What changed in this filing

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Item 1. Financial Statements

2022-11-08 compared with 2022-08-09 · 153 added, 124 removed, 506 unchanged (35% of the section changed)

3 unchanged sentences

(In thousands, except share and par value data)

September 30,

Current assets:

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Common stock, $ 0.0001 par value;

200,000,000 shares authorized at June 30, 2022 and

200,000,000 shares authorized at September 30, 2022 and

December 31, 2021;

24,479,646 shares issued and outstanding at June 30, 2022;

24,529,646 shares issued and outstanding at September 30, 2022;

24,457,838 and 24,455,390 shares issued and outstanding at December 31, 2021, respectively

1 unchanged sentence

Accumulated deficit

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Total stockholders’

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(In thousands, except share and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

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Loss from operations

Unrealized gain on short-term investments

Unrealized (loss) gain on short-term investments

Comprehensive loss

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Stockholders'

Income (Loss)

Balances, December 31, 2021

9 unchanged sentences

Balances, June 30, 2022

Stock based compensation

Issuance of commons stock in

connection with equity plans

Other comprehensive loss

Balances, September 30, 2022

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

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Balances, June 30, 2021

Stock based compensation

Issuance of common stock in

connection with equity plans

Other comprehensive income

Balances, September 30, 2021

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

2 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

5 unchanged sentences

Non-cash lease expense

Loss on disposal of fixed asset

Changes in operating assets and liabilities:

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

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities

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Property and equipment in accounts payable

Accrued deferred initial public offering costs

Vesting of unvested exercised options

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

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In December 2017, the Company in-licensed REN001, a novel oral peroxisome proliferator-activated receptor (PPAR) agonist.

Reverse Stock Split

On April 5, 2021, the Company effected a 1-for- 4.4748 reverse stock split of its common stock.

The par value and the authorized number of shares of the common stock were not adjusted as a result of the reverse stock split.

The reverse stock split resulted in an adjustment to the Series A and Series B convertible preferred stock conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion.

The accompanying consolidated financial statements and notes to the consolidated financial statements give retroactive effect to the reverse stock split for all periods presented.

Initial Public Offering

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Since inception in 2014, the Company has incurred significant losses and negative cash flows from operations.

As of June 30, 2022, the Company had cash, cash equivalents and short-term investments of $ 126.9 million and an accumulated deficit of $ 110.1 million.

As of September 30, 2022, the Company had cash, cash equivalents and short-term investments of $ 116.1 million and an accumulated deficit of $ 123.1 million.

Due to the Company’s continuing research and development activities, the Company expects to continue to incur net losses into the foreseeable future and may never become profitable.

1 unchanged sentence

In May 2022, the Company entered into an at-the-market equity offering sales agreement with SVB Securities LLC (ATM facility) under which the Company may offer and sell, from time to time at its sole discretion, up to $ 20.0 million in shares of its common stock.

The Company has no t sold shares of common stock under the ATM facility as of June 30, 2022 .

The Company has no t sold shares of common stock under the ATM facility as of September 30, 2022.

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 materially harm 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, as well as 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.

Summary of Significant Accounting Policies

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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.

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 latest Annual Report on Form 10-K.

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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 June 30, 2022 ;

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of September 30, 2022 ;

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 six months ended June 30, 2022 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, 2021.

The significant accounting policies used in the preparation of these consolidated financial statements for the nine months ended September 30, 2022 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, 2021.

New Accounting Pronouncements

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Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions .

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 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.

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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 six months ended June 30, 2022 and 2021 because such shares are 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, 2022 and 2021 because such shares are anti-dilutive.

Reverse Stock Split

On April 5, 2021, in connection with the IPO, the Company effected a 1-for-4.4748 reverse stock split of its common stock.

The par value and the authorized number of shares of the common stock were not adjusted as a result of the reverse stock split.

The accompanying consolidated financial statements and notes to the consolidated financial statements give retroactive effect to the reverse stock split for all periods presented.

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

As of June 30,

As of September 30,

Common stock options outstanding

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The Company categorized its money market funds as Level 1, using the quoted prices in active markets.

Commercial paper is valued using Level 2 significant other observable inputs.

treasury securities and commercial paper are valued using Level 2 significant other observable inputs.

The Company’s Level 2 securities are valued using third-party pricing sources.

The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly.

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents.

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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 six months ended June 30, 2022.

The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at June 30, 2022 consisted of the following (in thousands):

No assets or liabilities were transferred into or out of their classifications during the nine months ended September 30, 2022.

The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at September 30, 2022 consisted of the following (in thousands):

Quoted Prices in

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Money market investments

treasury securities

Short-term Investments:

treasury securities

Commercial paper

Performance award

The following table summarizes changes in fair value measurements of the Performance Award during the six months ended June 30, 2022 (in thousands):

The following table summarizes changes in fair value measurements of the Performance Award during the nine months ended September 30, 2022 (in thousands):

Balance as of January 1, 2022

Change in fair value

Balance as of June 30, 2022

Balance as of September 30, 2022

T he recurring fair value measurement of the Company’s assets and liabilities measured at fair value at December 31, 2021 consisted of the following (in thousands):

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Accrued expenses consisted of the following (in thousands):

As of June 30, 2022

As of September 30, 2022

As of December 31, 2021

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The lease terms for the Irvine, San Diego, and Sandwich offices extend through November 30, 2026, July 31, 2023, and December 20, 2022, respectively.

On October 20, 2022, the Company and Discovery Park Limited entered into a lease agreement (2022 Lease Agreement) for approximately 2,600 square feet of office space located in Sandwich, United Kingdom, with a term of 5 years and a termination option after three years .

The Company did not have control of the space as of September 30, 2022.

Therefore, no ROU or lease liabilities were recorded in connection with the 2022 Lease Agreement as of September 30, 2022.

The Company adopted ASU 2016-02 on January 1, 2022, which requires it to recognize a liability for lease payments and a ROU asset on the balance sheet.

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Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient to allow the Company to not have to separate lease and non-lease components.

At June 30, 2022 , the weighted average incremental borrowing rate was 5 % and the weighted average remaining lease term was 4.0 years for the operating leases held by the Company.

During the three and six months ended June 30, 2022, cash paid for amounts included for the measurement of lease liabilities was $ 0.1 million and $ 0.3 million, respectively.

During the three and six months ended June 30, 2022, the Company recorded operating lease expense of $ 0.1 million and $ 0.3 million, respectively.

Maturities of lease liabilities by fiscal year for our operating leases are as follows:

As of June 30, 2022

2022 (remaining six months)

At September 30, 2022 , the weighted average incremental borrowing rate was 5 % and the weighted average remaining lease term was 3.8 years for the operating leases held by the Company.

During the three and nine months ended September 30, 2022, cash paid for amounts included for the measurement of lease liabilities was $ 0.1 million and $ 0.4 million, respectively.

During the three and nine months ended September 30, 2022, the Company recorded operating lease expense of $ 0.1 million and $ 0.4 million, respectively.

Maturities of lease liabilities by fiscal year for the Company's operating leases are as follows:

As of September 30, 2022

2022 (remaining three months)

Total lease payments

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Series A Convertible Preferred Stock

As of June 30, 2022 , there were no shares of Series A convertible preferred stock outstanding.

As of September 30, 2022 , there were no shares of Series A convertible preferred stock outstanding.

In connection with the IPO (Note 1) in April 2021, all outstanding shares of Series A convertible preferred stock were converted into 5,430,957 shares of common stock.

Series B Convertible Preferred Stock

As of June 30, 2022 , there were no shares of Series B convertible preferred stock outstanding.

As of September 30, 2022 , there were no shares of Series B convertible preferred stock outstanding.

In March 2021, the Company completed the milestone closing of its the Series B convertible preferred stock financing and sold a total of 23,440,514 shares of Series B convertible preferred stock, at $ 2.0215 per share, for aggregate net proceeds of approximately $ 47.4 million.

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The shares purchased by the employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding until those shares vest.

As of June 30, 2022 , there were no shares subject to stock options that have been early exercised.

As of September 30, 2022 , there were no shares subject to stock options that have been early exercised.

Shares Reserved for Future Issuance

As of June 30, 2022, the Company had reserved shares of its common stock for future issuance as follows:

As of September 30, 2022, the Company had reserved shares of its common stock for future issuance as follows:

Common stock options outstanding

2 unchanged sentences

Available for future grants under the 2021 Employee Stock Purchase Plan

Available for future grants outside of the 2021 Plan as inducement awards

Total shares of common stock reserved

Stock Options

A summary of the Company’s stock option activity and related information during the six months ended June 30, 2022 is as follows:

Contractual Term

A summary of the Company’s stock option activity and related information during the nine months ended September 30, 2022 is as follows:

Contractual Term (in years)

Value (in thousands)

Outstanding at December 31, 2021

Forfeited/Expired

Outstanding at June 30, 2022

Vested at June 30, 2022

Exercisable at June 30, 2022

Options exercisable as of June 30, 2022 include vested options and options eligible for early exercise.

All outstanding options as of June 30, 2022 are expected to vest.

Unrecognized stock-based compensation expense at June 30, 2022 was $ 9.7 million, which is expected to be recognized over a weighted-average vesting term of 2.7 years.

Outstanding at September 30, 2022

Vested at September 30, 2022

Exercisable at September 30, 2022

Options exercisable as of September 30, 2022 include vested options and options eligible for early exercise.

All outstanding options as of September 30, 2022 are expected to vest.

Unrecognized stock-based compensation expense at September 30, 2022 was $ 9.0 million, which is expected to be recognized over a weighted-average vesting term of 2.6 years.

The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Risk-free interest rate

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Expected volatility.

Since the Company recently completed its IPO and does not have sufficient trading history for its common stock the expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available.

Since the Company does not have sufficient trading history for its common stock the expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available.

The peer group was developed based on companies in the biotechnology industry.

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Fair value of common stock.

For periods prior to the IPO, since there had been no public market for the Company’s common stock, the Company’s board of directors, with input from management, determined the fair value of the Company’s common stock on each grant date by considering a number of objective and subjective factors, including the most recent independent third-party valuations of the Company’s common stock, sales of the Company’s convertible preferred stock to unrelated third-parties, operating and financial performance of the Company, the lack of liquidity of capital stock and general and industry-specific economic outlook, and the Company’s board of directors’

For periods prior to the Company's IPO in April 2021, since there had been no public market for the Company’s common stock, the Company’s board of directors, with input from management, determined the fair value of the Company’s common stock on each grant date by considering a number of objective and subjective factors, including the most recent independent third-party valuations of the Company’s common stock, sales of the Company’s convertible preferred stock to unrelated third-parties, operating and financial performance of the Company, the lack of liquidity of capital stock and general and industry-specific economic outlook, and the Company’s board of directors’

assessment of additional objective and subjective factors that it believed were relevant.

Performance-Based Restricted Stock Units (PSUs)

The following table summarizes PSU activity as of June 30, 2022:

The following table summarizes PSU activity as of September 30, 2022:

Weighted-Average

Unvested at December 31, 2021

Unvested at June 30, 2022

Unvested at September 30, 2022

The PSUs vest based on the Company achieving certain regulatory milestones and are subject to the employee’s continued employment with the Company through the achievement date.

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Stock-based compensation expense is adjusted in future periods for subsequent changes in the expected outcome of the performance conditions.

The Company concluded that achievement of the performance conditions was not probable as of June 30, 2022 , and therefore no stock-based compensation expense was recognized for the three and six months ended June 30, 2022 in connection with the PSUs.

As of June 30, 2022, unrecognized stock-based compensation expense related to the PSUs that were deemed not probable was $ 1.4 million.

The Company concluded that achievement of the performance conditions was not probable as of September 30, 2022 , and therefore no stock-based compensation expense was recognized for the three and nine months ended September 30, 2022 in connection with the PSUs.

As of September 30, 2022, unrecognized stock-based compensation expense related to the PSUs that were deemed not probable was $ 1.4 million.

Market-Based Awards

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Stock-based compensation expense is recognized over the derived service period of 3 years .

Stock-based compensation expense in connection with the MRSUs was immaterial for the six months ended June 30, 2022.

As of June 30, 2022, there was $ 0.4 million of unrecognized stock-based compensation expense related to this MRSU.

Stock-based compensation expense in connection with the MRSUs was $ 0.1 million for the nine months ended September 30, 2022.

As of September 30, 2022, there was $ 0.3 million of unrecognized stock-based compensation expense related to this MRSU.

Performance Award

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The Company estimated the fair value of the Performance Award at each reporting period using the Monte Carlo simulation (Note 4), which is recognized as stock-based compensation expense over the derived service period.

During the six months ended June 30, 2022 , the Company reversed approximately $ 0.4 million in stock-based compensation expenses as a direct result of decreased value of the Performance Award caused by a decline in the Company’s common stock price.

During the nine months ended September 30, 2022 , the Company reversed approximately $ 0.4 million in stock-based compensation expenses as a direct result of decreased value of the Performance Award caused by a decline in the Company’s common stock price.

2021 Employee Stock Purchase Plan (ESPP)

In March 2021, the Company’s board of directors adopted the ESPP, which became effective immediately prior to the execution of the underwriting agreement in connection with the Company’s IPO.

As of June 30, 2022 , 29,720 shares have been issued under the ESPP.

As of September 30, 2022 , 29,720 shares have been issued under the ESPP.

In September 2021, the Company’s board of directors adopted the Company’s 2021 UK Sharesave Sub-plan (SAYE).

An allocation of 25,875 shares of common stock from the ESPP reserve pool was approved and reserved for issuance under the SAYE.

No shares have been issued under the SAYE through June 30, 2022.

The stock-based compensation expense related to the ESPP and SAYE for the three and six months ended June 30, 2022 and 2021, was immaterial.

No shares have been issued under the SAYE through September 30, 2022.

The stock-based compensation expense related to the ESPP and SAYE for the three and nine months ended September 30, 2022 and 2021, was immaterial.

The following table summarizes stock-based compensation expense, including expense associated with award modifications for unvested options, reflected in the unaudited consolidated statements of operations and comprehensive loss (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

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agonists, including REN001, for any therapeutic, prophylactic or diagnostic application in humans.

To date, the Company has paid a

$ 3.0 million upfront payment and a total of $ 2.0 million in milestone payments and issued an aggregate of 576,443 shares of our common stock to vTv Therapeutics.

To date, the Company has paid a $ 3.0 million upfront payment and $ 2.0 million in milestone payments and issued an aggregate of 576,443 shares of its common stock to vTv Therapeutics.

Upon the achievement of certain pre-specified development and regulatory milestones, the Company is also required to pay vTv Therapeutics milestone payments totaling up to $ 64.5 million.

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In addition, the Company is obligated to make royalty payments to vTv Therapeutics at mid-single digit to low teen percentage royalty rates, based on tiers of annual net sales of licensed products, subject to certain customary reductions.

There were no milestone payments achieved or recorded for the three and six months ended June 30, 2022 and 2021 .

There were no milestone payments achieved or recorded for the three and nine months ended September 30, 2022 and 2021 .

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

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REN001 was also studied in an open-label trial in patients with primary mitochondrial myopathies (PMM).

In this trial, administration of REN001 improved function, reduced symptoms, and increased expression of genes involved in mitochondrial activity.

In this trial, administration of REN001 improved function, reduced symptoms, and increased expression of genes involved in mitochondrial activities.

As a PPARδ

agonist, REN001 may benefit patients with genetic mitochondrial myopathies who experience weakness, fatigue, or deterioration in muscle due to impaired mitochondrial energy production.

We are currently developing REN001 in rare genetic diseases that typically present with myopathy and have high unmet medical needs, including PMM and long-chain fatty acid oxidation disorders (LC-FAOD).

Patients with these diseases are unable to perform many everyday activities, can experience cardiomyopathy and other organ dysfunction, and typically have a reduced life expectancy.

We completed an open-label Phase 1b study in PMM patients with mitochondrial DNA defects to assess the safety and tolerability of REN001, and measure changes in functional tests such as walk distance, exercise capacity and patient-reported symptoms that could serve as potential endpoints in future clinical studies.

We are currently developing REN001 in rare genetic diseases that typically present with myopathy, including PMM and long-chain fatty acid oxidation disorders (LC-FAOD).

There are currently no approved therapies for the treatment of PMM, representing a high unmet medical need with more than 66,000 and 82,000 patients with PMM in the United States and Europe, respectively.

There are approximately 5,000 and more than 6,000 LC-FAOD patients in the United States and Europe, respectively.

We have received orphan drug designation from the U.S.

Food and Drug Administration (FDA) for REN001 for the treatment of PMM and LC-FAOD and Fast Track designation for REN001 for treatment of PMM in the United States.

Additionally, we have received orphan drug designation for REN001 for treatment of long-chain 3-hydroxy acyl-CoA dehydrogenase (LCHAD) and mitochondrial encephalomyopathy, lactic acidosis, and neurological stroke-like episodes (MELAS) in the European Union (EU).

We completed an open-label Phase 1b study in PMM patients with mitochondrial DNA (mtDNA) defects to assess the safety and tolerability of REN001, and measure changes in functional tests such as walk distance, exercise capacity and patient-reported symptoms that could serve as potential endpoints in future clinical studies.

REN001 was well-tolerated and had an adequate safety profile in this trial.

Compared to baseline, patients receiving REN001 once-daily for 12 weeks experienced an average increase in distance of 104.4 meters in the 12-minute walk test (12MWT), an average increase in weight-adjusted peak oxygen consumption (VO 2 ) of 1.7 mL/kg/min, a reduction in fatigue and pain, and increased expression of genes involved with transport and metabolism of nutrients in the mitochondria including Pyruvate dehydrogenase lipoamide kinase isozyme 4 (PDK4), Angiopoietin-like 4 (ANGPTL4), and Solute carrier family 25 member 34 (SLC25A34).

Based on these results, we initiated a global, randomized, double-blind, placebo-controlled Phase 2b study of REN001 in patients with PMM (STRIDE).

We expect to complete enrollment by year-end 2022 and announce topline results in the second half of 2023.

We are also conducting a two-year, open-label, long-term safety trial outside the United States (STRIDE AHEAD).

Following our interactions with the U.S.

Food and Drug Administration (FDA), European Medicines Agency (EMA), and several other European regulatory agencies, we believe that positive results from the ongoing STRIDE and STRIDE AHEAD studies could support registration of REN001 for adult PMM patients with mitochondrial DNA defects in both the United States and in Europe.

We completed an open-label Phase 1b study in LC-FAOD patients with nuclear DNA defects to assess the safety and tolerability of REN001, and measure changes in functional tests such as walk distance, exercise capacity and patient-reported symptoms that could serve as potential endpoints in future clinical studies.

The study included patients with defective long-chain 3-hydroxy acyl-CoA dehydrogenase (LCHAD), carnitine palmitoyltransferase 2 (CPT2), very long-chain acyl-CoA dehydrogenase (VCLAD), or trifunctional protein (TFP).

Based on these results, we initiated a global, randomized, double-blind, placebo-controlled pivotal Phase 2b study of REN001 in adult PMM patients with mtDNA (STRIDE).

As of November 2022, we have achieved over 80% enrollment on our ongoing STRIDE study.

We expect to complete enrollment of this pivotal trial in the first quarter of 2023 and anticipate announcement of topline results in the fourth quarter of 2023.

We are also conducting a two-year, open-label, long-term safety trial in PMM patients (STRIDE AHEAD) outside the United States.

Following our interactions with the FDA, European Medicines Agency (EMA), and several other National regulatory agencies in Europe, we believe that positive results from the ongoing pivotal STRIDE and STRIDE AHEAD studies could potentially support registration of REN001 for PMM patients with mtDNA in the United States and Europe.

In addition, we are planning to study REN001 in PMM patients with nuclear DNA (nDNA) defects.

We completed an open-label Phase 1b study in LC-FAOD patients with nuclear DNA (nDNA) defects to assess the safety and tolerability of REN001, and measure changes in functional tests such as walk distance, exercise capacity and patient-reported symptoms that could serve as potential endpoints in future clinical studies.

The study included patients with defective LCHAD, carnitine palmitoyltransferase 2 (CPT2), very long-chain acyl-CoA dehydrogenase (VCLAD), or trifunctional protein (TFP).

REN001 was well-tolerated and had an adequate safety profile in this trial.

The LCHAD and CPT2 groups had the greatest improvement over baseline in 12MWT (73.7 and 51.9 meters, respectively).

We also completed an observational, non-interventional study in LC-FAOD patients with nuclear DNA defects to better understand the natural history of LC-FAOD and changes in patient function and symptoms over time (FORWARD).

Based on the results of the LC-FAOD Phase 1b study, in conjunction with the results of the FORWARD study, we intend to continue development of REN001 in patients with LC-FAOD.

We do not own or operate manufacturing facilities.

We rely, and expect to continue to rely, on third parties for the manufacture of REN001 for preclinical studies and clinical trials, as well as for commercial manufacturing if REN001 obtains marketing approval.

We also rely, and expect to continue to rely, on third parties to manufacture, package, label, store, and distribute REN001, if marketing approval is obtained.

We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment, and personnel while also enabling us to focus our expertise and resources on the development of REN001.

We also completed an observational, non-interventional study in LC-FAOD patients with nDNA defects to better understand the natural history of LC-FAOD and changes in patient function and symptoms over time (FORWARD).

Results of the studies were presented at the International Network of Fatty Acid Oxidation Research and Management (INFORM) Conference in August 2022.

Based on the results of the LC-FAOD Phase 1b study, in conjunction with the results of the FORWARD study, we intend to continue development of REN001 in LC-FAOD patients.

We expect feedback from the FDA in the first quarter of 2023 that will direct our regulatory pathways for our LC-FAOD program.

Since our inception in 2014, our operations have primarily focused on raising capital, establishing and protecting our intellectual property portfolio, organizing and staffing our company, business planning, and conducting preclinical, clinical and manufacturing development for REN001.

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Since inception, we have incurred significant operating losses.

Our net losses were $25.3 million and $16.4 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we had an accumulated deficit of $110.1 million, and cash, cash equivalents and short-term investments of $126.9 million.

Our net losses were $38.4 million and $29.2 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we had an accumulated deficit of $123.1 million, and cash, cash equivalents and short-term investments of $116.1 million.

We have funded our operations primarily through the issuance and sale of equity securities.

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We have not yet sold any shares of our common stock under the ATM facility.

We expect to continue to incur net operating losses for at least the next several years, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase as we conduct our ongoing and planned clinical trials and preclinical studies, engage in other research and development activities, seek regulatory approvals for any product candidates that successfully complete clinical trials, incur development milestone payments related to our research and development activities, prepare for commercialization, hire additional personnel, and protect our intellectual property.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

approvals for any product candidates that successfully complete clinical trials, incur development milestone payments related to our research and development activities, prepare for commercialization, hire additional personnel, and protect our intellectual property.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, our expenditures on other research and development, and commercialization activities.

As a result, we will need to raise additional capital.

Until such time as we can generate significant revenue from sales of our product candidate, if ever, we expect to finance our operations

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.

Until such time as we can generate significant revenue from sales of our product candidate, if ever, we expect to finance our operations 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.

Additional funds may not be available to us on acceptable terms or at all.

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If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.

Based upon our current operating plan, we believe that our cash, cash equivalents, and short-term investments as of June 30, 2022 will enable us to fund our operating expenses and capital expenditure requirements into 2024.

Based upon our current operating plan, we believe that our cash, cash equivalents, and short-term investments as of September 30, 2022 will enable us to fund our operating expenses and capital expenditure requirements into 2024.

The COVID-19 pandemic continues to evolve, and we will continue to monitor the COVID-19 situation closely.

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In addition, we are obligated to make tiered royalty payments to vTv Therapeutics at mid-single digit to low teen percentage royalty rates, based on tiers of annual net sales of licensed products, subject to certain customary reductions.

There were no milestone payments achieved or recorded for the three and six months ended June 30, 2022 and 2021.

There were no milestone payments achieved or recorded for the three and nine months ended September 30, 2022 and 2021.

Components of Our Results of Operations

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The following table summarizes our research and development expenses (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Clinical and regulatory

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Research and development-other expense

We expect our research and development expenses to increase substantially for the foreseeable future as we advance our product candidate into and through clinical trials, continue to conduct preclinical studies and pursue regulatory approval of our product candidate.

We expect our research and development expenses to increase substantially for the foreseeable future as we advance our product candidate through clinical trials, continue to conduct preclinical studies and pursue regulatory approval for our product candidate.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming.

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Results of Operations

Comparison of Three Months Ended June 30, 2022 and 2021 (Unaudited)

Comparison of Three Months Ended September 30, 2022 and 2021 (Unaudited)

The following table summarizes our results of operations (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

Operating expenses:

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Research and Development Expenses

Research and development expenses for the three months ended June 30, 2022 were $8.1 million, compared to $6.3 million for the three months ended June 30, 2021.

This increase of $1.8 million was primarily due to a $1.1 million increase in personnel-related costs due to the additional headcount required to support our clinical and manufacturing operation.

In addition, there was a $0.4 million increase in clinical trial and manufacturing costs and a $0.4 million increase in non-clinical activities.

Research and development expenses for the three months ended September 30, 2022 were $9.9 million, compared to $9.3 million for the three months ended September 30, 2021.

This increase of $0.6 million was primarily due to a $1.4 million increase in clinical study and manufacturing costs primarily related to our STRIDE study and a $0.8 million increase in personnel-related costs due to the additional headcount required to support our clinical and manufacturing operations, offset by a $1.5 million decrease in non-clinical activities.

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2022 were $4.3 million, compared to $2.9 million during the three months ended June 30, 2021.

This increase of $1.4 million was primarily attributable to increased costs to operate as a public company, including increases in outside professional services of $1.1 million and personnel-related expenses of $0.1 million.

Other income for the three months ended June 30, 2022 and 2021 was immaterial.

Comparison of Six Months Ended June 30, 2022 and 2021 (Unaudited)

General and administrative expenses for the three months ended September 30, 2022 were $3.9 million, compared to $3.4 million for the three months ended September 30, 2021.

This increase of $0.5 million was primarily attributable to increased costs to operate as a public company, including increases in outside professional services of $0.8 million offset by a decrease in stock-based compensation of $0.4 million.

The increase in other income for the three months ended September 30, 2022, compared to the same period in the prior year was due to a higher interest rate earned on our short-term investments.

Comparison of Nine Months Ended September 30, 2022 and 2021 (Unaudited)

The following table summarizes our results of operations (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Operating expenses:

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Research and Development Expenses

Research and development expenses for the six months ended June 30, 2022 were $17.4 million, compared to $11.8 million for the six months ended June 30, 2021.

This increase of $5.7 million was primarily due to an increase of $2.6 million related to clinical trial and manufacturing costs associated with the launch of our STRIDE and FORWARD studies as well as our Phase 1b clinical trials of LC-FAOD.

In addition, there was a $1.9 million increase in personnel-related costs due to the additional headcount required to support our clinical and manufacturing operations and a $1.1 million increase in non-clinical activities.

Research and development expenses for the nine months ended September 30, 2022 were $27.3 million, compared to $21.1 million for the nine months ended September 30, 2021.

This increase of $6.3 million was primarily due to an increase of $4.0 million related to clinical trial and manufacturing costs associated with the launch of our STRIDE study as well as our Phase 1b clinical trials of LC-FAOD.

In addition, there was a $2.7 million increase in personnel-related costs due to the additional headcount required to support our clinical and manufacturing operations offset by a $0.4 million decrease in non-clinical activities.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2022 were $8.0 million, compared to $4.7 million during the six months ended June 30, 2021.

This increase of $3.3 million was primarily attributable to increased costs to operate as a public company, including increases in outside professional services of $1.7 million, personnel-related expenses of $0.5 million, and insurance premiums of $0.3 million.

Other income for the six months ended June 30, 2022 and 2021 was immaterial.

General and administrative expenses for the nine months ended September 30, 2022 were $11.9 million, compared to $8.1 million for the nine months ended September 30, 2021.

This increase of $3.8 million was primarily attributable to increased costs to operate as a public company, including increases in outside professional services of $3.3 million, insurance premiums of $0.3 million, and personnel-related expenses of $0.2 million.

The increase in other income for the nine months ended September 30, 2022, compared to the same period in the prior year was due to a higher interest rate earned on our short-term investments.

Liquidity and Capital Resources

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The following table summarizes our cash flows (unaudited and in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash used in investing activities

Net cash provided by financing activities

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Operating Activities

Net cash used in operating activities for the six months ended June 30, 2022 was $21.0 million, consisting primarily of our net loss of $25.3 million adjusted for non-cash items of $2.0 million primarily due to stock-based compensation expense and $2.4 million net change in operating assets and liabilities.

The change in our net operating assets and liabilities was primarily due to an increase in accrued expenses of $1.7 million due to timing of receipt of invoices and payments and a decrease in prepaid and other current assets of $0.9 million.

Net cash used in operating activities for the six months ended June 30, 2021 was $18.3 million, consisting primarily of our net loss of $16.4 million and a $3.6 million net decrease in operating assets and liabilities, partially offset by $1.7 million in non-cash charges primarily consisting of stock-based compensation expense.

Net cash used in operating activities for the nine months ended September 30, 2022 was $31.7 million, consisting primarily of our net loss of $38.4 million adjusted for non-cash items of $3.0 million primarily due to stock-based compensation expense and a $3.6 million net change in operating assets and liabilities.

The change in our net operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $2.8 million due to timing of receipt of invoices and payments and a decrease in prepaid and other current assets of $1.1 million.

Net cash used in operating activities for the nine months ended September 30, 2021 was $28.0 million, consisting primarily of our net loss of $29.2 million and a $1.7 million net decrease in operating assets and liabilities, partially offset by $2.9 million in non-cash charges primarily consisting of stock-based compensation expense.

Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2022 was $14.5 million which was transferred to cash and cash equivalents, and consisted primarily of the proceeds from maturities of available-for-sale short-term investments of $30.5 million offset by the purchase of available-for-sale short-term investments of $15.9 million.

Net cash used in investing activities for the six months ended June 30, 2021 was $27.0 million consisting primarily of the purchase of available-for-sale short-term investments.

Net cash used in investing activities for the nine months ended September 30, 2022 and 2021 was $30.9 million and $31.5 million, respectively, consisting primarily of the purchases of available-for-sale short-term investments.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2022 was immaterial.

Net cash provided by financing activities for the six months ended June 30, 2021 was $132.1 million, consisting primarily of $84.6 million of net proceeds from our initial public offering (IPO), $47.4 million of net proceeds from the issuance of Series B convertible preferred stock, and $0.2 million of proceeds from the exercise of stock options.

Net cash provided by financing activities for the nine months ended September 30, 2022 was immaterial.

Net cash provided by financing activities for the nine months ended September 30, 2021 was $132.3 million, consisting primarily of $84.6 million of net proceeds from our initial public offering (IPO), $47.4 million of net proceeds from the issuance of Series B convertible preferred stock, and $0.4 million of proceeds from the exercise of stock options.

Funding Requirements

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the costs of establishing or contracting for sales and marketing capabilities if we obtain regulatory approvals to market any product candidates.

As of June 30, 2022, we had $126.9 million in cash, cash equivalents and short-term investments.

We believe, based upon our current operating plan, that our cash, cash equivalents and short-term investments as of June 30, 2022 will be sufficient to fund our planned operations into 2024.

As of September 30, 2022, we had $116.1 million in cash, cash equivalents and short-term investments.

We believe, based upon our current operating plan, that our cash, cash equivalents and short-term investments as of September 30, 2022 will be sufficient to fund our planned operations into 2024.

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive, and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales.

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Material Cash Requirements

The discussion below summarizes our significant contractual obligations and commitments as of June 30, 2022.

The discussion below summarizes our significant contractual obligations and commitments as of September 30, 2022.

See Note 6 of Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information, including the future operating lease minimum payments.

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Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.

The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements.

consolidated financial statements.

We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

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in our Annual Report on Form 10-K for the year ended December 31, 2021, and the notes to our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

During the six months ended June 30, 2022, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2021.

During the nine months ended September 30, 2022, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2021.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements