Mereo BioPharma Group plc

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 strategy is to become a leading biopharmaceutical company developing innovative therapeutics that aim to improve outcomes for patients with rare diseases.

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 for the treatment of severe alpha-1 antitrypsin deficiency-associated lung disease (AATD-LD).Setrusumab has received orphan designation for OI from the EC and the FDA, PRIME designation from the EMA and has Breakthrough Therapy designation and rare pediatric disease designation from the FDA. Alvelestat has received orphan designation for AATD from the EC and the FDA, and Fast Track designation for the treatment of AATD-LD from the FDA.

Previous wording

Revenue includes income from licensing and collaboration agreements. Consideration received up front is recognized at the point in time in which the right to use a license or intellectual property is transferred. Income from development, regulatory, commercial or similar milestones is recognized when considered highly probable that a significant reversal of revenue generated will not occur.

Current wording

No revenue was recognized in the year ended December 31, 2024, however in previous years revenue has included income from licensing and collaboration agreements. Consideration received up front is recognized at the point in time in which the right to use a license or intellectual property is transferred. Income from development, regulatory, commercial or similar milestones is recognized when considered probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the milestone is subsequently resolved.

Previous wording

Payments to third parties arising as a direct consequence of the revenue recognized are recorded within cost of revenue in the Company’s consolidated statements of operations and comprehensive loss. The costs recognized under cost of revenue in the year ended December 31, 2023 and December 31, 2022 are the payments that we are obligated to pay to Novartis under the 2015 asset purchase agreements. In 2015, when we purchased acumapimod, leflutrozole and setrusumab from Novartis, we agreed to pay Novartis if certain events occurred in relation to these compounds. The events that warrant a payment to Novartis are sales related or when a change in control occurs. When it is probable that either of these events will occur, revenue is recognized, and the corresponding payment obligation to Novartis is recognized within Cost of revenue.

Current wording

Payments to third parties arising as a direct consequence of the revenue recognized are recorded within cost of revenue in the Company’s consolidated statements of operations and comprehensive loss. No cost of revenue was recognized in the year ended December 31, 2024, however for the year ended December 31, 2023, cost of revenue included amounts that we were obligated to pay to Novartis under the 2015 asset purchase agreements. In 2015, when we purchased acumapimod, leflutrozole and setrusumab from Novartis, we agreed to pay Novartis if certain events occurred in relation to these compounds. The events that warrant a payment to Novartis are sales related or when a change in control occurs. When it is probable that either of these events will occur, revenue is recognized, and the corresponding payment obligation to Novartis is recognized within cost of revenue.

Previous wording

Intellectual property costs incurred on each drug candidate and costs associated withpre-commercial activities to support pricing and reimbursement by health technology assessment (“HTA”) authorities and payor decision-makers in Europe are excluded from R&D expenses and are recognized within General and administrative expenses. Our direct research and development expenses are allocated on a product-by-product basis. We allocate employee-related expenses for our research and development personnel and other related expenses to specific product candidate development programs.

Current wording

Intellectual property costs incurred on each drug candidate and costs associated with pre-commercial activities to support pricing and reimbursement by health technology assessment (“HTA”) authorities and payor decision-makers in Europe are excluded from R&D expenses and are recognized within general and administrative expenses. Our direct R&D expenses are allocated on a product-candidate-by-product-candidate basis. We allocate employee-related expenses for our R&D personnel and other related expenses to specific product candidate development programs.

Previous wording

Product candidates in a later stage of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later stage clinical trials as well as preparation for potential specific post-authorization evidence generation that might be demanded by regulatory authorities. As we advance the clinical development of our product candidates, we expect that our research and development expense will continue to include costs of inputting into development, regulatory and manufacturing plans with our partner, Ultragenyx, for setrusumab; activities associated with preparation of alvelestat for the Phase 3 study, including CMC and drug formulation, activities associated with validation of the patient reported outcome (PRO) and additional regulatory interactions; and the close-out of the Phase 1b portion of the Phase1b/2 basket study for etigilimab.

Current wording

Product candidates in a later stage of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later stage clinical trials as well as preparation for potential specific post-authorization evidence generation that might be demanded by regulatory authorities. As we advance the clinical development of our product candidates, we expect that our R&D expense will continue to include costs of inputting into development, regulatory and manufacturing plans with our partner, Ultragenyx, for setrusumab; and activities associated with preparation of alvelestat for the Phase 3 study, including CMC, regulatory and other activities required to initiate the study.

Previous wording

the scope, rate of progress, and expense of our research and development activities;

Current wording

the scope, rate of progress, and expense of our R&D activities;

Previous wording

Our general and administrative expenses principally consist of salaries and related benefits, including share-based compensation, for personnel in our executive, finance and other administrative functions. Other general and administrative costs include facility-related costs, professional services fees for auditing, tax and general legal services, intellectual property costs, pre-commercial activities, costs related toour requirements of being a public company listed on Nasdaq, and costs incurred relating to the issue of equity to the extent not capitalized.

Current wording

Our general and administrative expenses principally consist of salaries and related benefits, including share-based compensation, for personnel in our executive, finance and other administrative functions as well as certain pre-commercial activities, including those to support pricing and reimbursement by HTA authorities and payor decision-makers in Europe, particularly in relation to setrusumab. Other general and administrative costs include facility-related costs, professional services fees for auditing, tax and general legal services, intellectual property costs, costs related to our requirements of being a public company listed on Nasdaq, and costs incurred relating to the issue of equity to the extent not capitalized.

Previous wording

Changes in the fair value of financial instruments

Current wording

Changes in the fair value of financial instruments/warrants

Previous wording

The fair value changes in financial instruments are recognized in the statement of comprehensive loss.

Current wording

The fair value changes in financial instruments principally comprises warrant liabilities, which are recognized in the statement of comprehensive loss.

Previous wording

Our condensed consolidated financial statements are presented in U.S dollars. We initially record transactions in foreign currencies at the rate prevailing on the date the transaction first qualifies for recognition. Foreign currency transaction gain/(loss) consists of the difference arising on settlement or translation of transactions denominated in currencies other than the functional currency of the transacting foreign entity, which are primarily held in U.S. dollars and British pound sterling.

Current wording

Our consolidated financial statements are presented in U.S. dollars. We initially record transactions in foreign currencies at the rate prevailing on the date the transaction first qualifies for recognition. Foreign currency transaction gain/(loss) consists of the difference arising on settlement or translation of transactions denominated in currencies other than the functional currency of the transacting foreign entity, which are primarily held in U.S. dollars and British pound sterling.

Previous wording

As a U.K. resident trading entity, we are subject to U.K. corporate taxation. Due to the nature of our business, we have generated operating losses since formation. As of December 31, 2023 and 2022, we had cumulative carry-forward U.K. tax losses of $30.6 million and $28.7 million, respectfully. Subject to any relevant restrictions, we expect these to be available to carry forward and offset against future operating profits. As a company that carries out extensive research and development activities, we benefit from the U.K. R&D small or medium-sized enterprise tax credit regime and are able to surrender some of our trading losses that arise from our research and development activities for a cash rebate. To date, a cash rebate of up to 33.35% of eligible R&D expenditure has been available, but the cash rebate has reduced to a maximum of 27% for R&D intensive companies where at least 40% of their total expenditure is on qualifying R&D, or 18.6% of eligible R&D expenditure for other companies with effect from April 1, 2023 pursuant to changes made by the Finance Act 2023. Certain subcontracted qualifying research expenditures are eligible for a cash rebate, though the rate of the cash rebate has reduced with effect from April 1, 2023 from up to 21.67% of the subcontracted expenditures to 17.53% for R&D intensive companies or 12.09% for other companies. The difference in cash rebate for qualifying subcontracted expenditure vs other qualifying expenditure is due to a statutory restriction of 65% being applied to unconnected qualifying subcontracted expenditure, thus restricting the benefit available. Qualifying expenditures largely comprise employment costs for research staff, subcontracted CRO and CMO costs, consumables and certain internal overhead cost incurred as part of research projects. We may not be able to continue to claim payable R&D tax credits in the future because we may no longer qualify as a small or medium-sized company.

Current wording

As a U.K. resident trading entity, we are subject to U.K. corporate taxation. Due to the nature of our business, we have generated operating losses since formation. As of December 31, 2024 and 2023, we had cumulative carry-forward U.K. tax losses of $36.6 million and $30.6 million, respectively. Subject to any relevant restrictions, we expect these to be available to carry forward and offset against future operating profits. As a company that carries out extensive R&D activities, we benefit from the U.K. R&D small or medium-sized enterprise tax credit regime, or SME R&D Relief, and are able to surrender some of our trading losses that arise from our research and development activities for a cash rebate (the "R&D tax credit"). Pursuant to changes made by the Finance Act 2023, from April 1, 2023, a cash rebate of up to 27% of eligible R&D expenditure is available for R&D intensive companies where at least 40% of their total expenditure is on qualifying R&D, or for non-R&D intensive companies, a cash rebate of up to 18.6% of eligible R&D expenditure is available. From April 1, 2023, certain subcontracted qualifying research expenditures are eligible for a cash rebate of up to 17.53% for R&D intensive companies or 12.09% for other companies. The difference in cash rebate for qualifying subcontracted expenditure versus other qualifying expenditure is due to a statutory restriction of 65% being applied to unconnected qualifying subcontracted expenditure, thus restricting the benefit available. Qualifying expenditures largely comprise employment costs for R&D staff, subcontracted CRO and CMO costs, consumables and certain internal overhead cost incurred as part of research projects. We do not currently expect to qualify as an R&D intensive company.

Previous wording

In the event we generate revenues in the future, we may benefit from the U.K. “patent box” regime that allows profits attributable to revenues from patents or patented product candidates to be taxed at an effective rate of 10%. This relief applies to profits earned following election into the regime. When taken in combination with the enhanced relief available on our R&D expenditures, we expect a long-term lower rate of corporation tax to apply to us. If, however, there are unexpected adverse changes to the U.K. R&D tax credit regime or the “patent box” regime, or for any reason we are unable to qualify for such advantageous tax legislation, or we are unable to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments, our business, results of operations, and financial condition may be adversely affected.

Current wording

In the event we generate revenues in the future, we may benefit from the U.K. “patent box” regime that allows profits attributable to revenues from patents or patented product candidates to be taxed at an effective rate of 10%. This relief applies to profits earned following election into the regime. When taken in combination with the enhanced relief available on our R&D expenditures, we expect a long-term lower rate of corporation tax to apply to us. If, however, there are unexpected adverse changes to the U.K. R&D tax credit regime or the “patent box” regime, or for any reason we are unable to qualify for these regimes, or we are unable to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments, our business, results of operations, and financial condition may be adversely affected.

Previous wording

We operate in the U.K. and in the U.S. and are subject to corporate taxation in those countries. We have generated losses since inception and have therefore not paid U.K. corporation tax except for in 2021. The income tax benefit included in the consolidated statements of operations and comprehensive loss represents tax refunds in respect of income taxes paid in 2021.

Current wording

We operate in the U.K. and in the U.S. and are subject to corporate taxation in those countries. We have generated losses since inception and have therefore not paid U.K. corporation tax except in 2021. The income tax benefit included in the consolidated statements of operations and comprehensive loss in the year ended December 31, 2023 represents tax refunds in respect of income taxes paid in 2021.

Previous wording

The U.K corporation tax rate applied for 2023 was 23.52% (2022: 19.0%), which results from applying the enacted statutory rate of 19% from January 1, 2023 through April 1, 2023, and 25% for the remainder of 2023. U.K. deferred tax assets and liabilities have been measured at a rate of 25%. The U.S federal income tax rate is 21%.

Current wording

The U.K. corporation tax rate applied for 2024 was 25% (2023: 23.5%). The U.K. corporation tax for 2023 resulted from applying the enacted statutory rate of 19% from January 1, 2023 through April 1, 2023, and 25% for the remainder of 2023. U.K. deferred tax assets and liabilities have been measured at a rate of 25%. The U.S federal income tax rate is 21%.

Previous wording

As of December 31, 2023, the Company had U.K. net operating loss carryforwards of $30.6 million, that can be carried forward indefinitely. The Company had U.S. federal tax losses to be carried forward of approximately $66.2 million of which $18.2 million can be carried forward indefinitely and $48.0 million which will begin to expire in 2024. The Company also had $14.0 million of U.S. federal research and development (“R&D”) tax credits that begin to expire in 2024 and U.S. state tax losses to be carried forward of less than $0.1 million which begin to expire in 2027. The Company also had less than $0.1 million of state R&D tax credits that do not have an expiration date.

Current wording

As of December 31, 2024, the Company had U.K. net operating loss carryforwards of $36.6 million, that can be carried forward indefinitely. The Company had U.S. federal tax losses to be carried forward of approximately $66.3 million of which $19.5 million can be carried forward indefinitely and $46.8 million which will begin to expire in 2025. The Company also had $13.9 million of U.S. federal R&D tax credits that begin to expire in 2025 and U.S. state tax losses to be carried forward of less than $0.1 million which begin to expire in 2027. The Company also had less than $0.1 million of state R&D tax credits that do not have an expiration date.

Previous wording

Revenue of $10.0 million for the year ended December 31, 2023 comprised a one-time milestone payment of $9.0 million resulting from the achievement of a clinical milestone on setrusumab by Ultragenyx and a $1.0 million up-front payment from our global license agreement with ReproNovo for the development and commercialization of leflutrozole. No revenue was recognized for the year ended December 31, 2022.

Current wording

No revenue was recognized in the year ended December 31, 2024. Revenue of $10.0 million for the year ended December 31, 2023 comprised a one-time milestone payment of $9.0 million resulting from the achievement of a clinical milestone on setrusumab by Ultragenyx and a $1.0 million up-front payment from our global license agreement with ReproNovo for the development and commercialization of leflutrozole.

Previous wording

Cost of revenue for the year ended December 31, 2023 was $2.6 million compared to a credit of $1.1 million for the year ended December 31, 2022. Cost of revenue in 2023 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.

Current wording

No cost of revenue was recognized in the year ended December 31, 2024. Cost of revenue of $2.6 million for the year ended December 31, 2023 primarily represented 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.

Previous wording

Total R&D expenses decreased by $12.0 million, or 41%, from $29.5 million in 2022 to $17.4 million in 2023.

Current wording

Total R&D expenses increased by $3.5 million, from $17.4 million in 2023 to $20.9 million in 2024.

Previous wording

The decrease was primarily due to a $12.4 million reduction in R&D expenses for etigilimab, partially offset by an increase of $0.7 million in expenses for setrusumab.

Current wording

The increase was primarily due to a $6.2 million and $2.6 million increase in R&D expenses for alvelestat and setrusumab, respectively, partially offset by a $5.5 million decrease in R&D expenses for etigilimab.

Previous wording

The reduction in etigilimab expenses was primarily due to the winding down and completion 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 ongoing activities in Europe, and input into development, regulatory and manufacturing plans with our partner, Ultragenyx, as the global development of the 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 CMC and drug formulation activities, SGRQ validation activities and regulatory interactions.

Current wording

The reduction in etigilimab expenses was primarily due to the winding down and completion of the open label Phase 1b/2 basket study in combination with an anti-PD-1 in a range of tumor types.

Previous wording

The decrease is primarily related to overall reductions in staff costs, professional fees and corporate costs of $7.1 million, in addition to $3.6 million received from our depositary to reimburse certain expenses incurred by us in respect of our ADR program in the current and prior years 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.

Current wording

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 year ended December 31, 2024 compared to the year ended December 31, 2023; and

Previous wording

Changes in the fair value of financial instruments

Current wording

Changes in the fair value of warrants

Previous wording

The total change in fair value of financial instruments for 2023 was a gain of $0.2 million, a decrease of $9.0 million compared to an unrealized gain of $9.3 million in 2022.The unrealized gain in 2023 was due to the expiry of the Private Placement warrants, offset by an unrealized loss on the Bank loan warrants as a result of an increase in the market price of our ADSs. The unrealized gain in 2022 primarily resulted from our Private Placement warrants driven, by a decline in the market price of our ADSs.

Current wording

The total change in fair value of warrants for 2024 was an unrealized loss of $0.4 million, compared to an unrealized gain of $0.2 million in 2023. The unrealized loss in the year ended December 31, 2024 was primarily due to the impact of the increase in the price of the Company’s ADSs on the value of the warrant liabilities, whereas in the year ended December 31, 2023, the unrealized gain was primarily due to the expiry of the Private Placement warrants in June 2023.

Previous wording

The benefit from research and development tax credits decreased from $1.7 million in 2022 to $1.3 million in 2023. The income tax benefit 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 credit increased by $0.4 million, from $1.3 million in the year ended December 31, 2023 to $1.6 million in the year ended December 31, 2024. The income tax benefit 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 increase was due to a higher amount of eligible research and development activities.

Previous wording

The income tax benefit in both periods represents income taxes paid in prior years for which a carryback claim has been made to offset against taxable income in the prior year.

Current wording

The income tax benefit for the year ended December 31, 2023 represents income taxes paid in prior years for which a carryback claim was made to offset against taxable income in the prior year. No such claim was made in the year ended December 31, 2024.

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 $259.0 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

We have also received payments under various license and collaboration agreements, including:

Current wording

We have also received payments under various license and collaboration agreements, including payments of:

Previous wording

An upfront payment of $50.0 million under the license and collaboration agreement with Ultragenyx for setrusumab in 2021 and a further milestone payment of $9.0 million in July 2023.

Current wording

$50.0 million under the license and collaboration agreement with Ultragenyx for setrusumab in 2021 and a further milestone payment of $9.0 million in July 2023;

Previous wording

An upfront payment of $4.0 million under the license and collaboration agreement with Feng Biosciences (formerly OncXerna) for navicixizumab in 2020 and a further milestone payment of $2.0 million in 2022.

Current wording

$4.0 million under the license and collaboration agreement with Feng Biosciences for navicixizumab in 2020 and a further milestone payment of $2.0 million in 2022; and

Previous wording

An upfront payment of $1.0 million under the global license agreement with ReproNovo for leflutrozole in December 2023.

Current wording

$1.0 million under the global license agreement with ReproNovo for leflutrozole in December 2023.

Previous wording

As further described under “Item1. Business-Material Agreements-Novartis Agreements” and “Item1. 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 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.

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 $4.2 million as of December 31, 2023.

Current wording

In addition, Mereo enters into contracts in the ordinary course of business with CROs, CMOs, and other vendors, including with Ultragenyx for the manufacture of setrusumab as described in “Item 1. Business—Material Agreements—Agreements with Ultragenyx for Setrusumab,” 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 $0.5 million as of December 31, 2024 (2023: $4.2 million).

Previous wording

The table below summarizes our cash flows (used in) from operating, investing and financing activities for the years ended December 31, 2023 and 2022.

Current wording

The table below summarizes our cash flows (used in) provided by operating, investing and financing activities for the years ended December 31, 2024 and 2023.

Previous wording

As of December 31, 2023, we had an accumulated deficit of $419.6 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. See also “Item 1A. Risk Factors—Risks Related to Our Business and Industry - If we do not obtain adequate and timely funding, we may not be able to continue as a going concern”.

Current wording

As of December 31, 2024, we had an accumulated deficit of $462.9 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. See also “Item 1A. Risk Factors—Risks Related to Our Business and Industry—We will need additional funding to complete the development of our current product candidates; to license, acquire, and develop future product candidates; and to commercialize our product candidates, if approved."

Previous wording

The costs for our activities related to our ongoing collaboration with Ultragenyx for setrusumab for the treatment of adults and children with OI; and potential future clinical trials for alvelestat in AATD and other potential indications;

Current wording

The costs for our activities related to our ongoing collaboration with Ultragenyx for setrusumab for the treatment of children and adults with OI, including the costs for our preparation for the potential commercialization of setrusumab, if approved, in Europe and the U.K; and costs for potential future clinical trials for alvelestat in AATD;

Previous wording

the costs and timing of manufacturing clinical supplies of our product candidates;

Current wording

the costs and timing of manufacturing clinical or commercial supplies of our product candidates;

Previous wording

milestone and deferred payments under Mereo’s license and option agreement with AstraZeneca; and

Current wording

milestone and deferred payments under the Amended AstraZeneca Agreements; and

Previous wording

As of December 31, 2023, the former lenders have warrants outstanding to purchase a total of 1,243,908 ordinary shares at an exercise price of £2.95 per share ($3.76 per share), exercisable until August 2027, and a total of 1,234,908 ordinary shares at an exercise price of $0.4144 per share, exercisable until the period August 2027 to October 2028.

Current wording

As of December 31, 2024, the former lenders have warrants outstanding to purchase a total of 1,243,908 ordinary shares at an exercise price of £2.95 per share, exercisable until August 2027, and a total of 1,243,908 ordinary shares at an exercise price of $0.4144 per share, exercisable until the period August 2027 to October 2028.

Previous wording

On February 10, 2020, we entered into a $4.9 million (£3.8 million) convertible loan note instrument relating to the issue of 3,841,479 Novartis Loan Note. The Novartis Loan Note was convertible at any time at a fixed price of £0.265 ($0.337) per ordinary share until February 10, 2023. In addition, on February10, 2020, in connection with the Novartis Loan Note, we entered into a warrant instrument with Novartis to issue 1,449,614 ordinary shares at an exercise price of £0.265 ($0.037) per ordinary share. These warrants are exercisable until February 10, 2025.

Current wording

On February 10, 2020, we entered into a $4.9 million (£3.8 million) convertible loan note instrument relating to the issue of 3,841,479 Novartis Loan Note. The Novartis Loan Note was convertible at any time at a fixed price of £0.265 per ordinary share until February 10, 2023. In addition, on February 10, 2020, in connection with the Novartis Loan Note, we entered into a warrant instrument with Novartis to issue 1,449,614 ordinary shares at an exercise price of £0.265 per ordinary share. These warrants are exercisable until February 10, 2025.

Previous wording

On February 10, 2023, we amended the Novartis Loan Note, extending the maturity date to February 10, 2025 and increasing the interest rate to 9%, with all other terms remaining unchanged. Pursuant to the amendment and a new warrant instrument, interest accrued to the amendment date was paid in cash, and warrants to purchase 2,000,000 ordinary shares at an exercise price of £0.150 ($0.191) per ordinary share were issued and are exercisable until February 10, 2028.

Current wording

On February 10, 2023, we amended the Novartis Loan Note, extending the maturity date to February 10, 2025 and increasing the interest rate to 9%, with all other terms remaining unchanged. Pursuant to the amendment and a new warrant instrument, interest accrued to the amendment date was paid in cash, and warrants to purchase 2,000,000 ordinary shares at an exercise price of £0.150 per ordinary share were issued and are exercisable until February 10, 2028.