Full Press Release Details
MEREO BIOPHARMA GROUP PLC
Condensed Consolidated Statements of Comprehensive Loss
| Notes | Six months ended June 30, 2023 '000 | Six months ended June 30, 2022 '000 | ||||||||||
| Revenue | 3 | 7,128 | - | |||||||||
| Cost of revenue | 3 | ( 2,455 | ) | 352 | ||||||||
| Research and development expenses | ( 7,898 | ) | ( 13,322 | ) | ||||||||
| Administrative expenses | ( 9,548 | ) | ( 8,840 | ) | ||||||||
| Other operating income | 3 | 2,864 | - | |||||||||
| Operating loss | ( 9,909 | ) | ( 21,810 | ) | ||||||||
| Finance income | 4 | 550 | 173 | |||||||||
| Finance costs | 4 | ( 1,498 | ) | ( 1,859 | ) | |||||||
| Changes in the fair value of financial instruments | 4 | 365 | 1,210 | |||||||||
| Net foreign exchange (loss)/gain | ( 1,445 | ) | 1,582 | |||||||||
| Other income | 5 | - | 811 | |||||||||
| Loss before tax | ( 11,937 | ) | ( 19,893 | ) | ||||||||
| Taxation | 907 | 735 | ||||||||||
| Loss for the period, attributable to equity holders of the parent | ( 11,030 | ) | ( 19,158 | ) | ||||||||
| Items that may be reclassified subsequently to profit or loss: | ||||||||||||
| Currency translation of foreign operations | 1,493 | ( 1,775 | ) | |||||||||
| Total comprehensive loss for the period, attributable to equity holders of the parent | ( 9,537 | ) | ( 20,933 | ) | ||||||||
| Basic loss per share for the period (in ) | 6 | ( 0.02 | ) | ( 0.03 | ) | |||||||
| Diluted loss per share for the period (in ) | 6 | ( 0.02 | ) | ( 0.03 | ) |
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
MEREO BIOPHARMA GROUP PLC
Condensed Consolidated Balance Sheets
| Notes | June 30, 2023 '000 | December 31, 2022 '000 | ||||||||||
| Assets | ||||||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment | 7 | 1,565 | 1,831 | |||||||||
| Intangible assets | 8 | 24,845 | 24,116 | |||||||||
| 26,410 | 25,947 | |||||||||||
| Current assets | ||||||||||||
| Prepayments | 1,376 | 3,125 | ||||||||||
| R&D tax credits | 2,203 | 1,296 | ||||||||||
| Other taxes receivable | 643 | 614 | ||||||||||
| Trade and other receivables | 3 | 7,893 | 762 | |||||||||
| Cash and short-term deposits | 42,113 | 56,334 | ||||||||||
| 54,228 | 62,131 | |||||||||||
| Total assets | 80,638 | 88,078 | ||||||||||
| Equity and liabilities | ||||||||||||
| Non-current liabilities | ||||||||||||
| Provisions | 10 | 411 | - | |||||||||
| Convertible loan notes | 11 | 3,665 | - | |||||||||
| Warrant liability | 12 | 166 | 129 | |||||||||
| Lease liability | 973 | 1,222 | ||||||||||
| Other liabilities | 220 | 182 | ||||||||||
| 5,435 | 1,533 | |||||||||||
| Current liabilities | ||||||||||||
| Trade and other payables | 1,911 | 3,078 | ||||||||||
| Accruals | 4,786 | 4,491 | ||||||||||
| Provisions | 10 | 4,701 | 4,822 | |||||||||
| Convertible loan notes | 11 | 4,186 | 11,085 | |||||||||
| Warrant liability | 12 | - | 402 | |||||||||
| Lease liability | 488 | 466 | ||||||||||
| Other liabilities | 3 | 1,386 | 333 | |||||||||
| 17,458 | 24,677 | |||||||||||
| Total liabilities | 22,893 | 26,210 | ||||||||||
| Net assets | 57,745 | 61,868 | ||||||||||
| Equity | ||||||||||||
| Issued capital | 9 | 1,930 | 1,875 | |||||||||
| Share premium | 9 | 257,343 | 254,303 | |||||||||
| Other capital reserves | 9 | 134,999 | 132,680 | |||||||||
| Employee Benefit Trust shares | ( 1,058 | ) | ( 1,058 | ) | ||||||||
| Other reserves | 7,401 | 7,401 | ||||||||||
| Accumulated losses | ( 342,194 | ) | ( 331,164 | ) | ||||||||
| Translation reserve | ( 676 | ) | ( 2,169 | ) | ||||||||
| Total equity | 57,745 | 61,868 |
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
MEREO BIOPHARMA GROUP PLC
Condensed Consolidated Statements of Cash Flows
| Notes | Six months ended June 30, 2023 '000 | Six months ended June 30, 2022 '000 | ||||||||||
| Operating activities | ||||||||||||
| Loss before tax | ( 11,937 | ) | ( 19,893 | ) | ||||||||
| Adjustments to reconcile (loss)/profit to net cash flows: | ||||||||||||
| Depreciation and impairment of property, plant and equipment | 7 | 266 | 436 | |||||||||
| Amortization of intangible assets | 8 | 138 | - | |||||||||
| Share-based payment expense | 9 | 1,931 | 2,446 | |||||||||
| Net foreign exchange loss/(gain) | 1,282 | ( 2,100 | ) | |||||||||
| Increase in provisions and other liabilities | 10,3 | 1,130 | 307 | |||||||||
| Finance income | 4 | ( 550 | ) | ( 173 | ) | |||||||
| Finance costs | 4 | 1,084 | 1,696 | |||||||||
| Fair value remeasurement on warrants | 4 | ( 365 | ) | ( 1,210 | ) | |||||||
| Other income and expenses | 5 | - | ( 811 | ) | ||||||||
| Other non-cash movements | 3 | 155 | 330 | |||||||||
| Working capital adjustments | ||||||||||||
| (Increase)/decrease in receivables and prepayments | ( 5,521 | ) | 331 | |||||||||
| (Decrease)/increase in trade and other payables and accruals | ( 846 | ) | 1,364 | |||||||||
| Taxation | ( 29 | ) | ( 1,529 | ) | ||||||||
| Net cash flows used in operating activities | ( 13,262 | ) | ( 18,806 | ) | ||||||||
| Investing activities | ||||||||||||
| Purchase of property, plant and equipment | 7 | - | ( 10 | ) | ||||||||
| Proceeds from intangible asset (net of transaction costs) | 5 | - | 1,484 | |||||||||
| Payments to CVR holders | 5 | - | ( 673 | ) | ||||||||
| Interest earned | 4 | 468 | 173 | |||||||||
| Payments to acquire intangible assets | ( 337 | ) | - | |||||||||
| Net cash flows from investing activities | 131 | 974 | ||||||||||
| Financing activities | ||||||||||||
| Proceeds from issuance of ordinary shares | 2 | - | ||||||||||
| Interest paid | 4 | ( 771 | ) | - | ||||||||
| Payment of lease liabilities | ( 226 | ) | ( 445 | ) | ||||||||
| Proceeds from TAP agreement | 79 | 153 | ||||||||||
| Net cash flows used in financing activities | ( 916 | ) | ( 292 | ) | ||||||||
| Net decrease in cash and cash equivalents | ( 14,047 | ) | ( 18,124 | ) | ||||||||
| Cash and cash equivalents at the beginning of the period | 56,334 | 94,296 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( 174 | ) | 243 | |||||||||
| Cash and cash equivalents at the end of the period | 42,113 | 76,415 |
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
MEREO BIOPHARMA GROUP PLC
Condensed Consolidated Statements of Changes in Equity
| Notes | Issued capital '000 | Share premium '000 | Other capital reserves '000 | Employee Benefit Trust '000 | Other reserves '000 | Accumulated losses '000 | Translation reserve '000 | Total equity '000 | ||||||||||||||||||||||||||||
| At December 31, 2021 | 1,755 | 247,460 | 129,835 | ( 1,140 | ) | 7,401 | ( 296,968 | ) | ( 341 | ) | 88,002 | |||||||||||||||||||||||||
| Loss for the period | - | - | - | - | - | ( 19,158 | ) | - | ( 19,158 | ) | ||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | ( 1,775 | ) | ( 1,775 | ) | ||||||||||||||||||||||||||
| Total comprehensive loss | - | - | - | - | - | ( 19,158 | ) | ( 1,775 | ) | ( 20,933 | ) | |||||||||||||||||||||||||
| Share-based payments | 9 | - | - | 2,446 | - | - | - | - | 2,446 | |||||||||||||||||||||||||||
| Exercise of share options | - | - | ( 82 | ) | 82 | - | - | - | - | |||||||||||||||||||||||||||
| Issuance of warrants | - | - | 70 | - | - | - | - | 70 | ||||||||||||||||||||||||||||
| At June 30, 2022 | 1,755 | 247,460 | 132,269 | ( 1,058 | ) | 7,401 | ( 316,126 | ) | ( 2,116 | ) | 69,585 | |||||||||||||||||||||||||
| At December 31, 2022 | 1,875 | 254,303 | 132,680 | ( 1,058 | ) | 7,401 | ( 331,164 | ) | ( 2,169 | ) | 61,868 | |||||||||||||||||||||||||
| Loss for the period | - | - | - | - | - | ( 11,030 | ) | - | ( 11,030 | ) | ||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | - | - | 1,493 | 1,493 | ||||||||||||||||||||||||||||
| Total comprehensive loss | - | - | - | - | - | ( 11,030 | ) | 1,493 | ( 9,537 | ) | ||||||||||||||||||||||||||
| Share-based payments | 9 | - | - | 1,931 | - | - | - | - | 1,931 | |||||||||||||||||||||||||||
| Exercise of share options | 2 | - | - | - | - | - | - | 2 | ||||||||||||||||||||||||||||
| Issuance of shares | 9 | 53 | 3,040 | 347 | - | - | - | - | 3,440 | |||||||||||||||||||||||||||
| Issuance of warrants | - | - | 41 | - | - | - | - | 41 | ||||||||||||||||||||||||||||
| At June 30, 2023 | 1,930 | 257,343 | 134,999 | ( 1,058 | ) | 7,401 | ( 342,194 | ) | ( 676 | ) | 57,745 |
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
MEREO BIOPHARMA GROUP PLC
Notes to the Condensed Consolidated Financial Statements
1. Corporate information
Mereo BioPharma Group plc (the "Company" or "Mereo") is a clinical-stage, United Kingdom ("UK") based biopharmaceutical company focused on rare diseases and oncology.
The Company is a public limited company incorporated and domiciled in the UK, and registered in England, with shares publicly traded on the Nasdaq Capital Market via American Depositary Shares ("ADSs") under the ticker symbol MREO. The Company's registered office is located at Fourth Floor, 1 Cavendish Place, London, W1G 0QF, United Kingdom.
These financial statements are the unaudited condensed consolidated financial statements of Mereo BioPharma Group plc and its subsidiaries for the six months ended June 30, 2023. The principal activities of the Company are the development and commercialization of innovative therapeutic pharmaceutical products for rare diseases.
2. Significant accounting policies
Basis of preparation
The unaudited condensed consolidated financial statements for the six months ended June 30, 2023 have been prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting. These unaudited condensed consolidated financial statements do not include all information and disclosures required in the annual financial statements in accordance with International Financial Reporting Standards (IFRS) and should be read in conjunction with the Company's annual consolidated financial statements for the year ended December 31, 2022 filed with the Securities and Exchange Commission ("SEC") on March 28, 2023.
The financial information is presented in pound sterling (" "), which is the presentational currency of the Company. The functional currencies of consolidated subsidiaries are pound sterling and US dollars ("$"). All amounts disclosed in the condensed consolidated financial statements and notes have been rounded to the nearest thousand, unless otherwise stated.
The financial information for the year ended December 31, 2022 has been extracted from the Company's audited financial statements for that year, filed with the SEC on March 28, 2023.
These condensed consolidated financial statements are unaudited and do not constitute statutory accounts of the Company as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for financial year ended December 31, 2022 has been delivered to the Registrar of Companies. The auditors reported on those accounts and their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
Segmental information
The Company has one operating segment. The Chief Operating Decision Maker ("CODM") is the Chief Executive Officer. The Company has a single portfolio of product candidates, with only direct research and development expenses monitored by product candidate. The CODM makes decisions over resource allocation at an overall portfolio level and the Company's financing is managed and monitored on a consolidated basis.
The going concern basis has been applied in these condensed consolidated financial statements as the Company has adequate resources to meet its liabilities as they fall due for the foreseeable future and at least 12 months from the issuance date of these condensed consolidated financial statements.
The Company expects to incur significant operating losses for the foreseeable future as it continues its research and development efforts, seeks to obtain regulatory approval of its product candidates and pursues any future product candidates the Company may develop.
Until such time as the Company can generate significant revenue from product sales, or other commercial revenues, if ever, or through licensing and/or collaboration agreements for its rare disease or oncology product candidates, the Company will seek to finance its operations through a combination of public or private equity or debt financings or other non-dilutive
Summary of significant accounting policies
The accounting policies adopted in the preparation of the condensed consolidated financial statements are consistent with those followed in the preparation of the Company's consolidated financial statements for the year ended December 31, 2022.
Significant accounting estimates and judgments
The preparation of these condensed consolidated financial statements requires the management of the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates and judgments on historical experience and on various other assumptions that it considers to be reasonable. Actual results may differ from these estimates under different assumptions or conditions.
The significant accounting estimates and judgments adopted in the preparation of the condensed consolidated financial statements are consistent with those followed in the preparation of the Company's consolidated financial statements for the year ended December 31, 2022.
3. Revenue, Cost of revenue and Other operating income
The Company recognized milestone proceeds of $9 million (
7.1 million) as revenue under the collaboration and license agreement with Ultragenyx for setrusumab following achievement of a development milestone in the six months ended June 30, 2023. The milestone proceeds were
received in July 2023.
The variable consideration relating to future milestones and sales royalties will be recognized in the statement of comprehensive income when the milestones are achieved or the underlying commercial sales are made, in the event regulatory approval is obtained.
As a consequence of the milestone proceeds paid to the Company under the collaboration and license agreement with Ultragenyx and in accordance with the terms of the 2015 asset purchase agreement with Novartis, the Company also accrued for a payment to Novartis of
1.7 million. The payment included a deduction for costs of
1.4 million which was deferred to be recognized in the statement of comprehensive loss when the associated costs are incurred.
In the six month period ended June 30, 2023,
0.6 million (six months ended June 30, 2022: 0.4 million) of these deductions were recognized in the condensed consolidated statement of comprehensive loss. As of June 30, 2023, the remaining balance to be recognized of
million (December 31, 2022:
0.3 million) is included within "Other liabilities" in the condensed consolidated balance sheets.
In June 2023, the Company received a payment of 2.9 million from its depositary for reimbursement of certain expenses incurred by the Company in respect of its ADR program in the current and prior years pursuant to the agreement between both parties. The Company recognizes such amounts as "Other operating income" when it becomes entitled to them.
4. Finance income, finance costs and changes in the fair value of financial instruments
| Six months ended June 30, 2023 '000 | Six months ended June 30, 2022 '000 | |||||||
| Interest income on short-term deposits | 468 | 173 | ||||||
| Modification of convertible loan notes | 82 | - | ||||||
| Total | 550 | 173 |
Finance income includes a 0.1 million (2022:
nil) gain recognized on the modification of the Private Placement Loan Notes (see Note 11).
| Six months ended June 30, 2023 '000 | Six months ended June 30, 2022 '000 | |||||||
| Interest on convertible loan notes | ( 1,004 | ) | ( 1,567 | ) | ||||
| Interest on lease liabilities | ( 79 | ) | ( 113 | ) | ||||
| Discounting of provisions for deferred contingent cash consideration | ( 395 | ) | ( 163 | ) | ||||
| Other | ( 20 | ) | ( 16 | ) | ||||
| Total | ( 1,498 | ) | ( 1,859 | ) |
Interest on convertible loan notes includes 0.7 million of accrued interest paid as part of the amendment of the Novartis convertible loan note (see Note 11).
Changes in the fair value of financial instruments
| Six months ended June 30, 2023 '000 | Six months ended June 30, 2022 '000 | |||||||
| Changes in the fair value of warrants - private placement | 402 | 1,091 | ||||||
| Changes in the fair value of warrants - bank loan | ( 37 | ) | 119 | |||||
| Total | 365 | 1,210 |
See Note 12 for additional information on the warrant liability.
5. Other income and expenses
In February 2022, the Company received a milestone payment of $2.0 million ( 1.5 million) under the Navi License Agreement with OncXerna. An associated payment was made to the former shareholders of Mereo BioPharma 5, Inc. under the Contingent Value Rights Agreement ("CVR") of a total of $0.9 million ( 0.7 million), after deductions of costs, charges and expenditures, which resulted in other income, net of 0.8 million.
Basic loss per share is calculated by dividing the loss attributable for the period to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share is based on dividing the loss attributable for the period, adjusted for the effect of dilutive ordinary shares, by ordinary share equivalents, which includes the weighted average number of ordinary shares outstanding and the effect of dilutive ordinary share equivalents.
| Six months ended June 30, 2023 '000 | Six months ended June 30, 2022 '000 | |||||||
| Numerator - Basic loss per share ( '000) | ||||||||
| Loss attributable to equity holders of the parent | ( 11,030 | ) | ( 19,158 | ) | ||||
| Denominator - Basic loss per share | ||||||||
| Weighted average number of ordinary shares | 627,087,752 | 583,892,445 | ||||||
| Loss per share - basic ( ) | ( 0.02 | ) | ( 0.03 | ) | ||||
| Numerator - Diluted loss per share ( '000): | ||||||||
| Loss attributable to equity holders of the parent | ( 11,030 | ) | ( 19,158 | ) | ||||
| Effect of dilutive ordinary shares | - | - | ||||||
| Numerator - Diluted loss per share | ( 11,030 | ) | ( 19,158 | ) | ||||
| Denominator - Diluted loss per share: | ||||||||
| Number of ordinary shares used for basic loss per share | 627,087,752 | 583,892,445 | ||||||
| Weighted average effect of dilutive ordinary shares | - | - | ||||||
| Weighted average number of diluted ordinary shares outstanding | 627,087,752 | 583,892,445 | ||||||
| Loss per share - diluted ( ) | ( 0.02 | ) | ( 0.03 | ) |
For both periods, share options, convertible loan notes and warrants were considered to be anti-dilutive as they would have decreased the loss per share and were therefore excluded from the calculation of diluted loss per share. Therefore, the weighted average shares outstanding used to calculate both the basic and diluted loss per share was the same.
7. Property, plant and equipment
| Right-of-use asset (building) ( '000) | Leasehold improvements ( '000) | Office Equipment ( '000) | IT Equipment ( '000) | Total ( '000) | ||||||||||||||||
| Cost or valuation at January 1, 2023 and June 30, 2023 | 2,465 | 557 | 164 | 173 | 3,359 | |||||||||||||||
| Depreciation and impairment | ||||||||||||||||||||
| At January 1, 2023 | ( 1,088 | ) | ( 219 | ) | ( 76 | ) | ( 145 | ) | ( 1,528 | ) | ||||||||||
| Depreciation for the period | ( 199 | ) | ( 48 | ) | ( 11 | ) | ( 9 | ) | ( 266 | ) | ||||||||||
| At June 30, 2023 | ( 1,287 | ) | ( 267 | ) | ( 87 | ) | ( 154 | ) | ( 1,794 | ) | ||||||||||
| Net book value | ||||||||||||||||||||
| At January 1, 2023 | 1,377 | 338 | 88 | 28 | 1,831 | |||||||||||||||
| At June 30, 2023 | 1,178 | 290 | 77 | 19 | 1,565 |
8. Intangible assets
| Acquired development programs | ||||
| Cost | ||||
| At January 1, 2023 | 33,005 | |||
| Additions | 1,166 | |||
| At June 30, 2023 | 34,172 | |||
| Accumulated revision to estimated value | ||||
| At January 1, 2023 | ( 8,889 | ) | ||
| Revision to estimated value | ( 300 | ) | ||
| At June 30, 2023 | ( 9,189 | ) | ||
| Accumulated amortization | ||||
| At January 1, 2023 | - | |||
| Amortization for the period | ( 138 | ) | ||
| At June 30, 2023 | ( 138 | ) | ||
| Net book value | ||||
| At January 1, 2023 | 24,116 | |||
| At June 30, 2023 | 24,845 |
On February 3, 2023, the Company's wholly-owned subsidiary Mereo BioPharma 3 Limited, Ultragenyx, UCB Pharma SA ("UCB") and Amgen Inc. ("Amgen") entered into a non-exclusive worldwide, royalty-free license (the "UCB/Amgen License") to research, develop, and commercialize setrusumab in osteogenesis imperfecta ("OI") under certain UCB/Amgen-owned patent rights related to anti-sclerostin compounds and their uses. An intangible asset of
1.2 million was recognized in the period reflecting payments under the agreement that are not contingent. A corresponding liability of
0.6 million and a provision of
0.6 million for contingent consideration payable was also recognized (see Note 10). The license is amortized on a straight-line basis over its useful economic life. During the six months ended June 30, 2023, amortization expense of
nil) has been recorded within "Administrative expenses" in the condensed consolidated statement of comprehensive (loss)/income.
The present value of the provision for deferred contingent cash consideration relating to the agreement with AstraZeneca was reviewed as of June 30, 2023 (see Note 10). The decrease in the present value due to changes in timelines or probability of contractual milestones being achieved was 0.3 million (2022:
0.4 million) and was recognized as a reduction of the intangible asset.
During the period the Company did
not revise the value of any other intangible assets (2022: nil). With the exception of the UCB/Amgen License which is amortized, the intangible assets remain under development and no amortization charge has been recognized.
9. Issued capital and reserves
| Number of ordinary shares | Ordinary Share Capital '000 | Share Premium '000 | ||||||||||
| At January 1, 2022 and June 30, 2022 | 584,908,239 | 1,755 | 247,460 | |||||||||
| At January 1, 2023 | 624,928,519 | 1,875 | 254,303 | |||||||||
| Issued during the perio d | 18,276,275 | 55 | 3,040 | |||||||||
| At June 30, 2023 | 643,204,794 | 1,930 | 257,343 |
During the six months ended June 30, 2023, Private Placement Loan Notes with a carrying value of
3.1 million were converted into 17,774,895 ordinary shares at a conversion price of 0.174 per ordinary share (see Note 11) and 501,380 ordinary shares were issued upon the vesting of equity awards.
Other capital reserves
| Share-based payments '000 | Equity component of convertible loan '000 | Other warrants issued '000 | Merger reserve '000 | Other reserve '000 | Total '000 | |||||||||||||||||||
| At January 1, 2022 | 23,026 | 32,843 | 44 | 40,818 | 33,104 | 129,835 | ||||||||||||||||||
| Share-based payments expense during the period | 2,446 | - | - | - | - | 2,446 | ||||||||||||||||||
| Share option exercise | ( 82 | ) | - | - | - | - | ( 82 | ) | ||||||||||||||||
| Issuance of warrants | - | - | 70 | - | - | 70 | ||||||||||||||||||
| At June 30, 2022 | 25,390 | 32,843 | 114 | 40,818 | 33,104 | 132,269 | ||||||||||||||||||
| At January 1, 2023 | 26,806 | 31,838 | 114 | 40,818 | 33,104 | 132,680 | ||||||||||||||||||
| Share-based payments expense during the period | 1,931 | - | - | - | - | 1,931 | ||||||||||||||||||
| Extinguishment and issuance of Novartis Loan Note | - | 347 | - | - | - | 347 | ||||||||||||||||||
| Issue of warrants | - | - | 41 | - | - | 41 | ||||||||||||||||||
| At June 30, 2023 | 28,737 | 32,185 | 155 | 40,818 | 33,104 | 134,999 |
Equity component of convertible loan
The amendment of the Novartis Loan Note was treated as the extinguishment of the original instrument and the issuance of a new instrument (see Note 11). Accordingly,
million was allocated to the equity components of the new Novartis Loan Note, representing the embedded conversion option and the new warrants.
Other warrants issued
Other warrants issued also relate to funding arrangements with The Alpha-1 Project which are a compound instrument consisting of a liability and an equity component. In 2023, the Company issued
408,730 warrants over ordinary shares and received funding of 0.1 million, of which less than 0.1 million was allocated to the equity component. The total value of the equity component (consideration received for the warrants) as of
June 30, 2023 is 0.2 million (2022: 0.1 million).
Share-based payments
The Company has two principal share-based incentive schemes under which options at market value to subscribe for the Company's shares, restricted stock units ("RSUs") and performance share units ("PSUs") have been granted to certain executives, non-executive
directors ("NEDs") and employees. The share-based payment reserve is used to recognize the value of equity settled share-based payments provided to employees, including key management personnel, as part of their remuneration.
The total charge for the six months ended June 30, 2023 in respect of all share-based incentive schemes was
1.9 million (June 30, 2022: 2.4
The following awards were granted during the six months ended June 30, 2023:
| Mereo 2019 Equity Incentive Plan | Mereo 2019 NED Equity Incentive Plan | |||||||||||||||||||||||
| Awards (ADS) | Weighted average fair value ($) per share | Weighted average exercise price ($) per share | Awards (ADS) | Weighted average fair value ($) per share | Weighted average exercise price ($) per share | |||||||||||||||||||
| Options | 4,617,000 | 0.91 | 1.01 | 440,000 | 0.84 | 0.94 | ||||||||||||||||||
| RSU's | 617,750 | 1.01 | - | 479,813 | 0.94 | - | ||||||||||||||||||
| PSU's | 1,543,150 | 0.61 | - | - | - | - |
Mereo 2019 Equity Incentive Plan
Mereo 2019 NED Equity Incentive Plan