Mereo BioPharma Group plc (NASDAQ: MREO)

Sector: Healthcare Industry: Biotechnology CIK: 0001719714
Market Cap 58.20 Mn
P/B 1.25
P/E -1.40
P/S 116.40
ROIC (Qtr) -87.39
Div Yield % 0.00
Rev 1y % (Qtr) 0.00
Total Debt (Qtr) 397,000.00
Debt/Equity (Qtr) 0.01
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About

Mereo BioPharma Group plc, also known by its stock symbol MREO, is a company that operates in the biopharmaceutical industry. The company's main business activities involve the development and commercialization of innovative therapeutics for rare diseases. Mereo was incorporated in 2

Investment thesis

Bull case

  • Healthy cash reserves of 48.70M provide 122.66x coverage of short-term debt 397000, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 52.96M provides 133.40x coverage of total debt 397000, indicating robust asset backing and low credit risk.
  • Tangible assets of 52.96M provide robust 11.17x coverage of other current liabilities 4.74M, indicating strong asset backing.
  • Cash reserves of 48.70M provide solid 49.29x coverage of other non-current liabilities 988000, indicating strong liquidity.
  • Strong cash position of 48.70M provides 10.27x coverage of other current liabilities 4.74M, indicating excellent liquidity.

Bear case

  • Investment activities of (20000) provide weak support for R&D spending of 22.39M, which is -0x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • The company's operating cash flow of (32.71M) shows concerning coverage of stock compensation expenses of 7.57M, with a -4.32 ratio indicating potential earnings quality issues.
  • Free cash flow of (32.73M) provides weak coverage of capital expenditures of 20000, with a -1636.45 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (42.92M) show weak coverage of depreciation charges of 831000, with a -51.65 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of (32.71M) is outpaced by equity issuance of 248000 (-131.89 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Biotechnology
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SMMT Summit Therapeutics Inc. 1,204.25 Bn -1,306.67 0.00 0.01 Bn
2 ONC BeOne Medicines Ltd. 486.51 Bn 7,097.20 97.84 1.90 Bn
3 VRTX Vertex Pharmaceuticals Inc / Ma 122.05 Bn 30.87 10.17 1.85 Bn
4 REGN Regeneron Pharmaceuticals, Inc. 83.00 Bn 18.42 5.79 2.71 Bn
5 ARGX Argenx Se 50.78 Bn 33.71 26,480.10 -
6 ALNY Alnylam Pharmaceuticals, Inc. 43.66 Bn 139.17 11.76 2.97 Bn
7 BNTC Benitec Biopharma Inc. 43.61 Bn -941.82 0.00 0.00 Bn
8 INSM INSMED Inc 28.88 Bn -24.40 64.61 0.74 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.05 11.06
EV to Cash from Ops. EV/CFO -0.08 26.32
EV to Debt EV to Debt 6.75 762.61
EV to EBIT EV/EBIT -0.06 -13.49
EV to EBITDA EV/EBITDA -0.06 8.61
EV to Free Cash Flow [EV/FCF] EV/FCF -0.08 25.66
EV to Market Cap EV to Market Cap 0.05 203.37
EV to Revenue EV/Rev 5.36 156.31
Price to Book Value [P/B] P/B 1.25 20.59
Price to Earnings [P/E] P/E -1.40 -0.88
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -12.64
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 0.17
Dividend per Basic Share Div per Share (Qtr) 0.00 0.01
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -0.14
Interest Coverage Int. cover (Qtr) -70.71 956.66
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 0.00 7.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -39.52 753.48
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.01
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 6.87 -57.63
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -21.88 8.83
EBIT Growth (1y) % EBIT 1y % (Qtr) 5.99 -67.21
EBT Growth (1y) % EBT 1y % (Qtr) 7.39 -23.74
EPS Growth (1y) % EPS 1y % (Qtr) 0.00 -7.02
FCF Growth (1y) % FCF 1y % (Qtr) -8.36 -40.48
Gross Profit Growth (1y) % Gross Profit Growth (1y) % -71.09 264.51
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.01 0.14
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.00
Cash Ratio Cash Ratio (Qtr) 8.09 3.92
Current Ratio Curr Ratio (Qtr) 8.71 7.33
Debt to Equity Ratio Debt/Equity (Qtr) 0.01 0.48
Interest Cover Ratio Int Coverage (Qtr) -70.71 956.66
Times Interest Earned Times Interest Earned (Qtr) -70.71 956.66
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -8,417.40 -17,888.70
EBIT Margin % EBIT Margin % (Qtr) -8,583.60 -18,246.34
EBT Margin % EBT Margin % (Qtr) -8,705.00 -19,108.08
Gross Margin % Gross Margin % (Qtr) 73.60 -10.30
Net Profit Margin % Net Margin % (Qtr) -8,314.60 -19,056.96