<div id="readability-page-1"><div><p>Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the right price.   For example, although Amazon.com made losses for many years after listing, if you had bought and held the shares since 1999, you would have made a fortune.   But the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.</p><p> Given this risk, we thought we'd take a look at whether <strong>Mereo BioPharma Group</strong> (NASDAQ:MREO) shareholders should be worried about its cash burn.   In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth.  We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway. </p> <p>AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.</p> <h2> Does Mereo BioPharma Group Have A Long Cash Runway? </h2><p> A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn.   When Mereo BioPharma Group last reported its March 2025 balance sheet in May 2025, it had zero debt and cash worth US$62m.   Importantly, its cash burn was US$33m over the trailing twelve months.   Therefore, from March 2025 it had roughly 22 months of cash runway.    Importantly,  analysts think  that Mereo BioPharma Group will reach cashflow breakeven in 4 years.   That means unless the company reduces its cash burn quickly, it may well look to raise more cash.    The image below shows how its cash balance has been changing over the last few years. </p><figure><img height="526" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/307970474-debt-equity-history-analysis-1-dark/1747673208922?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="821" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/307970474-debt-equity-history-analysis-1-dark/1747673208922"/><figcaption>NasdaqCM:MREO Debt to Equity History May 19th 2025</figcaption></figure><p><span> Check out our latest analysis for Mereo BioPharma Group </span></p> <h2> How Is Mereo BioPharma Group's Cash Burn Changing Over Time? </h2><p> Because Mereo BioPharma Group isn't currently generating revenue, we consider it an early-stage business.  So while we can't look to sales to understand growth, we can look at how the cash burn is changing to understand how expenditure is trending over time.     During the last twelve months, its cash burn actually ramped up 63%.  Oftentimes, increased cash burn simply means a company is accelerating its business development, but one should always be mindful that this causes the cash runway to shrink.    While the past is always worth studying, it is the future that matters most of all.  So you might want to take a peek at how much the company is expected to grow in the next few years. </p> <h2> Can Mereo BioPharma Group Raise More Cash Easily? </h2><p> Given its cash burn trajectory, Mereo BioPharma Group shareholders may wish to consider how easily it could raise more cash, despite its solid cash runway.    Companies can raise capital through either debt or equity.  Many companies end up issuing new shares to fund future growth.  We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations. </p><p> Mereo BioPharma Group has a market capitalisation of US$356m and burnt through US$33m last year, which is 9.4% of the company's market value.    Given that is a rather small percentage, it would probably be really easy for the company to fund another year's growth by issuing some new shares to investors, or even by taking out a loan.  </p><h2> Is Mereo BioPharma Group's Cash Burn A Worry? </h2><p> On this analysis of Mereo BioPharma Group's cash burn, we think its cash burn relative to its market cap was reassuring, while its increasing cash burn has us a bit worried.      One real positive is that  analysts are forecasting  that the company will reach breakeven.    Cash burning companies are always on the riskier side of things, but after considering all of the factors discussed in this short piece, we're not too worried about its rate of cash burn.      An in-depth examination of risks revealed <strong>1 warning sign for Mereo BioPharma Group</strong> that readers should think about before committing capital to this stock.  </p><p> If you would prefer to check out another company with better fundamentals, then do not miss this <strong>free</strong> list of interesting companies, that have HIGH return on equity and low debt or this list of stocks which are all forecast to grow. </p><div><p>If you're looking to trade Mereo BioPharma Group, open an account with the lowest-cost platform trusted by professionals, Interactive Brokers.</p><p>With clients in over 200 countries and territories, and access to 160 markets, IBKR lets you trade stocks, options, futures, forex, bonds and funds from a single integrated account.</p><p>Enjoy no hidden fees, no account minimums, and FX conversion rates as low as 0.03%, far better than what most brokers offer.</p><p><span>Sponsored Content</span></p></div></div></div>

MREO

<p>Mereo BioPharma Group (NASDAQ:MREO) has a cash runway of approximately 22 months, with $62 million in cash and a cash burn of $33 million over the past year. Analysts predict the company will reach cash flow breakeven in four years. Despite a 63% increase in cash burn, its market capitalization of $356 million suggests it could easily raise funds through equity or debt. Overall, while there are concerns about rising cash burn, the company's financial position appears manageable for now.</p>

We're Not Very Worried About Mereo BioPharma Group's (NASDAQ:MREO) Cash Burn Rate