The Company currently grants equity awards under the Mereo 2019 Equity Incentive Plan (the “2019 EIP”) and the 2019 Non-Employee Equity Incentive Plan (the “2019 NED EIP”). There are also outstanding awards under two previous plans, the Mereo BioPharma Group Limited Share Option Plan and the Mereo Share Option Plan (together the “Previous Share Option Plans”). However, no further grants are envisioned from these plans.

The total number of ADSs available for issue under the 2019 EIP and 2019 NED EIP was 15.0 million as of March 31, 2026.

The expense for share-based compensation arises solely in respect of awards made under the two active plans as follows:


	Three Months Ended March 31,
	2026		2025
	($'000)		($'000)
2019 EIP	$	1,469	$	1,654
2019 NED EIP		136		624
Total	$	1,605	$	2,278

As of March 31, 2026, the total unrecognized compensation cost related to outstanding share awards was $5.5 million, which the Company expects to recognize over a weighted-average period of 1.5 years.

Options issued under the EIP have a contractual term of 10 years. Options generally permit the recipient to purchase ADSs at an exercise price equal to the market price of the underlying ADSs on the date of grant, however certain awards granted in the three months ended March 31, 2026 had an exercise price higher than the market price of the underlying ADSs on the date of grant.

Options generally vest over four years, with one-fourth of the award vesting on the first anniversary of the grant date and the remainder vesting in equal monthly installments over the three-year period thereafter, however in the three months ended March 31, 2026, certain options were granted that vest in equal monthly installments over a one year period from the grant date. No performance conditions apply to Options granted.

A summary of the Company’s Options activity and related information under the 2019 EIP for the three months ended March 31, 2026 is as follows:


	Number of options (ADSs)			Weighted Average Exercise Price ($)		Aggregate intrinsic value ($'000)
At December 31, 2025		13,477,883		$	2.17	$	—
Granted		6,463,000			0.53		—
Forfeited		(49,206	)		2.23		—
Expired		(3,292	)		4.69		—
At March 31, 2026		19,888,385		$	1.64	$	—
Vested		9,973,552		$	1.98	$	—

The weighted average fair value per share of Options granted during the three months ended March 31, 2026 and 2025 was $0.39 and $2.43, respectively.

The weighted average contractual life of Options outstanding as of March 31, 2026 and December 31, 2025 was 7.7 years and 7.0 years, respectively. The weighted average contractual life for vested Options as of March 31, 2026 and December 31, 2025 was 6.3 years and 6.3 years, respectively.

Where presented, the aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted market price of the Company’s ADSs for the Options that were in-the-money.

The fair value of each Option is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions:


	Three Months Ended March 31,
	2026			2025
Risk-free interest rate (%)		3.89	%		4.49	%
Expected life (years)		5.87			6.25
Expected volatility (%)		131.75	%		104.31	%
Expected dividends (%)		0.00	%		0.00	%

Expected volatility is calculated by reference to the historical volatility of the Company's ADSs. The grant date fair value is recognized over the requisite service period using the accelerated graded-vesting attribution method.

A summary of the Company’s RSU activity and related information under the 2019 EIP for the three months ended March 31, 2026 is as follows:


	Number of RSUs (ADSs)			Weighted Average Grant Date Fair Value ($)
At December 31, 2025		458,375		$	2.57
Vested		(173,726	)		2.28
Forfeited		(16,438	)		3.04
At March 31, 2026		268,211		$	2.73

As of March 31, 2026 and December 31, 2025, the weighted average remaining vesting period of RSUs outstanding was 1.8 and 2.0 years, respectively. The total fair value of RSUs vested and delivered during the three months ended March 31, 2026 and 2025 was $0.1 million and $0.4 million, respectively.

The fair value of each RSU was calculated by reference to the value of the shares awarded. The grant date fair value is recognized over the vesting period using the accelerated graded-vesting attribution method.

A summary of the Company’s Options activity and related information under the 2019 NED EIP for the three months ended March 31, 2026 is as follows:


	Number of options (ADSs)		Weighted Average Exercise Price ($)		Aggregate intrinsic value ($'000)
At December 31, 2025		1,982,087	$	2.38	$	—
Granted		528,000		0.39		—
At March 31, 2026		2,510,087	$	1.97	$	—
Vested		2,026,087	$	2.34	$	—

The weighted average fair value per share of Options granted during the three months ended March 31, 2026 and 2025 was $0.34 and $2.51, respectively.

The weighted average contractual life of Options outstanding as of March 31, 2026 and December 31, 2025 was 7.5 years and 7.0 years, respectively. The weighted average contractual life for vested Options as of March 31, 2026 and December 31, 2025 was 6.9 years and 7.0 years, respectively.


	Three Months Ended March 31,
	2026			2025
Risk-free interest rate (%)		3.60	%		4.25	%
Expected life (years)		5.25			5.25
Expected volatility (%)		129.95	%		104.39	%
Expected dividends (%)		0.00	%		0.00	%

Expected volatility is calculated by reference to the historical volatility of the Company's ADSs. The grant date fair value is recognized over the vesting period using the accelerated graded-vesting attribution method.

A summary of the Company’s DRSUs activity and related information under the 2019 NED EIP for the three months ended March 31, 2026 is as follows:


	Number of DRSUs (ADSs)		Weighted Average Grant Date Fair Value ($)
At December 31, 2025		979,608	$	1.65
Granted		657,115		0.39
At March 31, 2026		1,636,723	$	1.15
Vested		1,034,369	$	1.58
Unvested		602,354		0.39

As of December 31, 2025, there were 10,350 DRSUs unvested with a weighted average grant date fair value of $3.16 per DRSU. The total fair value of DRSUs vested during the three months ended March 31, 2026 and 2025 was less than $0.1 million and $0.1 million, respectively.

The fair value of each DRSU was calculated by reference to the value of the shares awarded. The grant date fair value is recognized over the vesting period using the accelerated graded-vesting attribution method.

Mereo previously granted Options to employees under the Previous Share Options Plans. No awards have been granted under either of these plans following the introduction of the 2019 EIP and the 2019 NED EIP and no further awards are envisioned.

As of March 31, 2026 and December 31, 2025, Options over 107,608 ADSs were outstanding and fully vested with a weighted average exercise price per Option of $16.68 and aggregate intrinsic value of $0.

The weighted average contractual life of Options outstanding and vested at March 31, 2026 and December 31, 2025 was 0.8 years and 1.1 years, respectively.