Operating Expenses
General and Administrative Expenses
General and administrative expenses consist primarily of compensation and benefits to our personnel, including the costs related to our employees, management services agreements, directors and scientific and senior advisors; professional fees and services, including accounting and legal services; and expenses related to obtaining and protecting our intellectual property. We incurred general and administrative expenses in the six months ended June 30, 2021 and 2020 of $3,545,793 and $1,279,689, respectively, an increase of $2,266,104 or 177%. This increase in our general and administrative expenses is primarily attributable to increases in fees and stock compensation expenses associated with our directors and scientific and senior advisors, most of whom joined the company during the second half of 2020 and did not have an impact on our financial results during the six months ended June 30, 2020; and professional fees and services related to operating as a public company (including increased costs for investor relations, directors and officers insurance and to comply with corporate governance, internal controls and similar requirements applicable to public companies), all of which have increased in 2021 following the completion of our IPO in December 2020. In the six months ended June 30, 2021 compared to the six months ended June 30, 2020, the increase of $2,266,104 is comprised principally of an additional $432,071, $1,638,263 and $206,125 of costs for compensation to our directors and scientific and senior advisors, professional fees and certain public company costs, respectively. Included in professional fees and services are legal fees and expenses incurred in connection with legal services provided to the board of directors and certain committees thereof, including relating to former officers and directors. See Part II-Other Information, Item 1. Legal Proceedings, the Form 10-K, the Schedule 13D filed with the SEC by a former director on April 7, 2021 and the Form 8-K filed with the SEC on July 9, 2021 for additional information concerning such matters.
Research and Development and Expenses
We recognize research and development expenses as they are incurred. Our research and development expenses consist of the costs associated with our acquisition of intellectual property that are classified as in-process research and development and fees incurred under our agreements with COH, the NIH and Hebrew University, including the expenses associated with securities issued in connection with such agreements, as applicable. For the six months ended June 30, 2021 and 2020, we incurred research and development expenses of $14,810,130 and $7,284,874, respectively, an increase of $7,525,256 or 103%. These expenses increased primarily as a result of the costs related to our acquisition of Olimmune, the upfront costs under the Olimmune Licenses and costs associated with the filing of the IND and preparation for the Phase 1 clinical trial for CO-sTiRNA. Expenses relating to the acquisition of Olimmune, the Olimmune Licenses and the CO-sTiRNA IND and Phase I clinical trial were $6,998,530, $1,081,622 and $1,503,277, respectively. These new expenses were offset by $1,995,702 due to lower in-process research and development costs related to our acquisition of Bioscience Oncology and CO-sTiRNA in 2021 compared to 2020. We anticipate that our research and development expenses, exclusive of any in-process research and development relating to our acquisitions, will increase for the foreseeable future as we continue the clinical development of CO-sTiRNA, the pre-clinical development of CpG-STAT3ASO, CpG-STAT3decoy and MRI-1867, and to further advance the development of our other research and development programs, subject to the availability of additional funding.
Other Expenses
Other expenses consists of changes in the fair value of a warrant liability, as well as interest expense on our Convertible Notes. Other expenses were $678,284 and $86,834 for the six months ended June 30, 2021 and 2020, respectively, an increase of $591,450 or 681%. Expense related to the change in fair value of warrant liability was $14,274 for the six months ended June 30, 2021 There were no expenses related to the warrant liability during the six months ended June 30, 2020. This expense during the six months ended June 30, 2021 is associated with the increase of a liability related to certain warrants issued in August and September 2020. We are required to revalue warrants classified on our balance sheet as a liability at the end of each reporting period and reflect a gain or loss from the change in fair value in the period in which the change occurred. We calculate the fair value of such warrants using a Monte Carlo daily price simulation. Interest expense was $664,010 and $86,834 for the six months ended June 30, 2021 and 2020, respectively, an increase of $577,176 or 665%. This increase is attributable to the entire principal amount of our Convertible Notes being outstanding for the full six months ended June 30, 2021, whereas only a portion of the principal amount of our Convertible Notes was outstanding during the three months ended June 30, 2020.