Mereo BioPharma Group plc
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 13, 2024
MREO$0.28+0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0000950170-24-060497
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0000950170-24-095777
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 84 previous paragraphs and 124 current paragraphs.
57 unchanged; 24 reworded; 28 added; 3 removed; 0 previous and 15 current paragraphs rearranged.
Tables are not compared: 3 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
On June 11, 2024, we and our partner, Ultragenyx jointly announced positive 14-month results from the Phase 2 portion of the ongoing Phase 2/3 Orbit study (NCT05125809) demonstrating that, as of a May 24, 2024 data cut-off date, treatment with setrusumab (UX143) continued to significantly reduce incidence of fractures in patients with OI with at least 14 months of follow-up. Treatment with setrusumab also resulted in ongoing and meaningful improvements in lumbar spine bone mineral density (BMD) at month 12 without evidence of plateau.
Current report
The large reduction in annualized radiologically confirmed fracture rate previously reported in patients treated for a minimum of 6 months was sustained in patients treated for at least 14 months with a high degree of significance. The median annualized rate of radiologically confirmed fractures across all 24 patients in the 2 years prior to treatment was 0.72. Following a mean treatment duration period of 16 months, the median annualized fracture rate was reduced 67% to 0.00 (p=0.0014; n=24). The annualized fracture rate excluded morphometric vertebral fractures and fractures of the fingers, toes, skull, and face, consistent with the Phase 3 study primary efficacy endpoint.
Current report
On June 17, 2024, we issued 12,531,300 ADSs representing 62,656,500 ordinary shares through an underwritten registered direct offering priced at-the-market on June 14, 2024 at a price of $3.99 per ADS. We raised aggregate gross proceeds of $50.0 million, or $47.0 million after underwriting discounts of $3.0 million. We also incurred other issuance costs of $1.0 million.
Current report
Revenue
Current report
No revenue was recognized for the three months ended June 30, 2024. Revenue of $9.0 million for the three months ended June 30, 2023 comprised a one-time milestone payment of $9.0 million resulting from the achievement of a clinical milestone on setrusumab by Ultragenyx.
Current report
Cost of revenue
Current report
No cost of revenue was recognized for the three months ended June 30, 2024. Cost of revenue for the three months ended June 30, 2023 was $3.4 million and primarily represents amounts payable pursuant to our 2015 agreement with Novartis, under which the Company pays a percentage of proceeds resulting from milestone revenue received, subject to certain deductions, and other amounts on the achievement of clinical milestones.
Current report
Total R&D expenses increased by $1.2 million, or 33%, from $3.7 million in the three months ended June 30, 2023 to $4.9 million in the three months ended June 30, 2024.
Current report
The increase was primarily due to increases of $1.9 million and $0.9 million of R&D expenses for alvelestat and setrusumab, respectively, partially offset by a $1.5 million reduction in R&D expenses for etigilimab.
Current report
General and administrative expenses increased by $5.2 million, or 195%, from $2.7 million in the three months ended June 30, 2023 to $7.9 million in the three months ended June 30, 2024. The increase is primarily related to: (i) a $3.4 million reduction in expenses which was recognized in the three months ended June 30, 2023 for amounts from our depository to reimburse certain expenses incurred by us in respect of our ADR program, whereas in 2024, $1.7 million was received from our depository in the three months ended March 31, 2024; and (ii) pre-commercial activities to lay the foundation for the commercial launch of setrusumab in Europe, including those to support pricing and reimbursement by HTA authorities and payor decision-makers in Europe of $0.9 million.
Current report
Other comprehensive income– Foreign currency translation adjustments
Current report
The foreign currency translation adjustment for the three months ended June 30, 2024 was a gain of less than $0.1 million, compared to a gain of $1.4 million for the three months ended June 30, 2023. The $1.4 million change primarily reflects the impact of the weakening of U.S. dollars when translating the net assets of the Company from its functional currency (pound sterling) into its presentational currency (U.S. dollars) which was fully offset by the change in the weighted average historical exchange rate used to translate the equity components.
Current report
Revenue
Current report
No revenue was recognized for the six months ended June 30, 2024. Revenue of $9.0 million for the six months ended June 30, 2023 comprised a one-time milestone payment of $9.0 million resulting from the achievement of a clinical milestone on setrusumab by Ultragenyx.
Current report
Cost of revenue
Current report
No cost of revenue was recognized for the six months ended June 30, 2024. Cost of revenue for the six months ended June 30, 2023 was $3.1 million and primarily represents amounts payable pursuant to our 2015 agreement with Novartis, under which the Company pays a percentage of proceeds resulting from milestone revenue received, subject to certain deductions, and other amounts on the achievement of clinical milestones.
Current report
General and administrative expenses
Current report
General and administrative expenses increased by $4.7 million, or 51%, from $9.1 million in the six months ended June 30, 2023 to $13.8 million in the six months ended June 30, 2024.
Current report
(i)
Current report
Pre-commercial activities to lay the foundation for the commercial launch of setrusumab in Europe, including those to support pricing and reimbursement by HTA authorities and payor decision-makers in Europe of $1.3 million.
Current report
(ii)
Current report
Net increases in other general and administrative expenses of approximately $1.7 million, including legal and professional fees in respect of compliance with the U.S. domestic reporting regime and employee-related costs.
Current report
(iii)
Current report
A reduction of $1.7 million in the amount received from our depository to reimburse certain expenses incurred by us in respect of our ADR program in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current report
Interest income and expense
Current report
Foreign currency transaction gain/(loss)
Current report
The net foreign exchange gain for the six months ended June 30, 2024 was $0.6 million compared to a loss of $2.0 million in for the six months ended June 30, 2023. This change primarily reflects the impact of a slight weakening in the value of U.S. dollars when translating U.S. dollar foreign currency balances into into our functional currency of pound sterling in the six months ended June 30 2024 compared to a greater strengthening of U.S. dollars in the six months ended June 30, 2023.
Current report
Comparison of The Six Months Ended June 30, 2024, and 2023
Removed paragraphs (3)
Previous report
On April 30, 2024, our partner, Ultragenyx announced that all patients have been enrolled across the Phase 3 Orbit and Cosmic studies evaluating setrusumab in pediatric and young adult patients with osteogenesis imperfecta (OI). The pivotal Phase 3 portion of the Orbit study has randomized 158 patients ages 5 to 25 years, and the Cosmic study has completed enrollment of 66 patients ages 2 to <7 years.
Previous report
On April 15, 2024, we entered into an extension letter, effective as of April 15, 2024 to the cooperation agreement, dated October 28, 2022, between the Company and Rubric Capital Management L.P. (“Rubric Capital”). The extension letter waived the requirement under Section 1(f) of the Cooperation Agreement for Mr. Justin Roberts to offer to resign from the Company’s Board of Directors and all applicable committees thereof upon the termination date of the Cooperation Agreement which was immediately following the conclusion of the Company’s 2024 annual shareholder meeting (the “Termination Date”) and extended the Termination Date of the Cooperation Agreement until immediately following the conclusion of the Company’s 2025 annual shareholder meeting.
Previous report
General and administrative expenses decreased by $0.5 million, or 8%, from $6.4 million in the three months ended March 31, 2023 to $5.9 million in the three months ended March 31, 2024.
Reworded paragraphs (24)
Previous wording
We are a biopharmaceutical company focused on the development of innovative therapeutics for rare diseases. We have developed a portfolio of late-stage clinical product candidates. Our two rare disease product candidates are setrusumab for the treatment of osteogenesis imperfecta (OI) and alvelestat primarily for the treatment of severe alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD). Setrusumab has received orphan designation for OI from the European Medicines Agency (EMA) and the U.S. Food and Drug Administration (FDA), PRIME designation from the EMA and has rare pediatric disease designation from the FDA. Alvelestat has received U.S. Orphan Drug Designation for the treatment of AATD and Fast Track designation for the treatment of AATD-LD.
Current wording
We are a biopharmaceutical company focused on the development of innovative therapeutics for rare diseases. We have developed a portfolio of late-stage clinical product candidates. Our two rare disease product candidates are setrusumab for the treatment of osteogenesis imperfecta (OI) and alvelestat primarily for the treatment of severe alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD). Setrusumab has received orphan designation for OI from the European Medicines Agency (EMA) and the U.S. Food and Drug Administration (FDA), PRIME designation from the EMA and has rare pediatric disease designation from the FDA. Alvelestat has received U.S. Orphan Drug Designation for the treatment of AATD and Fast Track designation from the FDA for the treatment of AATD-LD.
Previous wording
Our strategy is to selectively acquire and develop product candidates for rare diseases that have already received significant investment from large pharmaceutical and biotechnology companies and that have substantial pre-clinical, clinical and manufacturing data packages. Since our formation in March 2015, we have successfully executed on this strategy by acquiring six clinical-stage product candidates of which four were in rare diseases and oncology. Four of our six clinical-stage product candidates were acquired from large pharmaceutical companies and two were acquired in the Merger. We have successfully completed large, randomized Phase 2 clinical trials for four of our product candidates and the Phase 1b portion of a Phase 1b/2 for a fifth product candidate.
Current wording
Our strategy is to selectively acquire and develop product candidates for rare diseases that have already received significant investment from large pharmaceutical and biotechnology companies and that have substantial pre-clinical, clinical and manufacturing data packages. Since our formation in March 2015, we have successfully executed on this strategy by acquiring six clinical-stage product candidates of which four were in rare diseases and oncology. Four of our six clinical-stage product candidates were acquired from large pharmaceutical companies and two were acquired in our merger with OncoMed Pharmaceuticals Inc in 2019. We have successfully completed large, randomized Phase 2 clinical trials for four of our product candidates and the Phase 1b portion of a Phase 1b/2 for a fifth product candidate.
Previous wording
Rare diseases represent an attractive development and, in some cases, commercialization opportunity for us since they typically have high unmet medical need and can utilize regulatory pathways that facilitate acceleration to approval and to the potential market. Development of products for rare diseases involve close collaboration with key opinion leaders and investigators, and close coordination with patient organizations. Rare disease patients are typically treated at a limited number of specialized sites which helps identification of the patient population and enables a small, targeted sales infrastructure to commercialize the products in key markets.
Current wording
Rare diseases represent an attractive development and, in some cases, commercialization opportunity for us since they typically have high unmet medical need and can utilize regulatory pathways that facilitate acceleration to approval and to the potential market. Development of products for rare diseases involves close collaboration with key opinion leaders and investigators, and close coordination with patient organizations. Rare disease patients are typically treated at a limited number of specialized sites which helps identification of the patient population and enables a small, targeted sales infrastructure to commercialize the products in key markets.
Previous wording
The reduction in etigilimab expenses was primarily due to the winding down and completion during 2023 of the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types. Program expenses for setrusumab are in relation to increases in ongoing activities in Europe, and input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development program is funded by Ultragenyx pursuant to our license and collaboration agreement. Program expenses for alvelestat primarily include the preparatory work for the Phase 3 study, including manufacturing and drug formulation activities, St. Georges Respiratory Questionnaire (SGRQ) validation activities and regulatory interactions.
Current wording
The increase in the program expenses for alvelestat primarily relates to preparatory work for the Phase 3 study, including manufacturing and drug formulation activities, St. Georges Respiratory Questionnaire (SGRQ) validation activities and regulatory filings and interactions.
Previous wording
Total interest income increased from $0.3 million in the three months ended March 31, 2023 to $0.6 million in the three months ended March 31, 2024. The increase was principally due to higher interest rates on short-term deposits.
Current wording
Total interest income increased from $0.4 million in the three months ended June 30, 2023 to $0.6 million in the three months ended June 30, 2024. The increase was principally due to higher interest rates on short-term deposits.
Previous wording
Total interest expense decreased from $0.8 million in the three months ended March 31, 2023 to $0.3 million in the three months ended March 31, 2024. This decrease was principally due to the lower balance in the quarter of convertible loan notes as the private placement loan notes were fully converted and redeemed in August 2023.
Current wording
Total interest expense decreased from $1.0 million in the three months ended June 30, 2023 to $0.3 million in the three months ended June 30, 2024. This decrease was principally due to the lower balance in the quarter of convertible loan notes as the private placement loan notes were fully converted and redeemed in August 2023.
Previous wording
The total change in fair value of financial instruments for the three months ended March 31, 2024 was an unrealized loss of $0.4 million, compared to an unrealized gain of $0.5 million in the three months ended March 31, 2023. The unrealized loss in 2024 is principally due to the increase in the share price of the Company's ADSs while the unrealized gain in 2023 was due to the Private Placement warrants, which reduced in value as they neared expiration in June 2023.
Current wording
The total change in fair value of financial instruments for the three months ended June 30, 2024 was an unrealized loss of $0.1 million, compared to an unrealized loss of $0.1 million in the three months ended June 30, 2023. The unrealized loss in 2024 is principally due to the increase in the share price of the Company's ADSs while the unrealized gain in 2023 was due to the Private Placement warrants, which reduced in value as they neared expiration in June 2023.
Previous wording
The net foreign exchange gain for the three months ended March 31, 2024 was $0.6 million compared to a loss of $1.2 million in for the three months ended March 31, 2023. The net foreign exchange gain is primarily reflecting the impact of the strengthening of the U.S. dollars when translating pound sterling currency balances.
Current wording
The net foreign exchange gain for the three months ended June 30, 2024 was less than $0.1 million compared to a loss of $0.8 million in for the three months ended June 30, 2023. This change primarily reflects the impact of a slight weakening in the value of U.S. dollars when translating U.S. dollar foreign currency balances into our functional currency of pound sterling in the three months ended June 30, 2024, compared to a greater strengthening of U.S. dollars in the three months ended June 30, 2023.
Previous wording
The benefit from research and development tax credits was $0.5 million for the three months ended March 31, 2023 and 2024, which reflects similar levels of qualifying expenditure in both periods. This tax credit represents eligible cash rebates paid or receivable from the tax authorities in the jurisdictions within which we operate for eligible types of research and development activities and associated expenditure (the “R&D tax credit”).
Current wording
The benefit from research and development tax credits was $0.4 million for the three months ended June 30, 2024 and $0.6 million for the three months ended June 30, 2023, which reflects a combination of a lower level of qualifying expenditure in 2024 and a reduction in the proportion of qualifying expenditure that can be reclaimed under the scheme rules. The tax credits represent eligible cash rebates paid or receivable from the tax authorities in the jurisdictions within which we operate for eligible types of research and development activities and associated expenditure (the “R&D tax credit”).
Previous wording
Comparison of The Three Months Ended March 31, 2024, and 2023
Current wording
Comparison of the Six Months Ended June 30, 2024 and 2023
Previous wording
Total R&D expenses decreased by $1.3 million, or 25%, from $5.3 million in the three months ended March 31, 2023 to $4.0 million in the three months ended March 31, 2024.
Current wording
Total R&D expenses decreased by $0.1 million, or 1%, from $9.0 million in the six months ended June 30, 2023 to $8.9 million in the three months ended June 30, 2024.
Previous wording
The decrease was primarily due to a $1.8 million reduction in R&D expenses for etigilimab, partially offset by increases of $0.3 million of R&D expenses for both setrusumab and alvelestat.
Current wording
The decrease was primarily due to a $3.3 million reduction in R&D expenses for etigilimab, partially offset by increases of $2.2 million and $1.2 million of R&D expenses for alvelestat and setrusumab, respectively.
Previous wording
The decrease is primarily related to recognition of a $1.7 million reduction in expenses in the three months ended March 31, 2024 for amounts from our depository to reimburse certain expenses incurred by us in respect of our ADR program, partially offset by an increase in employee-related expenses and professional fees. No similar reimbursements from our depository were recognized in the three months ended March 31, 2023.
Current wording
The increase is primarily related to:
Previous wording
The foreign currency translation adjustment for the three months ended March 31, 2024 was a loss of $0.8 million compared to a gain of $2.3 million for the three months ended March 31, 2023. The $3.1 million change primarily reflects the impact of the strengthening of U.S. dollars when translating from the functional currency of the Company (pound sterling) into the presentational currency (U.S. dollars).
Current wording
The foreign currency translation adjustment for the six months ended June 30, 2024 was a loss of $0.8 million compared to a gain of $3.7 million for the six months ended June 30, 2023. The $ 4.5 million change primarily reflects the impact of the strengthening of U.S. dollars when translating from the functional currency of the Company (pound sterling) into the presentational currency (U.S. dollars).
Previous wording
We do not currently have any approved product candidates and as a result, have not generated any revenue from product sales. As a result, to date, we have financed our operations primarily through the issuances of our equity securities, convertible debt and warrants. Through these offerings, we raised approximately $209 million, including $12.0 million raised in July 2023 through an “at-the-market” offering pursuant to our Open Market Sale Agreement with Jefferies LLC.
Current wording
We do not currently have any approved product candidates and as a result, have not generated any revenue from product sales. As a result, to date, we have financed our operations primarily through the issuances of our equity securities, convertible debt and warrants. These offerings have raised approximately $259 million, including through the $50.0 million underwritten registered direct offering in June 2024 and the $12.0 million “at-the-market” offering pursuant to our Open Market Sale Agreement with Jefferies LLC in July 2023 (all amounts are gross proceeds before fees and discounts).
Previous wording
As further described in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 27, 2023, under “Item 1. Business—Material Agreements—Novartis Agreements” and “Item 1. Business—Material Agreements—Licensing Agreement with AstraZeneca,” under various agreements with Novartis and AstraZeneca, Mereo has agreed to make milestone payments and pay royalties. The amount, timing, and likelihood of such payments are not known and will remain uncertain for the foreseeable future.
Current wording
As further described in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 27, 2023, under “Item 1. Business—Material Agreements—Novartis Agreements” and “Item 1. Business—Material Agreements—Licensing Agreement with AstraZeneca,” under various agreements with Novartis and AstraZeneca, Mereo has agreed to make milestone payments and pay royalties on potential future commercial sales. The amount, timing, and likelihood of such payments are not known and will remain uncertain for the foreseeable future.
Previous wording
In addition, Mereo enters into contracts in the ordinary course of business with CROs, CMOs, and other vendors to assist in the performance of its research and development activities and other services and products for operating purposes. The contracts with CROs generally provide for termination on notice, and therefore are cancelable contracts. We have manufacturing commitments with CMOs of $3.1 million as of March 31, 2024.
Current wording
In addition, Mereo enters into contracts in the ordinary course of business with CROs, CMOs, and other vendors to assist in the performance of its research and development activities and other services and products for operating purposes. The contracts with CROs generally provide for termination on notice, and therefore are cancelable contracts. We have manufacturing commitments with CMOs of $2.4 million as of June 30, 2024.
Previous wording
The table below summarizes our cash flows (used in) from operating, investing and financing activities for the three months ended March 31, 2024 and 2023.
Current wording
The table below summarizes our cash flows (used in) from operating, investing and financing activities for the six months ended June 30, 2024 and 2023.
Previous wording
Net cash used in operating activities for the three months ended March 31, 2024, was $8.0 million, a decrease of $1.3 million from $9.2 million in the three months ended March 31, 2023. The decrease was primarily driven by the receipt of$1.7 million from our depository to reimburse certain expenses incurred by us in respect of our ADR program and $2.0 million received under a claim on our Directors and Officers insurance policy to reimburse us for certain legal and professional costs incurred in prior years. These inflows were partially offset by approximately $2.0 million higher up-front payments to suppliers, principally for clinical supply manufacturing, as well as payments pursuant to our asset purchase agreements with Novartis.
Current wording
Net cash used in operating activities for the six months ended June 30, 2024, was $15.9 million, a decrease of $1.1 million from $17.0 million in the six months ended June 30, 2023. The decrease was primarily driven by$2.0 million received from a claim on our Directors and Officers insurance policy to reimburse us for certain legal and professional costs incurred in prior years and $1.5 million higher net interest inflows. These decreases were partially offset by receipt of $1.7 million less from our depository to reimburse certain expenses incurred by us in respect of our ADR program in the six months ended June 30, 2024 than the six months ended June 30, 2023 and $0.7 million higher operating expense payments.
Previous wording
Net cash used in investing activities for the three months ended March 31, 2024, was $0.7 million, an increase of $0.3 million from $0.4 million in the three months ended March 31, 2023. In both periods, these cash flows relate to payments to acquire intangible assets.
Current wording
Net cash used in investing activities for the six months ended June 30, 2024, was $0.7 million, an increase of $0.3 million from $0.4 million in the six months ended June 30, 2023. In both periods, these cash flows relate to payments to acquire intangible assets.
Previous wording
Net cash provided by financing activities for the three months ended March 31, 2024 and March 31, 2023 was $ nil.
Current wording
Net cash provided by financing activities for the six months ended June 30, 2024 was $46.8 million, an increase of $46.7 million from $0.1 million in the six months ended June 30, 2023. The increase was due to the net proceeds received from the underwritten registered direct offering in June 2024.
Previous wording
As of March 31, 2024, we had an accumulated deficit of $428.6 million. We expect to continue to report significant operating losses for the foreseeable future as we continue our research and development efforts and seek to obtain regulatory approval of our product candidates and any future product we develop.
Current wording
As of June 30, 2024, we had an accumulated deficit of $440.8 million. We expect to continue to report significant operating losses for the foreseeable future as we continue our research and development efforts and seek to obtain regulatory approval of our product candidates and any future product we develop.
Previous wording
Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our accounting estimates based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The actual impact on our financial performance could differ from these estimates under different assumptions or conditions.
Current wording
Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our accounting estimates based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The actual impact on our financial performance could differ from these estimates under different assumptions or conditions.
Previous wording
An accounting estimate is considered critical if both (i) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (ii) the impact within a reasonable range of outcomes of the estimates and assumptions is material to our unaudited condensed consolidated financial statements. We believe that there are no estimates and assumptions made in our unaudited condensed consolidated financial statements that rise to this level. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our 2023 Annual Report, which was filed with the SEC on March 27, 2024. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. Other than as disclosed in Note 2 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no significant changes to our critical accounting estimates from those described in our 2023 Annual Report.
Current wording
An accounting estimate is considered critical if both (i) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (ii) the impact within a reasonable range of outcomes of the estimates and assumptions is material to our unaudited condensed consolidated financial statements. We believe that there are no estimates and assumptions made in our unaudited condensed consolidated financial statements that rise to this level. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting
Rearranged current paragraphs (15)
Current report — wording carried from elsewhere
The increase in program expenses for setrusumab is driven by additional activities in Europe and resources for the input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development program is funded by Ultragenyx pursuant to our license and collaboration agreement.
Current report — wording carried from elsewhere
The reduction in etigilimab expenses was primarily due to the winding down and completion during 2023 of the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types.
Current report — wording carried from elsewhere
The following table sets forth Mereo’s results of operations for the six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
Research and development (“R&D”) Expenses
Current report — wording carried from elsewhere
The following table sets forth our R&D expenses by product development program for the six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
The reduction in etigilimab expenses was primarily due to the winding down and completion during 2023 of the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types.
Current report — wording carried from elsewhere
The increase in the program expenses for alvelestat primarily relates to preparatory work for the Phase 3 study, including manufacturing and drug formulation activities, St. Georges Respiratory Questionnaire (SGRQ) validation activities and regulatory interactions.
Current report — wording carried from elsewhere
The increase in program expenses for setrusumab is driven by additional activities in Europe, and resources for the input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development program is funded by Ultragenyx pursuant to our license and collaboration agreement.
Current report — wording carried from elsewhere
Total interest income increased from $0.7 million in the six months ended June 30, 2023 to $1.2 million in the six months ended June 30, 2024. The increase was principally due to higher interest rates on short-term deposits.
Current report — wording carried from elsewhere
Total interest expense decreased from $1.8 million in the six months ended June 30, 2023 to $0.6 million in the six months ended June 30, 2024. This decrease was principally due to the lower balance in the six months of convertible loan notes as the private placement loan notes were fully converted and redeemed in August 2023.
Current report — wording carried from elsewhere
Changes in the fair value of financial instruments
Current report — wording carried from elsewhere
The total change in fair value of financial instruments for the six months ended June 30, 2024 was an unrealized loss of $0.5 million, compared to an unrealized gain of $0.4 million in the six months ended June 30, 2023. The unrealized loss in 2024 is principally due to the increase in the share price of the Company's ADSs during the period, while the unrealized gain in 2023 was due to the Private Placement warrants, which reduced in value as they neared expiration in June 2023.
Current report — wording carried from elsewhere
Benefit from research and development tax credit
Current report — wording carried from elsewhere
The benefit from research and development tax credits was $0.8 million for the six months ended June 30, 2024 compared to $1.1 million for the six months ended June 30, 2023, which reflects a combination of a lower level of qualifying expenditure in 2024 and a reduction in the proportion of qualifying expenditure that can be reclaimed under the scheme rules. The tax credits represent eligible cash rebates paid or receivable from the tax authorities in the jurisdictions within which we operate for eligible types of research and development activities and associated expenditure (the “R&D tax credit”).
Current report — wording carried from elsewhere
Estimates” in our 2023 Annual Report, which was filed with the SEC on March 27, 2024. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. Other than as disclosed in Note 2 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no significant changes to our critical accounting estimates from those described in our 2023 Annual Report.