator on the ASTRAEUS study, will deliver an oral presentation on the ASTRAEUS study data.

A poster will be presented on the post-hoc analysis and association between biomarker reductions and improvement in SGRQ.

Data from the ongoing Phase 2 investigator-led study in AATD-LD (ATALANTA), including in patients who may be on augmentation therapy, is expected in Q3 2023.

Setrusumab (UX143)

Mereo’s partner Ultragenyx has completed enrollment in the Phase 2 portion of the Phase 2/3 Orbit study of setrusumab in OI patients aged five to 25. Data from the Phase 2 portion of this study is expected in mid-2023.

A study in younger patients comparing setrusumab to bisphosphonates is expected to be initiated by Ultragenyx in 1H 2023.

Etigilimab (MPH-313)

Enrollment in the Phase 1b/2 ACTIVATE trial has completed the Phase 1b part of the study, with a total of 76 patients enrolled. The totality of emerging data from ACTIVATE and key Phase 3 trials of other therapies targeting the TIGIT axis, particularly in NSCLC, will inform next steps for the etigilimab program, which is focused on gynecological malignancies and rare cancers. The Company expects to report additional data from the ACTIVATE study later in 2023.

Etigilimab, in combination with nivolumab, is also being studied in an ongoing investigator-led single-arm, open-label Phase 1b/2 trial in a subtype of platinum-resistant recurrent ovarian cancer (clear cell ovarian cancer) at The University of Texas MD Anderson Cancer Center (MD Anderson), financed by the Cancer Focus Fund. MD Anderson are planning to follow per protocol procedure to expand the study from an initial 10 patients to 20 patients.

Navicixizumab (OMP305B83)

Following regulatory interactions, Mereo’s partner, OncXerna, has stated its intention to initiate a Phase 3 trial of navicixizumab in late line ovarian cancer.

OncXerna is also dosing patients in a Phase 2 basket study evaluating navicixizumab, alone or in combination with chemotherapy, in patients with select advanced solid tumors.

Full Year 2022 Financial Results

Full year 2022 research and development expenses were £25.0 million, compared to £23.6 million, in 2021, an increase of £1.4 million, or 6%. R&D expenses relating to etigilimab increased by £2.3 million. The increase was due to the costs associated with additional patients and the duration of treatment for patients responding to therapy in 2022 compared to 2021 in 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 increased £0.1 million, or 2%, primarily reflecting the end of study related costs for the Phase 2 proof-of-concept study in AATD. Partially offsetting the increases, R&D expenses relating to setrusumab decreased by £0.2 million, or 7%. Setrusumab R&D expenditure in 2022 comprised activities associated with laying the groundwork for reimbursement discussions in Europe, and input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development of the program is funded by Ultragenyx pursuant to our licensing and collaboration agreement.

Administrative expenses increased by £3.6 million, or 23%, from £15.9 million in 2021 to £19.5 million in 2022. The increase was primarily driven by additional costs incurred in connection with the Schedule 13D filings and subsequent Cooperation Agreement with Rubric Capital, and increased share-based payment expenses, partially offset by a reduction in other professional fees.

Net loss attributable to equity holders for the year ended December 31, 2022 was £34.2 million, compared to a net profit of £12.7 million in 2021, primarily reflecting an operating loss of £43.6 million and a gain of £7.8 million due to changes in the fair value of financial instruments resulting from an unrealized gain on warrants.

As of December 31, 2022, the Company had cash and short-term deposits of £56.3 million ($68.2 million). Net cash burn during the fourth quarter of 2022 amounted to £11.2 million ($13.5 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.

Total ordinary shares outstanding at December 31, 2022 were approximately 625 million. Total ADSs outstanding at December 31, 2022 were approximately 119 million, with each ADS representing five ordinary shares of the Company.