EX-10.25



 Exhibit 10.25 

Dated 3 June 2016 
  

 
 CONVERTIBLE
LOAN NOTE INSTRUMENT 
 RELATING TO 

MEREO BIOPHARMA GROUP PLC 
  

 
  





 

  









					
	1.	 	INTERPRETATION	  	1
			
	2.	 	NOMINAL AMOUNT	  	3
			
	3.	 	RANKING	  	3
			
	4.	 	USE OF PROCEEDS	  	3
			
	5.	 	LOAN NOTE CERTIFICATES	  	4
			
	6.	 	CONDITIONS OF ISSUE	  	4
			
	7.	 	INFORMATION RIGHTS	  	4
			
	8.	 	NOTES NOT TO BE QUOTED	  	4
			
	9.	 	ENFORCEMENT	  	4
			
	10.	 	SET-OFF	  	4
			
	11.	 	THIRD PARTY RIGHTS	  	4
			
	12.	 	GOVERNING LAW AND JURISDICTION	  	4
			
	SCHEDULE 1	 	Form of certificate	  	6
			
	SCHEDULE 2	 	Interest and Redemption	  	7
			
	SCHEDULE 3	 	Conversion	  	9


  
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	THIS DEED is dated	  	3 June 2016                

 PARTY 
 MEREO BIOPHARMA
GROUP PLC incorporated and registered in England and Wales with company number 09481161 whose registered office is at 4th Floor, One, Cavendish Place, London, England, W1G 0QF
(“Company”). 
 BACKGROUND 
 By
exercising of the powers conferred on them by the Articles, the Directors of the Company have, by a resolution passed on 2 June 2016, created 3,463,563 £1 unsecured convertible loan notes and have agreed to constitute them in the
following manner. 
 AGREED TERMS 
  

	1.	INTERPRETATION 

  

	1.1	The definitions and rules of interpretation in this clause 1 apply in this instrument. 

  

					
	        	 	Adjustment Event	 	 any or all of the following, at any time, or by reference to any record date, while the Notes remain in issue:

 
 (a)   any allotment or issue of
Equity Securities by the Company by way of capitalisation of profits or reserves;
  

(b)   any cancellation, purchase or redemption of Equity Securities, or any reduction or repayment
of Equity Securities, by the Company;
  

(c)   any sub-division or consolidation of Equity Securities
by the Company; and
  

(d)   any issue of securities or other instruments convertible into shares in, or Equity Securities
of, the Company or any grant of options, warrants or other rights to subscribe for, or call for the allotment or issue of, shares in, or Equity Securities of, the Company,
  

but excluding any issue of Equity Securities of the Company pursuant to the exercise of any options granted to employees or directors of the
Company

			
		 	Articles	 	the articles of association of the Company, as amended or superseded
			
		 	Business Day	 	a day (other than a Saturday, Sunday or public holiday) on which banks in the City of London are open for normal banking business
			
		 	Certificate	 	a certificate for Notes in the form (or substantially in the form) set out in Schedule 1 


  
 1 









					
		 	Change of Control	 	the acquisition of control of the Company (as defined in section 1124 of the Corporation Tax Act 2010) by any person or persons acting in concert (as defined in the City Code on Takeovers and Mergers) with them
			
		 	Conditions	 	the conditions attaching to the Notes, as set out in Schedule 2 to Schedule 3
			
		 	Conversion Date	 	the date specified in the Conversion Notice, being not less than 10 Business Days after service of the Conversion Notice
			
	        	 	Conversion Notice	 	a notice in writing by the Noteholder to the Company to convert any outstanding Note or Notes
			
		 	Conversion Price	 	£2.21 per share
			
		 	Conversion Shares	 	the Ordinary Shares to be issued fully paid to the Noteholder on conversion of the Notes
			
		 	Directors	 	the board of directors for the time being of the Company
			
		 	Equity Securities	 	has the meaning given in section 560(1) of the Companies Act 2006
			
		 	Event of Default	 	any of the events set out in paragraph 5 of Schedule 2
			
		 	Indebtedness	 	any indebtedness, monies, obligations, liabilities of the Company in any form whatsoever denominated in whatever currency, whether actual or contingent, present or future, which may be now or hereafter due, owing or incurred
howsoever and whether alone or jointly and whether as principal or surety
			
		 	Interest Rate	 	a rate of 4% per annum
			
		 	Maturity Date	 	the date which is 36 months from the date of this instrument
			
		 	Notes	 	the £3,463,563 unsecured convertible loan notes constituted by this instrument or, as the case may be, the principal amount from time to time issued and paid up and outstanding, and principal amount shall be construed
accordingly
			
		 	Noteholder	 	the several persons for the time being as holders of the Notes being the Holder of the Notes
			
		 	NVS Bonus Shares	 	the Ordinary Shares to be issued fully paid to the Noteholder in accordance with paragraph 5 of Part 1 of Schedule 3 of this instrument


  
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	        	 	Ordinary Shares	 	the ordinary shares of £0.003 each in the capital of the Company, which have the rights set out in the Articles
			
		 	Redemption Date	 	has the meaning given in paragraph 4.1 of Schedule 2
			
		 	Redemption Notice	 	has the meaning given in paragraph 4.2 of Schedule 2

  

	1.2	Any phrase introduced by the terms including, include or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms.


  

	1.3	The schedules to this instrument form part of (and are incorporated into) this instrument. 

  

	1.4	A person includes a corporate or unincorporated body. 

  

	1.5	Words in the singular include the plural and vice versa. 

  

	1.6	A reference to a clause or a schedule is (unless expressly stated otherwise) a reference to a clause of, or schedule to, this instrument. 


 

	1.7	Clause and schedule headings do not affect the interpretation of this instrument. 

  

	1.8	A reference to one gender includes a reference to the other gender. 

  

	1.9	Any reference in this instrument to this instrument or to any other instrument, agreement or document shall, unless the context otherwise requires, be construed as reference to this instrument or such
other instrument, agreement or document as the same may from time to time be amended, varied, supplemented or novated, in each case in accordance with its terms. 

  


	1.10	References to any statute or statutory provision shall include references to such statute or statutory provision as in force at the date of this instrument and as subsequently
re-enacted or consolidated and shall include references to any statute or statutory provision of which it is a re-enactment or consolidation. 


 

	2.	NOMINAL AMOUNT 

 The nominal amount of each Note is £1 and the aggregate principal
amount of all the Notes is limited to £3,463,563. 
  

	3.	RANKING 

 The Notes constitute direct, unsecured obligations of the Company ranking ahead
of any other unsecured Indebtedness of the Company, and without any preference among themselves. 
  

	4.	USE OF PROCEEDS 

 The proceeds of all subscriptions for the Notes shall be used to fund
the Company’s working capital and capital expenditure requirements for the time being. 
  

	5.	LOAN NOTE CERTIFICATES 

  

	5.1	The Noteholder shall be entitled to receive (without charge) a Certificate executed as a deed by the Company for the amount of Notes held by them. 


  
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	5.2	Every Certificate shall have copies of Schedule 2 and Schedule 3 endorsed on or attached to it. 

  

	6.	CONDITIONS OF ISSUE 

 Upon Company securing additional funding from third parties in an
aggregate amount no less than £6,000,000 on or before 1 July 2016, subject to the terms herein, Noteholder shall provide funding to Company up to the aggregate principal amount of £3,463,563, and Company shall issue the Notes. The
Notes shall be issued subject to, and with the benefit of, the Conditions set out in Schedule 2 to Schedule 3 inclusive. Those conditions shall be binding on the Company, the Noteholder and all persons claiming through or under them. 

 

	7.	INFORMATION RIGHTS 

 The Noteholder shall be entitled to receive information relating to,
or in connection with the Notes discussed in or arising from any directors’ or shareholders’ meeting of the Company prior to or as soon as reasonably practicable following such meeting. 

 

	8.	NOTES NOT TO BE QUOTED 

 No application has been, or is intended to be, made to any
listing authority, stock exchange or other market for the Notes to be listed or otherwise traded. 
  

	9.	ENFORCEMENT 

 The Company covenants with the Noteholder to perform and observe the
obligations in this instrument to the intent that this instrument shall enure for the benefit of the Noteholder, each of whom may sue for the performance and observance of the provisions of this instrument so far as his holding is concerned. 

 

	10.	SET-OFF 

 The Noteholder shall be recognised by
the Company as entitled to the Notes registered in his name free from any equity, defence, set-off or cross-claim on the part of the Company against the original, or any intermediate, Noteholder. 

 

	11.	THIRD PARTY RIGHTS 

 This instrument is enforceable under the Contracts (Rights of Third
Parties) Act 1999 by the Company and the Noteholder, but not by any other person. 
  

	12.	GOVERNING LAW AND JURISDICTION 

  

	12.1	This instrument and the Notes (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, the laws of England. 


 

	12.2	The courts of England shall have exclusive jurisdiction to settle any dispute or claim that arises out of, or in connection with, this instrument (including non-contractual
disputes or claims). Accordingly, any proceedings relating to, or in connection with, this instrument or the Notes (including non-contractual disputes or claims) may be brought in such courts.


 This document has been executed as a deed and is delivered and takes effect on the date stated at the beginning of it. 

  
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	 Signed as a Deed by MEREO BIOPHARMA GROUP PLC 
  

acting by:
	  	}
}
}
}
}	  	 



/s/ Denise Scots-Knight

Director

			
	in the presence of:	  	}
}	  	 /s/ F. Steadman

Name of Witness



  
 5 








 SCHEDULE 1 

FORM OF CERTIFICATE 
 MEREO BIOPHARMA
GROUP PLC incorporated in England and Wales with registered number 09481161 (Company). 
  

			
	CERTIFICATE NO. [NUMBER]	  	AMOUNT OF NOTES £[AMOUNT]

 unsecured convertible loan notes (Notes). 

Issued pursuant to the articles of association of the Company and created by a resolution of the directors passed on 2 June 2016. 

This is to certify that [NAME[S]] of [ADDRESS[ES]] is/are the registered holder(s) of the nominal amount stated above of the Notes constituted by a loan note
instrument dated [DATE] (Instrument) and made by the Company. The Notes are issued subject to, and with the benefit of, the provisions contained in the Instrument and the conditions and other provisions endorsed on this certificate and/or
attached to it (Conditions). Interest is payable only in certain circumstances in accordance with Schedule 2 of the Instrument. 
 Executed as a deed
by the Company this [DATE]. 
 Notes: 
  

	1.	No transfer of any part of the Notes represented by this Certificate can be registered without production of this Certificate. 

  

	2.	The Notes are governed by, and construed in accordance with, the laws of England. 

  

					
	 Signed as a Deed by MEREO BIOPHARMA GROUP PLC 
  

acting by:
	  	}
}
}
}
}	  	  

		  		  	Director
			
	in the presence of:	  	}
}	  	  
 Name of Witness



  
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 SCHEDULE 2 

INTEREST AND REDEMPTION 
  

	1.	INTEREST 

  

	1.1	Interest shall be payable on any outstanding Notes (so far as not converted under Schedule 3) at the Interest Rate. 

  

	1.2	Any interest due under paragraph 1.1 of this Schedule 2 shall be payable annually in immediately available funds on each anniversary of the date of this instrument, unless the Noteholder elects to convert the accrued
interest to Ordinary Shares in accordance with Part 2 of Schedule 3. 

  

	1.3	Interest, if payable, shall accrue daily at the Interest Rate and shall be calculated on the basis of a 365-day year and the actual number of days elapsed from the date of issue
of the Notes to the Redemption Date. 

  

	1.4	If the Company fails to pay redemption monies when due, interest shall continue to accrue on the unpaid amount at the Interest Rate. 


 

	2.	REPAYMENT OF PRINCIPAL 

 As and when the Notes are to be redeemed in accordance with
paragraph 4 of this Schedule 2, the Company shall pay the Noteholder in immediately available funds the principal amount of the Notes which are to be redeemed plus any outstanding accrued interest. 

 

	3.	TIME OF PAYMENT 

 Whenever any payment of principal (or otherwise) becomes due on a day
which is not a Business Day, payment shall be made on the next following Business Day. 
  

	4.	REDEMPTION 

  

	4.1	The Notes then in issue (so far as not converted under Schedule 3) shall, to the extent not previously converted, be redeemed at the principal amount together with interest on the Notes outstanding at the Interest Rate
on the Maturity Date. 

  

	4.2	Within five Business Days of the Redemption Date, the Company shall repay to the Noteholder the principal amount of the Notes so redeemed, together with interest on such Notes outstanding at the Interest Rate.


  

	5.	EVENTS RESULTING IN IMMEDIATE REDEMPTION 

 The Notes shall be immediately redeemed at the
principal amount, together with interest on the Notes outstanding at the Interest Rate, if: 
  

	 	(a)	an administration order is made in relation to the Company or any of its subsidiaries; or 

  

	 	(b)	an order is made, or an effective resolution is passed, for the winding-up, liquidation, administration or dissolution of the Company (except for the purpose of reorganisation or
amalgamation of the Company or any of its subsidiaries); or 

  

	 	(c)	 an encumbrancor takes possession or a receiver is appointed of the whole or the major part of the assets or
undertaking of the Company or any of its subsidiaries or if 



  
 7 









	 	
distress, execution or other legal process is levied or enforced or sued out on or against the whole or the major part of the assets of the Company or any of its subsidiaries and is not
discharged, paid out, withdrawn or removed within 30 Business Days; or 

  

	 	(d)	the Company or any of its subsidiaries stops (or threatens to stop) payment of its debts generally or ceases (or threatens to cease) to carry on its business or a substantial part of its business; 


 

	 	(e)	the Company breaches the provisions of paragraph 7(c) of part 2 of Schedule 3; and 

  

	 	(f)	the Company or any of its subsidiaries is deemed for the purposes of section 123 Insolvency Act 1986 to be unable to pay its debts or compounds or proposes or enters into any reorganisation or special arrangement with
its creditors generally. 

  

	6.	ACTION FOLLOWING REDEMPTION 

  

	6.1	The Company shall give written notice to the Noteholder immediately on the Company becoming aware of the occurrence of an event specified in paragraph 5 of this Schedule 2, giving reasonable details of that event.


  

	6.2	If, on redemption of a Note, the Noteholder fails to deliver the Certificate for it, or an indemnity in accordance with these Conditions or to accept payment of moneys due to him, the Company shall pay the moneys due to
him into a bank account which payment shall discharge the Company from all further obligations in respect of the Note. 

  

	6.3	The Company shall cancel any and all Notes repaid, redeemed or purchased and shall not reissue them. 


  
 8 








 SCHEDULE 3 

CONVERSION 
 Part 1

 Conversion 
  

	1.	The Noteholder shall be entitled, at any time when it holds 19.5% or less of the aggregate voting rights in the Company and prior to the Maturity Date, and on one or more occasions, to serve a Conversion Notice on the
Company to convert all or some only of the Notes outstanding into fully paid Ordinary Shares at the Conversion Price per Share. It shall be a condition of any Conversion Notice that such conversion shall not cause the Noteholder to hold, following
conversion of the Notes which are subject of the Conversion Notice, and the issue of any NVS Bonus Shares in connection with such conversion, more than 19.5% of the aggregate voting rights in the Company. 


 

	2.	To the extent not previously converted or redeemed, the principal amount of all outstanding Notes shall automatically convert into Conversion Shares at the Conversion Price immediately prior to and conditional upon the
occurrence of any Change of Control. If and when a Change of Control is proposed, the Company shall, to the extent it is lawful and practicable to do so, give Noteholder not less than 3 Business Days’ prior written notice of the proposed Change
of Control specifying (to the best of its knowledge) the terms and prospective date of the Change of Control. 

  

	3.	The Conversion Notice shall set out, at a minimum: 

  

	 	(a)	the principal amount of the Notes to be converted; 

  

	 	(b)	whether any accrued but unpaid interest on such principal amount is to be converted; and 

  

	 	(c)	the Conversion Date 

  

	4.	The service of a Conversion Notice shall be irrevocable and binding on the Noteholder. 

  

	5.	Upon conversion of any Note, in addition to the relevant number of Conversion Shares, the Noteholder shall be entitled to receive, and the Company shall issue to the Noteholder, such number of NVS Bonus Shares as is
equal to: the number of Conversion Shares into which such Notes are to convert, multiplied by 0.93, up to a maximum aggregate number of 1,453,520 NVS Bonus Shares. 


Part 2 
 Procedures on
conversion 
  

	1.	On the Conversion Date, the Directors shall convert the principal amount of the specified in the Conversion Notice, and, if so elected by the Noteholder, any accrued but unpaid interest on such principal amount, into
such number of new fully paid Ordinary Shares at the Conversion Price per Share, subject to any adjustment as set out in paragraph 8 of Part 2 of this Schedule 3 and in accordance with the following provisions of paragraph 2 to paragraph 6 of Part 2
of this Schedule 3. 


  
 9 









	2.	Conversion of the Notes shall be effected by the Company redeeming the relevant Notes on the Conversion Date. Each Noteholder whose Notes are being converted shall be deemed to irrevocably authorise and instruct the
Company to apply the redemption moneys payable to that Noteholder in subscribing for Ordinary Shares on conversion of the Notes. 

  

	3.	the Conversion Shares and any NVS Bonus Shares shall be issued and allotted by the Company on the Conversion Date and the certificates for such Ordinary Shares shall be dispatched to the persons entitled to them at
their own risk. 

  

	4.	The Conversion Shares and any NVS Bonus Shares arising on conversion of the Notes shall be credited as fully paid and rank pari passu with the other Ordinary Shares in issue on the Conversion Date and shall carry the
right to receive all dividends and other distributions declared after the Conversion Date. 

  

	5.	The entitlement of the Noteholder to a fraction of an Ordinary Share shall be rounded to the nearest whole number of Ordinary Shares which result from the conversion of the Notes. 


 

	6.	The Company warrants to the Noteholder that the board of directors of the Company has been authorised pursuant to the Articles to execute this instrument, and to allot and issue the Conversion Shares and the NVS Bonus
Shares in accordance with its terms and, pursuant to that authorisation, the board of directors may allot and issue the Conversion Shares and the NVS Bonus Shares free from pre emptive rights upon conversion. 


 

	7.	The Company undertakes that, while the Notes remain in issue, it shall (pending either the payment of any redemption moneys in respect of the Notes or the issue of the Ordinary Shares on conversion, each in accordance
with the provisions of this instrument): 

  

	 	(a)	notify the Noteholder in writing as soon as reasonably practicable after the relevant board or general meeting of shareholders (whichever is the earliest) has resolved to implement an Adjustment Event specifying the
prospective date of the Adjustment Event and the proposed terms of it; 

  

	 	(b)	maintain sufficient shareholder authority to satisfy in full, without the need for the passing of any further resolutions of its shareholders, the most onerous of the outstanding rights of conversion for the time being
attaching to the Notes pursuant to paragraph 1 and paragraph 2 of Schedule 3, without first having to offer the same to any existing shareholders of the Company or any other person; 


 

	 	(c)	without the prior written consent of the Noteholder, such consent not to be unreasonably withheld or delayed, issue any further Notes or Indebtedness which ranks senior to the Notes. 


 

	8.	Following an Adjustment Event, the professional advisors or auditors of the Company for the time being shall certify to the Company in writing the adjustments to the number and nominal value of the Conversion Shares
(and any NVS Bonus Shares to be issued) which they consider to be necessary so that, after such adjustment and on conversion, the Noteholder shall be entitled to receive the same percentage of the issued share capital of the Company carrying the
same proportion of votes exercisable at a general meeting of shareholders and the same entitlement to participate in distributions of the Company, in each case as nearly as practicable, as would have been the case had no Adjustment Event occurred
(and making such reduction or increase as is necessary to the premium arising on the issue and allotment of the Ordinary Shares on conversion of the Notes). The Company shall then notify the Noteholder in writing of the necessary adjustment as
determined by the professional advisors or auditors. 


  
 10 








 Dated May 4, 2017 

 
  

DEED OF AMENDMENT 
 BETWEEN

 (1) MEREO BIOPHARMA GROUP PLC 

(2) NOVARTIS PHARMA AG 

relating to the convertible loan note instrument constituting 3,463,563 £1 unsecured convertible loan notes dated 3 June 2016 

 
  

 
  
 



 

  








 TABLE OF CONTENTS 

 

					
	1.	  	 Definitions and Interpretations
	  	1
			
	2.	  	 Amendment
	  	1
			
	3.	  	 Assignment and Transfer
	  	3
			
	4.	  	 Contract (Rights of Third Parties) Act 1999
	  	3
			
	5.	  	 Counterparts
	  	3
			
	6.	  	 Governing Law
	  	3


  
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 THIS DEED OF AMENDMENT is dated 4 May, 2017 (the Deed) and made between: 

 

	(1)	MEREO BIOPHARMA GROUP PLC, a company incorporated and registered in England and Wales with company number 09481161 whose registered office is at 4th floor, One
Cavendish Place, London W1G 0QF (the Company); and 

  

	(2)	NOVARTIS PHARMA AG, a company incorporated and registered in Switzerland whose registered office is Postfach, 4002 Basel Switzerland (the Noteholder). 


RECITALS 
  

	(A)	On 3 June 2016, the Company executed a convertible loan note instrument (the Original Instrument) under which it constituted 3,463,563 £1 unsecured convertible loan notes (the Loan Notes). The
Noteholder is the holder of all the Loan Notes. 

  

	(B)	The Company has entered into this Deed in order to amend certain provisions of the Original Instrument. The Noteholder is a party to the Deed for the purposes of acknowledging and agreeing to the amendments to the
Conditions of the Loan Notes set out in this Deed. 

  

	1.	DEFINITIONS AND INTERPRETATIONS 

 Unless otherwise stated, all words and phrases defined
in the Original Instrument shall have the same meanings when used herein. 
  

	2.	AMENDMENT 

  

	2.1	Save as set out below, the Original Instrument shall remain in full force and effect. 

  

	2.2	With effect from the date of this Deed, the following amendments are made to the provisions of the Original Instrument (with any changes being struck out or underlined (as applicable)): 


 

	 	(a)	Schedule 2, Paragraph 1.2: 

 “Any interest due under paragraph 1.1 of this Schedule 2
shall be payable in immediately available funds on the Maturity Date unless the Noteholder elects to convert the accrued interest to Ordinary Shares in accordance with Part
2 of Schedule 3.” 
  

	 	(b)	Schedule 3 Part 1, Paragraph 5: 

 “Upon conversion of any Note and any accrued
interest (if applicable), in addition to the relevant number of Conversion Shares, the Noteholder shall be entitled to receive, and the Company shall issue to the Noteholder, such number of NVS Bonus Shares as is
equal to: the number of Conversion Shares into which such Notes and such accrued interest are to convert, multiplied by 0.93, up to a maximum aggregate number of 1,453,520 NVS Bonus Shares.” 

 

	 	(c)	Schedule 3 Part 2, Paragraph 2: 

 “Conversion of the Notes and any accrued
interest (if applicable) shall be effected by the Company redeeming the relevant Notes and any accrued interest on the Conversion Date. Each Noteholder whose Notes and any accrued interest are being
converted shall be deemed to irrevocably authorise and instruct the Company to apply the redemption moneys payable to that Noteholder in subscribing for Ordinary Shares on conversion of the Notes and any
accrued interest.” 

  
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	 	(d)	Schedule 3 Part 2, Paragraph 4: 

 “The Conversion Shares and any NVS Bonus Shares
arising on conversion of the Notes and any accrued interest (if applicable) shall be credited as fully paid and rank pari passu with the other Ordinary Shares in issue on the Conversion Date and shall carry the right to receive all
dividends and other distributions declared after the Conversion Date.” 
  

	 	(e)	Schedule 3 Part 2, Paragraph 5: 

 “The entitlement of the Noteholder to a fraction of an
Ordinary Share shall be rounded to the nearest whole number of Ordinary Shares which result from the conversion of the Notes and any accrued interest (if applicable).” 

 

	 	(f)	Schedule 3 Part 2, Paragraph 7: 

 “The Company undertakes that, while the Notes remain
in issue, it shall (pending either the payment of any redemption moneys in respect of the Notes and any accrued interest or the issue of the Ordinary Shares on conversion, each in accordance with the provisions of this instrument):
 
 (a) notify the Noteholder in writing as soon as reasonably practicable after the relevant board or general meeting of shareholders
(whichever is the earliest) has resolved to implement an Adjustment Event specifying the prospective date of the Adjustment Event and the proposed terms of it; 

(b) maintain sufficient shareholder authority to satisfy in full, without the need for the passing of any further resolutions of its
shareholders, the most onerous of the outstanding rights of conversion for the time being attaching to the Notes and any accrued interest pursuant to paragraph 1 and paragraph 2 of Schedule 3, without first having to offer the same to any existing
shareholders of the Company or any other person; 
 (c) without the prior written consent of the Noteholder, such consent not
to be unreasonably withheld or delayed, issue any further Notes or Indebtedness which ranks senior to the Notes.” 
  

	 	(g)	Schedule 3 Part 2, Paragraph 8: 

 “Following an Adjustment Event, the professional
advisors or auditors of the Company for the time being shall certify to the Company in writing the adjustments to the number and nominal value of the Conversion Shares (and any NVS Bonus Shares to be issued) which they consider to be necessary so
that, after such adjustment and on conversion, the Noteholder shall be entitled to receive the same percentage of the issued share capital of the Company carrying the same proportion of votes exercisable at a general meeting of shareholders and the
same entitlement to participate in distributions of the Company, in each case as nearly as practicable, as would have been the case had no Adjustment Event occurred (and making such reduction or increase as is necessary to the premium arising on the
issue and allotment of the Ordinary Shares on conversion of the Notes and any accrued interest (if applicable)). The Company shall then notify the Noteholder in writing of the necessary adjustment as determined by the professional
advisors or auditors.” 

  
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	2.3	The parties hereto agree that the amendments at clause 2.2 shall apply with respect to any and all interest due under the Original Instrument, whether such interest accrued prior to, on or after the date of this Deed.


  

	3.	ASSIGNMENT AND TRANSFER 

 The parties hereto acknowledge and agree that no party shall
have any right to assign, transfer or in any way dispose of the benefit (or any part thereof) or the burden (or any part thereof) of this Deed without the prior written consent of the other party. 

 

	4.	CONTRACT (RIGHTS OF THIRD PARTIES) ACT 1999 

 A person who is not a party to this Deed
shall have no right under the Contract (Rights of Third Parties) Act 1999 to enforce any term of this Deed. This Clause 4 does not affect any right or remedy of any person which exists or is available otherwise than pursuant to that Act. 

 

	5.	COUNTERPARTS 

 This Deed may be executed in any number of counterparts, each of which
when executed and delivered shall constitute a duplicate original, but all the counterparts shall together constitute the one Deed. 
  

	6.	GOVERNING LAW AND JURISDICTION 

  

	6.1	This Deed (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, the laws of England. 


 

	6.2	The courts of England shall have exclusive jurisdiction to settle any dispute or claim that arises out of, or in connection with, this Deed (including non-contractual disputes or
claims). Accordingly, any proceedings relating to, or in connection with, this Deed (including non-contractual disputes or claims) may be brought in such courts. 


  
 - 3 - 









					
	 Executed as a Deed by MEREO BIOPHARMA GROUP PLC 

 
	  	}
}
}	  	
	acting by:	  	}	  	
		  	}	  	 /s/ Richard Jones

		  		  	Director
			
	in the presence of:	  	}	  	 /s/ F. Steadman

		  	}	  	Name of Witness
			
	 Executed as a Deed by NOVARTIS PHARMA AG 

a company incorporated in Switzerland acting by,
	  	}
}
}
	  	
	being a person who, in accordance with the laws of that territory, is acting under the authority of the company	  	}	  	
	  	}	  	 /s/ Marc Ceulemans

		  		  	Director
			
	in the presence of:	  	}	  	 /s/ Florence Gros

		  	}	  	Name of Witness


  
 - 4 - 








 DATED 31st October, 2017 

(1) MEREO BIOPHARMA GROUP PLC 

and 
 (2) NOVARTIS PHARMA AG

  
  

SECOND DEED OF AMENDMENT 

relating to the convertible loan note instrument constituting 

3,463,563 £1 unsecured convertible loan notes dated 3 June 2016 

 
  







 THIS DEED OF AMENDMENT is made on 31st October, 2017 

BETWEEN: 
  

	(1)	MEREO BIOPHARMA GROUP PLC, a company incorporated and registered in England and Wales with company number 09481161 whose registered office is at 4th floor, One Cavendish Place, London W1G 0QF (the
“Company”); and 

  

	(2)	NOVARTIS PHARMA AG, a company incorporated and registered in Switzerland whose registered office is at Postfach, 4002 Basel, Switzerland (the “Noteholder”), 


each a “Party” and together the “Parties”. 

RECITALS 
  

	(A)	On 3 June 2016, the Company executed a convertible loan note instrument, which was amended by a deed of amendment entered into between the Parties and dated 4 May 2017 (as amended, the “Original
Instrument”) under which the Company constituted 3,463,563 £1 unsecured convertible loan notes, all of which are held by the Noteholder. 

  

	(B)	The Company has entered into a loan agreement with inter alia Silicon Valley Bank and Kreos Capital V (UK) Limited (the “Lenders”), pursuant to which the Company is obliged to repay to the
Lenders a principal amount of up to £20,000,000 and all interest accrued thereon. 

  

	(C)	The Parties are entering into this Deed in order to amend certain provisions of the Original Instrument. 


IT IS AGREED as follows: 
  

	1.	INTERPRETATION 

 Save where the context requires otherwise, or where
expressly defined herein to the contrary, words and expressions defined in the Original Instrument shall have the same meaning when used in this Deed. 
  

	2.	AMENDMENT 

  

	2.1	The following definitions shall be added to the Original Instrument: 

  

			
	Lenders	    	Silicon Valley Bank and Kreos Capital V (UK) Limited, collectively.
		
	Loan Agreement	    	the loan agreement between inter alia the Company and the Lenders, dated 7 August 2017.
		
	Loan Repayment Amount	    	the principal amount of up to £20,000,000 and all interest accrued thereon, payable by the Company to the Lenders in accordance with the terms of the Loan Agreement.









	2.2	The definition of “Maturity Date” shall be amended so as to read as follows: 

  

			
	 Maturity Date
	  	2 March 2021, or if agreed in writing between the Parties, any earlier date falling one (1) Business Day following the Company’s full repayment to the Lenders of the Loan Repayment Amount, provided in any event
that the Maturity Date shall not fall on any date preceding 3 June 2019.

  

	3.	CONTINUITY 

 The provisions of the Original Instrument shall, save as
amended by this Deed, continue in full force and effect, and shall be read an construed as one document with this Deed. 
  

	4.	COUNTERPARTS 

 This Deed may be executed in any number of counterparts,
which together shall constitute one Deed. Any party may enter into this Deed by executing any such counterpart. 
  

	5.	GOVERNING LAW 

  

	5.1	This Deed and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with the law of England and Wales.


  

	5.2	The courts of England and Wales shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Deed and any proceedings arising out of or in connection with this Deed shall be
brought in such courts. The Parties irrevocably submit to the jurisdiction of such courts and waive any objection to proceedings in any such court on the ground of venue or on the ground that the proceedings have been brought in an inconvenient
forum. 








 In witness hereof this Deed of Amendment has been executed and delivered as a DEED and is
DELIVERED and takes effect on the date first written above. 
  

					
	EXECUTED and DELIVERED	 		    	
	as a DEED by	 		    	
	MEREO BIOPHARMA GROUP PLC    )	 		    	 /s/ Richard Jones

	acting by its duly authorised director in the presence of:	 		    	Director

  

			
	Signature of witness:	 	
/s/ Florence Steadman              



  

			
	Name of witness:	 	Florence Steadman

  

			
	Address of witness:	 	[XXXX]

  

			
	Occupation:  	 	Executive Assistant









					
	EXECUTED and DELIVERED	 		    	
	as a DEED by	 		    	
	NOVARTIS PHARMA AG    )	 		    	 /s/ Marc Ceulemans

	acting by its duly authorised director in the presence of:	 		    	Director

  

			
	Signature of witness:	 	
/s/ Grazyna Stawana-Lubiniecki         
     


 Name of witness: Grazyna Stawana-Lubiniecki 

Address of witness:Novartis Venture Fund in Basel 
 Occupation:
Office Manager