What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2022-11-08 · 244 added, 335 removed, 324 unchanged (64% of the section changed)

3 unchanged sentences

(In thousands, except share and par value data)

September 30,

Current assets:

13 unchanged sentences

Operating lease liabilities, less current portion

Other long-term liabilities

Performance award

3 unchanged sentences

Common stock, $ 0.0001 par value;

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

December 31, 2021;

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

200,000,000 shares authorized at

March 31, 2023 and December 31, 2022;

25,107,430 and 24,699,553 shares

issued and outstanding at March 31, 2023 and December 31, 2022,

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive (loss) income

Accumulated other comprehensive income (loss)

Total stockholders’

4 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

3 unchanged sentences

Loss from operations

Unrealized (loss) gain on short-term investments

Other income (loss)

Unrealized gain on short-term investments

Comprehensive loss

3 unchanged sentences

RENEO PHARMACEUTICALS, INC.

Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’

Equity (Deficit )

Consolidated Statements of Changes in Stockholders’

(In thousands, except share data)

Preferred Stock

Comprehensive

Stockholders'

Stockholders’

Income (Loss)

1 unchanged sentence

Stock based compensation

Issuance of common stock in

connection with equity plans

Issuance of common stock in connection

with the at-the-market facility, net of

issuance costs

Other comprehensive income

Balances, March 31, 2023

Stock based compensation

Issuance of commons stock in

connection with equity plans

Other comprehensive income

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.

RENEO PHARMACEUTICALS, INC.

Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’

Equity (Deficit) (Continued)

(In thousands, except share data)

Preferred Stock

Comprehensive

Stockholders'

Equity (Deficit)

Stockholders’

Balances, December 31, 2021

Issuance of series B convertible

preferred stock, net of issuance

costs of $ 29

Stock based compensation

1 unchanged sentence

connection with equity plans

Balances, March 31, 2021

Conversion of convertible preferred

stock into common stock upon

initial public offering

Issuance of common stock in initial

public offering, net of offering costs

Stock based compensation

Issuance of common stock in

connection with equity plans

Other comprehensive income

Balances, June 30, 2021

Stock based compensation

Issuance of common stock in

connection with equity plans

Other comprehensive income

Balances, September 30, 2021

Balances, March 31, 2022

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

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

10 unchanged sentences

Operating lease liabilities

Other current and long-term liabilities

Net cash used in operating activities

3 unchanged sentences

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

Net cash used in investing activities

Net cash provided by investing activities

Cash flows from financing activities

Proceeds from issuance of Series B convertible preferred stock, net of issuance costs

Proceeds from initial public offering, net of offering costs

Proceeds from issuance of common stock in connection with equity plans

Proceeds from at-the-market facility, net of offering costs

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

2 unchanged sentences

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

Noncash investing and financing activities:

Property and equipment in accounts payable

Vesting of unvested exercised options

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

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(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 REN001, a novel oral peroxisome proliferator-activated receptor (PPAR) agonist.

Initial Public Offering

On April 13, 2021, the Company completed an initial public offering (IPO) of its common stock.

In connection with its IPO, the Company issued and sold 6,250,000 shares of its common stock at a price to the public of $ 15.00 per share.

The gross proceeds from the IPO were approximately $ 93.8 million before deducting underwriting discounts and commissions of $ 6.6 million and offering expenses of approximately $ 2.6 million payable by the Company.

At the closing of the IPO, 71,183,500 shares of outstanding convertible preferred stock were automatically converted into 15,907,629 shares of common stock.

Following the IPO, there were no shares of preferred stock outstanding.

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

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.

As a result, the Company will need to raise capital through public or private equity or debt financings, government or other third-party funding, collaborations, strategic alliances and licensing arrangements or a combination of these.

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 September 30, 2022.

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

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).

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

As of March 31, 2023, the Company had cash, cash equivalents and short-term investments of $ 93.8 million and an accumulated deficit of $ 151.8 million.

The Company had a net loss of $ 15.1 million and used cash of $ 9.0 million for operating activities for the three months ended March 31, 2023.

Since inception through March 31, 2023, the Company has funded its operations primarily with the net proceeds from the issuance of convertible preferred stock and common stock.

The Company expects that its existing balance of cash, cash equivalents and short-term investments as of March 31, 2023, together with the net proceeds from the May 2023 public offering and May 2023 private placement (see Footnote 10), are sufficient to fund operations through the Company’s planned near-term clinical milestones, but not for more than one year after the date of the filing of this Quarterly Report on Form 10-Q and therefore 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 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 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.

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 the coronavirus (COVID-19) pandemic, 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.

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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.

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.

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, 2022 ;

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of March 31, 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, 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 three months ended March 31, 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 February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (ASC 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheets for those leases classified as operating leases under previous GAAP.

ASU 2016-02 requires a lessee to recognize a liability for lease payments (lease liability) and a right-of-use (ROU)assets (representing its right to use the underlying asset for the lease term) on the balance sheet.

In July 2018, the FASB issued ASU 2018-11, Leases (ASC 842):

Targeted Improvements , which provides entities an optional transition method to apply the new guidance as of the adoption date, rather than as of the earliest period presented.

In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the effective date, unless the lease was modified, to not reassess (a) whether a contract is or contains a lease, (b) lease classification or (c) determination of initial direct costs, which effectively allows entities to carryforward accounting conclusions under previous GAAP.

The Company early adopted this standard on January 1, 2022 , using the optional transitional method and elected the package of practical expedients in transition for leases that commenced prior to January 1, 2022.

As a result of implementing ASC 842, the Company recognized operating lease ROU assets of $ 1.5 million and lease liabilities of $ 1.7 million on January 1, 2022, with no impact on its beginning retained earnings, consolidated statements of operations and comprehensive loss, or cash flows.

See Note 6, Leases, for further details.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes .

The standard simplifies the accounting for income taxes, eliminates certain exceptions within Accounting Standards Codification (ASC) 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

The new guidance was effective for the Company as of January 1, 2022.

Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

The Company adopted this standard on January 1, 2022 .

Adoption of this standard had no material impact on the Company’s consolidated financial position, results of operations or cash flows.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued 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 aren’t measured at fair value through net income.

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 .

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 is effective for the Company as of January 1, 2023.

The Company is currently evaluating the impact of this ASU and does not expect that adoption of this standard will have a material impact on its consolidated financial statements and related disclosures.

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 (Topic 820):

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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 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 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.

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 months ended March 31, 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,

As of March 31,

Common stock options outstanding

1 unchanged sentence

Fair Value Measurements

ASC 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).

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 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 820 establishes a three-tier fair value hierarchy that distinguishes between the following:

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 –

1 unchanged sentence

Level 2 –

Inputs, other than quoted prices in active markets, that are observable for the asset or liability, either directly or indirectly.

Inputs, other than quoted prices in active markets, which are observable for the asset or liability, either directly or indirectly.

Level 3 –

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The Company’s financial assets are subject to fair value measurements on a recurring basis.

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

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.

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.

In connection with the Company's chief executive officer's (CEO) employment agreement, he is entitled to receive a special performance award 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 8.

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 8.

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, 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):

No assets or liabilities were transferred into or out of their classifications during the three months ended March 31, 2023.

The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at March 31, 2023 consisted of the following (in thousands):

Quoted Prices in

4 unchanged sentences

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 nine months ended September 30, 2022 (in thousands):

Balance as of January 1, 2022

Change in fair value

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):

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

4 unchanged sentences

Money market investments

Commercial paper

Short-term investments:

treasury securities

Commercial paper

Performance award

The following table summarizes changes in fair value measurements of the Performance Award during the three months ended March 31, 2023 (in thousands):

Balance as of January 1, 2023

Change in fair value

Balance as of March 31, 2023

Marketable Debt Securities

During the three months ended March 31, 2023, the Company invested its excess cash balances in marketable debt securities and, at each balance sheet date presented, the Company classified all of its investments in debt securities as available-for-sale and as current assets as they mature within 12 months and represent the investment of funds available for current operations.

The following tables summarize the gross unrealized gains and losses of the Company’s available-for-sale securities as of March 31, 2023 and 2022 (in thousands):

As of March 31, 2023

Available-for-sale securities:

treasury securities

As of December 31, 2022

Available-for-sale securities:

treasury securities

Commercial paper

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

As of September 30, 2022

As of March 31, 2023

As of December 31, 2022

2 unchanged sentences

Accrued compensation

Accrued research and development-other

Accrued other

Total accrued expenses

1 unchanged sentence

The Company leases additional office space located in San Diego, California, and in Sandwich, United Kingdom.

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.

The Company elected the package of practical expedients permitted within the standard, which allows an entity to forego reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs.

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 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)

The lease terms for the Irvine, San Diego, and Sandwich offices extend through November 30, 2026, July 31, 2023, and October 23, 2027, respectively.

Other information related to the Company ’s operating leases as of the balance sheet dates presented are as follows:

Three Months Ended

Weighted incremental borrowing rate

Weighted average remaining lease term (in years)

Cash paid for amounts included in the measurement of lease liabilities (in thousands)

Lease expense (in thousands)

Maturities of lease liabilities by fiscal year for the Company ’s operating leases are as follows (in thousands):

As of March 31, 2023

2023 (remaining nine months)

Total lease payments

1 unchanged sentence

Present value of lease liabilities

Convertible Preferred Stock

Series A Convertible Preferred Stock

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 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.

In connection with the IPO in April 2021, all outstanding shares of Series B convertible preferred stock were converted into 10,476,672 shares of common stock.

Stock-Based Compensation

In March 2021, the Company’s board of directors adopted the Company’s 2021 Equity Incentive Plan (2021 Plan), which is the successor to the Company's 2014 Equity Incentive Plan (2014 Plan).

As of the effectiveness of the 2021 Plan, awards granted under the 2014 Plan that are forfeited or otherwise become available under the 2014 Plan will be included and available for issuance under the 2021 Plan.

Under the 2021 Plan, the Company may grant stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other awards to individuals who are employees, officers, directors or consultants of the Company, and employees and consultants of the Company’s affiliates.

In March 2021, the Company’s board of directors adopted the Company’s 2021 Equity Incentive Plan (2021 Plan), which is the successor to the Company’s 2014 Equity Incentive Plan (2014 Plan).

As of the effective date of the 2021 Plan, awards granted under the 2014 Plan that are forfeited or otherwise become available under the 2014 Plan will be included and available for issuance under the 2021 Plan.

Under the 2014 Plan, certain employees were granted the ability to early exercise their options.

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

As of March 31, 2023 , there were no shares subject to stock options that have been early exercised.

Shares Reserved for Future Issuance

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

As of March 31, 2023, the Company had reserved shares of its common stock for future issuance as follows:

Common stock options outstanding

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Stock Options

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

A summary of the Company’s stock option activity and related information during the three months ended March 31, 2023 is as follows:

Contractual Term (in years)

1 unchanged sentence

Outstanding at December 31, 2022

Forfeited/Expired

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.

Outstanding at March 31, 2023

Vested at March 31, 2023

Exercisable at March 31, 2023

Options exercisable at March 31, 2023 include vested options and options eligible for early exercise.

All outstanding options as of March 31, 2023 are expected to vest.

Unrecognized stock-based compensation expense at March 31, 2023 was $ 9.3 million, which is expected to be recognized over a weighted-average vesting term of 2.7 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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Risk-free interest rate

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The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends.

Fair value of common stock.

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 September 30, 2022:

Restricted Stock Units (RSUs)

RSUs consist of performance-based units (PSUs) and market-based units (MSUs).

The following table summarizes RSU activities during the three months ended March 31, 2023:

Weighted-Average

Unvested at December 31, 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.

Unvested at March 31, 2023

Performance-Based Units

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

The fair value of the awards was based on the value of the Company’s common stock at the grant date of the award and expense recognition is based on the probability of achieving the performance conditions.

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 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

Restricted Stock Units

In December 2021, the Company granted 100,000 market-based restricted stock units (MRSUs) to its CEO pursuant to the 2021 Plan.

The MRSUs vest based on the Company’s closing stock price trading above $ 20 per share for 30 consecutive trading days subject to the employee’s continued employment with the Company through the date of achievement.

The share price of the Company’s common stock on the date of issuance of the MRSUs was $ 6.69 per share.

The fair value was $ 0.4 million based on Monte Carlo simulation model on the grant date.

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

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.

The Company has 249,500 unvested shares underlying PSUs as of March 31, 2023.

The Company concluded that achievement of the performance conditions was not probable as of March 31, 2023 , and therefore no stock-based compensation expense was recognized for the three months ended March 31, 2023.

As of March 31, 2023, there was $ 1.6 million of unrecognized stock-based compensation expense related to the PSUs that were deemed not probable.

Market-Based Units

The vesting of the MSUs is based on the Company’s closing stock price trading above $ 20 per share for 30 consecutive trading days subject to the employee’s continued employment with the Company through the date of achievement.

The fair value was based on Monte Carlo simulation model on the grant date.

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

The Company has 120,000 unvested shares underlying MSUs as of March 31, 2023.

Stock-based compensation expense related to the MSUs during the three months ended March 31, 2023 and 2022 was immaterial.

As of March 31, 2023, there was $ 0.2 million of unrecognized stock-based compensation expense related to MSUs.

Performance Award

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Stock Compensation and includes both market and performance conditions.

Since the IPO, neither of the events have yet been satisfied.

Since the Company’

s initial public offering (IPO), neither of the events have yet been satisfied.

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 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.

For the three months ended March 31, 2023 , the Company recognized approximately $ 0.3 million in stock-based compensation expense as a direct result of the increased value of the Performance Award primarily caused by the increase in the Company’s common stock price.

For the three months ended March 31, 2022, stock-based compensation expense was immaterial.

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 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).

As of March 31, 2023 , 103,719 shares have been issued under the ESPP.

In September 2021, the Company’s board of directors adopted the Company’s 2021 United Kingdom (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 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 September 30,

Nine Months Ended September 30,

No shares have been issued under the SAYE through March 31, 2023.

Stock-Based Compensation Expense

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

Three Months Ended March 31,

Research and development

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agonists and products containing such PPARδ

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 $ 2.0 million in milestone payments and issued an aggregate of 576,443 shares of its common stock to vTv Therapeutics.

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

Under the terms of the vTv License Agreement, the Company paid vTv Therapeutics an initial upfront license fee of $ 3.0 million 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.

The Company is also required to pay vTv Therapeutics up to $ 30.0 million in total sales-based milestones upon achievement of certain sales thresholds of the licensed product.

As of March 31, 2023 , the Company has paid an aggregate of $ 2.0 million in development and regulatory milestone payments.

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 nine months ended September 30, 2022 and 2021 .

There were no milestone payments achieved or recorded for the three months ended March 31, 2023 and 2022 .

Subsequent Events

Public Offering and Private Placement

On May 8, 2023, the Company completed a public offering in which it sold an aggregate of 7,906,250 shares of common stock, which included the full exercise of the underwriters’

option to purchase an additional 1,031,250 shares of common stock, at a price of $ 8.00 per share.

The Company received total net proceeds from the offering of approximately $ 58.2 million, after deducting underwriting discounts and commissions and offering expenses.

On May 9, 2023, the Company completed a concurrent private placement in which it sold an aggregate of 625,000 shares of common stock to Abingworth Bioventures 8 L.P., a holder of more than 5 % of the Company’s common stock, at a price of $ 8.00 per share.

The Company received total net proceeds from the private placement of approximately $ 4.7 million, after deducting advisor fees and other estimated fees and expenses.

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

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These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

Reneo is a clinical-stage pharmaceutical company focused on the development and commercialization of therapies for patients with rare genetic mitochondrial diseases, which are often associated with the inability of mitochondria to produce adenosine triphosphate (ATP).

Our lead product candidate, REN001, is a potent and selective agonist of the peroxisome proliferator-activated receptor delta (PPARδ).

REN001 has been shown to increase transcription of genes involved in mitochondrial function and increase fatty acid oxidation, and may increase production of new mitochondria.

We are a clinical-stage pharmaceutical company focused on the development and commercialization of therapies for patients with rare genetic mitochondrial diseases, which are often associated with the inability of mitochondria to produce adenosine triphosphate (ATP).

Our lead product candidate, mavodelpar, is a potent and selective agonist of the peroxisome proliferator-activated receptor delta (PPARδ).

Mavodelpar has been shown to increase transcription of genes involved in mitochondrial function and increase fatty acid oxidation (FAO), and may increase production of new mitochondria.

The PPAR family of nuclear hormone receptors, PPARα, PPARγ, and PPARδ, control the transcription of genes critical for regulating energy metabolism and homeostasis.

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activity through transgenic overexpression or pharmacological activation increases muscular strength and endurance across a variety of functional measures.

REN001 was studied in healthy male volunteers with one leg immobilized to produce muscle atrophy.

Compared to placebo, administration of REN001 resulted in statistically significant increases in expression of genes involved in mitochondrial oxidative phosphorylation, and statistically significant improvements in muscle strength.

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 activities.

Mavodelpar was studied in healthy male volunteers with one leg immobilized to produce muscle atrophy.

Compared to placebo, administration of mavodelpar resulted in statistically significant increases in expression of genes involved in mitochondrial oxidative phosphorylation, and statistically significant improvements in muscle strength.

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

Patients with PMM in this trial exhibited improved function, reduced symptoms, and increased expression of genes involved in mitochondrial function.

Mavodelpar was also studied in an open-label trial in patients with long-chain fatty acid oxidation disorder (LC-FAOD).

In this trial, patients with LC-FAOD due to certain gene defects exhibited improved function and reduced symptoms.

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.

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

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 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 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.

We are currently developing mavodelpar in rare genetic diseases that typically present with myopathy, including PMM and LC-FAOD.

There are currently no approved therapies for the treatment of PMM, representing a high unmet medical need.

We have received orphan drug designations for mavodelpar in the United States for PMM and LC-FAOD.

Additionally, we have received orphan drug designations for mavodelpar for mitochondrial encephalomyopathy, lactic acidosis, and neurological stroke-like episodes (MELAS), a form of PMM, and long-chain 3-hydroxy acyl-CoA dehydrogenase (LCHAD), a form of LC-FAOD in Europe.

We have received Fast Track designation for mavodelpar for the treatment of patients with PMM and LC-FAOD due to LCHAD deficiency, one of the predominant LC-FAOD genotypes.

We are continuing to collaborate with the U.S.

Food and Drug Administration (FDA) and European regulatory agencies to advance the LC-FAOD program which will include patients with LCHAD as well as other genotypes.

These discussions include obtaining alignment on the study design, patient population, and endpoints for the LC-FAOD program’s next clinical trial.

Mavodelpar for the Treatment of PMM

We completed an open-label Phase 1b study of mavodelpar in patients with PMM due to mitochondrial DNA (mtDNA) defects to assess the safety and tolerability of mavodelpar, and evaluated changes in patient function using a 12-minute walk test (12MWT).

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

Compared to baseline, patients receiving mavodelpar once-daily for 12 weeks experienced an average increase in distance of 104.4 meters in the 12MWT, an average increase in weight-adjusted peak VO 2 of 1.7 mL/min/kg, 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, Angiopoietin-like 4, and Solute carrier family 25 member 34.

Based on these results, we initiated the STRIDE study, a global, randomized, double-blind, placebo-controlled pivotal Phase 2b trial of mavodelpar in adult patients with PMM due to mtDNA defects.

We completed enrollment of 213 patients in March 2023, exceeding target enrollment of 200 patients, in the pivotal STRIDE study.

We anticipate announcement of topline results in the fourth quarter of 2023 and potential filing of a new drug application (NDA) in the first half of 2024.

The STRIDE study is designed to investigate the efficacy and safety of 100 mg mavodelpar administered once-daily over a 24-week period.

The primary efficacy endpoint of the trial is the change from baseline in the distance walked during the 12MWT at week 24.

Key secondary endpoints include changes from baseline in the Modified Fatigue Impact Scale (MFIS) measures and the patient global impression of change scale, the fatigue 30-second sit-to-stand test, step counts, patient global impression of severity scale, Brief Pain Inventory (BPI), and additional patient-reported outcome measures.

We are also conducting the STRIDE AHEAD study, a 24-month, open-label extension (OLE) trial outside of the United States in patients with PMM due to mtDNA.

We have enrolled over 100 patients in the STRIDE AHEAD study, with over 50 patients reaching 6-months in the study.

The STRIDE AHEAD study was recently amended to also allow enrollment of patients with PMM due to nuclear DNA (nDNA) defects and initiate enrollment of nDNA patients in the second quarter of 2023.

Based on 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 mavodelpar for adult patients with PMM in the United States and Europe.

We intend to submit the data from STRIDE, together with the data from STRIDE AHEAD, to the FDA and the EMA in planned marketing applications in 2024.

Mavodelpar for the Treatment of LC-FAOD

We completed an open-label Phase 1b study in LC-FAOD adult patients with nDNA defects to assess the safety and tolerability of mavodelpar, and measure changes in functional test 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 (VLCAD), or trifunctional protein (TFP).

A total of 24 patients were enrolled, including patients with defective LCHAD (n=5), CPT2 (n=8), VLCAD (n=9), or TFP (n=2).

We initiated the trial with a dose of 50 mg once-daily in the first three patients followed by 100 mg once-daily in all subsequent patients.

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 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.

We do not have any product candidates approved for sale, have not generated any revenue from product sales, and do not expect to generate revenues from the commercial sale of our product candidate for several years, if ever.

Since inception, we have incurred significant operating losses.

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.

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

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, 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.

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

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to, and volatility in, the credit and financial markets in the United States and worldwide, including those resulting from the ongoing COVID-19 pandemic, as well as actual or perceived changes in interest rates and economic inflation.

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 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.

The extent of the impact of COVID-19 on our business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the pandemic, including new variants of the virus, and its impact on our clinical trial enrollment, trial sites, contract research organizations, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

For example, our Phase 1b study of REN001 in PMM patients was closed early as a result of COVID-19, and we may face future clinical trial disruptions.

The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

As a result of COVID-19, we have taken precautionary measures in order to minimize the risk of the virus to our employees and the communities in which we operate.

While we have experienced impacts to our clinical development activities as a result of COVID-19, there has been minimal disruption to date in our ability to ensure the effective operation of our business.

We will continue to actively monitor the evolving situation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business.

At this point, the extent to which the COVID-19 pandemic may affect our business, operations and clinical development timelines and plans, including the resulting impact on our expenditures and capital needs, remains uncertain.

In the LC-FAOD Phase 1b study, mavodelpar was well tolerated.

The most common adverse events experienced by patients were rhabdomyolysis (4 patients) and myalgia (4 patients), the majority reported to be mild or moderate in severity.

We also completed the FORWARD study, a 16-week, observational, non-interventional study in patients with LC-FAOD with different nDNA mutations to better understand the natural history of LC-FAOD and changes in patient function and symptoms over time.

A total of 58 patients participated in the FORWARD study, including patients with defective LCHAD (n=16), CPT2 (n=30), or VLCAD (n=12).

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

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

License Agreement

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agonists and products containing such PPARδ

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

Under the terms of the vTv License Agreement, we paid vTv Therapeutics an initial upfront license fee of $3.0 million and $2.0 million of milestone payments and issued an aggregate of 576,443 shares of our common stock to vTv Therapeutics.

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

Under the terms of the vTv License Agreement, we paid vTv Therapeutics an initial upfront license fee of $3.0 million and issued an aggregate of 576,443 shares of our common stock to vTv Therapeutics.

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

We are also required to pay vTv Therapeutics up to $30.0 million in total sales-based milestones upon achievement of certain sales thresholds of the licensed product.

As of March 31, 2023, we have paid an aggregate of $2.0 million in development and regulatory milestone payments.

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 nine months ended September 30, 2022 and 2021.

There were no milestone payments achieved or recorded for the three months ended March 31, 2023 and 2022.

Components of Our Results of Operations

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Research and Development Expenses

To date, our research and development expenses have primarily related to preclinical and clinical development of REN001.

Research and development expenses primarily relate to preclinical and clinical development of mavodelpar.

Research and development expenses include:

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Clinical and regulatory

Contract manufacturing cost

Medical affairs

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 through clinical trials, continue to conduct preclinical studies and pursue regulatory approval for our product candidate.

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.

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

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the number of patients that participate in the trials;

uncertainties in patient enrollment or drop out or discontinuation rates, particularly in light of the current COVID-19 pandemic environment;

uncertainties in patient enrollment or drop out or discontinuation rates, whether related to COVID-19 or otherwise;

potential additional safety monitoring requested by regulatory agencies;

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General and Administrative Expenses

General and administrative expenses consist primarily of personnel expenses, including salaries, benefits, and stock-based compensation expense, for personnel in executive, finance, accounting, and human resource and other administrative functions.

General and administrative expenses also include corporate facility costs not otherwise included in research and development expenses, legal fees related to intellectual property and corporate matters, insurance costs and fees for accounting and consulting services.

We expect our general and administrative expenses to increase for the foreseeable future to support continued research and development activities, including our ongoing and planned research and development of our product candidate for multiple indications.

We expect our general and administrative expenses to increase for the foreseeable future to support continued research and development activities, including our ongoing and planned clinical trials of mavodelpar and commercialization of mavodelpar.

Other income consists of interest income on our cash, cash equivalents and short-term investments.

Results of Operations

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

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

Three Months Ended September 30,

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Research and Development Expenses

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 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)

Comparison of Three Months Ended March 31, 2023 and 2022 (Unaudited)

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

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

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Loss from operations

Other income (loss)

Research and Development Expenses

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.

Research and development expenses for the three months ended March 31, 2023 were $11.0 million, compared to $9.3 million for the three months ended March 31, 2022.

This increase of $1.7 million was primarily due to an increase of $1.4 million related to clinical study costs in support of marketing registration for mavodelpar.

General and Administrative Expenses

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.

General and administrative expenses for the three months ended March 31, 2023 were $5.1 million, compared to $3.7 million for the three months ended March 31, 2022.

This increase of $1.4 million was primarily due to an increase of $1.1 million in facility and personnel-related costs due to additional headcount.

The increase in other income for the three months ended March 31, 2023, 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

Since inception, we have incurred operating losses and negative cash flows from operations and have funded our operations primarily through the sale of preferred and common stock.

We do not have any product candidates approved for sale and have not generated any revenue from product sales, and we do not expect to generate revenues from the commercial sale of our product candidate for at least the foreseeable future, if ever.

We are subject to all the risks related to the development and commercialization of novel therapeutics, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business.

We continue to incur additional costs associated with operating as a public company.

We anticipate that we will need substantial additional funding in connection with our continuing operations.

In May 2022, we entered into the ATM facility under which we may offer and sell, from time to time at our sole discretion, up to $20.0 million in shares of our common stock.

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

Since inception, we have financed our operations primarily through the sale of equity securities.

We have not generated any revenue from the sale of any products.

As of March 31, 2023, we had available cash, cash equivalents and short-term investments of approximately $93.8 million.

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

As of March 31, 2023, we have sold and issued approximately 500,000 shares of our common stock pursuant to the ATM facility at a weighted-average price of $2.48 per share, resulting in aggregate gross proceeds to us of $1.2 million.

Sales commissions to SVB Securities LLC and other issuance expenses were immaterial.

The remaining capacity under the ATM facility was approximately $18.8 million in shares of common stock as of March 31, 2023.

In May 2023, we completed a public offering in which we sold an aggregate of 7,906,250 shares of common stock which included the full exercise of the underwriters’

option to purchase an additional 1,031,250 shares of common stock, at a price of $8.00 per share.

Total net proceeds from this offering, after deducting underwriting discounts and commissions and offering expenses, were approximately $58.2 million.

Also, in May 2023, we completed a concurrent private placement in which we sold an aggregate of 625,000 shares of common stock to Abingworth Bioventures 8 L.P.

(Abingworth), a holder of more than 5% of our common stock, at a price of $8.00 per share.

Total net proceeds from this private placement, after deducting advisor fees and other estimated fees and expenses, were approximately $4.7 million.

Operating Capital Requirements

We have incurred operating losses since inception and we expect to continue to incur substantial expenses related to our development activities for the foreseeable future as we continue product development for mavodelpar.

Since product development is time-consuming and expensive, we may never generate the necessary data or results required to obtain marketing approval and achieve product sales.

We are subject to all the risks related to the development and commercialization of a product candidate, including those discussed in the section titled “Risk Factors”

under Part II, Item 1A below.

As of March 31, 2023, we had cash, cash equivalents and short-term investments of $93.8 million and an accumulated deficit of $151.8 million.

We had a net loss of $15.1 million and used cash of $9.0 million for operating activities for the three months ended March 31, 2023.

Since inception through March 31, 2023, we have funded our operations primarily with the net proceeds from the issuance of convertible preferred stock and common stock.

We expect our existing balance of cash, cash equivalents and short-term investments as of March 31, 2023, together with the net proceeds from our May 2023 public offering and May 2023 private placement, are sufficient to fund operations through our planned near-term clinical milestones, but not for more than one year after the date of the filing of this Quarterly Report on Form 10-Q and therefore management has concluded that substantial doubt exists about our ability to continue as a going concern.

In addition, we have the ability to defer certain commercial activities until additional capital is received.

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

Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies.

If adequate funds are not available to us, it could have a material adverse effect on our business, results of operations, and financial condition.

In April 2023, we entered into a non-binding term sheet (Term Sheet), with an investor that holds more than 5% of our common stock and is affiliated with one of our directors, and its affiliated development company for a structured royalty financing of up to $100 million in conditional tranched funding, currently contemplated to include $30 million funded in connection with entering into the definitive agreement and the remaining amount in multiple tranches based on the achievement of development and regulatory milestones.

If mavodelpar is approved in the United States or the European Union, we would pay to the investor (1) fixed payments and (2) variable royalty payments based on net sales of mavodelpar, subject to specified caps.

Pursuant to the Term Sheet, we will also enter into a collaboration agreement with the development company with respect to mavodelpar and establish a joint steering committee.

The Term Sheet does not represent a definitive funding agreement and there is no guarantee that we will enter into a definitive funding agreement and close the proposed structured financing with the investor.

If consummated, the closing is expected to occur in the second quarter of 2023.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by investing activities

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Operating Activities

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.

Net cash used in operating activities for the three months ended March 31, 2023 was $9.0 million, consisting primarily of our net loss of $15.1 million adjusted for non-cash items of $0.8 million primarily due to $1.2 million of stock-based compensation expense offset by $0.8 million of amortization/accretion on short term investments and a $5.2 million net change in operating assets and liabilities.

The change in our net operating assets and liabilities was primarily due to a decrease in prepaid and other current assets of $2.0 million and an increase in accounts payable and accrued expenses of $3.4 million due to timing of receipt of invoices and payments.

Net cash used in operating activities for the three months ended March 31, 2022 was $9.0 million, consisting primarily of our net loss of $13.0 million adjusted for non-cash items of $0.9 million primarily due to stock-based compensation expense and $3.2 million related to net change in operating assets and liabilities.

The change in our net operating assets and liabilities was primarily due to a decrease in prepaid and other current assets of $2.0 million as a result of prepayments made for clinical trial activities and an increase in accrued expense of $1.3 million due to timing of receipt of invoices and payments.

Investing Activities

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.

Net cash provided in investing activities for the three months ended March 31, 2023 and 2022 was $18.5 million and $5.4 million, respectively, consisting primarily of the net sales of available-for-sale short-term investments.

Financing Activities

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

We will need to raise 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.

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

Our future capital requirements will depend on many factors, including:

the scope, progress, results and costs of clinical trials and preclinical studies for REN001;

the scope, prioritization and number of our research and clinical indications we pursue;

the costs and timing of manufacturing for our product candidates;

the costs, timing, and outcome of regulatory review of REN001;

the timing and amount of the milestone or other payments we must make to vTv Therapeutics and any future licensors;

the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements;

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

the extent to which we acquire or in-license other product candidates and technologies;

the costs of securing manufacturing arrangements for commercial production;

our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;

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

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.

In addition, our product candidate, if approved, may not achieve commercial success.

Our commercial revenues, if any, will be derived from sales of a product candidate that we do not expect to be commercially available for many years, if at all.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder.

Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

If we raise funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidate that we would otherwise prefer to develop and market ourselves.

Net cash provided by financing activities for the three months ended March 31, 2023 was $1.0 million consisting primarily of net proceeds from the sale of common stock under our ATM facility.

Net cash provided by financing activities for the three months ended March 31, 2022 was immaterial.

Material Cash Requirements

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.

The discussion below summarizes our significant contractual obligations and commitments as of March 31, 2023.

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

Performance Award.

See Note 8 of Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information, including the maximum payout.

See Note 8 of Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding a special performance award that our chief executive officer may be entitled to receive, including the maximum payout.

vTv License Agreement .

See Note 9 of Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information, including the milestone payments, associated with the vTv License Agreement.

In addition to contractual obligations above, we also expect to have future material cash requirements related to our contract manufacturing, preclinical and clinical programs, personnel expenses, and commercialization activities.

See Note 9 of Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding the vTv License Agreement, including potential milestone and royalty payments.

In addition to the contractual obligations above, we also expect to have future material cash requirements related to our contract manufacturing, preclinical and clinical programs, and personnel expenses.

Critical Accounting Policies and Estimates

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.

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, 2022, and the notes to our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

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.

During the three months ended March 31, 2023, 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, 2022.

Recent Accounting Pronouncements

3 unchanged sentences

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