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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37773

MERUS N.V.

(Exact name of registrant as specified in its charter)

     The Netherlands

     Not Applicable

     (State or other jurisdiction of
incorporation or organization)

     (I.R.S. Employer
Identification No.)

     Uppsalalaan 17
3584 CT Utrecht
The Netherlands

     Not Applicable

     (Address of principal executive offices)

     (Zip code)

+31 85 016 2500

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading symbol(s)

     Name of each exchange on which registered

     Common shares, nominal value €0.09 per share

     MRUS

     The Nasdaq Stock Market LLC 
(Nasdaq Global Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2025, the registrant had 69,213,576 common shares, nominal value €0.09 per share, outstanding.


PART I — FINANCIAL INFORMATION

Item 1. Financial Statements	2

Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024	2

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2025 and 2024	3

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024	4

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2025 and 2024	5

Notes to Condensed Consolidated Financial Statements	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3. Quantitative and Qualitative Disclosures About Market Risk	26

Item 4. Controls and Procedures	26

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	27

Item 1A. Risk Factors	27

Item 5. Other Information	80

Item 6. Exhibits	80

Signatures	82

Cautionary Note Regarding Forward-looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements contained in this Quarterly Report on Form 10-Q, including without limitation statements regarding our plans to develop and commercialize our product candidates, the timing of our ongoing or planned clinical trials, the planned announcement of data from our clinical trials and related timing, the timing of and our ability to obtain and maintain regulatory approvals, the potential impact any of economic conditions and the global geopolitical landscape, including global instability due to the ongoing conflicts in Europe and the Middle East on our business and operations, the clinical utility and commercial potential of our product candidates, our commercialization, marketing and manufacturing capabilities and strategy, our expectations surrounding our collaborations and licenses, and related timelines, our expectations about the willingness of healthcare professionals to use our product candidates, the sufficiency of our cash, cash equivalents and investments, and the plans and objectives of management for future operations and capital expenditures.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of known and unknown risks, uncertainties, assumptions and other important factors, including those described under the sections in this Quarterly Report on Form 10-Q entitled “Summary Risk Factors,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our common shares. The principal risks and uncertainties affecting our business include the following:

•

We have incurred significant net losses since our inception and we expect to continue to incur significant expenses and operating losses for the foreseeable future.

•

We have a limited operating history, have limited experience with registrational clinical trials, and a single approved product for commercial sale through an exclusive licensee, which may make it difficult for you to evaluate our current business and predict our future success and viability.

•

We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce or eliminate one or more of our research and drug development programs or future commercialization efforts.

•

The outcome of pre-clinical testing and early clinical trials may not be predictive of the success of later clinical trials, and the results of our clinical trials may not satisfy the requirements of the FDA, EMA or other comparable foreign regulatory authorities.

•

The clinical trial and regulatory approval processes are lengthy, time consuming, require compliance with extensive regulations and consistent with appropriate quality, and are inherently unpredictable, and we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates or for our product approved under accelerated approval, we or our licensee may be unable to meet the requirements for full approval, including potential verification and description of clinical benefit in confirmatory trial(s).

•

Our antibody candidates may have serious adverse, undesirable or unacceptable side effects alone or in combinations being tested in clinical development, which may delay or prevent marketing approval. If such side effects are identified during the development of our antibody candidates or following approval, if any, we may need to abandon our development of such antibody candidates, the commercial profile of any approved label may be limited, or we may be subject to other significant negative consequences following marketing approval, if any.

•

We have never commercialized an antibody candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize our products on our own or together with our exclusive licensee Partner Therapeutics Inc., or PTx for the commercialization of BIZENGRI® in the United States in the field of NRG1 fusion cancer.

•

We rely, and expect to continue to rely, on third parties, including independent clinical investigators and contract research organizations or CROs, to conduct our pre-clinical studies, clinical trials, chemistry, manufacturing and controls and potential development of a companion diagnostic. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, perform with the requisite level of compliance and quality, or perform at reasonable cost, we may not be able to obtain regulatory approval for or commercialize our antibody candidates or we may be subject to other significant negative consequences following marketing approval for BIZENGRI®, and our business could be substantially harmed.

•

Due to our limited resources and access to capital, we must, and have in the past decided to, prioritize development of certain antibody candidates over other potential candidates. These decisions may prove to have been wrong and may adversely affect our revenues.

•

The competition for qualified personnel is particularly intense in our industry. If we are unable to retain or hire key personnel, we may not be able to sustain or grow our business.

•

We operate in highly competitive and rapidly changing industries, and if our competitors develop and market technologies or products more rapidly than we do or that are more effective, safer or less expensive than the product candidates we develop, our commercial opportunities will be negatively impacted.

•

Our success depends on our ability to protect our intellectual property and our proprietary technologies. If we are unable to adequately protect our intellectual property and our proprietary technologies or obtain and maintain issued patents which are sufficient to protect our product candidates and proprietary technologies, or if others do not respect our intellectual property rights and exclusivity, others could compete against us more directly, which would negatively impact our business.

•

Our existing collaboration and license agreements are important to our business and potential future collaborations and licenses may also be important to us, and if we are unable to maintain any of these collaborations and licenses or execute new collaborations or licenses, or if these arrangements are not successful, our business could be adversely affected.

•

The trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of disruptions and extreme volatility in the global economy, including rising inflation and interest rates, declines in economic growth, global instability, including the ongoing conflicts in Europe and the Middle East, which have and may continue to adversely impact our business, including our pre-clinical studies and clinical trials, financial condition, our ability to raise capital and results of operations.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

MERUS N.V.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Amounts in thousands, except share and per share data)


	March 31, 2025			December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	197,199		$	293,294
Marketable securities		261,126			243,733
Accounts receivable		14,203			1,261
Prepaid expenses and other current assets		49,744			30,784
Total current assets		522,272			569,072
Marketable securities		179,886			187,008
Property and equipment, net		10,937			10,770
Operating lease right-of-use assets		9,199			9,254
Intangible assets, net		1,703			1,679
Equity Investment		3,449			—
Deferred tax assets		364			1,520
Other assets		3,112			3,390
Total assets	$	730,922		$	782,693
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,984		$	4,164
Accrued expenses and other liabilities		42,799			43,957
Income taxes payable		8,015			7,317
Current portion of lease obligation		1,772			1,704
Current portion of deferred revenue		27,560			29,934
Total current liabilities		89,130			87,076
Lease obligation		8,084			8,208
Deferred revenue, net of current portion		37,589			39,482
Total liabilities		134,803			134,766
Commitments and contingencies - Note 6
Shareholders’ equity:
Common shares, €0.09 par value; 105,000,000 shares authorized at March 31, 2025 and December 31, 2024; 69,175,766 and 68,828,749 shares issued and outstanding as at March 31, 2025 and December 31, 2024, respectively		6,990			6,957
Additional paid-in capital		1,686,350			1,664,822
Accumulated other comprehensive income		(32,360	)		(55,465	)
Accumulated deficit		(1,064,861	)		(968,387	)
Total shareholders’ equity		596,119			647,927
Total liabilities and shareholders’ equity	$	730,922		$	782,693

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

MERUS N.V.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

(Amounts in thousands, except share and per share data)


	Three Months Ended March 31,
	2025			2024
Commercial material revenue	$	13,331		$	—
Collaboration revenue		13,148			7,889
Royalty revenue		9			—
Total revenue		26,488			7,889
Operating expenses:
Research and development		80,116			38,584
General and administrative		22,112			16,114
Total operating expenses		102,228			54,698
Operating loss		(75,740	)		(46,809	)
Other income, net:
Interest income, net		7,203			4,917
Foreign exchange gains (loss)		(24,316	)		8,534
Other expense		(1,766	)		—
Total other income (loss), net		(18,879	)		13,451

Net loss before income taxes		(94,619	)		(33,358	)
Income tax expense		1,855			1,098
Net loss	$	(96,474	)	$	(34,456	)
Other comprehensive loss:
Currency translation adjustment		23,105			(7,388	)
Comprehensive loss	$	(73,369	)	$	(41,844	)
Net loss per share attributable to common shareholders: Basic and diluted	$	(1.40	)	$	(0.59	)
Weighted-average common shares outstanding: Basic and diluted		69,017,576			58,085,416

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

MERUS N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Amounts in thousands)


	Three Months Ended March 31,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(96,474	)	$	(34,456	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment		537			561
Amortization of intangible assets		44			46
Foreign exchange losses (gains)		22,350			(8,616	)
Share-based compensation expense		14,818			4,793
Amortization (accretion) of discount on investments		(1,485	)		(1,149	)
Deferred tax expense (benefit)		1,156			923
Non-cash customer consideration		(3,356	)		—
Changes in operating assets and liabilities:
Accounts receivable		(12,544	)		(56,594	)
Operating lease right-of-use assets and lease obligations		(26	)		(23	)
Prepaid expenses and other current assets		(16,955	)		(2,009	)
Accounts payable		4,427			3,039
Accrued expenses and other liabilities		(2,032	)		(4,226	)
Deferred revenue		(6,921	)		53,323
Net cash used in operating activities		(96,461	)		(44,388	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities		(77,799	)		(58,825	)
Proceeds from maturities of marketable securities		69,255			46,809
Purchases of property and equipment		(171	)		(63	)
Net cash provided by (used in) investing activities		(8,715	)		(12,079	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from share issuance - Gilead Collaboration		—			22,613
Proceeds from share options exercised		6,743			7,543
Net cash provided by financing activities		6,743			30,156
Foreign exchange impact on cash, cash equivalents and restricted cash		2,298			222
Net increase (decrease) in cash, cash equivalents and restricted cash		(96,135	)		(26,089	)
Cash, cash equivalents, and restricted cash, beginning of period		294,031			205,014
Cash, cash equivalents, and restricted cash, end of period	$	197,896		$	178,925
SUPPLEMENTAL DISCLOSURES:
Non-cash purchases of property, equipment and intangibles	$	102		$	1
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	197,199		$	178,168
Restricted cash included in non-current other assets		697			757
	$	197,896		$	178,925

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

MERUS N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

(Amounts in thousands, except share data)


	Common Shares				Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Shareholders’
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity
Balance at January 1, 2024		57,825,879	$	5,883	$	1,126,054	$	(753,061	)	$	(22,533	)	$	356,343
Issuance of common shares - Gilead		452,527		45		22,568		—			—			22,613
Exercise of share options and vesting of restricted share units		409,145		40		7,503		—			—			7,543
Share-based compensation		—		—		4,793		—			—			4,793
Currency translation adjustment		—		—		—		—			(7,388	)		(7,388	)
Net loss		—		—		—		(34,456	)		—			(34,456	)
Balance at March 31, 2024		58,687,551	$	5,968	$	1,160,918	$	(787,517	)	$	(29,921	)	$	349,448


Balance at January 1, 2025		68,828,749	$	6,957	$	1,664,822	$	(968,387	)	$	(55,465	)	$	647,927
Exercise of share options and vesting of restricted share units		347,017		33		6,710		—			—			6,743
Share-based compensation		—		—		14,818		—			—			14,818
Currency translation adjustment		—		—		—		—			23,105			23,105
Net loss		—		—		—		(96,474	)		—			(96,474	)
Balance at March 31, 2025		69,175,766	$	6,990	$	1,686,350	$	(1,064,861	)	$	(32,360	)	$	596,119

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

MERUS N.V.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Overview

Merus N.V. is a clinical-stage oncology company developing innovative antibody therapeutics, headquartered in Utrecht, the Netherlands. Merus US, Inc. is a wholly-owned subsidiary of Merus N.V. located at 139 Main Street, Cambridge, Massachusetts, United States (collectively, "Merus" or the “Company”).

Since inception, the Company has generated an accumulated deficit of $1,064.9 million as of March 31, 2025. The Company expects to continue to incur significant expenses and operating losses for the foreseeable future as its antibody candidates advance through discovery, pre-clinical development and clinical trials and as it seeks regulatory approval and pursues commercialization of any approved antibody candidate.

As a result, the Company may need additional financing to support its continuing operations. Until the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operations through public equity offerings, debt financings, or other sources, which may include collaborations, business development and licensing opportunities with third parties. Adequate additional financing may not be available to the Company on acceptable terms, or at all. The Company’s inability to raise capital as and when needed would have a negative impact on its financial condition and ability to pursue its business strategy. The Company will need to generate significant revenues to achieve profitability and may never do so.

2. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these unaudited condensed consolidated financial statements are described in the Company’s audited financial statements as of and for the year ended December 31, 2024, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025 (the “Annual Report on Form 10-K”). There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2025.

Basis of Presentation

The Company prepared its unaudited consolidated condensed financial statements in compliance with generally accepted accounting principles in the U.S. ("U.S. GAAP"). Any reference in these notes to applicable guidance is meant to refer to authoritative U.S. GAAP as found in the Accounting Standards Codification ("ASC") and Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB").

The unaudited condensed consolidated financial statements include the accounts of Merus N.V. and its wholly owned, controlled subsidiary, Merus US, Inc. All intercompany transactions and balances of subsidiaries have been eliminated in consolidation. In the opinion of management, these financial statements reflect all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the unaudited condensed consolidated financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The three months ended March 31, 2025 and 2024 are referred to as the first quarter of 2025 and 2024, respectively. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

The unaudited condensed consolidated financial statements presented herein do not contain the required disclosures under U.S. GAAP for annual financial statements. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes as of and for the year ended December 31, 2024, included in the Annual Report on Form 10-K.

Going Concern

At each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company is required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by the Company’s plans or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern.

The Company’s evaluation entails analyzing prospective operating budgets and forecasts for expectations of the Company’s cash needs, and comparing those needs to the current cash, cash equivalent and marketable security balances. After considering the Company’s current research and development plans and the timing expectations related to the progress of its clinical-stage programs and its plans to pursue commercialization of any antibody candidate, if approved, and after considering its existing cash, cash

equivalents and marketable securities as of March 31, 2025, the Company did not identify conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date these financial statements were issued. Additional details of the Company’s cash runway are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Segment Information

The Company operates in one reportable segment, which comprises the discovery and development of innovative therapeutics. The Company's chief operating decision maker ("CODM") is Sven (Bill) Lundberg, Chief Executive Officer (CEO). The CODM measures the performance of the segment based on expenses by segment and earnings from operations. The CODM uses these results, in part, to evaluate the performance of, and to allocate resources to the segment.

The Company does not consider the impact of certain non-cash operating expenses such as share-based compensation expense, amortization of intangible assets, and depreciation of property, plant, and equipment when evaluating the segment. Total assets by segment are not presented as that information is not used to allocate resources or assess performance at the segment level and is not reviewed by the CODM.

The reconciliation of segment operating results to the Condensed Consolidated Statement of Operations and Comprehensive Loss for the three months ended March 31, 2025 and 2024 is as follows:


	For the three months ended March 31,
	2025
	(in thousands)
	Segment			Reconciling Items				Consolidated Statement of Operations and Comprehensive Loss
Commercial material revenue	$	13,331		$	-			$	13,331
Collaboration revenue		13,148			-			$	13,148
Royalty revenue		9			-			$	9
Total Revenue		26,488			-				26,488
Less
Research and development Expenses
Petosemtamab - MCLA-158		48,827			-				48,827
Zenocutuzumab - MCLA-128		7,571			-				7,571
MCLA - 129		848			-				848
Research general		2,412			-				2,412
R&D Employee-Related Expenses - Unallocated		4,733			7,099		(1)		11,832
Other Indirect R&D Expenses - Unallocated		8,362			264		(2)		8,626
Total Research and development expenses		72,753			7,363				80,116
General and Administrative expenses
G&A Expenses		8,619			317		(2)		8,936
G&A Employee-Related Expenses		5,457			7,719		(1)		13,176
Total General and administrative expenses		14,076			8,036				22,112
Operating loss		(60,341	)		(15,399	)			(75,740	)
Interest Income (Expense)		7,203			-				7,203
Foreign Exchange (losses) gains, net		(24,316	)		-				(24,316	)
Other expense		(1,766	)		-				(1,766	)
Loss before income tax expense	$	(79,220	)	$	(15,399	)		$	(94,619	)


	For the three months ended March 31,
	2024
	(in thousands)
	Segment			Reconciling Items				Consolidated Statement of Operations and Comprehensive Loss
Collaboration Revenue	$	7,889		$	-			$	7,889
Less
Research and development Expenses
Petosemtamab - MCLA-158		13,466			-				13,466
Zenocutuzumab - MCLA-128		6,759			-				6,759
MCLA - 129		5,494			-				5,494
Research general		2,781			-				2,781
R&D Employee-Related Expenses - Unallocated		3,635			1,895		(1)		5,530
Other Indirect R&D Expenses - Unallocated		4,299			255		(2)		4,554
Total Research and development expenses		36,434			2,150				38,584
General and Administrative expenses
G&A Expenses		7,928			351		(2)		8,279
G&A Employee-Related Expenses		4,937			2,898		(1)		7,835
Total General and administrative expenses		12,865			3,249				16,114
Operating loss		(41,410	)		(5,399	)			(46,809	)
Interest Income (Expense)		4,917			-				4,917
Foreign Exchange (losses) gains, net		8,534			-				8,534
Loss before income tax expense	$	(27,959	)	$	(5,399	)		$	(33,358	)

(1) Reconciling item for non-cash share-based compensation operating expense.

(2) Reconciling item for non-cash depreciation and amortization operating expense.

New Accounting Pronouncements

The Company considers the applicability and impact of any recent Accounting Standards Update ("ASU") issued by the Financial Accounting Standards Board ("FASB"). Based on the assessment, the ASUs were determined to be either not applicable or are expected to have minimal impact on the Company's condensed consolidated financial statements.

3. Investments in Debt Securities

The following tables summarize the Company’s investments in debt securities and their presentation in the condensed consolidated balance sheet:


	March 31, 2025		December 31, 2024
	(in thousands)
Money market funds	$	3,528	$	13,563
Corporate paper and notes		301,431		285,940
U.S. government agency securities		78,273		87,470
U.S. treasuries		66,257		57,331
Total	$	449,489	$	444,304

Fair value of debt securities	$	449,371	$	443,607


	March 31, 2025		December 31, 2024
	(in thousands)
Cash equivalents	$	8,477	$	13,563
Current marketable securities		261,126		243,733
Non-current marketable securities		179,886		187,008
Total	$	449,489	$	444,304

The Company does not intend to sell and the Company believes it is unlikely that the Company will be required to sell the above investments before recovery of their amortized cost bases, which may be at maturity. The Company determined that there was no material change in the credit risk of any of its investments.

The fair value of money market funds is determined based on publicly available market price for these funds (Level 1). The fair value of other debt securities is determined based on the publicly available inputs which includes a market price for the same or similar instruments adjusted for estimates in interest yield (Level 2).

4. Supplemental Balance Sheet Information

Prepaid expenses and other current assets consisted of the following:


	March 31, 2025		December 31, 2024
	(in thousands)
Prepaid research and development expenses	$	37,507	$	22,794
Prepaid general and administrative expenses		7,227		2,824
Interest receivable		3,170		3,449
Other		1,840		1,717
Total	$	49,744	$	30,784

Accrued expenses and other liabilities consisted of the following:


	March 31, 2025		December 31, 2024
	(in thousands)
Accrued research and development expenses	$	34,257	$	30,484
Accrued personnel costs		4,652		10,514
Accrued general and administrative expenses		3,010		2,856
Other		880		103
Total	$	42,799	$	43,957

5. Income Taxes

The Company files income tax returns for its subsidiary Merus US, Inc. in the U.S. federal and Massachusetts, Florida, New York, and New Jersey jurisdictions as well as for the Company in the Netherlands. The components of the income tax expense (benefit) from continuing operations are as follows:

After consideration of all positive and negative evidence, we believe that it is more-likely-than-not that the Netherlands deferred tax assets that are not supported by reversing temporary differences, will not be realized. As a result, we established a full valuation allowance against deferred tax assets of the Netherlands.

Under Dutch tax law, net operating loss carryforwards may be used to offset future taxable income in full up to €1.0 million and 50% of taxable income that exceeds €1.0 million. Effective as of January 1, 2022, these losses can be carried forward indefinitely.

The Company recorded $1.2 million deferred tax expense in relation to its operations in the U.S. during the three months ended March 31, 2025. The Company recorded $0.9 million deferred tax expense in relation to its operations in the U.S. during the three months ended March 31, 2024.

The effective income tax rate of 2.0% during the three months ended March 31, 2025 is substantially lower than the enacted rate of 25.8% in the Netherlands as the Company records a valuation allowance against its net deferred tax assets in the Netherlands. The effective income tax rate of 3.3% during the three months ended March 31, 2024 is substantially lower than the enacted rate of 25.8% in the Netherlands as the Company records a valuation allowance against its net deferred tax assets in the Netherlands.

6. Commitments and Contingencies

Litigation

From time to time, the Company may be involved in various claims and legal proceedings relating to or arising out of the Company’s operations. The Company is not currently a party to any material legal proceedings.

On August 5, 2024, the Company filed a complaint in the United States District Court of Delaware against Xencor, Inc. ("Xencor") alleging Xencor is infringing the Company's U.S. Patent Numbers (Nos.) 9,944,965 and 9,358,268, and 11,926,859, related to

Xencor's manufacture, use, offer for sale, sale, and/or importation of certain antibodies and antibody technologies and methods in and/or into the United States. The Company is the plaintiff and Xencor is the defendant. As a result of Xencor’s acts, the Company has alleged that the Company has suffered and continues to suffer damages, is entitled to recover from Xencor damages sustained as a result of Xencor's wrongful and infringing acts, and the Company has and will continue to suffer, irreparable harm for which there is no remedy at law. Accordingly, the Company seeks, among other things, damages, equitable remedies, and an award of attorneys' fees. On October 10, 2024, Xencor filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), which Merus responded to via an answering brief in opposition on October 31, 2024, and to which Xencor replied on November 14, 2024, with further submissions by the parties and proceedings to follow.

On February 11, 2025, Xencor filed two petitions for inter partes review (IPR) before the Patent Technical Appeal Board of U.S. Patent Nos. 9,358,268 and 11,926,859, challenging such patents as allegedly invalid as anticipated and obvious in view of certain alleged prior art. The Company may file preliminary responses to each petition within two and three months of the date of the notice of filing date accorded for such petitions, which occurred for both on March 31, 2025. Decisions on whether to institute an IPR will be bifurcated between (i) discretionary considerations, and (ii) merits and other statutory considerations. To facilitate this bifurcated approach, the United States Patent and Trademark Office (USPTO) will permit the parties to file briefing pertaining to discretionary considerations separate from briefing on the merits and other statutory considerations. The discretionary denial briefing must be filed within two months of the date on which the Patent and Technical Appeal Board or PTAB enters a notice of filing date accorded to a petition, a patent owner may file a brief explaining any applicable bases for discretionary denial of institution; the patent owner may file a merits brief, which is due three months after the date of the notice of filing date accorded.

On August 19, 2022, Kymab Limited ("Kymab"), a subsidiary of Sanofi, filed a notice of opposition against the Company's EP3456190 patent (the "'190 patent"), entitled "Antibody Producing Transgenic Murine Animal," in the European Opposition Division of the European Patent Office (the "EPO"). The notice asserted, as applicable, the '190 patent is contrary to the provision of Article 123(2) EPC, Article 75(1) EPC and Article 100(c) EPC, and alleges the '190 patent lacks novelty and/or is obvious contrary to the provisions of Articles 54 and/or 56 EPC, and Article 100(a) EPC, and that the specification of the '190 patent does not provide sufficient disclosure of the subject matter of the inventions contravening Article 83 EPC and Article 100(b). On January 17, 2023, the Company timely filed a response before the European Opposition Division of the EPO contesting each of these assertions, with further oral proceedings scheduled to follow on January 18, 2024. On June 2, 2023, the European Opposition Division issued a non-binding preliminary decision. On January 18, 2024, the European Opposition Division held oral proceedings addressing each allegation of invalidity raised by Kymab and maintained the '190 patent as granted, and issued a written decision documenting these conclusions on February 16, 2024. In April 2024, Kymab filed a notice of appeal before the Technical Board of Appeals, and Grounds of Appeal on June 17, 2024. The Company filed a response to Kymab's notice of appeal on October 18, 2024. Kymab filed a letter of the opponent on April 14, 2025, maintaining arguments provided in the grounds in its notice of appeal, with further submissions by the parties and proceedings to follow. The Company does not expect significant impact on its assets or liabilities as a result of the opposition proceeding.

7. Leases

The Company has noncancelable operating leases for offices and lab spaces expiring at various dates through 2032.

On December 7, 2022, the Company signed a second lease amendment terminating the lease for the former corporate headquarters as of January 1, 2023. The Company continued to make payments through mid-February 2023. The Company accounted for the second amendment as a lease modification and reduced the lease liability and right-of-use asset by approximately $0.1 million to equal to the remaining lease payments. As of March 31, 2023, the lease liability and right-of-use asset for the former corporate headquarters was $0. In July 2019, the Company entered into a lease agreement with Kadans Science Partner XIII B.V. for the Accelerator headquarters, which commenced in April 2022. On April 5, 2024, in accordance with the terms of the lease agreement, the annual rent for the Accelerator lease increased due to increases in the consumer price index (CPI). The portion of the rent payments related to the CPI are included within variable lease costs. There have been no changes in the Company’s lease arrangements for the three months ended March 31, 2025.

The components of lease expense for the three months ended March 31, 2025 and 2024 are as follows:


	Three Months Ended March 31,
	2025		2024
	(in thousands)
Lease cost
Operating lease cost	$	513	$	516
Variable lease cost		53		55
Total lease cost included in operating expenses	$	566	$	571
Other information
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows	$	535	$	543

8. Collaborations

Gilead

On March 5, 2024, the Company entered into a collaboration, option and license agreement (the “Gilead Collaboration Agreement”) and Share Subscription Agreement (the “Subscription Agreement”) with Gilead Sciences, Inc. (“Gilead”). Gilead agreed to pay the Company a $56.0 million, non-refundable upfront payment, and purchased 452,527 common shares at a stated price per share of $55.2454 for an aggregate purchase price of $25.0 million. Merus is also eligible to receive license option exercise payments, potential development and commercialization milestones, tiered royalties on product sales should Gilead successfully commercialize a therapy from the collaboration, and an initiation fee should Gilead exercise its right to include a third Program (as defined below) in the collaboration. Under the terms of the Gilead Collaboration Agreement, the Company and Gilead agreed to collaborate on the use of Merus’ proprietary Triclonics® platform to develop certain trispecific T-cell engaging multi-specific antibody products for the treatment of certain indications. The collaboration shall include at least two, but may include up to three, separate preclinical research programs (each, a “Program”) for the design and validation of candidates directed to the applicable Program targets selected by Gilead. On a Program-by-Program basis, the Company has granted Gilead an exclusive option to obtain an exclusive license for such Program. If Gilead exercises the license option with respect to a Program, for the first two Programs, Gilead will be responsible for clinical development and commercialization of the products arising from such Program. Upon exercise of its option to include the third Program in the collaboration, Gilead will pay the Company a non-refundable upfront initiation fee of $28.0 million, and Merus shall have the option to share in the worldwide net profit or loss, including development costs and expenses for the third Program only.

The initial term of the arrangement is the shorter of the completion of all activities under the applicable research plan or forty-eight months following the initiation of research plan activities. If, as of the fourth anniversary of the initiation of activities under the applicable Program, Merus has not completed the activities under the then current mutually agreed research plans in accordance with the timelines set forth therein (other than due to the act or omission of Gilead), the applicable term shall automatically be extended by an additional twelve months (for a maximum term of sixty months), unless otherwise extended by mutual agreement of the parties. Gilead's obligations under the collaboration to pay milestones and royalties, continues until the longer of an expiration of certain royalty bearing patents or fixed period after a first commercial sale. The arrangement may be terminated in its entirety or in relation to one or more Programs for any reason at any time upon ninety (90) days prior written notice to Merus.

At inception of the arrangement, the Company identified two performance obligations for each of the initial two Programs. The first is the License and Research single performance obligation comprised of a combined delivery of a nonexclusive license and related activities, including research activities associated with the Program and the activities of the joint steering committee. The second is the twelve-month extension (material right) for the Program. Merus accounted for the Program-by-Program options to obtain exclusive licenses as a marketing offer because the exclusive license provides Gilead with additional clinical development and commercialization rights, and the license option exercise fee of $10.0 million on a Program-by-Program basis was estimated to be offered at the standalone selling price. The option to include a third Program was accounted for as a marketing offer because the non-refundable upfront initiation fee of $28.0 million was estimated to be offered at the standalone selling price.

The transaction price at inception was comprised of fixed consideration of $58.4 million that was derived from the $56.0 million non-refundable upfront payment and $25.0 million common shares purchase proceeds, net of the fair value of the common shares delivered to Gilead of $22.6 million. All other consideration under the arrangement was determined to be variable consideration and fully constrained at inception.

The fixed consideration was allocated equally between the Program #1 and Program #2 License and Research performance obligations, respectively. The equal allocation of the fixed consideration was based on the estimated standalone selling price of each performance obligation as each was materially the same.

The Company initially deferred $58.4 million allocated to the performance obligations to be recognized as revenue over time using an output method to measure progress towards completing the research activities dictated by each Program’s respective research plan. Development milestones, commercialization milestones and royalties are variable consideration, fully constrained, to be included in the transaction price for each performance obligation and recognized in future periods in accordance with the Company’s revenue recognition policy. The revenue recognized relating to each combined performance obligation is presented in the notes according to the source of consideration received (upfront and milestone), reflective of their differing timing of receipt.

As of March 31, 2025, research activities have commenced, but no milestones have been achieved.

Partner Therapeutics

On November 27, 2024, the Company entered into a license agreement (the "Partner Therapeutics License Agreement") with Partner Therapeutics, Inc. ("PTx").Under the terms of the Partner Therapeutics License Agreement, the Company granted to PTx (i) an exclusive, sublicensable, royalty-bearing license under certain patent rights and know-how to (a) exploit zenocutuzumab for the treatment of neuregulin 1 gene fusion positive (NRG1+) cancer in the United States and (b) develop, manufacture and commercialize companion diagnostic tests with respect to zenocutuzumab for the treatment of NRG1+ cancer in the United States and (ii) a limited, non-exclusive, non-sublicensable, royalty-bearing license under certain patent rights and know-how to commercialize zenocutuzumab for the treatment of NRG1+ cancer outside of the United States solely in connection with a named patient program until the Company files for any regulatory approval for zenocutuzumab in any country outside the United States. The Company retains all rights not granted to PTx. PTx granted to the Company an exclusive, fully paid, royalty-free, perpetual and irrevocable license, with the right to grant sublicenses, to certain intellectual property of PTx to exploit zenocutuzumab for (1) the treatment of NRG1+ cancer in a country outside of the United States and (2) for any other uses of zenocutuzumab in any other territory. If after three years after the launch of zenocutuzumab in the United States, PTx does not to achieve certain specified annual net sales targets, the Company and PTx will work in good faith to develop a plan to improve net sales. If in the subsequent year PTx does not achieve the specified annual net sales target, the Company has the right to terminate the PTx License Agreement, with all rights reverting to Company.

In exchange for the rights granted under the Partner Therapeutics License Agreement, PTx has agreed to pay an upfront, non-refundable payment, agreed to fund the development, manufacturing and clinical trial expenses for zenocutuzumab and certain companion diagnostic products (other than a portion of the expenses associated with securing or maintaining approval from the United States Food and Drug Administration) and the Company is eligible to receive up to $130.0 million in commercialization milestone payments based on annual net sales of zenocutuzumab. The Company is also eligible to receive tiered royalties based on the level of aggregate annual net sales ranging from high single digits to low twenties until the royalty term expires. PTx also has the option to purchase existing quantities of zenocutuzumab from the Company at a specified cost-plus rate.

The initial term of the arrangement is the period from the first commercial sale until the latest of the following to occur: a) the expiration of the last-to-expire valid claim covering zenocutuzumab (b) the launch of a biosimilar; or (c) twelve (12) years after the date of the first commercial sale of zenocutuzumab. PTx holds termination for convenience rights and must give 9 months’ notice to exercise those rights and may only exercise those rights following the second anniversary of the first commercial sale of zenocutuzumab. The Company may terminate the Partner Therapeutics License Agreement if PTx fails to achieve a specified annual net sales target in the fourth calendar year after first commercial sale. The Company determined that, at the inception of the contract, there are enforceable rights and obligations throughout the term of the contract. The term of the contract is estimated to be 12 years.

At the inception of the arrangement, the Company identified three performance obligations. The first is the Licensed IP performance obligation which is the exclusive in the field of NRG1+ cancer in the territory of the United States, sublicensable, royalty-bearing license the Company granted to PTx. The Licensed IP performance obligation is comprised of technology, knowledge, regulatory, and clinical trial transfers which the Company determined are not capable of being distinct. These promises to transfer are combined into the single Licensed IP performance obligation. The second performance obligation is the Licensed Trademark the Company granted PTx as part of the agreement. The third performance obligation is the sale of the existing quantities of zenocutuzumab to PTx. The Partner Therapeutics License Agreement also included an option for the Company to provide clinical trial and technical assistance to PTx as necessary. The Company would be reimbursed at an agreed upon cost reimbursement rate for any clinical trial or technical assistance performed. The Company accounted for these cost reimbursements as a marketing offer because the underlying promise to which this additional clinical trial and technical assistance relates is the technology and knowledge transfer which was concluded to not be capable of being distinct and is part of the Licensed IP first performance obligation. Accordingly, because the clinical trial and technical assistance option is not related to an activity that is a performance obligation and is offered at a reimbursement rate, it is not a material right and not a performance obligation.

The transaction price at inception was comprised of fixed consideration of the immaterial upfront nonrefundable payment. The upfront nonrefundable consideration is not material to the contract or the Company as a whole. The upfront nonrefundable payment was intended to cover the efforts of the technology and knowledge transfer included in the first performance obligation. Accordingly, the Company will recognize upfront nonrefundable payment ratably over a six month period, which corresponds to the time period expected for the technology and knowledge transfer. Both the commercial milestone payments and royalty payments are tied to PTx annual net sales of the licensed product and are therefore considered variable consideration. Accordingly, the Company will apply the royalty recognition constraint to both. The commercial milestone payments and the royalty payments are allocated to the Licensed IP and Licensed Trademark performance obligations. There are stipulations in the agreement for royalty reductions and offsets for certain expenses incurred by PTx that will reduce the transaction price at the later of when the Company recognizes revenue for the transfer of the services or when the Company promises to pay the consideration. The transaction price for the sale of the existing quantities of zenocutuzumab performance obligation is at a cost-plus rate.

The Licensed IP performance obligation is satisfied at a point in time; however due to the royalty recognition constraint, revenue will be recognized as PTx sales of zenocutuzumab occur. The Licensed Trademark performance obligation is a right-to-access license and is a series of distinct service periods. The Licensed Trademark performance obligation is satisfied as PTx sales of zenocutuzumab occur in accordance with the variable consideration allocation exception and the royalty recognition constraint. The sale of existing quantities of zenocutuzumab is satisfied at the point of transfer.

As of March 31, 2025, no milestones have been achieved, $0.01 million of royalties have been earned, and $13.3 million has been earned related to sales of the existing quantities of zenocutuzumab.

Biohaven

On January 12, 2025, the Company entered into a research collaboration and license agreement with Biohaven Ltd. ("Biohaven") to co-develop three novel bispecific antibody drug conjugates (ADCs), leveraging Merus’ Biclonics® technology platform, and Biohaven’s ADC conjugation and payload platform technologies.

Under the terms of the agreement, Biohaven is responsible for the preclinical ADC generation of three Merus bispecific antibodies under mutually agreed research plans. The agreement includes two Merus bispecific programs previously generated using the Biclonics® platform, and one program under preclinical research by Merus (each a "Program"). Each program is subject to mutual agreement for advancement to further development, with the parties then sharing subsequent external development costs and commercialization, if advanced. Merus received an upfront payment of $5.0 million in the form of Biohaven shares pursuant to a private placement agreement, and is eligible to receive a license fee at the candidate nomination of the first program of $5.0 million, with Merus to assume the preclinical bispecific antibody generation cost of the third program, and Biohaven to assume the preclinical ADC generation cost for each of the three preclinical programs. Thereafter, upon mutual agreement to advance each program, the parties plan to share further development and commercialization costs

The contract meets the criteria for being accounted for under ASC 808 Collaborative Arrangements as there is a joint operating activity, both parties are actively involved, and both parties share in the significant risks and rewards of the commercial success of the programs. When analyzing the units of account for each of the programs, two of the promises in Program #1 were determined to be within the scope of ASC 606 as they represented a promise to a customer and the promised goods and services are typical revenue activities for Merus. These two promises are 1) the granting of the research license Merus’ Biclonics® technology platform and delivering the related Merus antibodies to Biohaven and 2) the granting of the co-exclusive license for development and commercialization of the first program at candidate nomination. These two promises represent performance obligations under ASC 606. The transaction price at inception was comprised of the fixed consideration related to the upfront payment and the candidate nomination license fee.

The first performance obligation is satisfied once control of the license is transferred. The license was transferred as of the effective date of the agreement, therefore the Company recognized the $5.0 million in Biohaven shares as revenue during the first quarter ended March 31, 2025. The second performance obligation is contingent upon the first program resulting in a candidate nomination, and the effectiveness of the co-exclusive license with Biohaven. This performance obligation will be satisfied at the point in time that co-exclusive license is effective. At that time, the Company will recognize the additional $5.0 million. All other activities in the contract will be recorded as R&D expense.

The Company received the $5.0 million in Biohaven shares during the quarter ended March 31, 2025. These shares are considered available-for-sale equity securities as there are no re-sale restrictions within the Biohaven agreement. The Company considers these shares to be Level 1 financial instruments as their valuation is based on a market approach using quoted prices in active markets for identical assets. Valuations of these shares does not require a significant degree of judgment. This investment is recorded at fair value and changes in fair value are recorded through earnings.

As of March 31, 2025, the performance obligation related to the granting of the research license has been satisfied and as such, the $5.0 million upfront payment of Biohaven shares was recognized as revenue.

Lilly

On January 18, 2021, Eli Lilly and Company (“Lilly”) agreed to pay the Company a $40.0 million, non-refundable upfront payment, and purchased 706,834 common shares at a stated price per share of $28.295, for an aggregate purchase price of $20.0 million. The Company and Lilly agreed to collaborate with respect to the discovery and research of bispecific antibodies utilizing the Company’s proprietary Biclonics® bispecific technology platform. The collaboration encompasses up to three (3) independent programs directed to the generation of T-cell re-directing bispecific antibodies that bind CD3 and a tumor associated antigen target selected by Lilly to be the subject of each program.

The objective of each program is to develop a lead compound that Lilly would be able to continue to develop through clinical trials. Lilly agreed to fund the research activities the Company conducts for each program under an agreed research plan and budget. Lilly receives an exclusive, worldwide, royalty-bearing, sublicensable license, under certain patent rights and know-how to exploit certain compounds and products directed to designated targets in combination with targeting CD3, or directed to such designated target(s) alone as a monospecific antibody or monospecific antibody drug conjugate, subject to rights granted by Merus to third parties under one or more existing third party agreements. Merus retains all rights not granted to Lilly. Lilly has certain rights to replace selected targets, including the right to substitute a target selection after initial selection for a period of time. The Company may be entitled to further milestones and royalties in the future dependent on development and commercialization of any resulting product.

The initial term of the arrangement includes a three-year research term for the Company to perform research and development activities, subject to two extension terms of six months at Lilly’s discretion. While the arrangement may be terminated in its entirety or on a program-by-program basis at will by Lilly, there are no direct costs or penalties to Lilly to terminate the arrangement prior to the end of the initial term.

At inception of the arrangement, the Company identified a single performance obligation comprised of a combined delivery of a license and related activities, including research activities associated with a product candidate against the first target and the activities of the joint steering committee. The Company also identified two other combined performance obligations relating to options exercisable by Lilly to select a second and third target to advance a second and third product candidate against the selected targets through discovery and research.

The transaction price at inception was comprised of fixed consideration of $43.5 million that was derived from the $40.0 million upfront payment and $20.0 million share purchase proceeds, net of the fair value of the shares delivered to Lilly of $16.5 million, and variable consideration associated with the funding of research services for the product candidate against the first target at inception. All other consideration under the arrangement was determined to be variable consideration and fully constrained at inception.

The fixed consideration was allocated equally amongst the three performance obligations and the variable consideration associated with each target was allocated to the performance obligation of each respective target. The equal allocation of the fixed consideration was based on the estimated standalone selling price of each performance obligation as each was materially the same.

On February 12, 2021, the Company and Lilly completed the initial exchange of fixed consideration and transfer of common shares. The Company initially deferred $43.5 million allocated to the performance obligations to be recognized as revenue over time using a cost-to-cost measure of progress toward the development of a lead compound for each respective target, anticipated to be recognized as revenue within the initial research term, along with research funding. Development milestones, commercialization milestones and royalties are variable consideration, fully constrained, to be included in the transaction price for each performance obligation and recognized in future periods in accordance with the Company’s revenue recognition policy. The revenue recognized relating to each combined performance obligation is presented in the notes according to the source of consideration received (upfront, reimbursement revenue, milestone), reflective of their differing timing of receipt.

During the year ended December 31, 2022, Lilly substituted one of the target programs. Under the current research plan, for the program to be completed in collaboration with Merus, Lilly has extended the research term to 2025. Lilly exercised the first six month extension in October 2023 for which there was no associated fee. The program timeline has extended beyond this first extension, and such an extension into 2025 resulted in a fee of $0.5 million. Lilly exercised the second six month extension in May 2024 and the Company received the $0.5 million extension fee payment in July 2024. The $0.5 million extension is included in the Lilly cost-to-cost model as of March 31, 2025 and March 31, 2024.

As of March 31, 2025, research activities were on-going, and no milestones have been achieved.

Incyte

On January 23, 2017, the Company completed the sale of shares and exchange of a license with Incyte Corporation (“Incyte”). The Company initially deferred $152.6 million of the transaction price allocated to the license and related performance obligation as deferred revenue, to be recognized as revenue over time as the primary benefit of the license to Incyte is access to the Company’s intellectual property covering its Biclonics® technology platform for the generation of potential product candidates. Development milestones, commercialization milestones and royalties are variable consideration, fully constrained, to be recognized in future periods in accordance with the Company’s revenue recognition policy. Cost reimbursements for research services are recognized as they are performed over time as these are considered a separate performance obligation.

In January 2022, the Company announced that Incyte elected to opt-out of its ex-U.S. development of MCLA-145, from the parties joint collaboration agreement executed in 2017. At inception of the collaboration, for the designated product candidate (MCLA-145), the Company retained the exclusive right to develop and commercialize products and product candidates in the United States, while Incyte obtained the exclusive right to develop and commercialize products and product candidates arising from such program outside the United States. For MCLA-145, the parties conducted and shared equally the costs of mutually agreed global development activities. Incyte’s opt-out of ex-U.S. rights to MCLA-145 provides the Company the exclusive right to develop and commercialize potential MCLA-145 products globally. Under the collaboration, Incyte continued to support the program for a limited time while ex-U.S. activities transitioned to the Company. Incyte will retain a right to a residual royalty of up to 4% on sales of future commercialization of MCLA-145, if approved.

There were no development or commercialization milestones earned during the three months ended March 31, 2025.

Ono

In April 2014, the Company granted Ono Pharmaceutical Co., Ltd. (“Ono”) an exclusive, worldwide, royalty-bearing license, with the right to sublicense, research, test, make, use and market a limited number of bispecific antibody candidates based on the Company’s Biclonics® technology platform against two undisclosed targets directed to a particular undisclosed target combination.

On March 14, 2018, the Company granted Ono an exclusive, worldwide, royalty-bearing license, with the right to sublicense, research, test, make, use and market a limited number of bispecific antibody candidates based on the Company’s Biclonics® technology platform against two undisclosed targets directed to a particular undisclosed target combination (the "2018 Ono Agreement"). Ono agreed to pay the Company an upfront, non-refundable payment of €0.7 million. In addition, the Company was entitled to €0.3 million intended to compensate the Company for research services already completed upon entering into the agreement, and €0.2 million to be paid to the Company over time for full-time equivalent funding. The Company is entitled to research and development milestones in addition to potential royalties on future sales of any bispecific antibody candidate that may be approved. The Company identified performance obligations for: (1) provision of a license for the target combination, and (2) research and development services. The Company concluded that Ono would be able to develop and benefit from the license, independent of the research and development services. Certain of the research and development services are capable of being performed by third parties with an appropriate sub-license, and are recognized over time as these services are delivered. Milestone payments are fully constrained as variable consideration to be recognized in future periods in accordance with the Company’s revenue recognition policy.

Amounts related to the provision of the licenses were amortized over the intended period of use. There were no development or commercialization milestones achieved during the three months ended March 31, 2025.

Contract Assets and Liabilities

The following tables provide amounts by year indicated and by line item included in the Company's accompanying condensed consolidated financial statements attributable to transactions arising from its collaboration arrangements. The dollar amounts in the tables below are in thousands.


	Incyte			Lilly			Gilead			PTx			Biohaven			Other			Total
CONTRACT ASSETS
Accounts receivable
Balance at January 1, 2025	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Billings		805			76			—			33			—			—			914
Cash receipts		(805	)		(76	)		—			—			—			—			(881	)
Adjustments		—			—			—			—			—			—			—
Foreign exchange		—			—			—			—			—			—			—
Balance at March 31, 2025	$	—		$	—		$	—		$	33		$	—		$	—		$	33

Unbilled receivables
Balance at January 1, 2025	$	597		$	78		$	—		$	400		$	—		$	186		$	1,261
Accrued receivables		750			7			—			13,469			—			—			14,226
Billings		(805	)		(76	)		—			(436	)		—			—			(1,317	)
Adjustments		186			—			—			—			—			(186	)		—
Foreign exchange		—			—			—			—			—			—			—
Balance at March 31, 2025	$	728		$	9		$	—		$	13,433		$	—		$	—		$	14,170

CONTRACT LIABILITIES
Deferred revenue
Balance at January 1, 2025	$	17,598		$	166		$	51,252		$	400		$	—		$	—		$	69,416
Additions to contract consideration		—			—			—			—			5,122			—			5,122
Revenue recognized in the period		(4,135	)		(166	)		(2,359	)		(260	)		(5,122	)		—			(12,042	)
Foreign exchange		608			—			2,036			9			—			—			2,653
Balance at March 31, 2025		14,071			—			50,929			149			—			—			65,149
Less: current portion		(14,071	)		—			(13,340	)		(149	)		—			—			(27,560	)
Non-current balance at March 31, 2025	$	—		$	—		$	37,589		$	—		$	—		$	—		$	37,589

The balance of unbilled receivables predominantly represents reimbursement revenue under the Company’s collaboration arrangements earned in the period to be billed and collected in the next period, generally quarterly.

Contract Revenues and Expenses


	Three Months Ended March 31, 2025
	(in thousands)
	Third Party
	Incyte		Lilly		Gilead		PTx		Biohaven		Other		Total
Collaboration Revenue
Upfront payments	$	4,135	$	166	$	2,359	$	260	$	5,122	$	—	$	12,042
Reimbursement revenue		723		4		—		379		—		—		1,106
Milestones		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Total collaboration revenue		4,858		170		2,359		639		5,122		—		13,148
Commercial material revenue		—		—		—		13,331		—		—		13,331
Royalty revenue		—		—		—		9		—		—		9
Total revenue	$	4,858	$	170	$	2,359	$	13,979	$	5,122	$	—	$	26,488
Revenue recognized that was included in deferred revenue at the beginning of the period	$	4,135	$	166	$	2,359	$	260	$	—	$	—	$	6,920

	Three Months Ended March 31, 2024
	(in thousands)
	Third Party
	Incyte		Lilly		Gilead		PTx		Biohaven		Other		Total
Collaboration Revenue
Upfront payments	$	4,302	$	810	$	—	$	—	$	—	$	—	$	5,112
Reimbursement revenue		1,458		314		—		—		—		—		1,772
Milestones		1,000		—		—		—		—		—		1,000
Other		—		—		—		—		—		5		5
Total collaboration revenue		6,760		1,124		—		—		—		5		7,889
Commercial material revenue		—		—		—		—		—		—		—
Royalty revenue		—		—		—		—		—		—		—
Total revenue	$	6,760	$	1,124	$	—	$	—	$	—	$	5	$	7,889
Revenue recognized that was included in deferred revenue at the beginning of the period	$	4,302	$	810	$	—	$	—	$	—	$	—	$	5,112

9. Common Share

Share Issuances

In February 2024, the Company entered into an Open Market Sale Agreement (the “2024 Sales Agreement”) with Jefferies to sell from time to time up to $300.0 million of the Company’s common shares through an “at-the-market” offering program under which Jefferies acts as the sales agent. Subject to the terms and conditions of the 2024 Sales Agreement, Jefferies could sell the common shares by any method deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under Securities Act.

Jefferies was entitled to compensation at a commission rate of up to 3.0% of the gross proceeds of any shares sold under the 2024 Sales Agreement. In connection with any sale of the common shares on the Company's behalf, Jefferies would be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation of Jefferies would be deemed to be underwriting commissions or discounts. The Company agreed to provide indemnification and contribution to Jefferies with respect to certain liabilities, including liabilities under the Securities Act or the Exchange Act. There have been no sales under the 2024 Sales Agreement through March 31, 2025.

In connection with entering into the Gilead Collaboration Agreement in March 2024, pursuant to the Subscription Agreement, Gilead purchased 452,527 common shares of the Company at a price per share of $55.2454 for aggregate gross proceeds to the Company of approximately $25.0 million. Gilead agreed not to transfer, sell, or otherwise dispose of the shares for a period of time following the purchase of the shares, subject to certain customary exceptions.

On May 29, 2024, the Company entered into an underwriting agreement (the “2024 Underwriting Agreement”) with Jefferies, BofA Securities, Inc., Leerink Partners LLC, Guggenheim Securities, LLC and BMO Capital Markets Corp., as representatives of the several underwriters named therein (collectively, the “2024 Underwriters”), in connection with the issuance and sale by the Company in a public offering of 7,550,000 common shares of the Company, nominal value €0.09 per share, at a public offering price of $53.00 per share, less underwriting discounts and commissions, pursuant to an effective shelf registration statement on Form S-3 and accompanying prospectus (Registration No. 333-277465), which became effective upon filing on February 28, 2024, and a prospectus supplement thereunder. Under the terms of the 2024 Underwriting Agreement, the Company also granted the 2024 Underwriters an option exercisable for 30 days to purchase up to an additional 1,132,500 common shares at the public offering price, less underwriting discounts and commissions. On May 30, 2024, the Underwriters exercised this option in full. The offering closed on May 31, 2024, and the Company received net proceeds of $434.9 million, after deducting underwriting discounts and commissions.

There were no financings or share issuances in the three months ended March 31, 2025.

10. Employee Benefits

Share-Based Compensation

Share-based compensation expense is classified in the condensed consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended March 31,
	2025		2024
	(in thousands)
Research and development	$	7,099	$	1,895
General and administrative		7,719		2,898
Total	$	14,818	$	4,793

The weighted-average grant date fair value of options, estimated as of the grant date using the Black Scholes option pricing model was $26.53 per option for the 2,177,100 options granted during the three months ended March 31, 2025. The following assumptions were used to estimate the fair value of the options granted during the three months ended March 31, 2025.


Volatility	66.0	%
Risk-free interest rate	4.3	%
Expected holding period (in years)	6.1
Dividend yield	-

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, which have been prepared by us in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, and with Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. This discussion and analysis is intended to assist in providing an understanding of our financial condition, changes in financial condition and results of operations and should be read in conjunction with these unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025 (the “Annual Report on Form 10-K”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many important factors, including those factors set forth in Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

General

We are an oncology company developing innovative antibody therapeutics. Our pipeline of full-length human multispecific antibody candidates is generated from our proprietary technology platforms, which are able to generate a diverse array of antibody binding domains, or Fabs, against virtually any target. Our antibody binding domain generally consists of a target-specific heavy chain paired with a common light chain. Multiple binding domains can be combined to produce novel multispecific antibodies that bind to a wide range of targets and display novel and innovative biology. These platforms, referred to as Biclonics® and Triclonics®, allow us to generate large numbers of diverse panels of bispecific and trispecific antibodies (Multiclonics®), respectively, which can then be functionally screened in large-scale cell-based assays to identify those unique molecules that possess novel biology, which we believe are best suited for a given therapeutic application. Further, by binding to multiple targets, Biclonics® and Triclonics® may be designed to provide a variety of mechanisms of action, including simultaneously blocking receptors that drive tumor cell growth and survival and mobilizing the patient’s immune response by engaging T cells, and/or activating various killer cells to eradicate tumors. Our Multiclonics® are compatible with a range of linkers and payloads to generate antibody-drug conjugates (ADClonics®) capable of binding two or more different targets with the potential for improved binding selectivity, internalization and cancer cell killing activity.

Our technology platforms employ an assortment of patented technologies and techniques to generate human antibodies. We utilize our patented MeMo® mouse to produce a host of antibodies with diverse heavy chains and a common light chain that are capable of binding to virtually any antigen target. We use our patented heavy chain and CH3 domain dimerization technology to generate substantially pure bispecific and trispecific antibodies. We employ our patented Spleen to Screen® technology to efficiently screen panels of diverse heavy chains, designed to allow us to rapidly identify Biclonics® and Triclonics® therapeutic candidates with differentiated modes of action for pre-clinical and clinical testing. We use our patented Triclonics® format to generate multispecific antibodies capable of binding to three different epitopes or antigens.

The U.S. Food and Drug Administration (FDA) approved BIZENGRI® (zenocutuzumab-zbco), the first and only treatment indicated for adults with pancreatic adenocarcinoma or NSCLC that are advanced, unresectable or metastatic and harbor a neuregulin 1 (NRG1) gene fusion who have disease progression on or after prior systemic therapy. Using our Biclonics® platform we have produced, and are currently developing, the following candidates: MCLA-128 (zenocutuzumab), which we are exploring for potential other development opportunities beyond NRG1 fusion; MCLA-158 (petosemtamab) for the potential treatment of solid tumors, including 1L PD-L1+ r/m head and neck squamous cell carcinoma (HNSCC) in combination with pembrolizumab, and 2/3L r/m HNSCC as monotherapy; and in mCRC in 1L and 2L in combination with standard chemotherapy and 3L+ metastatic colorectal cancer (mCRC) as monotherapy; MCLA-129, for the potential treatment of lung and other solid tumors, which is subject to a collaboration and license agreement, which permits Betta Pharmaceuticals Co. Ltd. (Betta) to exclusively commercialize MCLA-129 in China, if approved, while Merus retains full ex-China rights. Furthermore, we have a pipeline of proprietary antibody candidates in pre-clinical development and intend to further leverage our ADClonics®, Biclonics® and Triclonics® technology platforms to identify multispecific antibody candidates and multispecific ADCs and advance them into clinical development.

Funding Our Operations

We are an oncology company and have only generated modest revenue from royalties through our commercial licensee PTx's product sales. We expect to incur significant expenses and operating losses for the foreseeable future as we advance our antibody candidates from discovery through pre-clinical development and into clinical trials and seek regulatory approval and pursue commercialization of any approved antibody candidate. We have exclusively licensed to PTx the right to commercialize BIZENGRI®

(zenocutuzumab-zbco), in the United States, as the first and only treatment indicated for adults with pancreatic adenocarcinoma or NSCLC that are advanced unresectable or metastatic and harbor a NRG1 gene fusion who have disease progression on or after prior systemic therapy. Beyond zenocutuzumab, if we obtain regulatory approval for any of our other antibody candidates, if appropriate, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution, and compliance.

We anticipate that we will require additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations, business development and licensing opportunities with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of the United States political environment, disruptions and extreme volatility in the global economy, including rising inflation and interest rates, declines in economic growth, and global instability including the ongoing geopolitical conflicts in Europe and the Middle East. As a result, we may face difficulties raising capital through sales of our common shares and any such sales may be on unfavorable terms. See “The price of our common shares may be volatile and may fluctuate due to factors beyond our control.” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenue to achieve profitability, and we may never do so.

Based on our current operating plan, we expect that our existing cash, cash equivalents and marketable securities of $638.2 million as of March 31, 2025 will fund our operations into 2028. We have based this estimate on assumptions that may prove to be wrong, particularly as the process of testing product candidates in clinical trials is costly and the timing of progress in these trials is uncertain. As a result, we could use our capital resources sooner than we expect.

Clinical Programs

Petosemtamab (MCLA-158: EGFR x LGR5 Biclonics®): Solid Tumors

Phase 3 registrational trial investigating petosemtamab in combination with pembrolizumab in 1L PD-L1+ r/m head and neck squamous cell carcinoma (HNSCC), the LiGeR-HN1 trial, and phase 3 registrational trial investigating petosemtamab monotherapy in 2/3L HNSCC, the LiGeR-HN2 trial, are enrolling; phase 2 trial in 1L and 2L metastatic colorectal cancer (mCRC) cohort of petosemtamab in combination with standard chemotherapy, and in 3L+ mCRC as monotherapy are enrolling; a clinical update on the phase 2 investigation of petosemtamab in 1L r/m PD-L1+ HNSCC is planned for the 2025 ASCO® Annual Meeting, and a mCRC initial clinical data planned for the second half of 2025.

An updated analysis of the interim clinical data from the phase 2 trial of petosemtamab with pembrolizumab as 1L treatment of PD-L1+ (CPS ≥ 1) r/m HNSCC will be presented in a poster at the June, 2025 American Society of Clinical Oncology® (ASCO®) Annual Meeting. We expect the presentation will include data of the entire 45 patient cohort.

In February 2025, the FDA granted a Breakthrough Therapy designation for petosemtamab in combination with pembrolizumab for the first-line treatment of adult patients with r/m PD-L1 positive HNSCC with CPS ≥ 1.

LiGeR-HN1, a phase 3 trial evaluating the efficacy and safety of petosemtamab in combination with pembrolizumab in 1L PD-L1+ (CPS≥1) r/m HNSCC expressing PD-L1 compared to pembrolizumab, and LiGeR-HN2, a phase 3 trial evaluating the efficacy and safety of petosemtamab in 2/3L HNSCC compared to standard of care, are enrolling and we expect both trials to be substantially enrolled by year-end 2025.

We believe a randomized registration trial in HNSCC with an overall response rate endpoint could potentially support accelerated approval and the overall survival results from the same study could potentially verify its clinical benefit to support regular approval for the Company’s LiGeR-HN1 and LiGeR-HN2 trials.

A phase 2 trial evaluating petosemtamab in combination with standard chemotherapy in 1L and 2L mCRC, and as monotherapy in heavily pretreated (3L+) mCRC, is enrolling. We expect to provide initial clinical data for petosemtamab in mCRC in the second half of 2025.

Further, the Company manufactures both drug substance and drug product in the United States and Europe, with a plan to focus on potential commercial manufacturing in the United States.

Zenocutuzumab, or “Zeno” (MCLA-128: HER3 x HER2 Biclonics®): NRG1 gene fusion (NRG1+) cancers and other solid tumors BIZENGRI® (zenocutuzumab-zbco), obtained FDA accelerated approval as the first and only treatment indicated for adults with pancreatic adenocarcinoma or NSCLC that are advanced unresectable or metastatic and harbor a neuregulin 1 (NRG1) gene fusion who have disease progression on or after prior systemic therapy.

In December 2024, we entered into a license agreement with Partner Therapeutics, Inc. (PTx), a private, fully-integrated biotechnology company with a focus in hematology and oncology, in which we exclusively licensed to PTx the right to commercialize zenocutuzumab (Zeno) for the treatment of NRG1+ cancer in the United States.

We are conducting ongoing translational work on potential biomarkers outside of NRG1+ cancer and other potential development opportunities, which may support investigation of Zeno in additional areas of unmet need beyond NRG1+ cancer.

MCLA-129 (EGFR x c-MET Biclonics®): Solid Tumors

Investigation of MCLA-129 continues in MET ex14 NSCLC expansion cohort in the phase 1/2 trial; MCLA-129 in combination with chemotherapy in 2L+ EGFR mutant (EGFRm) NSCLC is ongoing.

MCLA-129 is in clinical development in a global, phase 1, open-label, clinical trial evaluating MCLA-129 in patients with c-MET exon 14 skipping mutations (METex14), and we continue to monitor and evaluate patients on treatment.

We are also enrolling patients in the phase 2 trial evaluating MCLA-129 in combination with chemotherapy in 2L+ EGFRm NSCLC, with a cohort receiving MCLA-129 and paclitaxel and carboplatin, and another cohort receiving MCLA-129 and docetaxel.

We remain interested in exploring partnering MCLA-129 to sufficiently resource the development of MCLA-129 and the potential benefit it may have for patients.

MCLA-129 is subject to a collaboration and license agreement with Betta, which permits Betta to develop MCLA-129 and potentially commercialize exclusively in China, while we retain global rights outside of China.

Collaborations

Refer to Item 1, “Business—Collaboration Agreements” and Note 12, “Collaborations,” of the notes to our consolidated financial statements included in our Annual Report on Form 10-K and Note 8, “Collaborations,” to our unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report on Form 10-Q for a description of the key terms of our arrangements.

Discussion and Analysis of our Results of Operations

Comparison of the three months ended March 31, 2025 and 2024

Revenue

Merus N.V. 10-Q