0000950170-24-055609 | 10-Q | XBRL Viewer

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - € / shares	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Common shares, par value	€ 0.09	€ 0.09
Common shares, authorized	67,500,000	67,500,000
Common shares, issued	58,687,551	57,825,879
Common shares, outstanding	58,687,551	57,825,879

Commitments and Contingencies	3 Months Ended
Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	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 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 with further proceedings to follow. The Company does not expect significant impact on its assets or liabilities as a result of the opposition proceeding.

Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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 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 with further proceedings to follow. The Company does not expect significant impact on its assets or liabilities as a result of the opposition proceeding.

Summary of Significant Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	Mar. 31, 2024
Accounting Policies [Abstract]
Basis of Preparation	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, 2024 and 2023 are referred to as the first quarter of 2024 and 2023, 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, 2023, included in the Annual Report on Form 10-K.
Going Concern	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, 2024, 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”.
New Accounting Pronouncements	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.

Supplemental Balance Sheet Information - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Prepaid Expense and Other Assets, Current [Abstract]
Prepaid research and development expenses	$ 7,632	$ 6,872
Prepaid general and administrative expenses	3,136	2,058
Interest receivable	1,693	1,552
Other	1,577	1,527
Total	$ 14,038	$ 12,009

Collaborations - Additional Information (Details) $ / shares in Units, € in Millions						1 Months Ended	3 Months Ended	12 Months Ended
	May 05, 2024 USD ($)	Mar. 05, 2024 USD ($) $ / shares shares	Jan. 18, 2021 USD ($) $ / shares shares	Mar. 14, 2018 EUR (€)	Jan. 23, 2017 USD ($)	Jan. 31, 2022	Mar. 31, 2024 USD ($) Milestone	Dec. 31, 2022 USD ($)	Apr. 30, 2024 USD ($)	Feb. 12, 2021 USD ($)
Lilly Collaborations Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Non-refundable upfront payment receivable			$ 40,000,000
Issuance of common share, net, shares \| shares			706,834
Common shares stated purchase price per share \| $ / shares			$ 28.295
Proceeds from issuance of common stock, net			$ 20,000,000
Fixed consideration			43,500,000							$ 43,500,000
Fee incurred for extension of research term								$ 500,000
Upfront payment			40,000,000
Net fair value of shares			$ 16,500,000
Incyte Collaboration and License Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Development milestones recognized							$ 1,000,000
Incyte Collaboration and License Agreement \| Maximum
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Residual royalty percentage						4.00%
Incyte Collaboration and License Agreement \| License and Related Activities
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaborations, transaction price as deferred revenue					$ 152,600,000
Second ONO Research and License Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Non-refundable upfront payment receivable \| €				€ 0.7
Payment to compensate research services \| €				0.3
Over time payment for full time equivalent funding \| €				€ 0.2
Development milestones recognized							$ 0
Gilead Collaboration Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Non-refundable upfront payment receivable		$ 56,000,000
Issuance of common share, net, shares \| shares		452,527
Common shares stated purchase price per share \| $ / shares		$ 55.2454
Proceeds from issuance of common stock, net	$ 25,000,000	$ 25,000,000
Fixed consideration		58,400,000
Net fair value of shares		22,600,000
Number of milestones achieved \| Milestone							0
Non-refundable upfront initiation fee		28,000,000
License option exercise fee		$ 10,000,000
Gilead Collaboration Agreement \| Subsequent Events
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Non-refundable upfront payment received									$ 56,000,000

Leases - Additional Information (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Liability, to be Paid, Total		$ 100,000
Former Corporate Headquarters
Lessee, Lease, Description [Line Items]
Operating lease liability	$ 0

Employee Benefits - Summary of Assumptions Used to Estimate Fair Value of Options Granted (Details)	3 Months Ended
	Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]
Volatility	67.50%
Risk-free interest rate	4.00%
Expected holding period (in years)	6 years 1 month 6 days

Employee Benefits

3 Months Ended

Mar. 31, 2024

Retirement Benefits [Abstract]

Employee Benefits

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,
	2024		2023
	(in thousands)
Research and development	$	1,895	$	2,858
General and administrative		2,898		2,892
Total	$	4,793	$	5,750

The weighted-average grant date fair value of options, estimated as of the grant date using the Black Scholes option pricing model was $26.90 per option for the 49,475 options granted during the three months ended March 31, 2024. The following assumptions were used to estimate the fair value of the options granted during the three months ended March 31, 2024.


Volatility	67.5	%
Risk-free interest rate	4.0	%
Expected holding period (in years)	6.1
Dividend yield	-

Contingent Share Option Awards

On February 1, 2024, the Board of Directors approved the grant of share options to purchase 2,446,045 shares of our common shares, at an exercise price of $36.09 per share, to employees as the annual grant for 2024. These share option grants were approved subject to Company's general meeting resolving upon, and the Board of Directors having implemented through an amendment to the Company's articles of association, an increase in the authorized share capital sufficient to satisfy the award set forth in the resolution (such shareholder resolution to be proposed to the Company's annual general meeting to be held in 2024) (the “Shareholder Approval Condition”), provided that such options will be forfeited if the Shareholder Approval Condition is not satisfied ultimately by January 1, 2025. On May 7, 2024, the shareholders approved the amendment to the Company’s articles of association, including the requisite increase in the authorized share capital satisfying the Shareholder Approval Condition, therefore the grant-date fair value of the contingent shares will be based on the Black-Scholes valuation model based on the fair market value of the share on the shareholder approval date. No share-based compensation expense was recorded in the first quarter of 2024 relating to this contingent share option grant.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Total revenue	$ 7,889	$ 13,499
Operating expenses:
Research and development	38,584	34,865
General and administrative	16,114	15,386
Total operating expenses	54,698	50,251
Operating loss	(46,809)	(36,752)
Other income, net:
Interest income, net	4,917	1,995
Foreign exchange gains (loss)	8,534	(5,441)
Total other income (loss), net	13,451	(3,446)
Net loss before income taxes	(33,358)	(40,198)
Income tax expense	1,098	(457)
Net loss	(34,456)	(39,741)
Other comprehensive loss:
Currency translation adjustment	(7,388)	4,242
Comprehensive loss	$ (41,844)	$ (35,499)
Net loss per share attributable to common stockholders:
Basic	$ (0.59)	$ (0.86)
Diluted	$ (0.59)	$ (0.86)
Weighted-average common shares outstanding:
Basic	58,085,416	46,323,772
Diluted	58,085,416	46,323,772
Collaboration Revenue [Member]
Total revenue from contracts with customers	$ 7,889	$ 13,499

Leases

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Leases

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, 2023, 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 index are included within variable lease costs. There have been no changes in the Company’s lease arrangements for the three months ended March 31, 2024.

The components of lease expense for the three months ended March 31, 2024 and 2023 are as follows:


	Three Months Ended March 31,
	2024		2023
	(in thousands)
Lease cost
Operating lease cost	$	516	$	712
Variable lease cost		55		28
Total lease cost included in operating expenses	$	571	$	740
Other information
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows	$	543	$	742

Common Share - Additional Information (Details)				1 Months Ended	3 Months Ended		12 Months Ended
Common Share - Additional Information (Details)	Aug. 14, 2023 USD ($)	Aug. 09, 2023 $ / shares shares	May 22, 2023 USD ($)	May 31, 2021 USD ($)	Mar. 31, 2024 USD ($) shares	Jun. 30, 2023 USD ($) shares	Dec. 31, 2022 USD ($) shares	Mar. 31, 2024 € / shares	Mar. 31, 2024 USD ($) $ / shares shares	Feb. 29, 2024 USD ($)	Dec. 31, 2023 € / shares	Dec. 31, 2023 USD ($) shares	Aug. 09, 2023 € / shares
Class of Stock [Line Items]
Common shares, value, issued									$ 5,968,000			$ 5,883,000
Common shares, issued \| shares									58,687,551			57,825,879
Common shares, par value \| € / shares								€ 0.09			€ 0.09
Sales Agreement
Class of Stock [Line Items]
Common shares, issued \| shares							2,720,846		0
Common shares, sold \| shares						3,272,280
Gross proceeds, before deducting sales agent commissions						$ 65,500,000	$ 59,500,000
Sales agent commissions							$ 1,700,000
Net proceeds, after deducting sales agent fees, underwriting discounts and commissions			$ 124,900,000			$ 63,800,000
Sales Agreement \| Maximum
Class of Stock [Line Items]
Shares sale agreement authorized amount			$ 125,000,000	$ 125,000,000
Underwriting commissions rate of gross proceeds of shares sold				3.00%
Underwriting Agreement
Class of Stock [Line Items]
Common shares, sold \| shares		6,818,182
Net proceeds, after deducting sales agent fees, underwriting discounts and commissions	$ 162,200,000
Sale of shares, price per share \| $ / shares		$ 22
Common shares, par value \| € / shares													€ 0.09
Additional common shares at public offering price \| shares		1,022,727
Gilead Collaboration Agreement
Class of Stock [Line Items]
Common shares, sold \| shares					452,527
Common shares stated purchase price per share \| $ / shares									$ 55.25
Gross proceeds, before deducting sales agent commissions					$ 25,000,000
2024 Sales Agreement \| Maximum
Class of Stock [Line Items]
Shares sale agreement authorized amount										$ 300,000,000
Underwriting commissions rate of gross proceeds of shares sold					3.00%

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (34,456)	$ (39,741)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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Reference 32: http://www.xbrl.org/2003/role/exampleRef
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-Section 50
-Paragraph 31
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Reference 34: http://www.xbrl.org/2003/role/disclosureRef
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Reference 35: http://fasb.org/us-gaap/role/ref/legacyRef
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-Section 45
-Paragraph 28
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Reference 36: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
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-Name Accounting Standards Codification
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-Subparagraph (a)
-Publisher FASB
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Reference 37: http://www.xbrl.org/2003/role/disclosureRef
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Reference 38: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 220
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-URI https://asc.fasb.org//1943274/2147483589/942-220-S99-1

+ Details

Income Taxes (Tables)

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Summary of Components of Expense for (Benefit) from Income Taxes

The components of the income tax expense (benefit) from continuing operations are as follows:


	Three Months Ended March 31,
	2024		2023
	(in thousands)
U.S. federal	$	124	$	(93	)
U.S. state		51		(36	)
Total current income tax expense (benefit)	$	175	$	(129	)

U.S. federal	$	653	$	(232	)
U.S. state		270		(96	)
Total deferred income tax expense (benefit)	$	923	$	(328	)

Total income tax expense (benefit)	$	1,098	$	(457	)

Income Taxes - Summary of Components of Expense for (Benefit) from Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Tax Disclosure [Abstract]
U.S. federal	$ 124	$ (93)
U.S. state	51	(36)
Total current income tax expense (benefit)	175	(129)
U.S. federal	653	(232)
U.S. state	270	(96)
Total deferred income tax expense (benefit)	923	(328)
Total income tax expense (benefit)	$ 1,098	$ (457)

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Investments in Debt Securities (Tables)

3 Months Ended

Mar. 31, 2024

Debt Securities [Abstract]

Summary of Investments in Debt Securities in Condensed Consolidated Balance Sheet

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


	March 31, 2024		December 31, 2023
	(in thousands)
Money market funds	$	14,014	$	24,273
Corporate paper and notes		154,127		146,415
U.S. government agency securities		34,146		39,456
U.S. treasuries		32,222		21,571
Total	$	234,509	$	231,715

Fair value of debt securities	$	234,367	$	231,945


	March 31, 2024		December 31, 2023
	(in thousands)
Cash equivalents	$	14,014	$	24,273
Current marketable securities		159,328		150,130
Non-current marketable securities		61,167		57,312
Total	$	234,509	$	231,715

Overview

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Overview

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, the “Company”).

Since inception, the Company has generated an accumulated deficit of $787.5 million as of March 31, 2024. 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.

Collaborations

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaborations

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 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, 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. If Gilead exercises its option to obtain exclusive licenses for all three Programs and has filed an Investigational New Drug Application (“IND”) for Program #1 and Program #2, 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). 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. 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, 2024, research activities had not begun, and no milestones have been achieved. The Company received the $56.0 million upfront payment from Gilead in April 2024.

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. The program timeline is expected to extend beyond the original research term. Under the current research plan, for the program to be completed in collaboration with Merus, Lilly would be required to extend the research term to 2025, subject to its discretion. Lilly exercised the first six month extension in October 2023 for which there was no associated fee. The program timeline is expected to extend beyond this first extension, and such an extension into 2025 would result in a fee of $0.5 million. The $0.5 million extension is included in the Lilly cost-to-cost model as of March 31, 2024 and December 31, 2023.

As of March 31, 2024, 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.

During the three months ended March 31, 2024, the Company recognized a $1.0 million milestone from Incyte related to candidate nomination.

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. 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, 2024.

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			Other			Total
CONTRACT ASSETS
Accounts receivable
Balance at January 1, 2024	$	—		$	—		$	—		$	—		$	—
Billings		2,609			817			55,999			7			59,432
Cash receipts		(1,608	)		(817	)		—			(7	)		(2,432	)
Adjustments		—			—			—			—			—
Foreign exchange		—			—			—			—			—
Balance at March 31, 2024	$	1,001		$	—		$	55,999		$	—		$	57,000

Unbilled receivables
Balance at January 1, 2024	$	1,397		$	839		$	—		$	193		$	2,429
Accrued receivables		2,425			298			56,045			—			58,768
Billings		(2,609	)		(817	)		(56,045	)		—			(59,471	)
Adjustments		—			—			—			—			—
Foreign exchange		—			—			—			—			—
Balance at March 31, 2024	$	1,213		$	320		$	—		$	193		$	1,726

CONTRACT LIABILITIES
Deferred revenue
Balance at January 1, 2024	$	36,325		$	5,934		$	—		$	—		$	42,259
Additions to contract consideration		—			—			58,387			—			58,387
Revenue recognized in the period		(4,302	)		(810	)		—			—			(5,112	)
Foreign exchange		(766	)		(126	)		(205	)		—			(1,097	)
Balance at March 31, 2024		31,257			4,998			58,182			—			94,437
Less: current portion		(17,228	)		(4,793	)		(12,121	)		—			(34,142	)
Non-current balance at March 31, 2024	$	14,029		$	205		$	46,061		$	—		$	60,295

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, 2024
	(in thousands)
	Third Party
	Incyte		Lilly		Gilead		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
Operating expenses:
Research and development expense	$	—	$	—	$	—	$	—	$	—
General and administrative expense		—		—		—		—		—
Total operating expenses from collaborations	$	—	$	—	$	—	$	—	$	—
Revenue recognized that was included in deferred revenue at the beginning of the period	$	4,302	$	810	$	—	$	—	$	5,112

	Three Months Ended March 31, 2023
	(in thousands)
	Third Party
	Incyte		Lilly		Gilead		Other		Total
Collaboration Revenue
Upfront payments	$	4,216	$	4,176	$	—	$	—	$	8,392
Reimbursement revenue		1,366		1,191		—		—		2,557
Milestones		2,501		—		—		—		2,501
Other		—		—		—		49		49
Total collaboration revenue	$	8,083	$	5,367	$	—	$	49	$	13,499
Operating expenses:
Research and development expense	$	24	$	—	$	—	$	—	$	24
General and administrative expense		—		—		—		—		—
Total operating expenses from collaborations	$	24	$	—	$	—	$	—	$	24
Revenue recognized that was included in deferred revenue at the beginning of the period	$	4,216	$	4,176	$	—	$	—	$	8,392

Leases (Tables)

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Summary of Components of Lease Cost

The components of lease expense for the three months ended March 31, 2024 and 2023 are as follows:


	Three Months Ended March 31,
	2024		2023
	(in thousands)
Lease cost
Operating lease cost	$	516	$	712
Variable lease cost		55		28
Total lease cost included in operating expenses	$	571	$	740
Other information
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows	$	543	$	742

Supplemental Balance Sheet Information

3 Months Ended

Mar. 31, 2024

Balance Sheet Related Disclosures [Abstract]

Supplemental Balance Sheet Information

4. Supplemental Balance Sheet Information

Prepaid expenses and other current assets consisted of the following:


	March 31, 2024		December 31, 2023
	(in thousands)
Prepaid research and development expenses	$	7,632	$	6,872
Prepaid general and administrative expenses		3,136		2,058
Interest receivable		1,693		1,552
Other		1,577		1,527
Total	$	14,038	$	12,009

Accrued expenses and other liabilities consisted of the following:


	March 31, 2024		December 31, 2023
	(in thousands)
Accrued research and development expenses	$	23,928	$	27,970
Accrued personnel costs		3,577		8,348
Accrued general and administrative expenses		5,022		2,129
Other		834		35
Total	$	33,361	$	38,482

Employee Benefits - Summary of Share-based Compensation Expense Classified in Condensed Consolidated Statements of Operations and Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total	$ 4,793	$ 5,750
Research and Development
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total	1,895	2,858
General and Administrative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total	$ 2,898	$ 2,892

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 35
-Paragraph 1D
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480483/718-10-35-1D

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Topic 718
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+ Details

Supplemental Balance Sheet Information - Summary of Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued research and development expenses	$ 23,928	$ 27,970
Accrued personnel costs	3,577	8,348
Accrued general and administrative expenses	5,022	2,129
Other	834	35
Total	$ 33,361	$ 38,482

Collaborations (Tables)

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Company's Accompanying Condensed Consolidated Financial Statements Attributable to Transactions Arising From Collaboration Arrangements


	Incyte			Lilly			Gilead			Other			Total
CONTRACT ASSETS
Accounts receivable
Balance at January 1, 2024	$	—		$	—		$	—		$	—		$	—
Billings		2,609			817			55,999			7			59,432
Cash receipts		(1,608	)		(817	)		—			(7	)		(2,432	)
Adjustments		—			—			—			—			—
Foreign exchange		—			—			—			—			—
Balance at March 31, 2024	$	1,001		$	—		$	55,999		$	—		$	57,000

Unbilled receivables
Balance at January 1, 2024	$	1,397		$	839		$	—		$	193		$	2,429
Accrued receivables		2,425			298			56,045			—			58,768
Billings		(2,609	)		(817	)		(56,045	)		—			(59,471	)
Adjustments		—			—			—			—			—
Foreign exchange		—			—			—			—			—
Balance at March 31, 2024	$	1,213		$	320		$	—		$	193		$	1,726

CONTRACT LIABILITIES
Deferred revenue
Balance at January 1, 2024	$	36,325		$	5,934		$	—		$	—		$	42,259
Additions to contract consideration		—			—			58,387			—			58,387
Revenue recognized in the period		(4,302	)		(810	)		—			—			(5,112	)
Foreign exchange		(766	)		(126	)		(205	)		—			(1,097	)
Balance at March 31, 2024		31,257			4,998			58,182			—			94,437
Less: current portion		(17,228	)		(4,793	)		(12,121	)		—			(34,142	)
Non-current balance at March 31, 2024	$	14,029		$	205		$	46,061		$	—		$	60,295

Summary of Company's Collaboration Arrangements Earned in Period to Be Billed and Collected in Next Period

Contract Revenues and Expenses


	Three Months Ended March 31, 2024
	(in thousands)
	Third Party
	Incyte		Lilly		Gilead		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
Operating expenses:
Research and development expense	$	—	$	—	$	—	$	—	$	—
General and administrative expense		—		—		—		—		—
Total operating expenses from collaborations	$	—	$	—	$	—	$	—	$	—
Revenue recognized that was included in deferred revenue at the beginning of the period	$	4,302	$	810	$	—	$	—	$	5,112

	Three Months Ended March 31, 2023
	(in thousands)
	Third Party
	Incyte		Lilly		Gilead		Other		Total
Collaboration Revenue
Upfront payments	$	4,216	$	4,176	$	—	$	—	$	8,392
Reimbursement revenue		1,366		1,191		—		—		2,557
Milestones		2,501		—		—		—		2,501
Other		—		—		—		49		49
Total collaboration revenue	$	8,083	$	5,367	$	—	$	49	$	13,499
Operating expenses:
Research and development expense	$	24	$	—	$	—	$	—	$	24
General and administrative expense		—		—		—		—		—
Total operating expenses from collaborations	$	24	$	—	$	—	$	—	$	24
Revenue recognized that was included in deferred revenue at the beginning of the period	$	4,216	$	4,176	$	—	$	—	$	8,392

Supplemental Balance Sheet Information (Tables)

3 Months Ended

Mar. 31, 2024

Balance Sheet Related Disclosures [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


	March 31, 2024		December 31, 2023
	(in thousands)
Prepaid research and development expenses	$	7,632	$	6,872
Prepaid general and administrative expenses		3,136		2,058
Interest receivable		1,693		1,552
Other		1,577		1,527
Total	$	14,038	$	12,009

Summary of Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following:


	March 31, 2024		December 31, 2023
	(in thousands)
Accrued research and development expenses	$	23,928	$	27,970
Accrued personnel costs		3,577		8,348
Accrued general and administrative expenses		5,022		2,129
Other		834		35
Total	$	33,361	$	38,482

Income Taxes

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

5. Income Taxes

The Company files income tax returns in the U.S. federal and Massachusetts jurisdictions as well as in the Netherlands. The components of the income tax expense (benefit) from continuing operations are as follows:


	Three Months Ended March 31,
	2024		2023
	(in thousands)
U.S. federal	$	124	$	(93	)
U.S. state		51		(36	)
Total current income tax expense (benefit)	$	175	$	(129	)

U.S. federal	$	653	$	(232	)
U.S. state		270		(96	)
Total deferred income tax expense (benefit)	$	923	$	(328	)

Total income tax expense (benefit)	$	1,098	$	(457	)

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.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Leases - Summary of Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Lease cost
Operating lease cost	$ 516	$ 712
Variable lease cost	55	28
Total lease cost included in operating expenses	571	740
Other information
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows	$ 543	$ 742

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Investments in Debt Securities

3 Months Ended

Mar. 31, 2024

Debt Securities [Abstract]

Investments in Debt Securities

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, 2024		December 31, 2023
	(in thousands)
Money market funds	$	14,014	$	24,273
Corporate paper and notes		154,127		146,415
U.S. government agency securities		34,146		39,456
U.S. treasuries		32,222		21,571
Total	$	234,509	$	231,715

Fair value of debt securities	$	234,367	$	231,945


	March 31, 2024		December 31, 2023
	(in thousands)
Cash equivalents	$	14,014	$	24,273
Current marketable securities		159,328		150,130
Non-current marketable securities		61,167		57,312
Total	$	234,509	$	231,715

The Company does not intend to sell and 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).

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Gilead [Member]	Common Shares [Member]	Common Shares [Member] Gilead [Member]	Additional Paid-In Capital [Member]	Additional Paid-In Capital [Member] Gilead [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning balance at Dec. 31, 2022	$ 247,055		$ 4,751		$ 870,874		$ (598,122)	$ (30,448)
Beginning balance, shares at Dec. 31, 2022			46,310,589
Exercise of share options and vesting of restricted share units	217		$ 3		214
Exercise of share options and vesting of restricted share units, shares			30,592
Share-based compensation	5,750				5,750
Currency translation adjustment	4,242							4,242
Net loss	(39,741)						(39,741)
Ending balance at Mar. 31, 2023	217,523		$ 4,754		876,838		(637,863)	(26,206)
Ending balance, shares at Mar. 31, 2023			46,341,181
Beginning balance at Dec. 31, 2023	356,343		$ 5,883		1,126,054		(753,061)	(22,533)
Beginning balance, shares at Dec. 31, 2023			57,825,879
Issuance of common share		$ 22,613		$ 45		$ 22,568
Issuance of common share, net, shares				452,527
Exercise of share options and vesting of restricted share units	7,543		$ 40		7,503
Exercise of share options and vesting of restricted share units, shares			409,145
Share-based compensation	4,793				4,793
Currency translation adjustment	(7,388)							(7,388)
Net loss	(34,456)						(34,456)
Ending balance at Mar. 31, 2024	$ 349,448		$ 5,968		$ 1,160,918		$ (787,517)	$ (29,921)
Ending balance, shares at Mar. 31, 2024			58,687,551

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

- Definition

Equity impact of the value of new stock issued during the period. Includes shares issued in an initial public offering or a secondary public offering.

+ References + Details

- Definition

Amount of equity (deficit) attributable to parent. Excludes temporary equity and equity attributable to noncontrolling interest.

+ References

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+ Details

Overview - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated deficit	$ (787,517)	$ (753,061)

- Definition

Amount of accumulated undistributed earnings (deficit).

+ References + Details

Investments in Debt Securities - Summary of Investments in Debt Securities in Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Schedule Of Held To Maturity Securities [Line Items]
Total	$ 234,509	$ 231,715
Fair value of debt securities	234,367	231,945
Cash equivalents [member]
Schedule Of Held To Maturity Securities [Line Items]
Total	14,014	24,273
Current marketable securities [member]
Schedule Of Held To Maturity Securities [Line Items]
Total	159,328	150,130
Non-current marketable securities [member]
Schedule Of Held To Maturity Securities [Line Items]
Total	61,167	57,312
Money market funds [member]
Schedule Of Held To Maturity Securities [Line Items]
Total	14,014	24,273
Corporate paper and notes [member]
Schedule Of Held To Maturity Securities [Line Items]
Total	154,127	146,415
U.S. government agency securities [member]
Schedule Of Held To Maturity Securities [Line Items]
Total	34,146	39,456
U.S. treasuries [member]
Schedule Of Held To Maturity Securities [Line Items]
Total	$ 32,222	$ 21,571

Collaborations - Summary of Company's Collaboration Arrangements Earned in Period to Be Billed and Collected in Next Period (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Collaboration Revenue
Collaborative Arrangement, Revenue Not from Contract with Customer, Statement of Income or Comprehensive Income [Extensible Enumeration]	Revenue from Contract with Customer, Excluding Assessed Tax	Revenue from Contract with Customer, Excluding Assessed Tax
Operating expenses:
Research and development	$ 38,584	$ 34,865
General and administrative	16,114	15,386
Total operating expenses	54,698	50,251
Incyte
Collaboration Revenue
Upfront payments	4,302	4,216
Reimbursement revenue	1,458	1,366
Milestones	1,000	2,501
Other	0	0
Total collaboration revenue	6,760	8,083
Operating expenses:
Research and development	0	24
General and administrative	0	0
Total operating expenses	0	24
Revenue recognized in the period	4,302	4,216
Lilly
Collaboration Revenue
Upfront payments	810	4,176
Reimbursement revenue	314	1,191
Milestones	0	0
Other	0	0
Total collaboration revenue	1,124	5,367
Operating expenses:
Research and development	0	0
General and administrative	0	0
Total operating expenses	0	0
Revenue recognized in the period	810	4,176
Gilead
Collaboration Revenue
Upfront payments	0	0
Reimbursement revenue	0	0
Milestones	0	0
Other	0	0
Total collaboration revenue	0	0
Operating expenses:
Research and development	0	0
General and administrative	0	0
Total operating expenses	0	0
Revenue recognized in the period	0	0
Other
Collaboration Revenue
Upfront payments	0	0
Reimbursement revenue	0	0
Milestones	0	0
Other	5	49
Total collaboration revenue	5	49
Operating expenses:
Research and development	0	0
General and administrative	0	0
Total operating expenses	0	0
Revenue recognized in the period	0	0
Collaboration Agreement
Collaboration Revenue
Upfront payments	5,112	8,392
Reimbursement revenue	1,772	2,557
Milestones	1,000	2,501
Other	5	49
Total collaboration revenue	7,889	13,499
Operating expenses:
Research and development	0	24
General and administrative	0	0
Total operating expenses	0	24
Revenue recognized in the period	$ 5,112	$ 8,392

Employee Benefits - Additional Information (Details) - USD ($)		3 Months Ended
	Feb. 01, 2024	Mar. 31, 2024	Mar. 31, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted-average fair value of options granted		$ 26.9
Share-based payment award, fair value assumptions, method used		Black Scholes option pricing model
Number of options granted		49,475
Share-based compensation expense		$ 4,793,000	$ 5,750,000
Research and Development
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense		1,895,000	$ 2,858,000
Contingent Stock Option [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense		$ 0
Contingent Stock Option [Member] \| Board of Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options granted	2,446,045
Weighted-average exercise price per share, granted	$ 36.09

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (34,456)	$ (39,741)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment	561	534
Amortization of intangible assets	46	54
Foreign exchange losses (gains)	(8,616)	5,842
Share-based compensation expense	4,793	5,750
Amortization (accretion) of discount on investments	(1,149)	(1,003)
Deferred tax expense (benefit)	923	(328)
Changes in operating assets and liabilities:
Accounts receivable	(56,594)	(631)
Operating lease right-of-use assets and lease obligations	(23)	(18)
Prepaid expenses and other current assets	(2,009)	879
Accounts payable	3,039	(3,447)
Accrued expenses and other liabilities	(4,226)	3,758
Deferred revenue	53,323	(8,392)
Net cash used in operating activities	(44,388)	(36,743)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(58,825)	(65,228)
Proceeds from maturities of marketable securities	46,809	60,441
Purchases of property and equipment	(63)	(3,620)
Net cash provided by (used in) investing activities	(12,079)	(8,407)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from share issuance - Gilead Collaboration	22,613	0
Proceeds from share options exercised	7,543	217
Net cash provided by financing activities	30,156	217
Foreign exchange impact on cash, cash equivalents and restricted cash	222	(171)
Net increase (decrease) in cash, cash equivalents and restricted cash	(26,089)	(45,104)
Cash, cash equivalents, and restricted cash, beginning of period	205,014	148,439
Cash, cash equivalents, and restricted cash, end of period	178,925	103,335
SUPPLEMENTAL DISCLOSURES:
Lease liabilities arising from obtaining right-of-use assets	0	0
Income taxes paid	0	0
Non-cash purchases of property, equipment and intangibles	1	32
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	178,168	102,635
Restricted cash included in non-current other assets	757	700
Cash, cash equivalents, and restricted cash, end of period	$ 178,925	$ 103,335

Income Taxes - Additional Information (Details) - Dutch Tax Law € in Millions	3 Months Ended
	Mar. 31, 2024 EUR (€)
Income Tax Disclosure [Line Items]
Taxable income that exceeds €1.0 million, percentage	50.00%
Maximum
Income Tax Disclosure [Line Items]
Future taxable income offset limit	€ 1.0
Minimum
Income Tax Disclosure [Line Items]
Future taxable income exceeding limit	€ 1.0

Common Share

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Common Share

9. Common Share

Share Issuances

In May 2021, the Company entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) to sell from time to time up to $125.0 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 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 the Securities Act of 1933, as amended (the “Securities Act”).

Jefferies was entitled to compensation at a commission rate of up to 3.0% of the gross proceeds of shares sold under the Sales Agreement. In connection with the sale of the common shares on the Company's behalf, Jefferies was deemed to be an “underwriter” within the meaning of the Securities Act and the compensation of Jefferies was 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 Securities Exchange Act of 1934, as amended, or the Exchange Act.

As of December 31, 2022, the Company, pursuant to the Sales Agreement, had issued and sold an aggregate of 2,720,846 shares of its common shares resulting in gross proceeds of $59.5 million, before deducting sales agent fees of $1.7 million.

During the three months ended June 30, 2023, the Company sold 3,272,280 shares of its common shares under the Sales Agreement for gross proceeds of approximately $65.5 million and net proceeds of approximately $63.8 million, after deducting sales agent fees. Having sold approximately $124.9 million of the $125.0 million available under the Sales Agreement, on May 22, 2023, the Company

delivered written notice to Jefferies, effective as of such date, to terminate the Sales Agreement. The Company was not subject to any termination penalties related to the termination of the Sales Agreement.

On August 9, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Jefferies LLC, BofA Securities, Inc., Guggenheim Securities, LLC and William Blair & Company, L.L.C., as representatives of the several underwriters named therein (collectively, the “Underwriters”), in connection with the issuance and sale by the Company in a public offering of 6,818,182 common shares of the Company, nominal value €0.09 per share, at a public offering price of $22.00 per share, less underwriting discounts and commissions, pursuant to an effective shelf registration statement on Form S-3 and accompanying prospectus (Registration No. 333-255903), which became effective upon filing on May 7, 2021, and a prospectus supplement thereunder. Under the terms of the Underwriting Agreement, the Company also granted the Underwriters an option exercisable for 30 days to purchase up to an additional 1,022,727 common shares at the public offering price, less underwriting discounts and commissions. On August 10, 2023, the Underwriters exercised this option in full. The offering closed on August 14, 2023, and the Company received net proceeds of $162.2 million, after deducting underwriting discounts and fees.

In February 2024, the Company entered into an Open Market Sale Agreement (the “2024 Sales Agreement”) with Jefferies LLC 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 the Securities Act of 1933, as amended (the “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 Securities Exchange Act of 1934, as amended, or the Exchange Act. There have been no sales under the Sales Agreement through March 31, 2024.

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 $55.25 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.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 13
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
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Reference 17: http://www.xbrl.org/2003/role/disclosureRef
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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, 2023, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024 (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, 2024.

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, 2024 and 2023 are referred to as the first quarter of 2024 and 2023, 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, 2023, 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, 2024, 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”.

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.

Employee Benefits (Tables)

3 Months Ended

Mar. 31, 2024

Retirement Benefits [Abstract]

Summary of Share-based Compensation Expense Classified in Condensed Consolidated Statements of Operations and Comprehensive Loss

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


	Three Months Ended March 31,
	2024		2023
	(in thousands)
Research and development	$	1,895	$	2,858
General and administrative		2,898		2,892
Total	$	4,793	$	5,750

Summary of Assumptions Used to Estimate Fair Value of Options Granted

The following assumptions were used to estimate the fair value of the options granted during the three months ended March 31, 2024.


Volatility	67.5	%
Risk-free interest rate	4.0	%
Expected holding period (in years)	6.1
Dividend yield	-

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2024	May 01, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Entity Registrant Name	MERUS N.V.
Trading Symbol	MRUS
Entity Central Index Key	0001651311
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding		58,687,551
Entity File Number	001-37773
Entity Incorporation, State or Country Code	P7
Entity Tax Identification Number	00-0000000
Entity Address, Address Line One	Uppsalalaan 17
Entity Address, City or Town	Utrecht
Entity Address, Postal Zip Code	3584 CT
Entity Address, Country	NL
City Area Code	+31 85
Local Phone Number	016 2500
Document Quarterly Report	true
Document Transition Report	false
Title of 12(b) Security	Common shares, nominal value €0.09 per share
Security Exchange Name	NASDAQ

Collaborations - Summary of Company's Accompanying Consolidated Financial Statements Attributable to Transactions Arising From Collaboration Arrangements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Incyte
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Revenue recognized in the period	$ 4,302	$ 4,216
Incyte \| Accounts Receivable
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Billings	2,609
Cash receipts	(1,608)
Balance at March 31, 2024	1,001
Incyte \| Unbilled Receivables
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Balance at January 1, 2024	1,397
Accrued receivables	2,425
Billings	(2,609)
Balance at March 31, 2024	1,213
Incyte \| Deferred Revenue
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Balance at January 1, 2024	31,257		$ 36,325
Revenue recognized in the period	(4,302)
Foreign exchange	(766)
Balance at March 31, 2024	31,257		36,325
Less: current portion	(17,228)
Non-current balance at March 31, 2024	14,029
Lilly
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Revenue recognized in the period	810	4,176
Lilly \| Accounts Receivable
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Billings	817
Cash receipts	(817)
Lilly \| Unbilled Receivables
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Balance at January 1, 2024	839
Accrued receivables	298
Billings	(817)
Balance at March 31, 2024	320
Lilly \| Deferred Revenue
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Balance at January 1, 2024	4,998		5,934
Revenue recognized in the period	(810)
Foreign exchange	(126)
Balance at March 31, 2024	4,998		5,934
Less: current portion	(4,793)
Non-current balance at March 31, 2024	205
Gilead
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Revenue recognized in the period	0	0
Gilead \| Accounts Receivable
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Billings	55,999
Balance at March 31, 2024	55,999
Gilead \| Unbilled Receivables
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Accrued receivables	56,045
Billings	(56,045)
Gilead \| Deferred Revenue
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Balance at January 1, 2024	58,182
Additions to contract consideration	58,387
Foreign exchange	(205)
Balance at March 31, 2024	58,182
Less: current portion	(12,121)
Non-current balance at March 31, 2024	46,061
Other
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Revenue recognized in the period	0	0
Other \| Accounts Receivable
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Billings	7
Cash receipts	(7)
Other \| Unbilled Receivables
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Balance at January 1, 2024	193
Balance at March 31, 2024	193
Collaboration Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Revenue recognized in the period	5,112	$ 8,392
Collaboration Agreement \| Accounts Receivable
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Billings	59,432
Cash receipts	(2,432)
Balance at March 31, 2024	57,000
Collaboration Agreement \| Unbilled Receivables
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Balance at January 1, 2024	2,429
Accrued receivables	58,768
Billings	(59,471)
Balance at March 31, 2024	1,726
Collaboration Agreement \| Deferred Revenue
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Balance at January 1, 2024	94,437		42,259
Additions to contract consideration	58,387
Revenue recognized in the period	(5,112)
Foreign exchange	(1,097)
Balance at March 31, 2024	94,437		$ 42,259
Less: current portion	(34,142)
Non-current balance at March 31, 2024	$ 60,295

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 178,168	$ 204,246
Marketable securities	159,328	150,130
Accounts receivable	58,726	2,429
Prepaid expenses and other current assets	14,038	12,009
Total current assets	410,260	368,814
Marketable securities	61,167	57,312
Property and equipment, net	11,336	12,135
Operating lease right-of-use assets	10,767	11,362
Intangible assets, net	1,716	1,800
Deferred tax assets	277	1,199
Other assets	2,560	2,872
Total assets	498,083	455,494
Current liabilities:
Accounts payable	7,488	4,602
Accrued expenses and other liabilities	33,361	38,482
Income taxes payable	1,822	1,646
Current portion of lease obligation	1,674	1,674
Current portion of deferred revenue	34,142	22,685
Total current liabilities	78,487	69,089
Lease obligation	9,853	10,488
Deferred revenue, net of current portion	60,295	19,574
Total liabilities	148,635	99,151
Commitments and contingencies - Note 6
Shareholders' equity:
Common shares, EUR 0.09 par value; 67,500,000 shares authorized at March 31, 2024 and December 31, 2023; 58,687,551 and 57,825,879 shares issued and outstanding as at March 31, 2024 and December 31, 2023, respectively	5,968	5,883
Additional paid-in capital	1,160,918	1,126,054
Accumulated other comprehensive income	(29,921)	(22,533)
Accumulated deficit	(787,517)	(753,061)
Total shareholders' equity	349,448	356,343
Total liabilities and shareholders' equity	$ 498,083	$ 455,494