Mereo BioPharma Group Plc ("Mereo" or the "Company" or the "Group") Preliminary Results for the Year Ended December 31, 2018 -- Strong Operational Progress
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON PUBLICATION OF THIS ANNOUNCEMENT THIS INFORMATION IS NOW CONSIDERED IN THE PUBLIC DOMAIN.
LONDON, April 29, 2019 (GLOBE NEWSWIRE) -- Mereo BioPharma Group plc (AIM: MPH) (NASDAQ: MREO), a clinical stage, UK-based, biopharmaceutical company focused on rare diseases, is pleased to announce its audited preliminary results for the year ended December 31, 2018.
Dr. Denise Scots-Knight, Chief Executive Officer, said:
“2018 was an important year for Mereo, identifying the opportunity to combine with OncoMed Pharmaceuticals, Inc (“OncoMed”) and delivering against significant clinical and corporate milestones. We announced positive clinical data from two of our non-rare disease programs, BGS-649 and BCT-197, and are progressing regulatory discussions in parallel with engaging with potential partners. We also made significant progress on our rare disease products initiating the Phase 2 study for MPH-966 and completing enrollment of the Phase 2b study for BPS-804.
We anticipate reporting initial six-month data from the open-label arm of the BPS-804 Phase 2b study later this quarter and the complete twelve-month data in Q4 2019, as well as top-line data from the Phase 2 MPH-966 study around the end of 2019.
We continue to review a strong pipeline of additional new rare disease product opportunities in bone, respiratory and endocrine diseases from pharmaceutical and large biotechnology companies. I am very pleased with the progress we have made in business development and in advancing our programs further into the clinic, with the hope of providing better treatment options for patients suffering from rare diseases.”
Operational and recent highlights
Merger with OncoMed completed post-period on April 23, 2019
- Acquired two clinical stage programs – navicixizumab and etigilimab
- ADR program listed on NASDAQ on April 24, 2019, deepening engagement with a broader international pool of equity capital
- US operational base established in Redwood City, California
- Following completion of the merger unaudited total cash resources¹ were £53.9 million ($70.1 million)
BPS-804 (setrusumab) for Osteogenesis Imperfecta (OI)
- Completed enrollment of 112 patients in adult Phase 2b study in Q4 2018, expect top dose six-month data in Q2 2019 and twelve-month data from all 112 patients in Q4 2019
- Following the approval of our Pediatric Investigation Plan (PIP) by the European Medicine Agency (EMA) in July 2018, BPS-804 in pediatrics is now Phase 3 ready with the registration study design agreed
- Further positive interactions with the EMA through the PRIority Medicines for Europe scheme (PRIME) and Adaptive Pathways providing valuable input into our regulatory, manufacturing and commercial roadmap for BPS-804
MPH-966 (alvelestat) for severe Alpha-1 Antitrypsin Deficiency (AATD)
- Dosed first patient in a Phase 2 study in November 2018, expected to enroll approximately 165 patients in the EU and US with severe AATD with top-line data expected around the end of 2019
- In April 2018, the National Center for Advancing Translational Sciences (NCATS) issued the first phase of a grant award expected to total $10 million to the University of Alabama at Birmingham (UAB) to study MPH-966 in AATD, which Mereo is supporting through the supply of clinical trial material and regulatory input
BGS-649 (leflutrozole) for Hypogonadotropic Hypogonadism (HH)
- Positive top-line data from Phase 2b dose optimization study in 271 patients announced in March 2018 confirming mechanism of action and included statistically significant increases in the secondary endpoints and exploratory end points
- Six-month extension study data reported in December 2018 confirmed safety of long-term treatment with all three doses meeting the end points of normalization of total testosterone in more than 75% of subjects and improvement of luteinising hormone (LH) and follicle stimulating hormone (FSH), consistent with the previously reported six-month data
- Data package forming the basis of regulatory interactions in 2019 to confirm development plans towards potential partnering
BCT-197 (acumapimod) for Acute Exacerbations of Chronic Obstructive Pulmonary Disease (AECOPD)
- Agreed outline for the design of a pivotal Phase 3 clinical trial program with the US Food and Drug Administration (FDA) following successful Type B end of Phase 2 meeting
- Top-line data from Mereo’s completed Phase 2 AECOPD study was presented at the American Thoracic Society (ATS) conference in May 2018
- Partnering discussions continue to progress
Corporate
- Appointed Wills Hughes-Wilson in February 2018 as Head of Patient Access and Commercial Planning
- Mereo continued to increase IP protection across the portfolio during the period with new patent applications being pursued for all four products
- Michael Wyzga and Deepa Pakianathan, Ph.D. appointed as Non-Executive Directors to the Mereo Board, following the merger with OncoMed
Financial Highlights
- Loss after tax for the 12-month period of £32.0million (2017: £38.8 million) or 45 pence per ordinary share (2017: 56 pence per ordinary share)
- Total research and development costs significantly reduced to £22.7 million (2017 £34.6 million) reflecting the reduced clinical trial activity focused on our two rare product development programs and the completion of clinical trials for our two non-rare disease products
- Cash resources¹ of £27.5 million at December 31, 2018
- At completion of the merger with OncoMed unaudited total Group cash resources¹ were £53.9 million ($70.1 million)
¹ Cash resources is defined as the aggregate of cash and short-term deposits and short-term investments
For Further Enquiries:
Mereo BioPharma Group plc | +44 (0)333 023 7319 |
Denise Scots-Knight, Chief Executive Officer | |
Richard Jones, Chief Financial Officer | |
Nominated Adviser and Joint Broker Cantor Fitzgerald Europe | +44 (0)20 7894 7000 |
Phil Davies | |
Will Goode | |
Andrew Keith, Healthcare Equity Sales | |
Joint Broker RBC Capital Markets | +44 (0)20 7653 4000 |
Rupert Walford | |
Jamil Miah | |
UK Public Relations Advisor to Mereo Biopharma FTI Consulting | +44 (0)20 3727 1000 |
Simon Conway | |
Brett Pollard | |
Ciara Martin | |
US Public Relations Advisor to Mereo Biopharma Burns McClellan | +01 (0) 212 213 0006 |
Lisa Burns | |
Jill Steier |
About Mereo
Mereo is a biopharmaceutical company focused on the development and commercialization of innovative therapeutics that aim to improve outcomes for patients with rare diseases. Mereo's strategy is to selectively acquire product candidates that have substantial preclinical, clinical and manufacturing data packages. Mereo's four product candidates have previously generated positive clinical data for Mereo's target indications or in related indications. Mereo has commenced randomized Phase 2 clinical trials for all four of the product candidates. In connection with the merger with OncoMed, Mereo added two candidates to its pipeline, Navicixizumab and Etigilimab.
- BPS-804 for osteogenesis imperfecta (OI). In October 2018, the Company announced completion of enrollment of 112 adult patients in a Phase 2b dose ranging study with initial data expected in Q2 2019 and top-line dose ranging data in late 2019. A pediatric Phase 3 study design has also been approved by the EMA. BPS-804 has orphan designation in the U.S. and the EU and has been accepted into the PRIME and Adaptive Pathways in EU;
- MPH-966 for alpha-1 antitrypsin deficiency (AATD). The Company recently announced dosing of the first patient in a Phase 2 dose ranging study in the U.S. with data expected around the end of 2019;
- BCT-197 for severe exacerbations of COPD. The Company announced positive Phase 2 data in May 2018 and recently announced the outline of the pivotal Phase 3 study including the primary and key secondary endpoints following the successful end of Phase 2 Type B meeting with the FDA;
- BGS-649 for hypogonadotropic hypogonadism (HH). The Company announced positive top-line Phase 2b data in March 2018 and positive results from the Phase 2b safety extension study in December 2018;
- Navicixizumab has completed a Phase 1a single-agent clinical trial in patients with advanced solid tumors and is currently in a Phase 1b trial in combination with a standard paclitaxel regimen in patients with platinum-resistant ovarian cancer. This study recently completed enrolment; and
- Etigilimab has completed a single-agent Phase 1a trial in patients with advanced or metastatic solid tumors and is currently in a Phase 1b combination study with nivolumab. Etigilimab is part of OncoMed’s prior collaboration with Celgene. Celgene has the option to obtain an exclusive licence to develop and commercialize the product. If Celgene exercises such option, OncoMed (now a wholly-owned indirect subsidiary of Mereo) will be eligible to receive a $35 million opt in payment.
Chairman and CEO’s statement
Introduction
The Group’s strategy continues to be to build a portfolio of rare disease products acquired from pharmaceutical and large biotechnology companies and to develop these through regulatory approval and subsequent commercialization.
Rare (and orphan) diseases represent an attractive development and commercialization opportunity for the Company, since they typically have high unmet medical need and can often utilize regulatory pathways that facilitate acceleration to the potential market. Development of rare disease products generally involves close co-ordination with patient organizations and key opinion leaders (KOLs) and investigators. Patients are typically treated at a limited number of specialized sites, which helps identification of the patient population and enables a small targeted sales infrastructure to commercialize the products in key markets.
The Group plans to partner or sell our existing non-rare disease products prior to commercialization, recognizing the need for a larger sales infrastructure and greater resources to take these products to market.
We have made significant progress across all our programs both in terms of clinical development and regulatory strategy. We were pleased to announce positive results from our Phase 2b study in Hypogonadotropic Hypogonadism (HH) in March 2018 and the completion of enrollment with 112 patients into our Adult Phase 2b study in Osteogenesis Imperfecta (OI) and the initiation of our 165 patient Phase 2 study into severe Alpha-1 Antitrypsin Deficiency (severe AATD) in Q4 2018. We were also admitted to the PRIME pathway in Europe, a regulatory process in Europe that is designed to provide faster approval timelines and access to medicines for patients. With both our OI and severe AATD programs well underway, we continue to expect to deliver some important clinical data on our two core rare disease products in 2019.
With respect to our long term funding strategy, earlier in 2018 we engaged in a process to consider an offering and listing of American Depositary Shares (“ADSs”) in the US on the Nasdaq Global Market. The Board decided to postpone this process in April 2018 in the best interests of our shareholders and based on market conditions at the time. We continued to believe that the Nasdaq Global Market would enable us to access a broad number of specialized US healthcare investors. In Q4 2018 we decided to explore opportunities to merge with a Nasdaq listed biopharmaceutical company. This culminated in our announcement of the merger with OncoMed Pharmaceuticals, Inc. (“OncoMed”) on December 5, 2018. The merger with OncoMed, which completed on April 23, 2019, brings to Mereo two clinical stage oncology products with potential for partnering, a strengthened balance sheet, a listing on the Nasdaq Global Market, an existing diversified US institutional shareholder base, additional liquidity and operations in the US with expertise in regulatory, quality assurance and finance. Following the merger with OncoMed, we now have unaudited total group cash resources¹ of approximately £53.9 million¹, ($70.1 million) sufficient to support our existing programs into mid 2020.
We continue to actively review opportunities from pharmaceutical and large biotechnology companies to expand our existing portfolio of rare disease products which is an important component of our business model.
Business Overview
Rare Disease Products
BPS-804 (Setrusumab)
BPS-804 is a human monoclonal antibody targeting sclerostin which we are developing for the treatment of OI, also known as brittle bone disease, which we acquired from Novartis in 2015. OI is characterized by fragile bones that fracture easily. An anti-sclerostin antibody is thought to be particularly well suited to treat OI since it has been demonstrated to be a strong bone building agent that also reduces the resorption of bone. We made significant progress across regulatory, clinical and manufacturing operations for this product during 2018 including completion of enrollment of 112 patients into our adult Phase 2b study in Q4 2018.
We now expect to report 6-month data at the top dose of BPS-804 on a small but significant open label cohort of patients in Q2 2019. These data will include the primary endpoint of change from baseline of Bone Mineral Density (BMD) as measured by High Resolution peripheral Quantitative Computed Tomography (HR-pQCT) and the secondary endpoints of BMD using traditional two-dimensional dual-energy X-ray absorptiometry (DXA) measurement together with measurement of serum bone biomarkers. We expect to report the 12-month data on this same cohort of patients and for the remaining dose ranging blinded portion of the Phase 2b in Q4 2019. Hence, all the data on all 112 patients following 12-month treatment with BPS-804 will be reported before the end of 2019.
Following approval of our Pediatric Investigation Plan (PIP) by the EMA we have continued to gather regulatory input into our program through the Adaptive and PRIME pathways. Our Phase 3 registration trial in children will be based on a primary endpoint of fracture rate over a 12-month period and will be conducted in approximately 165 children with severe disease aged 5-18 years old. We also intend to validate HR-pQCT as a biomarker in this study. This is a key step in our plans to commercialize BPS-804 in both children and adults.
MPH-966 (formerly AZD-9668) (alvelestat)
In October 2017, we acquired an exclusive license for MPH-966 from AstraZeneca together with an option to acquire the IP based on certain milestones. MPH-966 is a novel oral small molecule we are developing for the treatment of severe AATD, a potentially life-threatening rare, genetic condition affecting an estimated 50,000 patients in North America and 60,000 patients in Europe. AATD is caused by a lack of alpha-1 antitrypsin, or AAT, a protein that protects the lungs from enzymatic degradation. This degradation leads to severe debilitating diseases, including early-onset pulmonary emphysema, a disease that irreversibly destroys the tissues that support lung function. MPH-966 is designed to inhibit neutrophil elastase (NE), a neutrophil protease and a key enzyme involved in the destruction of lung tissue. We believe the inhibition of NE has the potential to protect AATD patients from further lung damage.
We have initiated a Phase 2 proof-of-concept clinical trial in approximately 165 patients with severe AATD with the first patient enrolled in Q4 2018. Top-line data is expected around the end of 2019. The primary endpoint for this study is based upon the biomarker desmosine which has been shown to correlate with deterioration of lung tissue as determined by CT scans. If the results are favorable, we intend to seek regulatory advice on the design of a pivotal trial.
As part of our development plans for MPH-966 we are supporting certain investigator-led studies and we are pleased to report that in April 2018, Mark T. Dransfield MD and the team at the University of Alabama at Birmingham were awarded the first phase of an NCATS grant expected to total $10 million to study the safety, tolerability and effectiveness of MPH-966 as an improved non-invasive treatment for patients with AATD. We continue to actively support this program including the supply of clinical trial materials and regulatory support.
Non-Rare Disease Products
BGS-649 (leflutrozole)
BGS-649 is a once-a-week oral treatment for HH in obese men, which we acquired from Novartis in 2015. BGS-649 is highly differentiated from current marketed and clinical-stage products in that it acts by restoring a patient’s own testosterone rather than delivering exogenous testosterone. BGS-649 is a novel aromatase inhibitor that inhibits conversion of the patient’s own testosterone to oestradiol, thereby increasing testosterone levels and improving rather than reducing the hormones LH and FSH, which are important for fertility. We successfully completed a Phase 2b dose optimization study in 271 patients with positive top-line data announced in March 2018 that confirmed the mechanism of action and included statistically significant increases in the secondary endpoints of LH and FSH at all three doses at week 24. In addition, the results included a demonstrated improvement in the exploratory endpoint of total motile sperm count across all three doses versus placebo and a positive trend on reduction of fatigue in the exploratory patient reported outcomes.
A 6-month extension study enrolled 143 patients to confirm the safety of long-term treatment and provide additional clinical data was reported in Q4 2018. The study was completed by 88 patients and successfully demonstrated that none of the doses of BGS-649 met the lower bound (95% confidence interval) of the pre-specified safety criterion of a greater than 3% reduction in lumbar spine BMD after 48 weeks of treatment. All three doses met the endpoints of normalization of total testosterone in more than 75% of subjects and improvement of luteinising hormone (LH) and follicle stimulating hormone (FSH), consistent with the previously reported 6-month data. The data from both studies, together with the comprehensive historical data package, will form the basis of regulatory interactions in 2019 to confirm the development plans towards commercialization of BGS-649 and the significant market opportunity it represents which will be important for partnering this program.
BCT-197 (acumapimod)
BCT-197 is an oral inhibitor of p38 MAP kinase which we acquired from Novartis in 2015 and that we are developing as a short-course acute therapy aimed at treating the inflammation associated with AECOPD. P38 MAP kinase inhibitors have a strong anti-inflammatory action. The standard of care for AECOPD has changed little in the past 20 years even though the acute exacerbations are generally accepted to account for the majority of costs associated with management of COPD patients.
In December 2017 we announced positive top-line data from a Phase 2 dose optimization study in 282 patients. The full results which were reported in May 2018 demonstrated the potent anti-inflammatory effect of BCT-197 with dose dependent, statistically significant reductions in both high sensitivity C-Reactive Protein (hsCRP) and fibrinogen. hsCRP remained suppressed for the period out to day 180. Furthermore, there was a statistically significant reduction of more than 50% in the pre-specified endpoint of re-hospitalizations for the treatment of COPD at days 90 through 150 in the high-dose group following a short course of three doses of treatment over five days. This effect was even more pronounced in patients with more than two exacerbations per year. Consistent with the above, there was a significant reduction in the use of corticosteroid and antibiotics in the follow-up phase of the study.
We have also completed a Drug Drug Interaction (DDI) study examining the effect of itraconazole, a potent inhibitor of Cytochrome P450 3A4 (CYP3A4), on BCT-197.The results show that there is minimal effect and we therefore believe that there will be no need for dose adjustment of BCT-197 for patients taking CYP3A4 inhibitors.
In line with our stated strategy for our non-rare products we have commenced discussions with potential partners for BCT-197 and these continue to progress. In parallel with these discussions, we progressed regulatory discussions with the FDA culminating in the end of Phase 2 Type B meeting. We recently reported the successful outcome of this meeting which provided clarity on the pivotal Phase 3 requirements through to approval. We plan to continue the regulatory interactions in Europe while progressing with potential partnering opportunities.
Navicixizumab (anti-dll4/VEGF bispecific, OMP-305b83)
Navicixizumab, acquired from OncoMed, is an anti-DLL4/VEGF bispecific antibody targeting both DLL4 in the Notch cancer stem cell pathway and vascular endothelial growth factor (VEGF). This antibody is intended to have anti-angiogenic plus anti-cancer stem cell activity. In a Phase 1a clinical trial, navicixizumab demonstrated single-agent anti-tumor activity and was safe enough to be administered on a continuous basis.
We are currently conducting a Phase 1b clinical trial of navicixizumab in combination with paclitaxel in patients with heavily pre-treated platinum-resistant ovarian cancer. The trial was expanded to enroll up to 60 patients in Q4 2018. Interim Phase 1b results were presented at the European Society for Medical Oncology in Q4 2018. The patients had received a median of four prior therapies, all of whom had received prior paclitaxel and 69% had received prior bevacizumab. 22 of the 26 patients (85%) treated with the novel regimen experienced clinical benefit. Notably 11 of the 26 patients (42%) achieved a partial response and the median progression-free survival was 5.4 months (95% Cl: 3.5-8 months).
We plan to undertake regulatory interactions in the US to determine the next steps for navicixizumab in platinum resistant ovarian cancer patients who have received at least two prior therapies and to pursue partnering of the program in parallel.
Etigilimab (anti-tigit, omp-313m32) TIGIT (T-cell immunoreceptor with Ig and ITIM domains) is an inhibitory receptor that is thought to stop T-cells from attacking tumor cells. Our anti-TIGIT therapeutic candidate etigilimab is intended to activate the immune system through multiple mechanisms and enable anti-tumor activity. A Phase 1a/b clinical trial enrolled patients with advanced solid tumors into either a Phase 1a single-agent portion (dose escalation in all patients and expansion in selected tumor types) or Phase 1b combination portion in selected tumor types with nivolumab (dose escalation);18 patients were treated in the Phase 1a dose escalation study with doses up to 20mg/kg every two weeks. Tumor types included colorectal cancer (6), endometrial cancer (2), pancreatic cancer (1) and 8 other tumor types. No dose limiting toxicities were observed and the recommended Phase 2 dose was the top dose of 20mg/kg biweekly. The Phase 1b is ongoing.
The TIGIT program is subject to an exclusive license option with Celgene Corporation (CELG) as part of OncoMed’s previous broad collaboration agreement. If Celgene opts in we would receive a $35 million up-front option fee and an additional development milestone.
New Product Opportunities
We continue to seek and review new product opportunities to expand and grow our portfolio in rare diseases for bone, respiratory and endocrine indications where we have built our expertise in the company with the aim of becoming a leading player. There continues to be a good number of opportunities arising from pharma and large biotechnology companies as they continue to reappraise development pipelines and focus on a smaller number of therapeutic areas.
Outlook
2019 is set to be a transformational year for the Company with key data expected on both of our core rare disease products in OI and alpha-1 antitrypsin deficiency as well as the listing of the Company on Nasdaq with a more diversified shareholder base. We expect to report our initial 6-month data for BPS-804 in OI in Q2 2019 and the remaining 12-month complete dose ranging data on all 112 patients enrolled in Q4 2019. We also expect to announce the results of our Phase 2 study for MPH-966 around the end of 2019 following the initiation of the trial in Q4 2018.
We continue to focus on partnering opportunities for our non-rare disease products BCT-197 and navicixzumab and BGS-649, and to actively evaluate new product opportunities in rare diseases. In addition, we are planning our future “go-to-market” commercialization strategy for BPS-804 which includes active engagement with the wider stakeholder community in OI, including Key Opinion Leaders (“KOLs”), investigators, patient groups, regulators, Health Technology Assessment bodies (HTAs) and payers.
Finally, we remain funded through our key milestones in 2019 and into mid 2020, and will evaluate the opportunities to strengthen the balance sheet through a balanced approach.
Dr Peter Fellner | Dr Denise Scots-Knight |
Chairman | Chief Executive Officer |
April 28, 2019
¹ Cash resources defined as cash and short-term deposits and short-term investments
Financial Review
The financial statements are presented on a consolidated group basis prepared in accordance with IFRS as issued by the IASB and adopted in the EU for the year ended December 31, 2018. Comparative data is shown on the same basis for the year ended December 31, 2017.
Research and Development (R&D)
Our total research and development, or R&D, expenses reduced by £11.9 million, or 34.4%, from £34.6 million in 2017 to £22.7 million in 2018. This reduction was due to the focus in 2018 on our two rare disease product development programs and the completion of clinical trials for our two specialist pharma product candidates.
In 2018 we completed the two Phase 2 clinical studies for our two non-rare products, BCT-197 and BGS-649. We continued our Phase 2b adult study for BPS-804 and in late 2018 commenced our Phase 2 proof of concept study for MPH-966. Clinical trial costs, including payments made to CROs and other suppliers for the ongoing clinical development of BPS-804 and MPH-966 and for completing the clinical trials for BCT-197 and BGS-649, reduced from £22.8 million in 2017 to £14.9 million in 2018.
Our payments to CMOs for the provision of drug substance and drug product and associated manufacturing development to support our clinical trials and further development and scale-up activities associated with our BPS-804 monoclonal antibody manufacturing development reduced from £7.3 million in 2017 to £4.2 million in 2018, reflecting the higher cost in 2017 due to the manufacture of clinical trial supplies for our ongoing BPS-804 adults study.
The cost of our in-house R&D team reduced slightly from £3.3 million in 2017 to £2.6m million in 2018, before including share-based payments with total R&D team costs after these costs falling from £4.3m to £2.9m considering lower share-based payment charges in 2018.
General and administrative expenses (G&A)
G&A expenses increased by £1.8 million, or 16.8%, from £10.7 million in 2017 to £12.5 million in 2018.
Our total staff expenses reduced by £2.4 million after taking account of a reduction in share-based payment charges of £3.1 million and an increase in underlying staff costs of £0.7 million. Our total professional fees increased from £1.9 million in 2017 to £6.3 million in 2018. This increase was due to the impact of cost relating to the aborted Nasdaq IPO in early 2018, of which £1.0 million was held on the balance sheet as prepayments as at December 31, 2017 and released during 2018, together with the costs associated with the merger with OncoMed and fees in respect of the bank loan renegotiation.
Finance Income and charges
Total finance income was £0.3 million in 2018, down from £0.8 million in 2017 reflecting lower balances held on deposit during the year. Finance charges increased from £1.1 million in 2017 to £2.4 million in 2018 reflecting a full year of interest charges on the bank loan in the year.
Net Foreign Exchange Gain/(Loss)
The foreign exchange loss fell £1.3 million from £1.4 million in 2017 to £0.1 million in 2018. This represented the unrealized gain on translation of cash deposits held primarily in U.S. dollars at year end, and the fall reflected a lower exchange rate various year to year and lower U.S. denominated cash balances held at the end of 2018.
Taxation
We recorded a tax credit of £5.3 million in 2018, reduced from £8.2 million in 2017. The tax credit represents the cash rebate from the U.K. tax authorities we qualified for in respect of eligible research and development activities during the years. Due to the reduction in qualifying R&D expenditure in 2018, the estimated 2018 tax credit receivable reduced by £2.9 million compared to 2017. The 2017 tax credit was received in August 2018. We expect to receive the 2018 tax credit of £5.3 million in 2019.
Loss per share
Basic and Diluted Loss per share for the year was 45 pence, down from 56 pence in 2017.
Liquidity and capital resources
As of December 31, 2018, we had cash and short-term deposits and short-term investments (together “cash resources”) of £27.5 million compared to £52.5 million as at December 31, 2017.
On September 30, 2018, we entered into a revised loan agreement with Silicon Valley Bank and Kreos Capital V (UK) Limited, which enabled us to amend the term to increase the interest only period of the loan from September 30, 2018 to April 30, 2019. In connection with the revised loan agreement, we issued to the lenders 225,974 additional warrants to subscribe for our ordinary shares at an exercise price of £2.31 per ordinary share taking the total warrants issued to our lenders to 922,464.
On October 8, 2018 we entered into a funding agreement with the Alpha-1 Project (“TAP”) which provided for funding of up to $0.4 million as a contribution towards the development of our product candidate MPH-966. On November 1, 2018 the first tranche of $0.1 million was received and as a result we issued 41,286 warrants to subscribe for our ordinary shares. at an exercise price of £0.03 per share.
On April 23, 2019 the Group agreed an amendment to the terms of its bank loan with the lenders. The new terms extended the interest-only period to December 31, 2019 followed by a 15-month capital and interest repayment period.
Merger with OncoMed Pharmaceuticals, Inc.
On April 23, 2019 we completed the merger with OncoMed, a California-based and Nasdaq-listed company, at which time OncoMed became a US subsidiary of Mereo. At completion, we acquired cash and short-term deposits and short-term investments of $50.8 million. The estimated fair value of the intangible assets acquired was £14.5 million.
On April 23, 2019, in connection with the merger, 24,783,320 ordinary shares were issued and listed on AIM. On April 24, 2019, 4,956,664 American Depositary Receipts (“ADR’s”) were listed on the NASDAQ Global Exchange. Following completion of the merger, former OncoMed shareholders own 25.8% of the enlarged share capital of the group.
Following completion of the merger, unaudited total Group cash resources were £53.9 million ($71.3 million)
Financial Outlook
The merger with OncoMed significantly extended our cash runway into mid 2020 and this will enable us to continue to invest in the development programs for our two rare disease product candidates BPS-804 and MPH-966. In addition, as set out in our strategic report we have a number of opportunities to monetize our other product candidates we have developed internally and those acquired from OncoMed through potential partnerships.
Richard Jones
Chief Financial Officer
April 28, 2019
Consolidated statement of comprehensive loss
for the year ended December 31, 2018
Year ended | Year ended | ||||||
December 31, | December 31, | ||||||
2018 | 2017 | ||||||
Notes | £ | £ | |||||
R&D expenses | (22,703,553 | ) | (34,606,649 | ) | |||
Administrative expenses | (12,504,887 | ) | (10,697,194 | ) | |||
Operating loss | (35,208,440 | ) | (45,303,843 | ) | |||
Finance income | 306,831 | 826,855 | |||||
Finance charge | (2,360,648 | ) | (1,089,925 | ) | |||
Net foreign exchange (loss)/gain | (43,863 | ) | (1,384,225 | ) | |||
Loss before tax | 5 | (37,306,120 | ) | (46,951,138 | ) | ||
Taxation | 6 | 5,277,380 | 8,152,084 | ||||
Loss attributable to equity holders of the parent | (32,028,740 | ) | (38,799,054 | ) | |||
Other comprehensive income for the year, net of tax | — | — | |||||
Total comprehensive loss for the year, net of tax and attributable to the equity holders of the parent | (32,028,740 | ) | (38,799,054 | ) | |||
Basic and diluted loss per share | (£0.45 | ) | (£0.56 | ) |
Consolidated balance sheet
as at December 31, 2018
December 31, | December 31, | ||||
2018 | 2017 | ||||
Notes | £ | £ | |||
Assets | |||||
Non-current assets | |||||
Property, plant and equipment | 148,935 | 153,361 | |||
Intangible assets | 8 | 32,632,229 | 33,005,229 | ||
32,781,164 | 33,158,590 | ||||
Current assets | |||||
Prepayments | 1,066,932 | 1,970,781 | |||
R&D tax credits | 6 | 5,277,380 | 8,152,084 | ||
Other receivables | 608,893 | 509,350 | |||
Short-term investments | 2,500,000 | 2,500,000 | |||
Cash and short-term deposits | 25,041,945 | 50,044,672 | |||
34,495,150 | 63,176,887 | ||||
Total assets | 67,276,314 | 96,335,477 | |||
Equity and liabilities | |||||
Equity | |||||
Issued capital | 9 | 213,721 | 213,285 | ||
Share premium | 9 | 118,492,073 | 118,226,956 | ||
Other capital reserves | 9 | 18,592,618 | 16,359,169 | ||
Employee Benefit Trust shares | (306,838 | ) | — | ||
Other reserves | 9 | 7,000,000 | 7,000,000 | ||
Accumulated loss | (111,220,794 | ) | (79,315,920 | ) | |
Total equity | 32,770,780 | 62,483,490 | |||
Non-current liabilities | |||||
Provisions | 2,641,353 | 4,075,386 | |||
Interest-bearing loans and borrowings | 14,646,753 | 18,812,511 | |||
Warrant liability | 11 | 1,005,613 | 1,346,484 | ||
Other liabilities | 12 | 34,289 | — | ||
18,328,008 | 24,234,381 | ||||
Current liabilities | |||||
Trade and other payables | 4,570,307 | 3,024,026 | |||
Accruals | 4,437,321 | 4,379,774 | |||
Provisions | 332,014 | 274,000 | |||
Interest-bearing loans and borrowings | 6,837,884 | 1,939,806 | |||
16,177,526 | 9,617,606 | ||||
Total liabilities | 34,505,534 | 33,851,987 | |||
Total equity and liabilities | 67,276,314 | 96,335,477 |
Consolidated statement of cash flows
for the year ended December 31, 2018
December 31, | December 31, | ||||
2018 | 2017 | ||||