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Item 8. Financial Statements and Supplementary Data

2025-03-10 compared with 2024-03-28 · 568 added, 430 removed, 142 unchanged (88% of the section changed)

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (Ernst & Young LLP;

San Diego, California;

Report of Independent Registered Public Accounting Firm (KPMG LLP;

Denver, Colorado;

Consolidated Balance Sheets

4 unchanged sentences

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Reneo Pharmaceuticals, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Reneo Pharmaceuticals, Inc.

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S.

To the Stockholders and Board of Directors of

OnKure Therapeutics, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of OnKure Therapeutics, Inc.

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the years then ended and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

generally accepted accounting principles .

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

1 unchanged sentence

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2021.

San Diego, California

Denver, Colorado

March 10, 2025

RENEO PHARMACEUTICALS, INC.

ONKURE THERAPEUTICS, INC.

Consolidated Balance Sheets

2 unchanged sentences

Cash and cash equivalents

Short-term investments

Prepaid expenses and other current assets

1 unchanged sentence

Property and equipment, net

Right-of-use assets

Other non-current assets

Liabilities and stockholders’ equity

Operating lease right-of-use asset

LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

3 unchanged sentences

Total current liabilities

Operating lease liabilities, less current portion

Performance award

Long-term operating lease liabilities

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Common stock, $ 0.0001 par value;

200,000,000 shares authorized at

December 31, 2023 and December 31, 2022;

and 24,699,553 shares issued and outstanding at December 31, 2023

and December 31, 2022, respectively

Commitments and contingencies (Note 14)

Convertible preferred stock, Series C, $ 0.0001 par value;

no shares and 7,404,919 shares authorized;

no shares and 6,840,620 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively;

liquidation preference of $ 195,823 as of December 31, 2023

Stockholders’ equity (deficit):

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

no shares issued or outstanding at December 31, 2024

Common stock, Class A, $ 0.0001 par value;

200,000,000 and 943,840 shares authorized;

12,660,590 and 313,747 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

Common stock, Class B, $ 0.0001 par value;

10,000,000 and 226,285 shares authorized;

686,527 and no shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive income (loss)

Total stockholders’ equity

Total liabilities and stockholders’ equity

Total stockholders’ equity (deficit)

Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)

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

RENEO PHARMACEUTICALS, INC.

ONKURE THERAPEUTICS, INC.

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

Year Ended December 31,

Years Ended December 31,

(in thousands, except share

and per share amounts)

Operating expenses:

3 unchanged sentences

Loss from operations

Unrealized gain (loss) on short-term investments

Comprehensive loss

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

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

Other income and (expense):

Interest income

Interest and other expense

Total other income and (expense)

Net loss and comprehensive loss

Net loss per share attributable to common stockholders:

Basic and diluted

Weighted average shares outstanding:

Basic and diluted

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

RENEO PHARMACEUTICALS, INC.

ONKURE THERAPEUTICS, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share data)

Comprehensive

Convertible Preferred Stock

Class A Common stock

Class B Common stock

Stockholders'

Income (Loss)

Balances, December 31, 2021

Stock based compensation

Issuance of common stock in connection

with at-the-market facility, net of

issuance costs

Issuance of common stock in

connection with equity plans

Other comprehensive loss

Balances, December 31, 2022

Stock based compensation

Issuance of common stock in public

offering, net of offering costs

Issuance of common stock in private

placement, net of offering costs

Issuance of common stock in connection

with at-the-market facility, net of

issuance costs

Issuance of common stock in

connection with equity plans

Repurchase and retirement of common

stock in connection with common

stock repurchase agreement

Other comprehensive income

Balances, December 31, 2023

Balance, December 31, 2022

Issuance of Series C Preferred Stock under a stock purchase agreement, net of issuance costs of $ 0.7 million

Issuance of Class A Common Stock and Series C Preferred Stock in exchange for Series A, A-1, and Series B Preferred Stock under a stock purchase agreement

Issuance of Class A Common Stock for

cash upon the exercise of stock options

Share-based compensation expense

Balance, December 31, 2023

Conversion of Convertible Preferred Stock for Class A and B Common Stock in connection with the Merger

Issuance of Class A Common Stock in the Concurrent Financing, less issuance costs

Issuance of common stock to former stockholders of Reneo Pharmaceuticals, Inc.

in the reverse recapitalization

Reverse recapitalization transaction costs of OnKure

Issuance of Class A Common Stock for the conversion of Convertible Promissory Notes

Issuance of Class A common stock for the settlement of restricted stock units

Issuance of Class A Common Stock from the exercise of stock options

Adjustment for fractional shares in the reverse recapitalization

Share-based compensation

Balance, December 31, 2024

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

RENEO PHARMACEUTICALS, INC.

ONKURE THERAPEUTICS, INC.

Consolidated Statements of Cash Flows

(In thousands)

Years Ended December 31,

(in thousands)

Cash flows from operating activities:

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

Stock-based compensation

Adjustments to reconcile net loss to net cash used

in operating activities:

Share-based compensation expense

Depreciation and amortization

Amortization/accretion on short-term investments

Changes in the fair value of performance award

Non-cash lease expense

Right-of-use and leasehold improvement impairment expenses

Changes in operating assets and liabilities:

Amortization of right-of-use asset - operating

Amortization of debt issuance costs

Non-cash interest expense

Loss on sales of available-for-sale securities

Change in operating assets and liabilities:

Prepaid and other assets

Accounts payable and accrued expenses

Operating lease liabilities

Accounts payable, accrued and other liabilities

Lease liabilities

Net cash used in operating activities

Cash flows from investing activities:

Proceeds from sales of marketable securities

Purchases of property and equipment

Purchase of available-for-sale short-term investments

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

Net cash provided by (used in) investing activities

Cash flows from financing activities:

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

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

Repurchase of common stock in connection with common

stock repurchase agreement

Proceeds from issuance of common stock under the at-the-market

facility, net of offering costs

Proceeds from issuance of common stock in connection with equity plans

Proceeds from the issuance of common stock in Concurrent Financing

Payment of issuance costs associated with the Concurrent Financing

Cash acquired in connection with the reverse recapitalization

Payment of reverse recapitalization transaction costs

Proceeds from the issuance of Convertible Preferred Stock

Payment of issuance costs associated with the issuance of

Convertible Preferred Stock

Proceeds from issuance of convertible notes payable

Payment of issuance costs associated with the issuance of convertible

notes payable

Proceeds from the issuance of common stock in connection with equity plans

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Noncash operating activities:

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

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental cash flow information:

Interest paid

Supplemental disclosure of noncash financing activities:

Right-of-use asset obtained in exchange for new operating lease liability

Issuance of Series C Preferred Stock conversion

Conversion of Series C Preferred Stock

Conversion of convertible note payable

Assets acquired in connection with the reverse recapitalization

Other liabilities assumed in connection with the reverse recapitalization

Reverse recapitalization transaction costs included in accounts payable

Concurrent Financing issuance costs included in accounts payable

Concurrent Financing issuance costs paid by Reneo prior to Merger

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

RENEO PHARMACEUTICALS, INC.

ONKURE THERAPEUTICS, INC.

Notes to Consolidated Financial Statements

Organization and Business

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.

OnKure Therapeutics, Inc., ("OnKure" or the "Company") is a clinical-stage biopharmaceutical company focused on the discovery and development of precision medicines that target biologically validated drivers of cancers that are underserved by available therapies.

Using a structure- and computational chemistry-driven drug design platform, OnKure is committed to improving clinical outcomes for patients by building a pipeline of small molecule drugs designed to selectively target specific mutations thought to be key drivers of cancer.

The Company was formed in 2014 as Reneo Pharmaceuticals, Inc.

(“Reneo”) under the laws of the State of Delaware.

On October 4, 2024, the Company changed its name to OnKure Therapeutics, Inc.

Merger with Reneo

On October 4, 2024, Radiate Merger Sub I, Inc.

("Merger Sub I") a wholly-owned subsidiary of Reneo completed its merger with and into OnKure, Inc.

(referred to herein as “Legacy OnKure”), with Legacy OnKure continuing as the surviving entity as a wholly-owned subsidiary of Reneo.

This transaction is referred to as the “Merger.” Following the Merger, Reneo changed its name to OnKure Therapeutics, Inc.

Legacy OnKure remains as a wholly-owned subsidiary of the Company.

The Merger was effected pursuant to an Agreement and Plan of Merger, dated as of May 10, 2024 (the "Merger Agreement"), by and among Reneo, Radiate Merger Sub I, Inc., a Delaware corporation Radiate Merger Sub II, LLC, a Delaware limited liability company ("Merger Sub II"), and Legacy OnKure.

In connection with the Merger Agreement, certain parties entered into a subscription agreement with the Company to purchase shares of Reneo’s common stock for an aggregate purchase price of $ 65.0 million contingent upon the concurrent consummation of the Merger (the “Concurrent Financing”).

On October 4, 2024 (the “Closing Date”), the Merger and the Concurrent Financing closed.

The Merger was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

For accounting purposes, Legacy OnKure is considered the accounting acquirer and Reneo is the acquired company based on the terms of the Merger Agreement and other factors, such as relative voting rights and the composition of the combined company’s board of directors and senior management.

Accordingly, the Merger was treated as the equivalent of Legacy OnKure issuing stock to acquire the net assets of Reneo.

As a result of the Merger, the net assets of Reneo were recorded at their acquisition-date fair value in the financial statements of the combined company and the reported operating results prior to the Merger are those of Legacy OnKure.

Legacy OnKure’s historical financial statements became the historical consolidated financial statements of the combined company.

All issued and outstanding Legacy OnKure common stock, convertible preferred stock, restricted stock units, and options to purchase common stock prior to the effective date of the Merger have been retroactively adjusted to reflect the exchange ratio for all periods presented .

See Note 3 for further discussion.

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, the Company implemented a workforce reduction and recognized approximately $ 2.5 million in severance and continuation of benefit expenses for the year ended December 31, 2023.

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.

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 December 31, 2023, the Company had cash, cash equivalents and short-term investments of $ 103.0 million to fund future operations.

Since inception through December 31, 2023, 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, liquidate assets where possible, and/or suspend or curtail planned programs.

Any of these actions could negatively impact the Company’s business, results of operations, and future prospects.

Public Offerings

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

On November 13, 2023,

concurrent with entering into the 2023 ATM Facility (defined below), the Company and Leerink terminated the 2022 ATM Facility.

The Company had sold an aggregate of $ 1.2 million under the 2022 ATM Facility as of the termination date.

In May 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 $ 58.9 million, after deducting underwriting discounts and commissions and offering expenses.

Also, in May 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 of approximately $ 4.7 million, after deducting advisor fees and other estimated fees and expenses.

On November 13, 2023, the Company entered into an at-the-market equity offering sales agreement (Sales Agreement) with Leerink under which it may offer and sell, from time to time, at its sole discretion, up to $ 100.0 million in shares of its common stock (2023 ATM Facility).

As of December 31, 2023 , the Company had no t sold any shares of its common stock under the 2023 ATM Facility and on March 25, 2024, the Company provided notice to Leerink of its election to terminate the Sales Agreement, effective as of April 8, 2024 .

The board of directors of the Company discusses with management macroeconomic and geopolitical developments, including inflation, instability in the banking and financial services sector, tightening of the credit markets, international conflicts, cybersecurity, and sanctions so that the Company can be prepared to react to new developments as they arise.

The board of directors and the management of the Company are carefully monitoring these developments and the resulting economic impact on its financial condition and results of operations.

Liquidity and Capital Resources

The Company had recurring losses from operations, an accumulated deficit of $ 154.7 million and cash and cash equivalents of $ 110.8 million as of December 31, 2024.

The Company’s ability to fund its ongoing operations is highly dependent upon raising additional capital through the issuance of equity securities, issuing debt or other financing vehicles.

As of December 31, 2023, the Company had determined that substantial doubt about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of the issuance of those financial

statements did exist.

However, following the completion of the Merger and Concurrent Financing, as described in more detail in Note 3, management believes the Company’s cash and cash equivalents will be sufficient to fund its current operating plan for at least the next 12 months from the date of issuance of these consolidated financial statements and as such substantial doubt has been alleviated.

The Company’s ability to secure capital is dependent upon success in discovering and developing its drug candidates.

The Company cannot provide assurance that additional capital will be available on acceptable terms, if at all.

The issuance of additional equity or debt securities will likely result in substantial dilution to the Company’s stockholders.

Should additional capital not be available to the Company in the near term, or not be available on acceptable terms, the Company may be unable to realize value from the Company’s assets or discharge liabilities in the normal course of business, which may, among other alternatives, cause the Company to delay, substantially reduce, or discontinue operational activities to conserve cash, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

The financial statements do not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on the Company’s financial condition and its ability to discover and develop its product candidates.

Changing circumstances may cause the Company to consume capital significantly faster or slower than currently anticipated.

If the Company is unable to acquire additional capital or resources, it will be required to modify its operational plans.

The estimates included herein are based on assumptions that may prove to be wrong, and the Company could exhaust its available financial resources sooner than currently anticipated.

Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP) and reflect the operation of the Company and its wholly owned subsidiary.

The Company’s consolidated financial statements are prepared in accordance with GAAP and reflect the operation of the Company and its wholly owned subsidiaries, OnKure, Inc.

and Merger Sub II.

All intercompany balances and transactions among the consolidated entities have been eliminated in consolidation.

Segment Information

The Company operates in one operating segment:

clinical research.

All equipment and other property and equipment are physically located within the United States .

Use of Estimates

The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure in the Company’s consolidated financial statements and accompanying notes.

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates.

The preparation of the Company’s consolidated financial statements in accordance with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period.

Although these estimates are based on the Company’s knowledge of current events and actions it may take in the future, actual results may ultimately differ from these estimates.

The most significant estimates relate to external research and development expenses, and the fair value of stock options and restricted stock awards and units .

Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources.

The Company’s comprehensive loss was the same as its reported net loss for all periods presented.

Research and Development Expenses

Research and development (“R&D”) costs are expensed as incurred in performing research and development activities.

The costs include employee-related expense, including salaries, severance, benefits,

share-based compensation, fees for acquiring and maintaining licenses under third-party license agreements, consulting fees, costs of research and development activities conducted by third parties on the Company’s behalf, costs to manufacture or have manufactured clinical trial materials, depreciation, and facilities and overhead costs.

Accrued Research and Development Expenses

The Company records research and development expenses in the period in which the Company receives or takes ownership of the applicable goods or when the applicable services are performed.

The Company is required to estimate its expenses resulting from its obligations under contracts with vendors, consultants, and contract research organizations, in connection with conducting research and development activities.

The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts.

The Company reflects research and development expenses in its financial statements by matching those expenses with the period in which services and efforts are expended.

The Company accounts for these expenses according to the progress of the preclinical studies or clinical trials, as measured by the timing of various aspects of the study or related activities.

The Company determines accrual estimates through a review of the underlying contracts along with the preparation of financial models considering discussions with research and other key personnel as to the progress of studies, trials, or other services being conducted.

During a study or trial, the Company adjusts its rate of expense recognition if actual results differ from its estimate.

Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as an expense in the period that the related goods are consumed, or services are performed.

The Company expenses all costs as incurred in connection with patent applications (including direct application fees and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses in the statements of operations and comprehensive loss.

Share-Based Compensation

The Company maintains an equity incentive compensation plan under which incentive stock options and nonqualified stock options to purchase common stock, and restricted stock units for common stock, are granted to employees, board of directors, and non-employee consultants.

Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service or performance period.

The fair value of stock options granted to employees is estimated using the Black-Scholes option pricing model.

The Black-Scholes valuation method requires certain assumptions be used as inputs, such as the fair value of the underlying common stock, expected term of the option before exercise, expected volatility of the Company’s common stock, risk-free interest rate and expected dividend.

Options granted have a maximum contractual term of 10 years.

The Company has limited historical stock option activity and therefore estimates the expected term of stock options granted using the simplified method, which represents the arithmetic average of the original contractual term of the stock option and its weighted-average vesting term.

The expected volatility of stock options is based on the historical volatility of several publicly traded companies in similar stages of clinical development.

The Company will continue to apply this process until enough historical information regarding the volatility of its stock price becomes available.

The risk-free interest rates used are based on the U.S.

Treasury yield in effect at the time of grant for zero-coupon U.S.

treasury notes with maturities approximately equal to the expected term of the stock options.

The Company has historically not declared or paid any dividends and does not currently expect to do so in the foreseeable future, and therefore has estimated the dividend yield to be zero.

(See Note 12).

The Company recognizes stock-based compensation expense for grants under its various Equity Incentive Plans and employee stock purchase plan ("ESPP").

The Company accounts for all stock-based awards granted to employees and directors at their fair value and recognizes compensation expense over the award’s vesting period.

Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates of fair values of stock options as of the grant date.

The Company calculates the grant date fair values of stock options using the Black-Scholes valuation model, which requires the input of subjective assumptions, including but not limited to expected stock price volatility over the term of the awards and the expected term of stock options.

value of restricted stock awards granted to employees is based on the quoted closing market price per share on grant date.

Common Stock Valuation

Due to the lack of marketability for the Company’s common stock prior to the Merger, the Company utilized methodologies, approaches and assumptions consistent with the American Institute of Certified Public Accountants’ Audit and Accounting Practice Guide:

Valuation of Privately-Held Company Equity Securities Issued as Compensation to estimate the fair value of its common stock.

In determining the exercise prices for options granted prior to the Merger, the Company had considered the fair value of the common stock as of the grant date.

The fair value of the common stock has been determined based upon a variety of factors, including the prices at which the Company sold shares of its convertible preferred stock to outside investors in arms-length transactions, and the superior rights, preferences and privileges of the preferred stock relative to the common stock at the time of each grant;

the progress of the Company’s research and development programs, including their stages of development, and the Company’s business strategy;

external market and other conditions affecting the biotechnology industry, and trends within the biotechnology industry;

the Company’s financial position, including cash on hand, and its historical and forecasted performance and operating results;

the lack of an active public market for the Company’s common stock;

and the market performance of peer companies in the biopharmaceutical industry.

Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date.

Fair Value of Financial Instruments

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, receivables, prepaid and other current assets, accounts payable, and accrued expenses approximate their fair values because of the short maturity of these instruments.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less, when purchased, to be cash equivalents.

As of December 31, 2023 and 2022 , the Company had cash balances deposited at major financial institutions.

Cash balances are subject to minimal credit risk as the balances are with high credit quality financial institutions.

Cash and cash equivalents include cash in readily available checking, money market accounts and repurchase agreements.

Short-term Investments

The Company accounts for short-term investments in accordance with Accounting Standard Codification (ASC) Topic 320, Investments – Debt and Equity Securities .

Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determinations at each reporting period.

At December 31, 2023, the Company’s investments comprised of U.S.

treasury securities and commercial paper classified as available-for-sale securities.

Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in accumulated other comprehensive income (loss) in stockholders’ equity.

Realized gains and losses on sales of investments are included in interest income and are derived using the specific identification method for determining the cost of securities.

When the fair value of an available-for-sale debt security falls below the amortized cost basis it is evaluated to determine if any of the decline in value is attributable to credit loss.

Decreases in fair value attributable to credit loss are recorded directly to earnings with a corresponding allowance for credit losses, limited to the amount that the fair value is less than the amortized cost basis.

If the credit quality subsequently improves the allowance is reversed up to a maximum of the previously recorded credit losses.

When the Company intends to sell an impaired available-for-sale debt security, or if it is more likely than not that the Company will be required to sell the security prior to recovering the amortized cost basis, the entire fair value adjustment will immediately be recognized in earnings with no corresponding allowance for credit losses.

The Company did not recognize any credit losses on its short-term investments during the years ended December 31, 2023 and 2022.

Money market account balances are included as cash and cash equivalents on the consolidated balance sheets, which are also disclosed in Note 4, Fair Value Measurements .

All highly liquid investments with maturities of 90 days or less, at the time of purchase, are classified as cash equivalents.

Cash equivalents are reported at cost, which approximates fair value.

The Company’s cash and cash equivalents consist of money held in demand depository accounts and money market funds.

The carrying amount of cash and cash equivalents was $ 110.8 million and $ 29.9 million as of December 31, 2024, and 2023, respectively, which approximates fair value and was determined based upon Level 1 inputs.

The money market account is valued using quoted market prices with no valuation adjustments applied and is categorized as Level 1 .

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash, cash equivalents and short-term investments.

The Company maintains deposits in federally insured financial institutions in excess of federally insured limits.

The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents.

The Company maintains accounts in federally insured financial institutions above federally insured limits of $ 250,000 as of December 31, 2024 and 2023.

Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held and of the money market funds in which these investments are made .

Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation and amortization.

Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets.

Maintenance and repairs are expensed as incurred.

The following estimated useful lives were used to depreciate or amortize the Company’s assets:

Estimated Useful Life

Furniture and fixtures

Computers and software

Leasehold improvements

Shorter of useful life or remaining lease term

The Company carries its property and equipment at cost, less accumulated depreciation, amortization and impairment, if any.

Expenditures for renewals or betterments that materially extend the useful life of an asset or increase its productivity, such as leasehold improvements, are capitalized.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between three to seven years .

Leasehold improvements are amortized over the shorter of the life of the lease (including any renewal periods that are deemed to be reasonably assured) or the estimated useful life of the assets .

Repair and maintenance costs are expensed as incurred and expenditures for major improvements are capitalized .

Impairment of Long-Lived Assets

Long-lived assets consist primarily of property and equipment.

Long-lived assets are evaluated for impairment when events and circumstances indicate the assets might be impaired by first comparing the estimated future undiscounted cash flows of the asset or asset group to the carrying value.

If the carrying value exceeds the estimated future undiscounted cash flows, an impairment loss is recognized based on the amount that the carrying value exceeds the fair value of the asset or asset group.

As a result of suspending development activities of the Company’s only product candidate, mavodelpar, the Company recognized $ 0.3 million and $ 0.4 million in impairment losses of right-of-use assets and leasehold improvements, respectively, for the year ended December 31, 2023.

The Company recognized an immaterial amount in impairment related to its leases for the year ended December 31, 2022.

The Company determines if an arrangement includes a lease at inception.

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company’s lease terms may include options to extend or terminate a lease when it is reasonably certain that it will exercise that option.

The Company combines lease and non-lease components when determining lease payments.

Right-of-use (ROU) assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term, unless there is a transfer of title or purchase option the Company is reasonably certain to exercise.

For leases where an implicit rate is not readily determinable, the Company uses its incremental borrowing rate based on information available at the lease commencement date to determine the present value of future lease payments.

Lease expense for operating leases is recognized on a straight-line basis over the expected lease term.

Research and Development Costs and Accruals

All research and development costs are expensed as incurred.

Research and development costs consist primarily of costs associated with manufacturing drug substance and drug product, costs associated with preclinical studies, clinical trials managed through contract research organizations (CROs) and other third parties, license fees, salaries and employee benefits.

The Company bases its expense accruals related to clinical trials on its estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical trials on its behalf.

The financial terms of these agreements vary from contract to contract and may result in uneven payment flows.

Payments under certain contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones.

In accruing costs, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period.

Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as expense in the period that the related goods are consumed, or services are performed.

To date, the Company has not experienced significant changes in its estimates of accrued research and development expenses after a reporting period.

The Company expenses amounts paid to acquire licenses associated with products under development when the ultimate recoverability of the amounts paid is uncertain and the technology has no alternative future use when acquired.

Acquisitions of technology licenses are charged to expense or capitalized based upon management’s assessment regarding the ultimate recoverability of the amounts paid and the potential for alternative future use.

The Company has determined that technological feasibility for its product candidate would be reached when the requisite regulatory approvals are obtained to make the product available for sale.

Contingent milestone payments are recognized when the related contingency is resolved, and the amounts are paid or become payable.

These amounts are expensed to research and development if there is no alternative future use associated with the license or capitalized as an intangible asset if alternative future use of the license exists.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized.

In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations.

If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount,

management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (1) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit.

To date, there have been no interest or penalties charged in relation to unrecognized tax benefits.

The Company assesses the carrying amount of its property and equipment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.

No impairment charges were recorded during the years ended December 31, 2024 and 2023 .

Leasing – Lessee Accounting

The Company determines if an arrangement is a lease at inception.

The Company’s operating lease agreements are primarily for office space and research labs.

For operating leases with a term greater than one year, the Company recognizes the right-of-use (“ROU”) assets and lease liabilities related to the lease payments on its balance sheet.

The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date.

The ROU assets represent the Company’s right to use the underlying assets for the term of the lease and the lease liabilities represent the Company’s obligation to make lease payments arising for the agreements.

ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received.

The ROU asset is periodically reviewed for impairment unless a triggering event occurs.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Variable lease payments, except for the ones that depend on index or rate, are excluded from the calculation of the ROU assets and lease liabilities and are recognized as variable lease expense in the statements of operations and comprehensive loss in the period in which they are incurred.

As the interest rate implicit in the Company’s leases is not readily determinable, the Company uses its estimated incremental borrowing rate in its present value calculations.

One of the Company’s lessee agreements include an option to extend the lease, which the Company does not include in its minimum lease term unless it is reasonably certain to exercise such option.

Operating leases with a term of less than one year are recognized as a lease expense over the term of the lease, with no asset or liability recognized on the balance sheet.

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently payable and deferred taxes.

The Company accounts for income taxes using the asset and liability method of accounting for deferred income taxes.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and operating losses and tax credit carryforwards.

A valuation allowance is recorded to the extent it is more likely than not that some portion of a deferred tax asset will not be realized.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

The Company’s significant deferred tax assets are net operating loss carryforwards, tax credits, and accruals.

The Company has provided a valuation allowance equal to its net deferred tax assets since inception as, due to its history of operating losses, the Company has concluded that it is more likely than not that most of its deferred tax assets will not be realized.

Accounting for uncertain tax positions requires a more likely than not threshold for recognition in the financial statements.

The Company recognizes a tax benefit based on whether it is more likely than not that a tax position will be sustained.

The Company records a liability to the extent that a tax position taken or expected to be taken on a tax return exceeds the amount recognized in the financial statements.

The Company has no unrecognized tax benefits as of December 31, 2024 and 2023.

The Company classifies interest and penalties arising from the underpayment of income taxes in the statements of operations as general and administrative expenses.

No such expenses have been recognized during the years ended December 31, 2024 and 2023.

The Company is subject to taxation in the United States and the United Kingdom ("UK").

As of December 31, 2024 , the Company’s tax years since inception are subject to examination by taxing authorities in the United States, and the UK tax returns from 2018 forward are subject to examination.

Stock-Based Compensation

The Company recognizes stock-based compensation expense for grants under its 2014 and 2021 Equity Incentive Plans and employee stock purchase plan (ESPP).

The Company accounts for all stock-based awards granted to employees and directors at their fair value and recognizes compensation expense over the award’s vesting period.

Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates of fair values of stock options as of the grant date.

The fair value of restricted stock awards granted to employees is based on the quoted closing market price per share on grant date.

The Company granted restricted stock awards with performance conditions that are based upon the achievement of pre-specified clinical development or regulatory performance events.

As the outcome of each event has inherent risks and uncertainties, and a positive outcome may not be known until the event is achieved, the Company will begin to recognize the value of the performance-based restricted stock awards when the achievement of each performance condition is deemed probable, a determination that requires significant judgment by management.

Compensation cost is recognized under the accelerated method and is adjusted in future periods for subsequent changes in the expected outcome of the performance-related conditions.

The Company granted restricted stock awards with market conditions.

The Company measures the fair value of stock-based awards with market-based vesting conditions on the date of grant using a Monte Carlo simulation model.

In accordance with accounting guidance for awards with market conditions, the stock-based compensation expense will be recognized over the derived service period regardless of whether the award achieves the market condition and will only be adjusted to the extent the service condition is not met.

Foreign Currency Transactions

The functional currency of Reneo Pharma Ltd, the Company’s wholly owned subsidiary in the UK, is the U.S.

All foreign exchange transactional and remeasurement gains and losses are recognized in the consolidated statements of operations and comprehensive loss.

For the years ended December 31, 2023 and 2022 , total foreign currency gains and losses were immaterial.

Comprehensive Income or Loss

Comprehensive income or loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standard Board (FASB) issued Accounting Standard Update (ASU) 2016-13, Financial Instruments - Credit Losses (ASC 326), Measurement of Credit Losses on Financial Instruments .

The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in the carrying value of the asset.

Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized.

This new guidance was effective for the Company as of January 1, 2023.

The Company adopted the guidance as of January 1, 2023 , with no material impact on its consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (ASC 740), Improvements to Income Tax Disclosures.

The standard will require more detailed information in the rate reconciliation table and for income taxes paid, among other enhancements.

The standard is effective for years beginning after December 15, 2025 and early adoption is permitted.

The Company is evaluating the impact of this standard on its consolidated financial statements.

Recently Issued Accounting Pronouncemen ts

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

This update is effective beginning with the Company’s 2024 fiscal year annual reporting period, with early adoption permitted.

The disclosure related to this ASU are in Note 4 below.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires enhanced income tax disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations.

The requirements of the ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this pronouncement.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

This ASU requires more detailed disclosures, on an annual and interim basis, about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

This ASU may be applied either prospectively or retrospectively.

The Company is currently evaluating the impact of this pronouncement.

The Company continues to monitor new accounting pronouncements issued by the FASB and does not believe any accounting pronouncements issued through the date of this report will have a material impact on its financial statements.

Merger Agreement and Concurrent Financing

As described in Note 1, Merger Sub I merged with and into Legacy OnKure, with Legacy OnKure surviving as a wholly-owned subsidiary of the Company on October 4, 2024.

At the Closing, each then-outstanding share of Legacy OnKure common stock was converted into the right to receive 0.023596 shares of common stock of Reneo based on the Common Exchange Ratio, which was reclassified as Class A Common Stock in connection with the Merger, and each then-outstanding share of Legacy OnKure preferred stock was converted into the right to receive 0.144794 shares of Class A Common Stock based on the Preferred Exchange Ratio;

provided that one holder of Legacy OnKure preferred stock elected to receive 686,527 shares that it would otherwise have received in the form of Class A Common Stock in an equal number of shares of Class B Common Stock.

Upon the closing of the Merger, (i) an aggregate of 6,470,281 shares of Class A Common Stock and 686,527 shares of Class B Common Stock of the combined company were issued in exchange for the shares of Legacy OnKure capital stock outstanding as of immediately prior to the Closing and (ii) outstanding shares of Reneo common stock were reclassified into an aggregate of approximately 3,343,604 shares of Class A Common Stock.

In addition, each then-outstanding option to purchase shares of Legacy OnKure common stock was assumed and converted into an option to purchase Class A Common Stock based on the Common Exchange Ratio, and each then-outstanding RSU of Legacy OnKure corresponding to shares of Legacy OnKure preferred stock was assumed and converted into RSUs covering 213,254 shares of Class A Common Stock based on the Preferred Exchange Ratio.

Each share of Reneo common stock, each option to purchase shares of Reneo common stock and each RSU award covering shares of Reneo common stock that was issued and outstanding as of immediately prior to the Closing remained issued and outstanding in accordance with its terms and such shares, options and RSUs, subject to the Reverse Stock Split, were reclassified as Class A Common Stock but were otherwise unaffected by the Merger;

provided that, to the extent not previously vested, all such options and RSUs held by Reneo’s directors and executive officers vested at Closing.

In connection with the Merger Agreement, Reneo entered into a subscription agreement with certain investors, pursuant to which the investors subscribed for and purchased, concurrent with the closing of the Merger, an aggregate of 2,839,005 shares of Class A Common Stock at a price of approximately $ 22.895 per share for aggregate gross proceeds of approximately $ 65.0 million , including the conversion of previously funded Convertible Promissory Notes principal of $ 6.0 million and accrued interest there on of $ 120 thousand, on October 4, 2024.

At the effective time of the Merger, the authorized shares of Class A Common Stock of the Company are 200,000,000 with par value of $ 0.0001 and Class B Common Stock of the Company are 10,000,000 with par value of $ 0.0001 .

In addition, in October 2024 the Company adopted the 2024 Equity Incentive Plan (the "2024 Plan") and 2024 Employee Stock Purchase Plan (the "2024 ESPP").

Under the 2024 Plan a total of 2,480,000 shares of Class A Common Stock were initially reserved for issuance.

In addition, shares reserved for issuance under the 2024 Plan will include shares of Class A Common Stock equity awards granted under the Reneo 2021 Plan and any shares of Class A Common Stock equity awards that were assumed in the Merger.

Under the 2024 ESPP, an aggregate of 137,500 shares of Class A Common Stock are currently reserved and available for issuance.

The Merger was accounted for as a reverse recapitalization in accordance with GAAP, with Legacy OnKure as the accounting acquirer of Reneo.

Legacy OnKure was determined to be the accounting acquirer based on the terms of the Merger Agreement and other factors, such as relative voting rights and the composition of the combined company’s board of directors and senior management.

As a result, Legacy OnKure’s historical financial statements became the historical consolidated financial statements of the combined company for accounting purposes together with a deemed issuance of shares, equivalent to the shares held by the former stockholders Reneo, the legal acquirer, and a recapitalization of the equity of Legacy OnKure, the accounting acquirer.

The final transaction amounts have been recorded as a reduction of proceeds in stockholders' equity.

At the effective time of the Merger, the net assets of Reneo were recorded at their acquisition-date fair value in the financial statements of the combined company, which approximated book value due to the short-term nature.

Reneo’s development programs had ceased prior to the Merger and were deemed to be de minimis in value at the transaction date.

No goodwill or intangible assets were recognized.

As part of the recapitalization, excluding the Concurrent Financing, the Company acquired the assets and liabilities listed below (in thousands):

Cash and cash equivalents

Short-term investments

Other current assets

Accrued expenses

Long-term operating lease liability

Net assets acquired

The Company is a publicly listed company with a single reportable segment:

clinical research.

Because the Company has one reportable segment, before adopting the ASU, it provided only the entity-wide disclosures required by ASC 280.

The clinical research segment has no revenues.

The accounting policies of the clinical research segment are the same as those described in the summary of significant accounting policies.

The Chief Operating Decision Maker ("CODM") assesses the performance for the clinical research segment and decides how to allocate resources based on operating expenses as reported on the income statement.

The measure of segment assets is reported on the balance sheets as total consolidated assets.

The CODM considers a variety of factors, including actual and projected expenses in deciding whether to invest funds in the clinical research segment or into other parts of the entity, such as for acquisitions or to pay dividends.

The Company does not have intra-entity sales or transfers.

The Company's CODM is the senior executive committee that is comprised of the Chief Financial Officer and the Chief Executive Officer .

Clinical Research Segment

Operating expenses:

Direct program expense

Indirect program expense

Workforce salaries and benefits

Stock-based compensation expense

General corporate expenses

Interest and other expense

Segment net loss

Reconciliation of loss:

Interest income

Adjustments and reconciling items

The Company’s headquarters are located in Boulder, Colorado, where it leases 14,790 square feet of office and lab facilities under operating leases that expire in December 2026 , with rights to extend for a 5 year period .

In the Merger with Reneo, the Company assumed the lease in Irvine, California, where it leases office space under a lease agreement that expires in November 2026 ("Irvine lease").

In January 2025, the Company entered into a sublease agreement on the Irvine lease.

See Note 16 for further discussion.

Right-of-use assets and lease liabilities for operating leases as included in the Company’s financial statements are as follows (in thousands):

December 31, 2023

Operating lease right-of-use assets

Current operating lease liabilities

Noncurrent operating lease liabilities

Total lease liabilities

Lease expense for operating leases as included in the Company’s financial statements are as follows (in thousands):

Operating lease cost

Variable lease expense

Lease term, discount rates, and additional information for operating leases are as follows (in thousands):

As of December 31,

Weighted-average remaining lease term - operating leases (years)

Weighted-average discount rate - operating leases

Cash paid for amounts included in the measurement of

lease liabilities:

Operating cash flows for operating leases

The aggregate maturities of the Company’s operating lease liabilities were as follows as of December 31, 2024 (in thousands):

Total future minimum lease payments

imputed interest

Current portion

Operating lease liability, net of current portion

Net Loss Per Share

1 unchanged sentence

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 years ended December 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 December 31,

Common stock options outstanding

For purposes of this calculation, common stock shares to be issued upon if-converted method for the convertible Series C Preferred Stock, if-converted method for the convertible promissory note, exercise of all outstanding stock options and restricted stock units were excluded from the diluted net loss per share calculation for the twelve months ended December 31, 2024 and 2023 because such shares are anti-dilutive.

Anti-dilutive securities outstanding during the period not included in the diluted net loss per share calculation include the following :

Convertible Series C Preferred Stock

Convertible Promissory Notes

Outstanding stock options

Unvested restricted stock units

Unreleased restricted stock units assumed in the Merger

Fair Value Measurements

11 unchanged sentences

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.

Investments are reviewed periodically to identify possible other-than-temporary impairments.

As the Company has the ability and intends to hold these investments with unrealized losses for a reasonable period of time sufficient for the recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired for any of the periods presented.

In connection with the Company’s chief executive officer’s (CEO) employment agreement, he is entitled to receive a special performance bonus in the amount of $ 7.5 million (Performance Award), payable in cash, common stock or a combination of cash and common stock, at the election of the Company, based on achievement of certain conditions as described in more detail in Note 9.

The Company estimated the fair value of the Performance Award using a Monte Carlo simulation, which incorporates the stock price at the date of the valuation and utilizes Level 3 inputs such as volatility, probabilities of success, and other inputs that are not observable in active markets.

The Performance Award is required to be measured at fair value on a recurring basis each reporting period, with changes in the fair value recognized in general and administrative expense in the consolidated statements of operations and comprehensive loss over the derived service period of the award.

No assets or liabilities were transferred into or out of their classifications during the years ended December 31, 2024 and 2023.

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

Significant Other

Cash and cash equivalents:

Money market investments

treasury securities

Short-term investments:

treasury securities

Performance award

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

Quoted Prices in

Active Markets

For Identical

Significant Other

Cash and cash equivalents:

Money market investments

Commercial paper

Short-term investments:

treasury securities

Commercial paper

Performance award

The following table sets forth a summary of changes in the fair value measurements of the Performance Award liability (in thousands):

Balance as of January 1, 2023

Change in fair value

Balance as of December 31, 2023

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.

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 December 31, 2023

Available-for-sale securities:

treasury securities

As of December 31, 2022

Available-for-sale securities:

treasury securities

Commercial paper

As part of the Merger, the Company acquired certain short-term investments in debt securities that were carried at fair value and classified as current assets available-for-sale and represented the investment of funds available for current operations.

During the year ended December 31, 2024, the Company sold these short-term investments for proceeds of $ 15.9 million which resulted in a realized loss of approximately $ 54,000 .

The Company had no available-for-sale securities as of December 31, 2024 or 2023.

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following (in thousands):

December 31, 2023

Prepaid clinical trial expenses

Prepaid insurance expense

Other prepaid expenses

Total prepaid expenses

Property and Equipment, Net

Property and equipment, net, consisted of the following (in thousands):

As of December 31,

Computer, software and office equipment

December 31, 2023

Lab equipment

Leasehold improvements

Total property and equipment, gross

Computer hardware and software

Furniture and fixtures

Property and equipment, gross

Accumulated depreciation and amortization

Total property and equipment, net

*All leasehold improvements were fully impaired and written off.

For further information see Note 13.

Property and equipment, net

Depreciation and amortization expense for the years ended December 31, 2024 and 2023 was $ 459,000 and $ 417,000 , respectively .

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

As of December 31,

Accrued clinical and regulatory

Accrued contract manufacturing cost

December 31, 2023

Accrued compensation

Accrued contract manufacturing costs

Accrued clinical trial costs

Accrued other

2 unchanged sentences

For further information see Note 14.

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, UK under a lease agreement that expires in October 2027 (UK lease), with an option to early terminate in October 2025 with no termination fee.

In January 2024, the Company exercised its early termination option .

The Company concluded that its current leases are impaired and recognized approximately $ 0.3 million of ROU assets impairment expense for the year ended December 31, 2023.

For further information, see Note 13.

At December 31, 2023, 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.

For the years ended December 31, 2023 and 2022, cash paid for amounts included for the measurement of lease liabilities was $ 0.5 million.

For the years ended December 31, 2023 and 2022, operating lease expense was $ 0.4 million and $ 0.5 million, respectively.

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

As of December 31, 2023

Total lease payments

Imputed interest

Present value of lease liabilities

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 December 31, 2023 , there were no unvested shares of common stock outstanding that were issued pursuant to the early exercise of stock options.

The Company is authorized to issue 210,000,000 shares of common stock, of which 200,000,000 shares have been designated as Class A Common Stock and 10,000,000 shares have been designated as Class B Common Stock, both with a par value of $ 0.0001 per share.

The number of authorized shares of common stock may be increased or decreased by the affirmative vote of the holders of a majority of the Company’s stock who are entitled to vote.

Each share of Class A Common Stock is entitled to one vote.

Class B Common Stock is not entitled to vote on any matter on which the holders of Class A Common Stock or Preferred Stock are entitled to vote.

All holders of common stock are entitled to receive dividends when and as declared or paid by the Company’s board of directors, subject to the preferential rights of the holders of preferred stock.

Class B Common Stock is convertible into a corresponding number of shares of Class A Common Stock upon written notice of the holder, subject to defined beneficial ownership limitations.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, with a par value of $ 0.0001 per share.

As of December 31, 2024, no ne of these shares of preferred stock have been designated or issued.

Convertible Preferred Stock

As of December 31, 2023, the Company’s Preferred Stock was classified as temporary equity in the accompanying consolidated balance sheets given that the holders of the convertible preferred stock could cause certain events to occur that were outside of the Company’s control whereby the Company could be obligated to redeem the convertible preferred stock.

The carrying value of the convertible preferred stock is not adjusted to the redemption value until the contingent redemption events are considered probable to occur.

Series C Preferred Stock

In March 2023, the Company entered into a Series C Purchase Agreement pursuant to which the Company issued 2,818,192 shares of Series C Preferred Stock at a purchase price of $ 19.06 per share, which resulted in gross proceeds of approximately $ 53.8 million, as well as the conversion of all Series A Preferred Stock, Series A-1 Preferred Stock, and Series B Preferred Stock.

In conjunction with the Merger, immediately following the Closing, each then-outstanding share of Legacy OnKure preferred stock converted into Class A or Class B Common Stock.

No Convertible Preferred Shares are authorized, issued or outstanding at December 31, 2024.

The Company’s convertible preferred stock had the following characteristics as of December 31, 2023:

Conversion of Preferred Stock into Common Stock

Each share of preferred stock, at the option of the holder, was convertible into a number of shares of common stock as determined by multiplying the number of shares of preferred stock being converted by the conversion rate.

The conversion rate in effect at any time for conversion of preferred stock is determined by dividing the Original Issue Price by the Conversion Price.

The Original Issue Price for the Series C Preferred Stock was

$ 19.06 per share.

The Conversion Price was subject to certain adjustments as provided in the Company’s restated certificate of incorporation.

The preferred stock would have automatically converted to common stock upon the closing of an initial public offering of the Company’s common stock in which the per-share price is at least $ 38.19 and gross proceeds of not less than $ 75 million, or the date and time specified by vote or the written consent of the holders of at least a majority of the then outstanding shares of Series C Preferred Stock voting or consenting as a separate class on an as-converted basis.

Voting Rights

Each preferred stockholder was entitled to the number of votes equal to the number of shares of Class A Common Stock into which such holder’s shares are convertible.

At any time when a defined number of shares of Series C Preferred Stock are outstanding, the Company was restricted from certain actions described in the Company’s restated certificate of incorporation without the vote or written consent of the holders of a majority of the then outstanding shares of Series C Preferred Stock voting or consenting as a separate class on an as-converted basis.

The Company could not have declared, paid or set aside any dividends on any shares of any other class or series of capital stock unless each holder of the preferred stock first received a dividend based upon a formula in the Company’s restated certificate of incorporation.

No dividends were declared during the years ended December 31, 2024 or 2023.

Liquidation Preference

Upon any liquidation, dissolution or winding up of the Company, certain qualifying mergers, sales or transactions with a special purpose acquisition companies, and other deemed liquidation events as defined in the Company’s restated certificate of incorporation, unless the holders of a majority of the then outstanding shares of Series C Preferred Stock, voting as a separate class on an as-converted basis, elected otherwise, prior to and in preference to any distribution to the holders of common stock, holders of Series C Preferred Stock were entitled to be paid out of the assets of the Company legally available for distribution, or the consideration received in such transaction, an amount per share of Series C Preferred Stock equal to the greater of:

i) 1.50 times the Series C Original Issuance Price plus all declared and unpaid dividends on Series C Preferred Stock or ii) such amount per share that would have been payable had all shares of Series C Preferred Stock been converted into common stock immediately prior to such event.

If upon liquidation, dissolution, or winding up of the Company, the assets and funds of the Company are insufficient to permit the payment of the full preferential amounts to the holders of preferred stock, then the holders shall share ratably in any distribution of the assets available for distribution, in proportion to the respective amounts which would otherwise be payable in respect of the shares held by the preferred stockholders.

After the payment of all preferential amounts required to be paid to the holder of shares of preferred stock, the remaining assets available for distribution to its stockholders would have been distributed to the holders of shares of common stock, pro rata based on the number of shares held by each holder.

The liquidation preference as of December 31, 2023 was $ 195.8 million.

Share-Based Compensation

The Company's share-based compensation plans are described below:

2024 Equity Incentive Plan

In October 2024, the Company established an equity incentive plan (the “2024 Plan”).

The 2024 Equity Incentive Plan became effective upon the closing of the Merger, and will continue in effect for a period of ten years from its effectiveness, unless terminated earlier by the administrator.

The 2024 Plan provides for the grant of stock options, RSUs and RSAs to employees, non-employee directors, advisors, and consultants.

Under the 2024 Plan a total of 2,480,000 shares of Class A Common Stock were initially reserved for issuance.

As of the effective date of the 2024 Plan, awards granted under the 2011, 2021 and 2023 Plans that are forfeited or otherwise become available will be included and available for issuance under the 2024 Plan.

Under the 2024 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.

The Company issues new shares in settlement of equity awards under the 2024 Plan.

See Note 16 for discussion of the increase to the available for issuance as of January 1, 2025.

2023 RSU Equity Incentive Plan

In September 2023, the Company established an equity incentive plan (the “2023 Plan”).

The 2023 Plan provided for the grant of restricted stock units (“RSU”) to employees, directors, and consultants.

Upon the close of the Merger, all shares available for issuance under the 2023 Plan were cancelled.

2021 Equity Incentive Plan

In February 2021, the Company established an equity incentive plan (the “2021 Plan”).

The 2021 Plan provided for the grant of stock options and RSA to employees, non-employee directors, advisors, and consultants.

Upon the close of the Merger, all shares available for issuance under the 2021 Plan were cancelled.

2011 Equity Incentive Plan

In October 2011, the Company established an equity incentive plan (the “2011 Plan”).

The 2011 Plan provided for the grant of stock options and restricted stock awards (“RSA”) to employees, non-employee directors, advisors, and consultants.

Shares are no longer available for issuance under the 2011 Plan, which was subsequently terminated in March 2023.

Upon the close of the Merger, all shares available for issuance under the 2011 Plan were cancelled.

In addition, as part of the Merger with Reneo discussed in Note 1, the Company assumed outstanding awards under the following Reneo Equity Incentive Plans and certain awards not issued pursuant to a Reneo Equity Plan:

Reneo 2021 and 2014 Equity Incentive Plans

In March 2021, the Reneo Board of Directors adopted the Reneo 2021 Equity Incentive Plan ("Reneo 2021 Plan"), which is the successor to Reneo’s 2014 Equity Incentive Plan and UK Sub-Plan ("2014 Plan").

In October 2024, the Company established the 2024 ESPP.

Under the 2024 ESPP, an aggregate of 137,500 shares of Class A Common Stock are currently reserved and available for issuance.

As of December 31, 2024, no offering periods have been established under the 2024 ESPP.

See Note 16 for discussion of the increase to the available for issuance as of January 1, 2025.

Shares Reserved for Future Issuance

1 unchanged sentence

Common stock options outstanding

Unvested restricted stock units

Unvested restricted stock units under the 2023 Plan

Unreleased restricted stock units assumed in the Merger

Available for future grants under the 2024 Equity Incentive Plan

Available for future grants under the 2024 Employee Stock Purchase Plan

Total shares of common stock reserved

Total shares of common stock reserved for future issuance

Stock Options

Options granted under the Company’s equity incentive plans have an exercise price equal to or in excess of the market value of the Class A Common Stock at the date of grant and expire no more than 10 years from the date of grant.

Generally, options become exercisable ratably over a period of three to four years from the date of grant.

Stock options granted to non-employees generally vest quarterly over two to three years .

A summary of the Company’s stock option activity and related information for the year ended December 31, 2024 is as follows:

Contractual Term (in years)

Value (in thousands)

Outstanding at December 31, 2022

Forfeited/Expired

Outstanding at December 31, 2023

Vested at December 31, 2023

Exercisable at December 31, 2023

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

Options Outstanding

Weighted Average

Weighted Average Remaining Contractual Term

Aggregate Intrinsic Value

(in thousands)

Options outstanding - December 31, 2023

Assumed in reverse recapitalization

Options outstanding - December 31, 2024

Options exercisable - December 31, 2024

All outstanding options as of December 31, 2024 are expected to vest.

Unrecognized stock-based compensation expense at December 31, 2023 was $ 5.9 million, which is expected to be recognized over a weighted-average vesting term of 2.0 years.

As of December 31, 2024, the Company had unrecognized compensation cost for unvested stock options of $ 26.5 million, expected to be recognized over a weighted-average period of approximately 2.8 years.

The aggregate intrinsic value is calculated as the difference between the exercise price and the estimated fair value of the Company’s common stock as of December 31, 2024.

The weighted-average grant-date fair value of options granted for the years ended December 31, 2024, and 2023 was $ 16.05 and $ 5.51 , respectively.

The Company has granted performance-based stock options.

During the year ended December 31, 2023, the Company granted 8,449 performance-based shares, which are included in the table above.

The company recognized $ 30,000 and $ 13,000 in performance-based compensation expense for the years ended December 31, 2024 and 2023, respectively.

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.

2 unchanged sentences

Year Ended December 31,

Risk-free interest rate

Expected term (years)

Expected volatility

Expected term (in years)

Risk-free interest rate

Expected dividend yield

11 unchanged sentences

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 year ended December 31, 2023:

Weighted-Average

Unvested at December 31, 2022

Unvested at December 31, 2023

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 December 31, 2023.

The stock-based compensation expense related to such TSUs for the year ended December 31, 2023 was immaterial.

Unrecognized stock-based compensation expense at December 31, 2023 was $ 0.3 million, which is expected to be recognized over a weighted-average vesting term of 1.3 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 149,500 unvested shares underlying PSUs as of December 31, 2023.

The Company concluded that achievement of the performance conditions was not probable as of December 31, 2023 and 2022 , and therefore no stock-based compensation expense was recognized for the years ended December 31, 2023 and 2022 in connection with the PSUs.

As of December 31, 2023 , 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 December 31, 2023.

Stock-based compensation expense related to the MSUs during the years ended December 31, 2023 and 2022 was immaterial.

As of December 31, 2023, 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 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 years ended December 31, 2023 and 2022 , the Company reversed approximately $ 22,000 and $ 0.4 million in stock-based compensation expenses, respectively, as a direct result of the decreased value of the Performance Award caused by a decline in the Company’s common stock price.

Restricted Stock Awards (RSAs) and Restricted Stock Units (RSUs)

RSA typically vests 25 % on the first anniversary of the issuance date and incrementally vest monthly for the three-year period thereafter.

In the event of a termination of services, all unvested shares are forfeited, and the Company has the option to purchase all outstanding vested shares at their fair market value.

RSU vests based on a service-based requirement and a liquidity event plus service requirement.

No RSU had vested as of December 31, 2023.

The following table summarizes RSU and RSA activities during the year ended December 31, 2024:

Unvested balance as of December 31, 2023

RSUs outstanding - December 31, 2024

Unvested balance as of December 31, 2024

As of December 31, 2024, the Company had unrecognized compensation cost for unvested RSU awards of $ 2.8 million, expected to be recognized over a weighted-average period of approximately 2.0 years.

In addition to the RSUs in the table above, in connection with the Merger, the Company assumed 24,700 RSUs which were fully vested at the time of the Merger.

The RSUs were releasable upon set time frames after completion of the Merger.

From the Merger through December 31, 2024, 7,700 RSUs were released.

The remaining 17,000 RSUs were released in January 2025.

There was no unamortized compensation cost related to these RSUs as of the Merger or December 31, 2024.

2024 Employee Stock Purchase Plan

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 December 31, 2023 , 288,466 shares have been issued under the ESPP.

In September 2021, the compensation committee of the Company’s Board of Directors adopted the Company’s 2021 UK Sharesave Sub-plan (SAYE).

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

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

The stock-based compensation expense related to the ESPP and the SAYE for the years ended December 31, 2023 and 2022 , was $ 0.4 million and $ 0.2 million, respectively.

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):

Year Ended December 31,

In October 2024, the Company’s Board of Directors adopted the ESPP, which became effective immediately upon completion of the Merger with Reneo.

As of December 31, 2024, no shares have been issued under the ESPP.

Share-Based Compensation Expense

The following table shows the allocation of share-based compensation expense related to the company’s share-based awards (in thousands) :

Research and development

General and administrative

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.

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 December 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 years ended December 31, 2023 and 2022.

The Company’s net loss was generated in the following jurisdictions (in thousands):

Year Ended December 31,

The components of net deferred taxes consisted of the following (in thousands):

The Company recorded accelerated share-based compensation expenses related to modifications of RSUs under certain separation agreements of $ 1.7 million during the year ended December 31, 2024, which is reflected in the above table.

See Note 14 for further discussion on severance.

There were no such modifications during the year ended December 31, 2023.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled.

The components of the income tax benefit are as follows:

Years ended December 31,

Federal tax at statutory rate

State taxes, net of federal deduction

Change in valuation allowance

Income tax benefit

Significant components of deferred income taxes are as follows (in thousands):

As of December 31,

Deferred tax assets:

NOL carryforwards

Capitalized research and development expenses

Credit carryforwards

Intangible assets

Compensation accruals

Operating lease liabilities

Gross deferred tax assets

Less valuation allowance

Net operating loss carryforwards

R&D tax credit

Deferred R&D expenses

Accrued expenses

Share-based compensation

Total deferred tax assets

Deferred tax liabilities:

Net deferred tax assets (liabilities)

For the years ended December 31, 2023 and 2022 , the Company recorded no provision for income taxes.

A reconciliation of the effective tax rate to the amount computed by applying the statutory federal income tax rate to the loss from operations is summarized for the years ended December 31, 2023 and 2022, as follows:

As of December 31,

federal statutory income tax rate

Tax credits, net

Return-to-provision adjustment

GILTI inclusion

Foreign Rate Differential

Valuation allowance

federal effective tax rate

The Company had federal net operating loss (NOL) carryforwards available of approximately $ 110.9 million as of December 31, 2023, before consideration of limitations under Section 382 of the Internal Revenue Code of 1986, as amended (Section 382), as further described below.

The federal NOLs generated after 2017 of $ 109.3 million will carry forward indefinitely.

NOLs generated prior to 2018 of $ 1.6 million will begin to expire in 2034 .

Additionally, the Company had state NOL carryforwards available of $ 1.8 million as of December 31, 2023 .

The state NOLs may be used to offset future taxable income and will begin to expire in 2034 .

The Company has generated UK NOLs of $ 0.2 million which carryforward indefinitely.

At December 31, 2023, the Company had federal and state tax credit carry forwards of approximately $ 16.9 million and $ 0.7 million, respectively.

Deferred tax assets, net of valuation allowance

As of December 31, 2024, the Company had approximately $ 3.1 million of net operating loss carryforwards (“NOLs”) and $ 0.8 million of research and experimental credits which expire through 2037 , and approximately $ 216.5 million of federal and state net operating loss carryforwards which have an indefinite life .

At December 31, 2024, the Company had federal and state tax credit carry forwards of approximately $ 6.9 million .

The Company has not performed a formal research and development credit study with respect to these credits.

The federal credits will begin to expire in 2034 , if unused, and the state credits carry forward indefinitely.

The future utilization of the Company’s NOL and tax credit carryforwards to offset future taxable income may be subject to a substantial annual limitation as a result of changes in ownership by stockholders that hold 5 % or more of the Company’s common stock.

An assessment of such ownership changes under Section 382 was not completed through December 31, 2023.

To the extent that an assessment is completed in the future, the Company’s ability to utilize tax attributes could be restricted on a year-by-year basis and certain attributes could expire before they are utilized.

The Company will examine the impact of any potential ownership changes in the future.

The Company has elected to record the inclusion related to the Global Intangible Low-Taxed Income (GILTI) in the period incurred.

The estimated GILTI inclusion generated by the Company’s wholly-owned controlled foreign corporation in the UK for the year ended December 31, 2023 was $ 1.5 million.

This amount is included in the income tax provision, however, has zero impact to the provision due to the full valuation allowance.

The Company has established a full valuation allowance for its deferred tax assets due to uncertainties that preclude it from determining that it is more likely than not that the Company will be able to generate sufficient taxable income to realize such assets.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets.

A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2023.

Such objective evidence limits the ability to consider other subjective evidence such as the Company’s projections for future growth.

Based on this evaluation, as of December 31, 2023, a full valuation allowance of $ 49.9 million has been recorded against the Company net deferred tax assets, as the Company has determined that none of the Company’s balance of deferred tax assets is more likely than not to be realized.

The amount of the deferred tax assets considered realizable, however, could be adjusted in the future if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence, such as estimates of future taxable income during carryforward periods and the Company’s projections for growth.

The following table summarizes the changes to unrecognized tax benefits (in thousands):

Year Ended December 31,

Beginning balance of unrecognized tax benefits

Additions based on tax positions related to the current year

Ending balance of unrecognized tax benefits

The amount of the unrecognized tax benefits that would impact the effective tax rate, absent the valuation allowance, would be $ 11.0 million.

Due to the full valuation allowance, the impact, however, is zero.

The federal credits will begin to expire in 2034 , if unused.

Pursuant to Internal Revenue Code (“IRC”) Sections 382 and 383, the Company’s ability to use NOLs and research tax credit carry forwards to offset future taxable income may be limited if the Company experiences a cumulative change in ownership of more than 50% within a three-year testing period.

The Company has not completed an ownership change analysis pursuant to IRC Section 382.

If ownership changes within the meaning of IRC Section 382 are identified as having occurred, the amount of NOLs and research tax carryforwards available to offset future taxable income and income tax liabilities in future years may be significantly restricted or eliminated.

Further, deferred tax assets associated with such NOLs and research tax credits could be significantly reduced upon realization of an ownership change within the meaning of IRC Section 382.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible.

Management considers projected future taxable income and tax planning strategies in making this assessment.

At December 31, 2024 and 2023 , the Company has no t accrued any interest or penalties related to uncertain tax positions.

The Company does not anticipate that there will be a significant change in the amount of unrecognized tax benefits over the next 12 months.

The Company does not anticipate that there will be a significant change in the amount of unrecognized

tax benefits over the next 12 months.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

The Company is subject to taxation in the United States and the UK.

The UK subsidiary operations ceased in 2024.

The Company’s federal and state income tax returns for all years will remain open to examination by federal and state tax authorities for three years from the date of utilization of any net operating loss carryforwards.

The Company’s federal and state returns since inception are subject to examination due to the carryover of net operating losses.

The Company has not been, nor is it currently, under examination by any tax authorities.

The UK tax returns from 2018 forward are subject to examination by the UK tax authorities.

The UK tax returns from 2018 through 2024, are subject to examination by the UK tax authorities.

Commitments and Contingencies

Legal Proceedings

The Company is currently not a party to any legal proceedings, nor is the Company aware of any threatened or pending litigation .

However, from time-to-time in the future, the Company could be involved in disputes, including litigation, relating to claims arising out of operations in the normal course of business, which may have a material adverse effect on the Company’s consolidated results of operations or financial position.

The Company maintains a defined contribution 401(k) plan available to eligible employees.

Employee contributions are voluntary and are determined on an individual basis, limited to the maximum amount allowable under federal tax regulations.

Matching contributions to the 401(k) plan are made for certain eligible employees to meet non-discrimination provisions of the plan.

During the years ended December 31, 2023 and 2022 , the expense recorded by the Company was $ 0.2 million and immaterial, respectively.

Financial Impact of Suspension of Mavodelpar Development Activities

On December 14, 2023, the Company announced that its pivotal STRIDE study 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 reductions.

In December 2023, the Company implemented a workforce reduction and recognized approximately $ 2.5 million in severance and continuation of benefit expenses for the year ended December 31, 2023.

In addition, the Company assessed the impairment of its ROU and fixed assets due to the suspension of mavodelpar’s development activities and concluded that its current leases and leasehold improvements were impaired.

The Company recognized approximately $ 0.3 million and $ 0.4 million of impairment expenses for ROU and leasehold improvements for the year ended December 31, 2023, respectively.

Merger Proceedings

In connection with the Merger, two complaints were filed in the Supreme Court of the State of New York, County of New York, captioned Thomas v.

Reneo Pharmaceuticals, Inc., et al.

654628/2024 (filed September 5, 2024) and Kent v.

Reneo Pharmaceuticals, Inc., et al.

654642/2024 (filed September 6, 2024) (together, the “Complaints”).

The Complaints generally allege that the Proxy Statement/Prospectus filed by Reneo with the SEC misrepresented and/or omitted certain purportedly material information relating to Reneo management’s financial projections for Reneo and OnKure, the data and inputs underlying the financial valuation analyses that support the fairness opinion provided by Leerink Partners, Reneo’s financial advisor, and potential conflicts of interest with Leerink Partners LLC, Evercore Group L.L.C., and LifeSci Capital LLC, which were the placements agents for the Concurrent Financing that closed concurrently with the Merger.

The Complaints assert violations of negligent misrepresentation and concealment in violation of New York common law and negligence in violation of New York common law.

The Complaints sought orders enjoining the proposed Merger, or in the event that the Merger was consummated, orders rescinding the Merger or awarding actual and punitive damages, as well as all of the plaintiffs’ fees and expenses in connection with the litigation, including reasonable attorneys’ and experts’ fees and expenses.

We cannot predict the outcome of the Complaints or any other litigation that might be filed arising out of the Merger or the Concurrent Financing.

The Company and the individual defendants intend to vigorously defend against the Complaints and any subsequently filed, similar actions.

It is possible additional lawsuits may be filed arising out of the Merger or the Concurrent Financing.

Absent new or significantly different allegations, the Company will not necessarily disclose such additional filings.

From time-to-time in the future, the Company could be involved in disputes, including litigation, relating to claims arising out of operations in the normal course of business, which may have a material adverse effect on the Company’s consolidated results of operations or financial position.

Clinical Trial Collaboration and Supply Agreement with Pfizer

In August 2020, as amended in December 2024, the Company entered into a clinical trial collaboration and supply agreement under which Pfizer Inc.

(“Pfizer”) agreed to supply drug product in connection with a clinical trial.

The agreement continues until the earlier of the completion of all obligations of the parties or the termination of the contract by either party as defined in the agreement.

The Company may terminate the agreement if the clinical trial is deemed to be unsafe, regulatory authorities raise concerns, or if Pfizer does not uphold its obligations outlined in the agreement.

Indemnification

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising of breach of such agreements or from intellectual property infringement claims made by third parties.

In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors.

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited.

To date, the Company has not incurred any material costs because of such indemnifications.

The Company is not aware of any claims under

indemnification arrangements, and it has not accrued any liabilities related to such obligations in its financial statements as of December 31, 2024.

A former officer of the Company terminated his employment with the Company on May 24, 2024 and entered into a separation agreement and release on that date.

The separation agreement and release provides for payments and benefits including continuing payments of base salary for a period of 14 months following termination of employment, payment for or reimbursement for COBRA premiums for up to 14 months following termination of employment, a full accelerated vesting of his equity awards and extension of the post-termination exercise period applicable to his Options through the earlier of 12 months following termination of service or the applicable option expiration date.

During the year ended December 31, 2024, the Company recorded an expense of $ 622,000 for these severance benefits in research and development expense, of which $ 326,000 remains unpaid and is included in accrued compensation.

See Note 12 for discussion of stock-based compensation recorded for the modifications of equity awards discussed above.

The related RSU shares were released in January 2025.

Certain Reneo employees became employees of the Company to assist with the Merger transition through the end of the year December 31, 2024 at which time they were terminated and received severance benefits in accordance with the Reneo severance agreements.

The Company recorded expense of $ 225,000 for severance benefits for these employees for the year ended December 31, 2024, which is included in General and Administrative expenses and of which, approximately $ 154,000 remains unpaid as of December 31, 2024 and is included in accrued compensation.

Employee Benefit Plan

The Company established a qualified 401(k) plan in June 2021 which covers all employees who meet eligibility requirements.

The Company matches its employee contributions up to a maximum amount of 4 % of the participant’s compensation.

During the years ended December 31, 2024, and 2023, the Company made matching contributions of approximately $ 360,000 and $ 294,000 , respectively.

Convertible Promissory Notes

In June 2024, the Company entered into convertible promissory note agreements with certain of its existing investors for up to $ 12.0 million.

At closing, the Company received total proceeds of $ 6.0 million and had the ability to draw up to an additional $ 6.0 million in the event the Merger with Reneo had not closed by September 30, 2024, but no additional draw was made.

The notes bore interest at rates from 6 % per annum.

All unpaid principal and accrued interest were due in December 2025, unless earlier converted.

In October 2024, the unpaid notes and accrued unpaid interest automatically converted into shares issued in the Concurrent Financing at the price per share paid by investors in the Concurrent Financing.

See Note 3 for further discussion.

The Company incurred $ 142,000 of debt issuance costs related to the convertible promissory notes during the year ended December 31, 2024.

Debt issuance costs are amortized as a component of interest expense over the term of the related debt using the straight-line method, which approximates the interest method.

The Company recognized $ 148,000 in interest expense related to the amortization of the debt issuance costs for the year ended December 31, 2024 and a $ 114,000 loss on the conversion for the year ended December 31, 2024, both of which are recorded in interest and other expense in the Statement of Operations.

As of December 31, 2024, the Company had no accrued interest related to the convertible promissory notes.

Subsequent Events

In February 2024, the Company implemented a second workforce reduction.

As a result of this workforce reduction, the Company will recognize approximately $ 1.6 million in severance and continuation of benefit expenses in first quarter of 2024.

In January 2025, the Company entered into a sublease on the Irvine lease for all of the leased square footage.

The sublease rent payments will be approximately $ 450,000 over the term of the lease, which expires in November 2026 .

Available for Issuance Increase

The Company's 2024 Plan provides that on the first day of each fiscal year, the number of shares of our Class A common stock available for issuance thereunder is automatically increased by a number equal to the least of (i) 2,407,100 shares, (ii) 5 % of the outstanding shares of all classes of common stock as of the last day of the

immediately preceding fiscal year, or (iii) such other amount as the Company’s board of directors may determine.

The Company's ESPP provides that on the first day of each fiscal year, the number of shares of Class A common stock available for issuance thereunder is automatically increased by a number equal to the least of (i) 481,500 shares, (ii) 1 % of the outstanding shares of all classes of common stock as of the last day of the immediately preceding fiscal year, or (iii) such other amount as the board of directors may determine.

On January 1, 2025, the number of shares of Class A common stock available for issuance under the 2024 Plan and the ESPP increased by 667,355 and 133,471 shares, respectively, pursuant to these provisions.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data