Results of Placing

The 'Results of Placing' announcement for Mereo BioPharma Group plc released last Friday, 31 March 2017 at 17:54, has been re-released in the interest of market clarity. The announcement text corrects the date '29 March 2016' to '29 March 2017' and is reproduced in full below.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA

Mereo BioPharma Group plc

("Mereo" or the "Company")

Results of Placing

London, 3 April 2017 - Mereo BioPharma Group plc (AIM: MPH), a clinical stage, UK-based, biopharmaceutical company focused on rare and specialty diseases, is pleased to announce the successful completion of the Placing (defined below), as announced at 12:30 p.m. on 29 March 2017.

A total of 5,042,017 new Ordinary Shares (the "Placing Shares") have been placed by Cantor Fitzgerald Europe and RBC Capital Markets at a price of 297.5 pence per share (the "Placing Price") to raise gross proceeds of approximately £15.0 million (the "Placing"). The Placing Shares being issued represent approximately 7.8 per cent of the issued ordinary share capital of the Company prior to the Placing. The Placing Price is equivalent to the closing price for the preceding business day prior to this announcement.

Cantor Fitzgerald Europe and RBC Capital Markets acted as joint bookrunners in connection with the Placing.

Denise Scots-Knight, CEO of Mereo, commented:

"We are delighted to have undertaken a successful placing to provide the financing for the acceleration and expansion of the development of BPS-804. The programme will now have the potential to treat children suffering from the debilitating condition, osteogenesis imperfecta. We would like to thank both existing shareholders and new investors for their support of the placing."

Application has been made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM (the "Admission"). It is expected that Admission will become effective and that dealings in the Placing Shares will commence at 8.00 a.m. on 4 April 2017. The Placing Shares will be credited as fully paid and rank pari passu with the existing Ordinary Shares. Following Admission, the Company will have a total of 69,382,815 Ordinary Shares in issue. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Disclosure Guidance and Transparency Rules.

Dispensation from Rule 9 of the Code

The investment by CF Woodford Equity Income Fund and Woodford Patient Capital Trust plc (together the "Woodford Funds") (or parties acting in concert with either of them, or in concert with Woodford Investment Management LLP ("WIM") (including, but not limited to, Old Mutual Woodford Equity Income Fund and Omnis Income and Growth Fund)) of 2,168,745 Placing Shares at the Placing Price (the "Woodford Investment") gives rise to certain considerations under the City Code on Takeovers and Mergers (the "Code"). Brief details of the Panel on Takeovers and Mergers (the "Panel"), the Code and the protections they provide are set out below.

The Code is issued and administered by the Panel. The Code applies to all takeover and merger transactions, however effected, where the offeree company is, inter alia, a listed or unlisted public company resident in the United Kingdom (and to certain categories of private limited companies). The Company is a listed public company and its shareholders are entitled to the protections afforded by the Code.

Under Rule 9 of the Code, where any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares already held by that person and any interests in shares held or acquired by persons acting in concert with him or her) carry 30 per cent or more of the voting rights of a company which is subject to the Code, that person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company.

Rule 9 of the Code also provides that, among other things, where any person who, together with persons acting in concert with him or her, is interested in shares which in aggregate carry not less than 30 per cent but does not hold shares carrying more than 50 per cent of the voting rights of a company which is subject to the Code, and such person, or any person acting in concert with him or her, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he or she is interested, then such person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights of that company to acquire the balance of their interests in the company.

An offer under Rule 9 of the Code must be in cash (or with a cash alternative) and at the highest price paid within the preceding 12 months to acquire any interest in shares in the Company by the person required to make the offer or any person acting in concert with him or her.

Pursuant to the Woodford Investment, 2,168,745 Placing Shares will be issued to the Woodford Funds (or parties acting in concert with either of them, or in concert with WIM (including, but not limited to, Old Mutual Woodford Equity Income Fund and Omnis Income and Growth Fund)).

The Panel has agreed based on information provided by the Company that an increase in the aggregate shareholding of CF Woodford Equity Income Fund and Woodford Patient Capital Trust plc (or parties acting in concert with either of them, or in concert with WIM (including, but not limited to, Old Mutual Woodford Equity Income Fund and Omnis Income and Growth Fund)) as a result of the subscription for Placing Shares in the Placing will not trigger an obligation to make a Rule 9 Offer because the aggregate percentage shareholding of CF Woodford Equity Income Fund and Woodford Patient Capital Trust plc (and parties acting in concert with either of them, or in concert with WIM (including, but not limited to, Old Mutual Woodford Equity Income Fund and Omnis Income and Growth Fund)) will not increase as a result of the issue of the Placing Shares in the Placing. Prior to the Placing, the aggregate percentage shareholding of the Woodford Funds, Old Mutual Woodford Equity Income Fund and Omnis Income and Growth Fund (and parties acting in concert with either of them, or in concert with WIM) was 43.013 per cent. Immediately following completion of the Placing, the aggregate percentage shareholding of the Woodford Funds, Old Mutual Woodford Equity Income Fund and Omnis Income and Growth Fund, (and parties acting in concert with either of them, or in concert with WIM) is expected to remain at 43.013 per cent.

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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.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.