Positive recommendation for BGS-649 Phase 2b trial

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Mereo BioPharma Group plc

("Mereo" or the "Company" or the "Group")

Positive recommendation for BGS-649 Phase 2b trial following planned IDMC interim analysis

Committee recommends trial continues unchanged with all three doses

On track to deliver data in H2 2017

London, 7 March 2017 - Mereo BioPharma Group plc (AIM: MPH), a clinical stage, UK-based, biopharmaceutical company focused on rare and specialty diseases, is pleased to announce that the Independent Data Monitoring Committee (IDMC) has recommended the continuation of all three different dose arms of the Phase 2b BGS-649 study following a prospectively defined interim analysis of safety and efficacy. The Company remains completely blinded to the data from this analysis.

BGS-649 is a novel once weekly oral aromatase inhibitor in development as a first-line therapy for the treatment of obese men with hypogonadotropic hypogonadism (HH). It is currently being investigated in a Phase 2b clinical study in 268 HH patients with a body mass index (BMI) of more than 30. This study compares three doses of BGS-649 with placebo.

The interim analysis was performed once the first 93 patients had completed at least one month's treatment. In addition to safety, the efficacy analysis assessed if each dose was likely to normalise testosterone in at least 75% of patients, the primary endpoint, over the six months course of treatment.

Based on the review of the data, the IDMC has recommended that all three arms should continue versus placebo until patients have received the full six months of treatment. At the end of the initial treatment period, patients have the option to enrol into a six month safety extension study in which they will receive the same dose or in the case of placebo patients they will be randomised to one of the three doses.

To date there have been no trends that raise safety concerns including all patients enrolled into the initial six month study. Results from the Phase 2b study are expected to be announced during the second half of 2017.

Dr Denise Scots-Knight, Chief Executive Officer of Mereo BioPharma Group plc commented:

"We are delighted the IDMC has recommended that all three doses continue to be tested in the ongoing Phase 2b trial for BGS-649. We believe this drug has the potential to become a novel and effective treatment option for obese men suffering from hypogonadotropic hypogonadism. We are encouraged by the number of patients who have already enrolled into the six month safety extension study and look forward to announcing the headline results of the Phase 2b study in H2 2017."

The primary objective of this Phase 2b study is to demonstrate the efficacy of BGS-649 to normalise total testosterone levels in greater than 75% of subjects after 24 weeks of treatment. The Company is also assessing patient recorded outcomes and determining the impact of BGS-649 on the levels of LH and FSH and on semen parameters. The Company has also initiated a six-month Phase 2b extension study for BGS-649 to confirm the safety of long-term treatment. This study aims to enrol up to 120 patients from the initial six month BGS-649 study and will include monitoring of testosterone levels and any changes in bone parameters.

In previous clinical studies with Novartis, BGS-649 was shown to normalise testosterone levels, increase LH and FSH and was safe and well tolerated in men with HH with an average body mass index (BMI) of 34. These data will be presented as a late breaker poster at the Endo 2017 meeting on 2 April in Orlando.

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About Hypogonadotropic hypogonadism

Hypogonadotropic hypogonadism (HH) results from inadequate levels of testosterone. Symptoms associated with testosterone deficiency include reduced/loss of libido, erectile dysfunction, tiredness, fatigue, impaired physical endurance, loss of vitality, lack of motivation and mood disturbance. There are approximately six million cases of HH in obese men in the US and approximately four million cases in Europe. Current therapies for HH involve direct replacement of testosterone administered by gel formulations applied to the skin, which risk transference to anyone in close contact, or intramuscular injections, which can be painful and inconvenient. Testosterone replacement can render men infertile by suppressing luteinising hormone (LH) and follicle stimulating hormone (FSH). BGS-649 is a once a week oral dose designed to be more convenient compared with current therapies and due to its mechanism of action, is expected to restore normal testosterone production without the risk of supra-physiological levels, thereby treating the symptoms of HH whilst maintaining or improving testicular function.

About Mereo

Mereo is a UK-based biopharmaceutical company focused on the development of innovative medicines that aim to address unmet medical needs in rare and specialty disease areas and improve patient quality of life. The Company seeks to selectively acquire development-stage product candidates with demonstrated clinically meaningful data from large pharmaceutical companies and to rapidly progress these product candidates to subsequent value inflection points.

Mereo combines the operational discipline and efficiency of a small company with the financial resources to conduct comprehensive clinical studies. The Company has the option to directly commercialise products, for example in orphan diseases, in addition to partnering or divesting its products.

Mereo's initial portfolio consists of three mid-late stage clinical assets that were acquired from Novartis in July 2015. BPS-804 is being developed for the prevention of fractures resulting from osteogenesis imperfecta (brittle bone disease); acumapimod (BCT-197), is being developed to treat inflammation in patients with an AECOPD; and BGS-649 is a once-weekly pill to restore normal testosterone levels in men with hypogonadotropic hypogonadism.

In H1 2016 the Company initiated a Phase 2 study with acumapimod and a Phase 2b study with BGS-649. Mereo expects to commence the first pivotal trial for BPS-804 during H1 2017. Additional product opportunities, from a range of large pharmaceutical and biotechnology companies, are under active evaluation.