OnKure Therapeutics, Inc. 10-Q

Item 1. Financial Statements RENEO PHARMACEUTICALS, INC. Consolidated Balance Sheets (In thousands, except share and par value data) March 31, 2024 December 31, 2023 (Unaudited) Assets Current assets: Cash and cash equivalents $ 20,375 $ 27,632 Short-term investments 62,460 75,331 Prepaid expenses and other current assets 1,092 3,659 Total current assets 83,927 106,622 Property and equipment, net 102 134 Right-of-use assets 546 599 Other non-current assets 64 81 Total assets $ 84,639 $ 107,436 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 676 $ 8,717 Accrued expenses 1,807 9,129 Operating lease liabilities, current portion 331 331 Total current liabilities 2,814 18,177 Operating lease liabilities, less current portion 576 642 Performance award 7 7 Total liabilities 3,397 18,826 Commitments and contingencies Stockholders’ equity: Common stock, $ 0.0001 par value; 200,000,000 shares authorized at March 31, 2024 and December 31, 2023; 33,420,808 shares issued and outstanding at March 31, 2024 and December 31, 2023 3 3 Additional paid-in capital 308,151 307,073 Accumulated deficit ( 226,900 ) ( 218,474 ) Accumulated other comprehensive (loss) income ( 12 ) 8 Total stockholders’ equity 81,242 88,610 Total liabilities and stockholders’ equity $ 84,639 $ 107,436 The accompanying notes are an integral part of these consolidated financial statements. 3 RENEO PHARMACEUTICALS, INC. Consolidated Statements of Operations and Comprehensive Loss (In thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Operating expenses: Research and development $ 4,942 $ 10,991 General and administrative 4,622 5,132 Total operating expenses 9,564 16,123 Loss from operations ( 9,564 ) ( 16,123 ) Other income 1,138 1,016 Net loss ( 8,426 ) ( 15,107 ) Unrealized (loss) gain on short-term investments ( 20 ) 55 Comprehensive loss $ ( 8,446 ) $ ( 15,052 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 0.25 ) $ ( 0.60 ) Weighted-average shares used in computing net loss per share, basic and diluted 33,420,808 25,036,410 The accompanying notes are an integral part of these consolidated financial statements. 4 RENEO PHARMACEUTICALS, INC. Consolidated Statements of Changes in Stockholders’ Equity (In thousands, except share data) (Unaudited) Additional Accumulated Other Total Common Stock Paid-In Comprehensive Accumulated Stockholders’ Shares Amount Capital Income (Loss) Deficit Equity Balances, December 31, 2023 33,420,808 $ 3 $ 307,073 $ 8 $ ( 218,474 ) $ 88,610 Stock based compensation — — 1,078 — — 1,078 Other comprehensive loss — — — ( 20 ) — ( 20 ) Net loss — — — — ( 8,426 ) ( 8,426 ) Balances, March 31, 2024 33,420,808 $ 3 $ 308,151 $ ( 12 ) $ ( 226,900 ) $ 81,242 Additional Accumulated Other Total Common Stock Paid-In Comprehensive Accumulated Stockholders’ Shares Amount Capital (Loss) Income Deficit Equity Balances, December 31, 2022 24,699,553 $ 3 $ 236,693 $ ( 43 ) $ ( 136,683 ) $ 99,970 Stock based compensation — — 1,157 — — 1,157 Issuance of common stock in connection with at-the-market facility, net of issuance costs 407,877 — 1,009 — — 1,009 Other comprehensive income — — — 55 — 55 Net loss — — — — ( 15,107 ) ( 15,107 ) Balances, March 31, 2023 25,107,430 $ 3 $ 238,859 $ 12 $ ( 151,790 ) $ 87,084 The accompanying notes are an integral part of these consolidated financial statements. 5 RENEO PHARMACEUTICALS, INC. Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended March 31, 2024 2023 Cash flows from operating activities Net loss $ ( 8,426 ) $ ( 15,107 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 1,078 1,157 Depreciation and amortization 16 41 Amortization/accretion on short-term investments ( 906 ) ( 770 ) Changes in the fair value of performance award — 295 Non-cash lease expense 67 120 Loss on disposal of fixed asset 16 3 Changes in operating assets and liabilities: Prepaid and other assets 2,584 1,952 Accounts payable and accrued expenses ( 15,363 ) 3,398 Operating lease liabilities ( 80 ) ( 137 ) Net cash used in operating activities ( 21,014 ) ( 9,048 ) Cash flows from investing activities Purchases of property and equipment — ( 172 ) Purchase of available-for-sale short-term investments ( 45,243 ) ( 28,321 ) Proceeds from maturities of available-for-sale short-term investments 59,000 47,000 Net cash provided by investing activities 13,757 18,507 Cash flows from financing activities Proceeds from issuance of common stock under the at-the-market facility, net of offering costs — 1,009 Net cash provided by financing activities — 1,009 Net (decrease) increase in cash and cash equivalents ( 7,257 ) 10,468 Cash and cash equivalents, beginning of period 27,632 19,927 Cash and cash equivalents, end of period $ 20,375 $ 30,395 The accompanying notes are an integral part of these consolidated financial statements. 6 RENEO PHARMACEUTICALS, INC. Notes to Consolidated Financial Statements (Unaudited) 1. Organization and Business Organization Reneo Pharmaceuticals, Inc. (Reneo or the Company) commenced operations on September 22, 2014 as a pharmaceutical company and has historically focused on the development of therapies for patients with rare genetic mitochondrial diseases. In December 2017, the Company in-licensed mavodelpar (REN001), a novel oral peroxisome proliferator-activated receptor delta (PPARδ) agonist. Risks and Uncertainties On December 14, 2023, the Company announced that its pivotal STRIDE study, a global, randomized, double-blind, placebo-controlled Phase 2b trial of mavodelpar in adult patients with primary mitochondria myopathy due to mitochondrial DNA defects, did not meet its primary or secondary efficacy endpoints. As a result, the Company suspended the development activities of its only product candidate, mavodelpar, and implemented cash preservation activities, including substantial workforce reduction. In December 2023 and February 2024, the Company implemented a workforce reduction and recognized approximately $ 2.5 million and $ 1.6 million in severance and continuation of benefit expenses, respectively. The Company is subject to a number of risks similar to other pharmaceutical companies including, but not limited to, dependency on the clinical and commercial success of the Company’s potential product candidates, ability to obtain regulatory approval of any such potential product candidates, the need for substantial additional financing to achieve its goals, uncertainty of broad adoption of its approved products, if any, by physicians, consumers and third-party payors, significant competition and untested manufacturing capabilities, and dependence on key individuals and sole source suppliers. Liquidity From its inception in 2014, the Company has incurred significant losses and negative cash flows from operations and expects to continue to incur net losses into the foreseeable future and may never become profitable. As of March 31, 2024, the Company had cash, cash equivalents and short-term investments of $ 82.8 million to fund future operations. Since inception through March 31, 2024, the Company has funded its operations primarily through the issuance and sale of equity securities. Management has prepared cash flow forecasts which indicate that, based on the Company’s current cash resources available and working capital, the Company will have sufficient resources to fund its operations for at least one year after the date the consolidated financial statements are issued. Future capital requirements will depend on many factors, including the timing and extent of spending on its operations and 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, and liquidate assets where possible. Any of these actions could negatively impact the Company’s business, results of operations, and future prospects . 7 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The Company has prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted, although the Company believes that the disclosures made are adequate to make the information not misleading. The Company recommends that the unaudited consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. 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 subsidiary. All intercompany balances and transactions have been eliminated in consolidation. Summary of Significant Accounting Policies The significant accounting policies used in the preparation of these consolidated financial statements for the three months ended March 31, 2024 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, 2023. New Accounting Pronouncements There were various accounting standards and interpretations issued recently, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows. 3. Net Loss Per Share The Company computes basic loss per share by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock shares to be issued upon exercise of all outstanding stock options and vesting of restricted stock units were excluded from the diluted net loss per share calculation for the three months ended March 31, 2024 and 2023 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 March 31, 2024 2023 Common stock options outstanding 4,798,794 6,013,345 Unvested restricted stock units 311,500 369,500 Total 5,110,294 6,382,845 8 4. Fair Value Measurements ASC Topic 820, Fair Value Measurement , establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. ASC Topic 820 identifies fair value as the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a three-tier fair value hierarchy that distinguishes between the following: • Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities. • Level 2 – Inputs, other than quoted prices in active markets, which are observable for the asset or liability, either directly or indirectly. • Level 3 – Unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company’s financial assets are subject to fair value measurements on a recurring basis. The Company categorizes its money market funds as Level 1, using the quoted prices in active markets. Commercial paper and U.S. treasury securities are categorized as Level 2, using significant other observable inputs. The fair value of the Company’s investments in certain money market funds is their face value and such instruments are classified as Level 1 and are included in cash and cash equivalents on the consolidated balance sheets. 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 three months ended March 31, 2024. 9 The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at March 31, 2024 consisted of the following (in thousands): Quoted Prices in Active Markets For Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets Cash and cash equivalents: Money market investments $ 10,902 $ — $ — $ 10,902 U.S. treasury securities — 5,975 — 5,975 Short-term investments: U.S. treasury securities — 62,439 — 62,439 Total $ 10,902 $ 68,414 $ — $ 79,316 Liabilities Performance award $ — $ — $ 7 $ 7 Total $ — $ — $ 7 $ 7 The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at December 31, 2023 consisted of the following (in thousands): Quoted Prices in Active Markets For Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets Cash and cash equivalents: Money market investments $ 10,983 $ — $ — $ 10,983 U.S. treasury securities — 9,928 — 9,928 Short-term investments: U.S. treasury securities — 75,331 — 75,331 Total $ 10,983 $ 85,259 $ — $ 96,242 Liabilities Performance award $ — $ — $ 7 $ 7 Total $ — $ — $ 7 $ 7 The following table sets forth a summary of changes in the fair value measurements of the Performance Award liability (in thousands): Performance Award Balance as of January 1, 2024 $ 7 Change in fair value — Balance as of March 31, 2024 $ 7 5. Marketable Debt Securities The Company’s investments in debt securities are carried at fair value and classified as current assets available-for-sale and represent the investment of funds available for current operations. Accretion of bond 10 discount and interest income on marketable securities is included in other income as a separate component of other income (expense) on the statement of operations and comprehensive loss. Unrealized gains and losses on available-for-sale debt securities are included in other comprehensive income or loss, and charged to income or expense in the period when realized. The following tables summarize the gross unrealized gains and losses of the Company’s available-for-sale securities (in thousands) : As of March 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value Available-for-sale securities: U.S. treasury securities $ 62,451 $ — $ ( 12 ) $ 62,439 Total $ 62,451 $ — $ ( 12 ) $ 62,439 As of December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value Available-for-sale securities: U.S. treasury securities $ 75,324 $ 8 $ ( 1 ) $ 75,331 Total $ 75,324 $ 8 $ ( 1 ) $ 75,331 As of March 31, 2024, the Company considered the unrealized losses in its investment portfolio to be temporary in nature and not due to credit losses. The Company has the intent and ability to hold such investments until their recovery at fair value. The Company did no t have any realized gains or losses in its available for sale securities during the three months ended March 31, 2024 and 2023. 6. Accrued Expenses Accrued expenses consisted of the following (in thousands): As of March 31, 2024 As of December 31, 2023 Accrued clinical and regulatory $ 190 $ 3,661 Accrued contract manufacturing cost 1 1,100 Accrued compensation* 1,170 3,948 Accrued other 446 420 Total accrued expenses $ 1,807 $ 9,129 *Accrued compensation includes severance costs. 7. Leases The Company’s headquarters are located in Irvine, California, where it leases office space under a lease agreement that expires in November 2026. The Company leases additional office space located in Sandwich, United Kingdom under a lease agreement that expires in October 2027, with an option to early terminate in October 2025 with no termination fee. In January 2024, the Company exercised its early termination option . 11 Other information related to the Company ’s operating leases as of the balance sheet dates presented are as follows: As of March 31, 2024 2023 Weighted incremental borrowing rate 5 % 5 % Weighted average remaining lease term (in years) 2.5 3.8 Cash paid for amounts included in the measurement of lease liabilities (in thousands) $ 96 $ 142 Lease expense (in thousands) $ 83 $ 120 Maturities of lease liabilities by fiscal year for the Company ’s operating leases are as follows (in thousands): As of March 31, 2024 2024 (remaining nine months) $ 293 2025 371 2026 285 Total lease payments 949 Less: Imputed interest ( 42 ) Present value of lease liabilities $ 907 8. 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 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 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 its affiliates. Under the 2014 Plan, certain employees were granted the ability to early exercise their options. The shares of common stock issued pursuant to the early exercise of unvested stock options are restricted and continue to vest over the requisite service period after issuance. The Company has the option to repurchase any unvested shares at the original purchase price upon any voluntary or involuntary termination. 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 March 31, 2024 , there were no unvested shares of common stock outstanding that were issued pursuant to the early exercise of stock options. Shares Reserved for Future Issuance As of March 31, 2024, the Company had reserved shares of its common stock for future issuance as follows: Shares Reserved Common stock options outstanding 4,798,794 Unvested restricted stock units 311,500 Available for future grants under the 2021 Equity Incentive Plan 4,296,163 Available for future grants under the 2021 Employee Stock Purchase Plan 780,098 Total shares of common stock reserved 10,186,555 12 Stock Options A summary of the Company’s stock option activity and related information for the three months ended March 31, 2024 is as follows: Options Outstanding Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2023 5,301,254 $ 4.76 6.9 $ — Forfeited/Expired ( 502,460 ) $ 4.85 Outstanding at March 31, 2024 4,798,794 $ 4.75 6.9 $ — Vested at March 31, 2024 3,105,675 $ 4.90 6.4 $ — Exercisable at March 31, 2024 3,369,189 $ 4.90 6.4 $ — Options exercisable at March 31, 2024 include vested options and options eligible for early exercise. All outstanding options as of March 31, 2024 are expected to vest. Unrecognized stock-based compensation expense as of March 31, 2024 was $ 4.4 million, which is expected to be recognized over a weighted-average vesting term of 1.8 years. The Company estimates stock awards fair value on the date of grant using the Black-Scholes valuation, with the vesting being subject to service requirements. The Company accounts for forfeitures when they occur. The Company did no t grant any stock options during the three months ended March 31, 2024. The fair value of the options granted during the three months ended March 31, 2023 were estimated at the date of grant with the following assumptions: risk-free interest rate of 3.9 %, expected volatility of 85.1 %, expected life of 6.1 years, and expected dividend yield of 0 %. Risk-free interest rate. The Company bases the risk-free interest rate assumption on the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. Expected volatility. The expected volatility assumption was based on the volatilities of a peer group of similar companies whose share prices are publicly available and the Company’s own stock. The peer group was developed based on companies in the biotechnology industry. Expected term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period. Expected dividend yield. 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. Restricted Stock Units (RSUs) RSUs consist of time-based units (TSUs), performance-based units (PSUs) and market-based units (MSUs). The following table summarizes RSU activities during the three months ended March 31, 2024: 13 Number of RSUs Weighted-Average Grant Date Fair Value Unvested at December 31, 2023 326,500 $ 5.90 Cancelled ( 15,000 ) $ 6.98 Unvested at March 31, 2024 311,500 $ 5.85 Time-Based Units TSUs typically vest over four years , with 25 % vesting on the one-year anniversary of the employee’s hire date and the remainder vesting monthly or quarterly over the following three years subject to the employee’s continued employment with the Company through the vesting dates. 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 is recognized on a straight-line basis. The Company had 57,000 unvested shares underlying TSUs as of March 31, 2024. The stock-based compensation expense related to such TSUs for the three months ended March 31, 2024 was immaterial. Unrecognized stock-based compensation expense as of March 31, 2024 was $ 0.3 million, which is expected to be recognized over a weighted-average vesting term of 3.4 years. Performance-Based Units The vesting of the PSUs is based on the Company achieving certain regulatory milestones and is 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 had 134,500 unvested shares underlying PSUs as of March 31, 2024. The Company concluded that achievement of the performance conditions was not probable as of March 31, 2024 and 2023, and therefore no stock-based compensation expense was recognized for the three months ended March 31, 2024 and 2023 in connection with the PSUs. As of March 31, 2024, there was $ 1.1 million of unrecognized stock-based compensation expense related to PSUs that were deemed not probable of vesting. 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 share price of the Company’s common stock on the date of issuance of the MSUs was $ 2.78 per share. 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 had 120,000 unvested shares underlying MSUs as of March 31, 2024. Stock-based compensation expense related to the MSUs during the three months ended March 31, 2024 and 2023 was immaterial. As of March 31, 2024, unrecognized stock-based compensation expense related to the MSUs was immaterial. Performance Award In connection with the CEO’s employment agreement, he is entitled to receive a Performance Award in the amount of $ 7.5 million, payable in cash, common stock or a combination of cash and common stock, at the election of the Company, in the event that (i) the Company’s market value exceeds $ 750.0 million utilizing the volume-weighted average of the closing sale price of its common stock on the Nasdaq Stock Market or other principal exchange for each of the 30 trading days immediately prior to the measurement date, or (ii) the fair market value of the net proceeds available for distribution to the Company’s stockholders in connection with a change in control as defined in the Company’s severance benefit plan, as determined in good faith by its Board of 14 Directors, exceeds $ 750.0 million. The Company has determined that the Performance Award is subject to ASC 718, Compensation – Stock Compensation and includes both market and performance conditions. 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. For the three months ended March 31, 2024, stock-based compensation expense was immaterial. 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. 2021 Employee Stock Purchase Plan In March 2021, the Company’s Board of Directors adopted the Company’s 2021 Employee Stock Purchase Plan (ESPP), which became effective immediately prior to the execution of the underwriting agreement in connection with the Company’s IPO. As of March 31, 2024 , 288,466 shares have been issued under the ESPP. In September 2021, the compensation committee of the Company’s Board of Directors (Compensation Committee) 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. The Compensation Committee terminated the SAYE in January 2024 and the reserved shares were returned to the ESPP reserve pool. No shares were issued under the SAYE prior to its termination. The stock-based compensation expense related to the ESPP and the SAYE for the three months ended March 31, 2024 and 2023, was immaterial. Stock-Based Compensation Expense The following table summarizes stock-based compensation expense, including expense associated with options, TSUs, MSUs and award modifications for unvested options, reflected in the consolidated statements of operations and comprehensive loss (in thousands): Three Months Ended March 31, 2024 2023 Research and development $ 253 $ 473 General and administrative 825 684 Total $ 1,078 $ 1,157 9. License Agreement In December 2017, the Company entered into a license agreement (the vTv License Agreement) with vTv Therapeutics LLC (vTv Therapeutics), under which the Company obtained an exclusive, worldwide, sublicensable license under certain vTv Therapeutics intellectual property to develop, manufacture and commercialize PPARδ agonists and products containing such PPARδ agonists, including mavodelpar, for any therapeutic, prophylactic or diagnostic application in humans. Since the Company has suspended all development activity related to mavodelpar, it is not currently performing any development efforts under the vTv License Agreement. To date, the Company has paid a $ 3.0 million upfront payment, $ 2.0 million in milestone payments and issued an aggregate of 576,443 shares of its common stock to vTv Therapeutics. On October 30, 2023, the Company repurchased from vTv Therapeutics all 576,443 shares of its common stock previously issued to vTv Therapeutics under the vTv License Agreement for an aggregate purchase price of approximately $ 4.4 million in a private, non-underwritten transaction. 15 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, 2024 , 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 months ended March 31, 2024 and 2023 . 16