10-Q 1 rphm-20230930.htm 10-Q 10-Q
0001637715--12-31falseQ30001637715us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001637715us-gaap:FairValueMeasurementsRecurringMember2023-09-300001637715us-gaap:AccountingStandardsUpdate201613Member2023-09-3000016377152022-01-012022-03-310001637715us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001637715us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001637715us-gaap:CommonStockMemberrphm:EmployeeStockPurchasePlan2021Member2023-01-012023-09-300001637715us-gaap:RetainedEarningsMember2023-06-300001637715us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-3000016377152021-12-310001637715us-gaap:AdditionalPaidInCapitalMember2022-06-300001637715us-gaap:PerformanceSharesMember2023-01-012023-09-3000016377152022-06-300001637715rphm:AtTheMarketFacilityMemberus-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001637715us-gaap:CommonStockMemberrphm:EquityIncentivePlan2014Member2023-01-012023-09-300001637715us-gaap:AdditionalPaidInCapitalMember2022-03-310001637715us-gaap:RetainedEarningsMember2023-09-300001637715rphm:PublicOfferingMember2023-05-082023-05-0800016377152022-07-012022-09-300001637715us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-3000016377152022-03-310001637715us-gaap:RestrictedStockUnitsRSUMember2023-09-300001637715rphm:PublicOfferingMember2023-05-080001637715us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001637715us-gaap:RetainedEarningsMember2022-01-012022-03-310001637715us-gaap:PerformanceSharesMembersrt:ChiefExecutiveOfficerMember2023-01-012023-09-300001637715us-gaap:PerformanceSharesMembersrt:ChiefExecutiveOfficerMember2023-09-3000016377152022-01-012022-09-300001637715rphm:LeerinkPartnersLlcMemberus-gaap:CommonStockMemberrphm:AtTheMarketEquityOfferingSalesAgreementMember2022-05-022022-05-020001637715us-gaap:CommonStockMember2023-06-300001637715us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001637715us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-3000016377152023-01-012023-09-300001637715rphm:PublicOfferingMemberus-gaap:CommonStockMember2023-04-012023-06-300001637715us-gaap:RetainedEarningsMember2022-12-310001637715us-gaap:CommonStockMember2023-09-3000016377152023-07-012023-09-300001637715rphm:LeerinkPartnersLlcMemberus-gaap:SubsequentEventMemberrphm:AtTheMarketEquityOfferingSalesAgreementMember2023-11-132023-11-130001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001637715rphm:PerformanceBasedRestrictedStockUnitsRSUMemberrphm:EquityIncentivePlan2021Member2023-01-012023-09-300001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001637715rphm:PerformanceAwardLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001637715us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001637715us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001637715us-gaap:RetainedEarningsMember2023-07-012023-09-300001637715us-gaap:AdditionalPaidInCapitalMember2022-12-310001637715us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001637715rphm:UkSharesaveSubPlanMember2023-01-012023-09-3000016377152023-09-300001637715rphm:UkSharesaveSubPlanMember2023-09-300001637715us-gaap:RetainedEarningsMember2022-04-012022-06-300001637715rphm:EmployeeStockPurchasePlan2021Member2023-09-300001637715srt:ChiefExecutiveOfficerMember2023-07-012023-09-300001637715us-gaap:USTreasurySecuritiesMember2022-12-310001637715us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001637715us-gaap:PerformanceSharesMember2023-09-300001637715us-gaap:AdditionalPaidInCapitalMember2023-09-300001637715us-gaap:PerformanceSharesMember2022-12-3100016377152022-04-012022-06-300001637715us-gaap:RetainedEarningsMember2023-01-012023-03-310001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001637715us-gaap:RetainedEarningsMember2022-03-310001637715us-gaap:FairValueInputsLevel3Memberrphm:PerformanceAwardLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001637715us-gaap:CommonStockMember2023-07-012023-09-300001637715us-gaap:AdditionalPaidInCapitalMember2022-09-300001637715rphm:LeerinkPartnersLlcMemberus-gaap:CommonStockMemberus-gaap:SubsequentEventMemberrphm:AtTheMarketEquityOfferingSalesAgreementMember2023-11-132023-11-130001637715us-gaap:RestrictedStockUnitsRSUMemberrphm:EquityIncentivePlan2021Member2022-12-310001637715us-gaap:CommonStockMember2022-01-012022-03-310001637715rphm:EquityIncentivePlan2021Memberrphm:MarketBasedUnitsMember2023-09-300001637715us-gaap:CommonStockMember2023-03-310001637715us-gaap:PrivatePlacementMemberus-gaap:CommonStockMember2023-04-012023-06-300001637715us-gaap:CommonStockMember2022-06-300001637715us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001637715rphm:UnvestedRestrictedStockUnitsMember2023-01-012023-09-300001637715srt:ChiefExecutiveOfficerMember2023-01-012023-09-300001637715us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001637715us-gaap:PrivatePlacementMember2023-04-012023-06-300001637715us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-3100016377152022-01-012022-12-310001637715us-gaap:CommonStockMember2022-09-300001637715us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001637715us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001637715us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001637715us-gaap:RetainedEarningsMember2023-04-012023-06-300001637715us-gaap:PrivatePlacementMember2023-05-092023-05-090001637715us-gaap:CommonStockMember2022-03-310001637715us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001637715rphm:AtTheMarketFacilityMember2023-01-012023-03-310001637715us-gaap:RetainedEarningsMember2023-03-310001637715rphm:VtvTherapeuticsLlcMemberrphm:CommonStockRepurchaseAgreementMemberus-gaap:CommonStockMemberus-gaap:SubsequentEventMember2023-10-302023-10-300001637715rphm:PerformanceBasedRestrictedStockUnitsRSUMemberrphm:EquityIncentivePlan2021Member2023-09-300001637715us-gaap:FairValueMeasurementsRecurringMember2022-12-310001637715rphm:EquityIncentivePlan2021Member2023-09-300001637715us-gaap:CommonStockMember2022-12-310001637715us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001637715us-gaap:CommonStockMember2022-07-012022-09-300001637715us-gaap:AdditionalPaidInCapitalMemberus-gaap:PrivatePlacementMember2023-04-012023-06-300001637715us-gaap:ShareBasedPaymentArrangementEmployeeMemberrphm:EquityIncentivePlan2021Memberrphm:MarketBasedUnitsMember2023-09-300001637715us-gaap:RestrictedStockUnitsRSUMemberrphm:EquityIncentivePlan2021Member2023-01-012023-09-300001637715srt:MinimumMemberus-gaap:PrivatePlacementMember2023-05-092023-05-090001637715rphm:VtvTherapeuticsLlcMemberus-gaap:ResearchAndDevelopmentExpenseMember2017-12-012017-12-3100016377152023-06-300001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001637715us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001637715rphm:EquityIncentivePlan2021Memberrphm:TimeBasedRestrictedStockUnitsRsuMember2023-09-300001637715rphm:EquityIncentivePlan2021Memberrphm:TimeBasedRestrictedStockUnitsRsuMember2023-01-012023-09-300001637715us-gaap:AdditionalPaidInCapitalMember2023-03-310001637715us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001637715us-gaap:CommonStockMember2022-04-012022-06-300001637715us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001637715rphm:AtTheMarketFacilityMemberus-gaap:CommonStockMember2023-01-012023-03-310001637715rphm:EquityIncentivePlan2021Memberrphm:TimeBasedRestrictedStockUnitsRsuMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-01-012023-09-300001637715us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001637715us-gaap:RetainedEarningsMember2022-09-300001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001637715us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001637715us-gaap:PrivatePlacementMember2023-05-090001637715us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-3100016377152023-01-012023-03-310001637715us-gaap:RetainedEarningsMember2021-12-310001637715us-gaap:AdditionalPaidInCapitalMemberrphm:PublicOfferingMember2023-04-012023-06-300001637715us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300001637715rphm:VtvTherapeuticsLlcMember2023-01-012023-09-300001637715us-gaap:ShareBasedCompensationAwardTrancheTwoMemberrphm:EquityIncentivePlan2021Memberrphm:TimeBasedRestrictedStockUnitsRsuMember2023-01-012023-09-300001637715rphm:UnvestedRestrictedStockUnitsMember2022-01-012022-09-300001637715us-gaap:CommonStockMember2021-12-310001637715us-gaap:USTreasurySecuritiesMember2023-09-300001637715rphm:VtvTherapeuticsLlcMember2022-09-3000016377152022-09-300001637715rphm:PerformanceAwardLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-3100016377152022-12-3100016377152023-03-310001637715us-gaap:RetainedEarningsMember2022-06-300001637715rphm:PublicOfferingMember2023-04-012023-06-300001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001637715us-gaap:CommercialPaperMember2022-12-310001637715rphm:PerformanceBasedRestrictedStockUnitsRSUMemberrphm:EquityIncentivePlan2021Member2023-07-012023-09-300001637715us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001637715us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001637715us-gaap:RetainedEarningsMember2022-07-012022-09-300001637715us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001637715rphm:VtvTherapeuticsLlcMember2017-12-310001637715us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001637715us-gaap:ShareBasedPaymentArrangementEmployeeMemberrphm:MarketBasedUnitsMemberrphm:EquityIncentivePlan2021Member2023-01-012023-09-3000016377152023-04-012023-06-300001637715us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300001637715us-gaap:FairValueInputsLevel3Memberrphm:PerformanceAwardLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001637715rphm:PublicOfferingMember2023-01-012023-09-300001637715rphm:AtTheMarketFacilityMember2023-01-012023-09-300001637715us-gaap:RestrictedStockUnitsRSUMemberrphm:EquityIncentivePlan2021Member2023-09-3000016377152023-11-090001637715us-gaap:CommonStockMember2023-04-012023-06-300001637715us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001637715rphm:VtvTherapeuticsLlcMember2023-09-300001637715rphm:VtvTherapeuticsLlcMemberus-gaap:ResearchAndDevelopmentExpenseMember2017-12-310001637715us-gaap:AdditionalPaidInCapitalMember2021-12-310001637715us-gaap:EmployeeStockOptionMember2023-09-300001637715us-gaap:AdditionalPaidInCapitalMember2023-06-30rphm:Daysxbrli:purexbrli:sharesiso4217:USDxbrli:sharesiso4217:USD

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

or

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40315

 

 

img27530863_0.jpg 

Reneo Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Delaware

47-2309515

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

18575 Jamboree Road, Suite 275-S, Irvine, CA

(Address of Principal Executive Offices)

92612

(Zip Code)

(Registrant’s telephone number, including area code): (858) 283-0280

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

RPHM

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

Smaller reporting company

Non-accelerated filer

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 9, 2023, there were 33,311,787 shares of the registrant’s common stock, $0.0001 par value per share, outstanding.

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

Part I

 

Financial Information

3

 

 

 

 

Item 1.

 

Consolidated Financial Statements (Unaudited)

3

 

 

 

 

 

 

Consolidated Balance Sheets

3

 

 

 

 

 

 

Consolidated Statements of Operations and Comprehensive Loss

4

 

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity

5

 

 

 

 

 

 

Consolidated Statements of Cash Flows

7

 

 

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

8

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

28

 

 

 

 

Item 4.

 

Controls and Procedures

28

 

 

 

 

Part II

 

Other Information

29

 

 

 

 

Item 1.

 

Legal Proceedings

29

 

 

 

 

Item 1A.

 

Risk Factors

29

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

99

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

100

 

 

 

 

Item 4.

 

Mine Safety Disclosures

100

 

 

 

 

Item 5.

 

Other Information

100

 

 

 

 

Item 6.

 

Exhibits

101

 

 

 

 

Signatures

 

 

102

 

 

2


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

RENEO PHARMACEUTICALS, INC.

Consolidated Balance Sheets

(In thousands, except share and par value data)

 

 

September 30,
2023

 

 

December 31,
2022

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,737

 

 

$

19,927

 

Short-term investments

 

 

113,877

 

 

 

81,246

 

Prepaid expenses and other current assets

 

 

3,158

 

 

 

5,180

 

Total current assets

 

 

128,772

 

 

 

106,353

 

Property and equipment, net

 

 

529

 

 

 

453

 

Right-of-use assets

 

 

1,006

 

 

 

1,292

 

Other non-current assets

 

 

81

 

 

 

84

 

Total assets

 

$

130,388

 

 

$

108,182

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,473

 

 

$

1,893

 

Accrued expenses

 

 

10,765

 

 

 

4,827

 

Operating lease liabilities, current portion

 

 

325

 

 

 

404

 

Total current liabilities

 

 

13,563

 

 

 

7,124

 

Operating lease liabilities, less current portion

 

 

812

 

 

 

1,059

 

Performance award

 

 

1,069

 

 

 

29

 

Total liabilities

 

 

15,444

 

 

 

8,212

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized at
   September 30, 2023 and December 31, 2022;
33,872,166 and 24,699,553 shares
   issued and outstanding at September 30, 2023 and December 31, 2022,
   respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

305,479

 

 

 

236,693

 

Accumulated deficit

 

 

(190,517

)

 

 

(136,683

)

Accumulated other comprehensive loss

 

 

(21

)

 

 

(43

)

Total stockholders’ equity

 

 

114,944

 

 

 

99,970

 

Total liabilities and stockholders’ equity

 

$

130,388

 

 

$

108,182

 

 

The accompanying notes are an integral part of these consolidated financial statements.

3


 

RENEO PHARMACEUTICALS, INC.

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

13,622

 

 

$

9,938

 

 

$

39,009

 

 

$

27,348

 

General and administrative

 

 

7,266

 

 

 

3,902

 

 

 

19,038

 

 

 

11,938

 

Total operating expenses

 

 

20,888

 

 

 

13,840

 

 

 

58,047

 

 

 

39,286

 

Loss from operations

 

 

(20,888

)

 

 

(13,840

)

 

 

(58,047

)

 

 

(39,286

)

Other income

 

 

1,692

 

 

 

833

 

 

 

4,213

 

 

 

931

 

Net loss

 

 

(19,196

)

 

 

(13,007

)

 

 

(53,834

)

 

 

(38,355

)

Unrealized gain (loss) on short-term investments

 

 

10

 

 

 

(194

)

 

 

22

 

 

 

(60

)

Comprehensive loss

 

$

(19,186

)

 

$

(13,201

)

 

$

(53,812

)

 

$

(38,415

)

Net loss per share attributable to common stockholders,
   basic and diluted

 

$

(0.57

)

 

$

(0.53

)

 

$

(1.81

)

 

$

(1.57

)

Weighted-average shares used in computing net
   loss per share, basic and diluted

 

 

33,807,945

 

 

 

24,496,313

 

 

 

29,718,689

 

 

 

24,472,974

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


 

RENEO PHARMACEUTICALS, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated
Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances, December 31, 2022

 

 

24,699,553

 

 

$

3

 

 

$

236,693

 

 

$

(43

)

 

$

(136,683

)

 

$

99,970

 

Stock based compensation

 

 

 

 

 

 

 

 

1,157

 

 

 

 

 

 

 

 

 

1,157

 

Issuance of common stock in connection
   with at-the-market facility, net of
   issuance costs

 

 

407,877

 

 

 

 

 

 

1,009

 

 

 

 

 

 

 

 

 

1,009

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

55

 

 

 

 

 

 

55

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,107

)

 

 

(15,107

)

Balances, March 31, 2023

 

 

25,107,430

 

 

$

3

 

 

$

238,859

 

 

$

12

 

 

$

(151,790

)

 

$

87,084

 

Issuance of common stock in public
   offering, net of offering costs

 

 

7,906,250

 

 

 

 

 

 

58,862

 

 

 

 

 

 

 

 

 

58,862

 

Issuance of common stock in private
   placement, net of offering costs

 

 

625,000

 

 

 

 

 

 

4,667

 

 

 

 

 

 

 

 

 

4,667

 

Stock based compensation

 

 

 

 

 

 

 

 

1,207

 

 

 

 

 

 

 

 

 

1,207

 

Issuance of common stock in
   connection with equity plans

 

 

162,108

 

 

 

 

 

 

282

 

 

 

 

 

 

 

 

 

282

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(43

)

 

 

 

 

 

(43

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,531

)

 

 

(19,531

)

Balances, June 30, 2023

 

 

33,800,788

 

 

$

3

 

 

$

303,877

 

 

$

(31

)

 

$

(171,321

)

 

$

132,528

 

Stock based compensation

 

 

 

 

 

 

 

 

1,429

 

 

 

 

 

 

 

 

 

1,429

 

Issuance of common stock in
   connection with equity plans

 

 

71,378

 

 

 

 

 

 

173

 

 

 

 

 

 

 

 

 

173

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

10

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,196

)

 

 

(19,196

)

Balances, September 30, 2023

 

 

33,872,166

 

 

$

3

 

 

$

305,479

 

 

$

(21

)

 

$

(190,517

)

 

$

114,944

 

 

 

5


 

RENEO PHARMACEUTICALS, INC.

Consolidated Statements of Changes in Stockholders’ Equity (Continued)

(In thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated
Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balances, December 31, 2021

 

 

24,455,390

 

 

$

3

 

 

$

231,902

 

 

$

34

 

 

$

(84,728

)

 

$

147,211

 

Stock based compensation

 

 

 

 

 

 

 

 

1,107

 

 

 

 

 

 

 

 

 

1,107

 

Issuance of common stock in
   connection with equity plans

 

 

3,160

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

30

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,036

)

 

 

(13,036

)

Balances, March 31, 2022

 

 

24,458,550

 

 

$

3

 

 

$

233,015

 

 

$

64

 

 

$

(97,764

)

 

$

135,318

 

Stock based compensation

 

 

 

 

 

 

 

 

1,006

 

 

 

 

 

 

 

 

 

1,006

 

Issuance of common stock in
   connection with equity plans

 

 

21,096

 

 

 

 

 

 

41

 

 

 

 

 

 

 

 

 

41

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

104

 

 

 

 

 

 

104

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,312

)

 

 

(12,312

)

Balances, June 30, 2022

 

 

24,479,646

 

 

$

3

 

 

$

234,062

 

 

$

168

 

 

$

(110,076

)

 

$

124,157

 

Stock based compensation

 

 

 

 

 

 

 

 

990

 

 

 

 

 

 

 

 

 

990

 

Issuance of common stock in
   connection with equity plans

 

 

50,000

 

 

 

 

 

 

99

 

 

 

 

 

 

 

 

 

99

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(194

)

 

 

 

 

 

(194

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,007

)

 

 

(13,007

)

Balances, September 30, 2022

 

 

24,529,646

 

 

$

3

 

 

$

235,151

 

 

$

(26

)

 

$

(123,083

)

 

$

112,045

 

 

The accompanying notes are an integral part of these consolidated financial statements.

6


 

RENEO PHARMACEUTICALS, INC.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(53,834

)

 

$

(38,355

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation

 

 

3,793

 

 

 

3,103

 

Depreciation and amortization

 

 

126

 

 

 

63

 

Amortization/accretion on short-term investments

 

 

(3,551

)

 

 

(169

)

Changes in the fair value of performance award

 

 

1,040

 

 

 

(378

)

Non-cash lease expense

 

 

354

 

 

 

338

 

Loss on disposal of fixed asset

 

 

5

 

 

 

3

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

2,025

 

 

 

1,146

 

Accounts payable and accrued expenses

 

 

6,507

 

 

 

2,838

 

Operating lease liabilities

 

 

(394

)

 

 

(338

)

Net cash used in operating activities

 

 

(43,929

)

 

 

(31,749

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(196

)

 

 

(96

)

Purchase of available-for-sale short-term investments

 

 

(190,058

)

 

 

(67,329

)

Proceeds from maturities of available-for-sale short-term investments

 

 

161,000

 

 

 

36,500

 

Net cash used in by investing activities

 

 

(29,254

)

 

 

(30,925

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from public offering of common stock, net of offering costs

 

 

58,862

 

 

 

 

Proceeds from private placement of common stock, net of offering costs

 

 

4,667

 

 

 

 

Proceeds from issuance of common stock under the at-the-market
   facility, net of offering costs

 

 

1,009

 

 

 

 

Proceeds from issuance of common stock in connection with equity plans

 

 

455

 

 

 

146

 

Net cash provided by financing activities

 

 

64,993

 

 

 

146

 

Net decrease in cash and cash equivalents

 

 

(8,190

)

 

 

(62,528

)

Cash and cash equivalents, beginning of period

 

 

19,927

 

 

 

124,660

 

Cash and cash equivalents, end of period

 

$

11,737

 

 

$

62,132

 

Noncash operating activities:

 

 

 

 

 

 

Right-of-use assets obtained in exchange for lease obligations

 

$

 

 

$

1,524

 

Noncash investing and financing activities:

 

 

 

 

 

 

Property and equipment in accounts payable

 

$

11

 

 

$

 

 

The accompanying notes are an integral part of these consolidated financial statements.

7


 

RENEO PHARMACEUTICALS, INC.

Notes to Consolidated Financial Statements

(Unaudited)

1. Organization and Business

Organization

Reneo Pharmaceuticals, Inc. (Reneo or the Company) commenced operations on September 22, 2014 as a clinical-stage pharmaceutical company focused on the development of therapies for patients with rare genetic mitochondrial diseases. In December 2017, the Company in-licensed mavodelpar (REN001), a novel oral peroxisome proliferator-activated receptor delta (PPARδ) agonist.

Liquidity

From its inception in 2014, the Company has incurred significant losses and negative cash flows from operations. For the three and nine months ended September 30, 2023, the Company had a net loss of $19.2 million and $53.8 million, respectively, and used $43.9 million of cash in operating activities during the nine months ended September 30, 2023. As of September 30, 2023, the Company had an accumulated deficit of $190.5 million.

The Company follows Accounting Standards Codification (ASC) Topic 205-40, Presentation of Financial Statements—Going Concern, which requires that management perform a two-step analysis over its ability to continue as a going concern. Management must first evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern and to meet its obligations as they become due within one year after the date that the consolidated financial statements are issued (step 1). If management concludes that substantial doubt is raised, management is also required to consider whether its plans alleviate that doubt (step 2).

As of September 30, 2023, the Company had cash, cash equivalents and short-term investments of $125.6 million, which the Company expects are sufficient to fund operations through the potential submission of a new drug application for mavodelpar for the treatment of primary mitochondrial myopathies in the United States anticipated in the first half of 2024, however, based on the anticipated increase in commercial development expenses for mavodelpar, not for more than one year from the date of the filing of this Quarterly Report on Form 10-Q. Accordingly, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern. Management plans to alleviate this risk by raising additional capital through public or private equity offerings or debt financings, credit or loan facilities, collaborations, strategic alliances, licensing arrangements or a combination of one or more of these funding sources. In addition, the Company has the ability to defer certain commercial development activities until additional capital is received.

There can be no assurance that the Company will be successful in obtaining additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could negatively impact the Company’s business, results of operations, and future prospects. The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions, disruptions to, and volatility in, financial markets in the United States and worldwide, including those resulting from armed conflicts, infectious diseases, bank failures, actual or perceived changes in interest rates and economic inflation. The Company may not be able to secure additional financing in a timely manner or on favorable terms, if at all. In addition, successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support the Company’s cost structure.

8


 

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The Company has prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted, although the Company believes that the disclosures made are adequate to make the information not misleading. The Company recommends that the unaudited consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements, have been included in the accompanying unaudited financial statements. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year.

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of September 30, 2023; all intercompany transactions and balances have been eliminated.

Summary of Significant Accounting Policies

The significant accounting policies used in the preparation of these consolidated financial statements for the nine months ended September 30, 2023 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standard Board (FASB) issued Accounting Standard Update (ASU) 2016-13, Financial Instruments - Credit Losses (ASC 326), Measurement of Credit Losses on Financial Instruments. The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in the carrying value of the asset. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. This new guidance was effective for the Company as of January 1, 2023. The Company adopted the guidance as of January 1, 2023, with no material impact on its financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (ASC 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The ASU clarifies that (1) a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value, (2) an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction, and (3) new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with ASC 820. The new guidance is effective for the Company for fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

9


 

3. Net Loss Per Share

The Company computes basic loss per share by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock shares to be issued upon exercise of all outstanding stock options and restricted stock units were excluded from the diluted net loss per share calculation for the three and nine months ended September 30, 2023 and 2022 because such shares are anti-dilutive.

Historical outstanding anti-dilutive securities not included in the diluted net loss per share calculation include the following:

 

 

As of September 30,

 

 

2023

 

 

2022

 

Common stock options outstanding

 

 

6,095,807

 

 

 

4,470,120

 

Unvested restricted stock units

 

 

441,500

 

 

 

309,500

 

Total

 

 

6,537,307

 

 

 

4,779,620

 

 

4. Fair Value Measurements

ASC Topic 820, Fair Value Measurement, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC Topic 820 identifies fair value as the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a three-tier fair value hierarchy that distinguishes between the following:

Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs, other than quoted prices in active markets, which are observable for the asset or liability, either directly or indirectly.
Level 3 – Unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company’s financial assets are subject to fair value measurements on a recurring basis.

The Company categorizes its money market funds as Level 1, using the quoted prices in active markets. Commercial paper and U.S. treasury securities are categorized as Level 2, using significant other observable inputs. The fair value of the Company’s investments in certain money market funds is their face value and such instruments are classified as Level 1 and are included in cash and cash equivalents on the consolidated balance sheets.

10


 

In connection with the Company’s chief executive officer’s (CEO) employment agreement, he is entitled to receive a special performance bonus in the amount of $7.5 million (Performance Award), payable in cash, common stock or a combination of cash and common stock, at the election of the Company, based on achievement of certain conditions as described in more detail in Note 9. The Company estimated the fair value of the Performance Award using a Monte Carlo simulation, which incorporates the stock price at the date of the valuation and utilizes Level 3 inputs such as volatility, probabilities of success, and other inputs that are not observable in active markets. The Performance Award is required to be measured at fair value on a recurring basis each reporting period, with changes in the fair value recognized in general and administrative expense in the consolidated statements of operations and comprehensive loss over the derived service period of the award.

No assets or liabilities were transferred into or out of their classifications during the nine months ended September 30, 2023.

The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at September 30, 2023 consisted of the following (in thousands):

 

 

Quoted Prices in
Active Markets
For Identical
Items
(Level 1)

 

 

Significant Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market investments

 

$

4,946

 

 

$

 

 

$

 

 

$

4,946

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury securities

 

 

 

 

 

113,877

 

 

 

 

 

 

113,877

 

Total

 

$

4,946

 

 

$

113,877

 

 

$

 

 

$

118,823

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Performance award

 

$

 

 

$

 

 

$

1,069

 

 

$

1,069

 

Total

 

$

 

 

$

 

 

$

1,069

 

 

$

1,069

 

 

The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at December 31, 2022 consisted of the following (in thousands):

 

 

Quoted Prices in
Active Markets
For Identical
Items
(Level 1)

 

 

Significant Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market investments