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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 June 30, 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 July 29, 2025, the registrant had 75,634,358 common shares, nominal value €0.09 per share, outstanding.


PART I — FINANCIAL INFORMATION

Item 1. Financial Statements	2

Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	2

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2025 and 2024	3

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024	4

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 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	21

Item 3. Quantitative and Qualitative Disclosures About Market Risk	28

Item 4. Controls and Procedures	29

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	30

Item 1A. Risk Factors	30

Item 5. Other Information	84

Item 6. Exhibits	84

Signatures	85

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 United States political environment, disruptions and extreme volatility in the global economy, including rising inflation and interest rates, declines in economic growth and the ongoing conflicts in Europe and the Middle East on our business and operations, the potential impact of enacted U.S. federal legislation, 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 may not be able to successfully manufacture our product candidates in sufficient quality and quantity, which would delay or prevent us from developing our product candidates and commercializing resulting approved products, if any.

•

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, and certain indications and combination studies over others. 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)


	June 30, 2025			December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	442,791		$	293,294
Marketable securities		267,433			243,733
Accounts receivable		16,889			1,261
Prepaid expenses and other current assets		41,169			30,784
Total current assets		768,282			569,072
Marketable securities		181,729			187,008
Property and equipment, net		11,346			10,770
Operating lease right-of-use assets		10,320			9,254
Intangible assets, net		1,797			1,679
Equity Investment		2,430			—
Deferred tax assets		758			1,520
Other assets		3,514			3,390
Total assets	$	980,176		$	782,693
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	21,075		$	4,164
Accrued expenses and other liabilities		41,387			43,957
Income taxes payable		478			7,317
Current portion of lease obligation		2,245			1,704
Current portion of deferred revenue		26,394			29,934
Total current liabilities		91,579			87,076
Lease obligation		8,754			8,208
Deferred revenue, net of current portion		38,107			39,482
Total liabilities		138,440			134,766
Commitments and contingencies - Note 6
Shareholders’ equity:
Common shares, €0.09 par value; 105,000,000 shares authorized at June 30, 2025 and December 31, 2024; 75,565,138 and 68,828,749 shares issued and outstanding as at June 30, 2025 and December 31, 2024, respectively		7,647			6,957
Additional paid-in capital		2,038,795			1,664,822
Accumulated other comprehensive income		18,373			(55,465	)
Accumulated deficit		(1,223,079	)		(968,387	)
Total shareholders’ equity		841,736			647,927
Total liabilities and shareholders’ equity	$	980,176		$	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 June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Commercial material revenue	$	—		$	—		$	13,331		$	—
Collaboration revenue		8,828			7,332			21,976			15,221
Royalty revenue		—			—			9			—
Total revenue		8,828			7,332			35,316			15,221
Operating expenses:
Research and development		93,926			49,119			174,042			87,703
General and administrative		25,252			22,587			47,364			38,701
Total operating expenses		119,178			71,706			221,406			126,404
Operating loss		(110,350	)		(64,374	)		(186,090	)		(111,183	)
Other income, net:
Interest income, net		7,122			7,130			14,325			12,047
Foreign exchange gains (loss)		(51,854	)		9,519			(76,170	)		18,053
Other expense		(1,265	)		—			(3,031	)		—
Total other income (loss), net		(45,997	)		16,649			(64,876	)		30,100

Net loss before income taxes		(156,347	)		(47,725	)		(250,966	)		(81,083	)
Income tax expense		1,871			2,317			3,726			3,415
Net loss	$	(158,218	)	$	(50,042	)	$	(254,692	)	$	(84,498	)
Other comprehensive loss:
Currency translation adjustment		50,733			(8,978	)		73,838			(16,366	)
Comprehensive loss	$	(107,485	)	$	(59,020	)	$	(180,854	)	$	(100,864	)
Net loss per share attributable to common shareholders: Basic and diluted	$	(2.23	)	$	(0.81	)	$	(3.64	)	$	(1.41	)
Weighted-average common shares outstanding: Basic and diluted		71,096,937			61,851,260			69,996,121			59,968,338

See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

MERUS N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Amounts in thousands)


	Six Months Ended June 30,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(254,692	)	$	(84,498	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment		1,125			1,160
Amortization of intangible assets		91			87
Foreign exchange losses (gains)		89,836			(16,187	)
Share-based compensation expense		35,171			16,479
Amortization (accretion) of discount on investments		(2,833	)		(2,145	)
Deferred tax expense (benefit)		761			657
Non-cash customer consideration		(2,283	)		—
Changes in operating assets and liabilities:
Accounts receivable		(14,530	)		516
Operating lease right-of-use assets and lease obligations		(56	)		(47	)
Prepaid expenses and other current assets		(6,193	)		(4,990	)
Accounts payable		14,770			(21	)
Accrued expenses and other liabilities		(13,884	)		3,131
Deferred revenue		(12,975	)		47,103
Net cash used in operating activities		(165,692	)		(38,755	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities		(163,718	)		(99,165	)
Proceeds from maturities of marketable securities		147,802			91,857
Purchases of property and equipment		(259	)		(1,539	)
Net cash provided by (used in) investing activities		(16,175	)		(8,847	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net		326,025			434,863
Payments of offering costs		—			(96	)
Proceeds from share issuance - Gilead Collaboration		—			22,613
Proceeds from share options exercised		13,999			17,671
Net cash provided by financing activities		340,024			475,051
Foreign exchange impact on cash, cash equivalents and restricted cash		(8,659	)		(2,236	)
Net increase (decrease) in cash, cash equivalents and restricted cash		149,498			425,213
Cash, cash equivalents, and restricted cash, beginning of period		294,031			205,014
Cash, cash equivalents, and restricted cash, end of period	$	443,529		$	630,227
SUPPLEMENTAL DISCLOSURES:
Income taxes paid	$	9,802		$	2,800
Non-cash purchases of property, equipment and intangibles	$	118		$	—
Non-cash financing costs	$	(532	)	$	(237	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	442,791		$	629,475
Restricted cash included in non-current other assets		738			752
	$	443,529		$	630,227

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
Issuance of common stock in connection with public offerings, net of underwriting discounts and commissions and offering costs		8,682,500		848		433,682		—			—			434,530
Exercise of share options and vesting of restricted share units		482,869		47		10,081		—			—			10,128
Share-based compensation		—		—		11,686		—			—			11,686
Currency translation adjustment		—		—		—		—			(8,978	)		(8,978	)
Net loss		—		—		—		(50,042	)		—			(50,042	)
Balance at June 30, 2024		67,852,920	$	6,863	$	1,616,367	$	(837,559	)	$	(38,899	)	$	746,772


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
Issuance of common stock in connection with public offerings, net of underwriting discounts and commissions and offering costs		6,052,631		622		324,871		—			—			325,493
Exercise of share options and vesting of restricted share units		336,741		35		7,221		—			—			7,256
Share-based compensation		—		—		20,353		—			—			20,353
Currency translation adjustment		—		—		—		—			50,733			50,733
Net loss		—		—		—		(158,218	)		—			(158,218	)
Balance at June 30, 2025		75,565,138	$	7,647	$	2,038,795	$	(1,223,079	)	$	18,373		$	841,736

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 an 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 $1,223.1 million as of June 30, 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 six months ended June 30, 2025.

Basis of Presentation

The Company prepared its unaudited condensed consolidated 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 June 30, 2025 and 2024 are referred to as the second 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 June 30, 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 June 30, 2025 and 2024 is as follows:


	For the three months ended June 30,
	2025
	(in thousands)
	Segment			Reconciling Items				Consolidated Statement of Operations and Comprehensive Loss
Commercial material revenue	$	-		$	-			$	-
Collaboration revenue		8,828			-			$	8,828
Royalty revenue		-			-			$	-
Total Revenue		8,828			-				8,828
Less
Research and development Expenses
Petosemtamab - MCLA-158		68,967			-				68,967
Zenocutuzumab - MCLA-128		(1,916	)		-				(1,916	)
MCLA - 129		2,942			-				2,942
Research general		2,968			-				2,968
R&D Employee-Related Expenses - Unallocated		6,272			10,147		(1)		16,419
Other Indirect R&D Expenses - Unallocated		4,260			286		(2)		4,546
Total Research and development expenses		83,493			10,433				93,926
General and Administrative expenses
G&A Expenses		9,180			341		(2)		9,521
G&A Employee-Related Expenses		5,525			10,206		(1)		15,731
Total General and administrative expenses		14,705			10,547				25,252
Operating loss		(89,370	)		(20,980	)			(110,350	)
Interest Income (Expense)		7,122			-				7,122
Foreign Exchange (losses) gains, net		(51,854	)		-				(51,854	)
Other expense		(1,265	)		-				(1,265	)
Loss before income tax expense	$	(135,367	)	$	(20,980	)		$	(156,347	)


	For the three months ended June 30,
	2024
	(in thousands)
	Segment			Reconciling Items				Consolidated Statement of Operations and Comprehensive Loss
Collaboration Revenue	$	7,332		$	-			$	7,332
Less
Research and development Expenses
Petosemtamab - MCLA-158		24,857			-				24,857
Zenocutuzumab - MCLA-128		6,762			-				6,762
MCLA - 129		3,236			-				3,236
Research general		2,454			-				2,454
R&D Employee-Related Expenses - Unallocated		4,015			5,220		(1)		9,235
Other Indirect R&D Expenses - Unallocated		2,271			304		(2)		2,575
Total Research and development expenses		43,595			5,524				49,119
General and Administrative expenses
G&A Expenses		11,498			338		(2)		11,836
G&A Employee-Related Expenses		4,285			6,466		(1)		10,751
Total General and administrative expenses		15,783			6,804				22,587
Operating loss		(52,046	)		(12,328	)			(64,374	)
Interest Income (Expense)		7,130			-				7,130
Foreign Exchange (losses) gains, net		9,519			-				9,519
Loss before income tax expense	$	(35,397	)	$	(12,328	)		$	(47,725	)

The reconciliation of segment operating results to the Condensed Consolidated Statement of Operations and Comprehensive Loss for the six months ended June 30, 2025 and 2024 is as follows:


	For the six months ended June 30,
	2025
	(in thousands)
	Segment			Reconciling Items				Consolidated Statement of Operations and Comprehensive Loss
Commercial material revenue	$	13,331		$	-			$	13,331
Collaboration revenue		21,976			-			$	21,976
Royalty revenue		9			-			$	9
Total Revenue		35,316			-				35,316
Less
Research and development Expenses
Petosemtamab - MCLA-158		117,794			-				117,794
Zenocutuzumab - MCLA-128		5,655			-				5,655
MCLA - 129		3,790			-				3,790
Research general		5,381			-				5,381
R&D Employee-Related Expenses - Unallocated		11,005			17,246		(1)		28,251
Other Indirect R&D Expenses - Unallocated		12,621			550		(2)		13,171
Total Research and development expenses		156,246			17,796				174,042
General and Administrative expenses
G&A Expenses		17,800			658		(2)		18,458
G&A Employee-Related Expenses		10,981			17,925		(1)		28,906
Total General and administrative expenses		28,781			18,583				47,364
Operating loss		(149,711	)		(36,379	)			(186,090	)
Interest Income (Expense)		14,325			-				14,325
Foreign Exchange (losses) gains, net		(76,170	)		-				(76,170	)
Other expense		(3,031	)		-				(3,031	)
Loss before income tax expense	$	(214,587	)	$	(36,379	)		$	(250,966	)


	For the six months ended June 30,
	2024
	(in thousands)
	Segment			Reconciling Items				Consolidated Statement of Operations and Comprehensive Loss
Collaboration Revenue	$	15,221		$	-			$	15,221
Less
Research and development Expenses
Petosemtamab - MCLA-158		38,323			-				38,323
Zenocutuzumab - MCLA-128		13,520			-				13,520
MCLA - 129		8,730			-				8,730
Research general		5,235			-				5,235
R&D Employee-Related Expenses - Unallocated		7,650			7,115		(1)		14,765
Other Indirect R&D Expenses - Unallocated		6,570			559		(2)		7,129
Total Research and development expenses		80,029			7,674				87,703
General and Administrative expenses
G&A Expenses		19,427			689		(2)		20,116
G&A Employee-Related Expenses		9,221			9,364		(1)		18,585
Total General and administrative expenses		28,648			10,053				38,701
Operating loss		(93,456	)		(17,727	)			(111,183	)
Interest Income (Expense)		12,047			-				12,047
Foreign Exchange (losses) gains, net		18,053			-				18,053
Loss before income tax expense	$	(63,356	)	$	(17,727	)		$	(81,083	)

(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:


	June 30, 2025		December 31, 2024
	(in thousands)
Money market funds	$	4,699	$	13,563
Corporate paper and notes		290,197		285,940
U.S. government agency securities		90,528		87,470
U.S. treasuries		68,437		57,331
Total	$	453,861	$	444,304

Fair value of debt securities	$	453,861	$	443,607


	June 30, 2025		December 31, 2024
	(in thousands)
Cash equivalents	$	4,699	$	13,563
Current marketable securities		267,433		243,733
Non-current marketable securities		181,729		187,008
Total	$	453,861	$	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:


	June 30, 2025		December 31, 2024
	(in thousands)
Prepaid research and development expenses	$	29,141	$	22,794
Prepaid general and administrative expenses		6,030		2,824
Interest receivable		3,740		3,449
Other		2,258		1,717
Total	$	41,169	$	30,784

Accrued expenses and other liabilities consisted of the following:


	June 30, 2025		December 31, 2024
	(in thousands)
Accrued research and development expenses	$	29,635	$	30,484
Accrued personnel costs		5,827		10,514
Accrued general and administrative expenses		4,412		2,856
Other		1,513		103
Total	$	41,387	$	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 $0.4 million deferred tax benefit in relation to its operations in the U.S. during the three months ended June 30, 2025. The Company recorded $0.3 million deferred tax benefit in relation to its operations in the U.S. during the three months ended June 30, 2024. The Company has recorded $0.8 million deferred tax expense in relation to its operations in the U.S. during the six months ended June 30, 2025. The Company recorded $0.7 million deferred tax expense in relation to its operations in the U.S. during the six months ended June 30, 2024.

The effective income tax rate of 1.2% during the three months ended June 30, 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 4.9% during the three months ended June 30, 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.

The effective income tax rate of 1.5% during the six months ended June 30, 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 4.2% during the six months ended June 30, 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.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S. It contains a broad range of tax reform provisions affecting businesses, including extending and modifying many provisions of the Tax Cuts and Jobs Act. Certain provisions will take

effect beginning in 2026, while others apply retroactively to January 1, 2025. The Company is evaluating the full effects of the legislation on its estimated annual effective tax rate and cash tax position but expects that the legislation will likely not have a material impact on its financial statements.

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 (PTAB) of U.S. Patent Nos. 9,358,268 (the "'268 Patent") and 11,926,859 (the "'859 Patent"), challenging such patents as allegedly invalid as anticipated and obvious in view of certain alleged prior art. On May 30, 2025, the Company filed requests for discretionary denial of institution of each petition. On June 30, 2025, Xencor filed oppositions to the Company’s discretionary denial briefs. The Company filed reply briefs on July 9, 2025, and Xencor filed sur-reply briefs on July 11, 2025. On July 17, 2025, the Acting Director of the United States Patent and Trademark Office (USPTO) issued a decision denying the Company’s requests for discretionary denial and referring the petitions to the PTAB to handle in the normal course, including by issuing a decision on whether to institute a petition, addressing the merits and other non-discretionary considerations. On June 30, 2025, the Company filed a Patent Owner’s Preliminary Response (POPR) under 37 C.F.R. § 42.107, addressing the merits of Xencor’s petitions and other statutory considerations, in each IPR proceeding, asserting institution should be denied for both patents. A decision from the PTAB on whether to institute IPR proceedings on the merits for the '268 Patent and '859 Patent is expected within three months after the POPR filing.

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. Oral proceedings are now scheduled to occur on July 9, 2026. 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.

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, 2025, 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 material changes in the Company’s lease arrangements for the three months ended June 30, 2025.

The components of lease expense for the three and six months ended June 30, 2025 and 2024 are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands)				(in thousands)
Lease cost
Operating lease cost	$	545	$	518	$	1,058	$	1,034
Variable lease cost		76		63		129		118
Total lease cost included in operating expenses	$	621	$	581	$	1,187	$	1,152
Other information
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows	$	566	$	542	$	1,101	$	1,085

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 June 30, 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.

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 June 30, 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 June 30, 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 during the first quarter ended March 31, 2025. No other performance obligations have been achieved to date.

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 extended the research term to January 2025. Lilly exercised the first six month extension in October 2023 for which there was no associated fee. The program timeline 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 June 30, 2025 and June 30, 2024.

As of June 30, 2025, the research term concluded, no Company research activities were on-going, two programs are being advanced for development by Lilly, 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.

During the three months ended June 30, 2025, the Company recognized a $1.0 million milestone from Incyte related to a candidate nomination. There have not been any other milestones recognized during the year.

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 and six months ended June 30, 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		2,506			81			—		14,115			—		—			16,702
Cash receipts		(1,759	)		(81	)		—		(9	)		—		—			(1,849	)
Adjustments		—			—			—		—			—		—			—
Foreign exchange		2			—			—		2			—		—			4
Balance at June 30, 2025	$	749		$	—		$	—	$	14,108		$	—	$	—		$	14,857

Unbilled receivables
Balance at January 1, 2025	$	597		$	78		$	—	$	400		$	—	$	186		$	1,261
Accrued receivables		4,088			8			—		13,884			—		—			17,980
Billings		(3,248	)		(81	)		—		(14,518	)		—		—			(17,847	)
Adjustments		186			—			—		—			—		(186	)		—
Foreign exchange		—			—			—

Merus N.V. 10-Q