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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-11-07 · 121 added, 107 removed, 54 unchanged (81% of the section changed)

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

You should read the following discussion and analysis of Reneo’s financial condition and results of operations together with (i) the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, (ii) the audited consolidated financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Reneo’s Annual Report on Form 10-K for the year ended December 31, 2023, (iii) Legacy OnKure’s audited financial statements and the related notes for the years ended December 31, 2023 and 2022 included in the proxy statement/prospectus (the Proxy Statement/Prospectus) filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the Securities Act), with the SEC on August 26, 2024 and (iv) the unaudited pro forma condensed combined financial statements for the six months ended June 30, 2024 and for the year ended December 31, 2023 included in the Proxy Statement/Prospectus.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Legacy OnKure’s audited financial statements and the related notes for the years ended December 31, 2024 and 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent filings.

Unless otherwise indicated, all references in this Quarterly Report on Form 10-Q to “OnKure,” the “Company,” “we,” “our,” “us,” or similar terms refer to OnKure Therapeutics, Inc.

and its subsidiaries after completion of the Merger.

In addition, references to “Reneo” refers to the Company prior to the completion of the Merger.

In addition, references to “Reneo” refer to the Company prior to the completion of the Merger.

Forward-Looking Statements

In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part II, Item 1A below.

In addition to historical financial information, this discussion and analysis contains forward-looking statements based upon our current beliefs, estimates, plans, and expectations that involve risks, uncertainties, and assumptions.

Our actual results may differ materially from those contained in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part II, Item 1A below.

In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “project,” “positioned,” “potential,” “seek,” “should,” “target,” “will,” “would” or the negative of these terms or other similar expressions.

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

On the Closing Date, Reneo, consummated the previously announced Merger pursuant to the terms of the Merger Agreement, by and among Reneo, Merger Sub I, Merger Sub II, and Legacy OnKure.

Pursuant to the Merger Agreement, on the Closing Date, (i) Reneo effected the Reverse Stock Split, (ii) Reneo changed its name to “OnKure Therapeutics, Inc.”, (iii) Reneo reclassified all of its common stock as Class A Common Stock, and (iv) Merger Sub I merged with and into Legacy OnKure, with Legacy OnKure as the surviving company in the Merger and, after giving effect to such Merger, Legacy OnKure became a wholly-owned subsidiary of OnKure Therapeutics, Inc.

Pursuant to the terms of the Merger Agreement, we determined that the Merger would qualify for the intended tax treatment even if only the merger with Merger Sub I was consummated, and therefore the parties determined not to consummate the second merger with Merger Sub II contemplated by the Merger Agreement.

Concurrently with the closing of the Merger, Reneo completed a private placement with certain investors (the PIPE Investors) to purchase 2,839,005 shares of Class A Common Stock at a price per share of approximately $22.895 per share for an aggregate purchase price of approximately $65.0 million, including the conversion of outstanding convertible notes and accrued but unpaid interest thereon held by certain Legacy OnKure investors (the Concurrent PIPE Investments).

In connection with the Concurrent PIPE Investments, Reneo entered into a registration rights agreement with the PIPE Investors, pursuant to which Reneo agreed to use commercially reasonable efforts to prepare and file a registration statement with the SEC within 45 calendar days after the Closing Date, registering the resale of the shares of Class A Common Stock issued pursuant to the Concurrent PIPE

The Company filed such Registration Statement on Form S-1 with the SEC, and it was declared effective by the SEC on October 30, 2024.

Immediately after the effective time of the Merger, following the consummation of the Concurrent PIPE Investments, Legacy OnKure stockholders owned approximately 53.6%, pre-Merger Reneo stockholders owned approximately 25.1%, and the PIPE Investors owned approximately 21.3% of the Combined Company’s outstanding common stock.

As of the open of trading on October 7, 2024, the Class A Common Stock of the Combined Company began trading on the Nasdaq Global Market (Nasdaq) under the symbol “OKUR.”

Post-Merger Business

As a result of the Merger, Reneo’s historic business operations ceased and our go-forward operations will be those of Legacy OnKure.

We are a clinical-stage biopharmaceutical company focused on the discovery and development of precision medicines designed to target biologically validated drivers of cancers underserved by available therapies.

We are a clinical-stage biopharmaceutical company focused on the discovery and development of precision medicines that target biologically validated drivers of cancers underserved by available therapies.

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

Our lead product candidate, OKI-219, is a highly selective inhibitor of 3 kinase alpha (PI3Kα), a key mediator in cancer growth signaling, harboring the H1047R mutation (PI3KαH1047R) that has a much smaller impact on non-mutated (or wild-type) PI3Kα (PI3KαWT).

OKI-219 is currently in a first-in-human Phase 1 monotherapy dose-escalation trial in H1074R-mutated advanced solid tumors including breast cancer.

Early clinical data are anticipated in the fourth quarter of 2024.

In addition to OKI-219,we are also pursuing programs designed to selectively target the other specific mutations of PI3Kα.

The unaudited interim financial information included in this section are representative of Reneo’s operations prior to the closing of the Merger, the adoption of our business plan and the commencement of conducting our business.

License Agreement

In December 2017, Reneo entered into a License Agreement (vTv License Agreement) with vTv Therapeutics LLC (vTv Therapeutics), under which Reneo 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, Reneo’s product candidate, for any therapeutic, prophylactic or diagnostic application in humans.

Since all development activity related to mavodelpar has been suspended, no development efforts under the vTv License Agreement are currently being performed.

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

On October 30, 2023, Reneo repurchased from vTv Therapeutics all 576,443 shares of Reneo’s 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.

On October 22, 2024, we provided vTv Therapeutics notice of our intention to terminate the vTv License Agreement effective 90 days from the date of notice.

Following termination of the vTv License Agreement, we intend to cease maintenance and prosecution of all mavodelpar intellectual property.

Components of Reneo’s Results of Operations

By improving selectivity for the oncogenic and mutated form of these cancer-driver proteins, we aim to discover and develop drugs with improved safety and efficacy by sparing toxicity that arises from non-selective inhibition of the non-mutated (or wild-type) version of the protein.

We work under the belief that inhibiting target proteins with specific mutations instead of wild-type variants should enable precise patient selection that will, in turn, improve the probability of clinical success.

We designed our current product candidates utilizing disciplined medicinal chemistry, x-ray crystallography, and computational chemistry to inhibit specified mutated versions of PI3K α , a key mediator in cancer growth signaling.

Our lead product candidate, OKI-219, is a highly selective inhibitor of PI3K α H1047R that has a much smaller impact on PI3K α WT .

We plan to initially focus on the development of OKI-219 in patients with advanced breast cancer of genetic subtypes that are (a) both HR+ and HER2-;

and (b) HER2+.

We believe we can potentially expand the application of OKI-219 by conducting appropriate clinical trials in earlier lines of treatment within breast cancer, other subtypes of breast cancer, and potentially in other solid tumors.

OKI-219 is currently in a first-in-human Phase 1a/1b clinical trial.

On the Closing Date, Reneo consummated the previously announced Merger pursuant to the terms of the Merger Agreement, by and among Reneo, Merger Sub I, Merger Sub II, and Legacy OnKure.

Pursuant to the Merger Agreement, on the Closing Date, (i) Reneo effected a reverse stock split of Reneo’s issued common stock at a ratio of 1:10, (ii) Reneo changed its name to “OnKure Therapeutics, Inc.”, (iii) Reneo reclassified all of its common stock as “Class A Common Stock” or “Class B Common Stock”, and (iv) Radiate Merger Sub I merged with and into Legacy OnKure, with Legacy OnKure as the surviving company in the Merger and, after giving effect to such Merger, Legacy OnKure becoming a wholly owned subsidiary of OnKure

Therapeutics, Inc.

Concurrently with the closing of the Merger, Reneo completed a private placement with certain investors (the “Concurrent Investors”) to purchase 2,839,005 shares of Common Stock at a price per share of approximately $22.895 per share for an aggregate purchase price of approximately $65.0 million, including the conversion of outstanding convertible notes and accrued but unpaid interest thereon held by certain Legacy OnKure investors (the “Concurrent Financing”).

In connection with the Concurrent Financing, Reneo entered into a registration rights agreement with certain investors, pursuant to which Reneo agreed to use commercially reasonably efforts to prepare and file a registration statement with the SEC within 45 calendar days after the Closing Date, registering the resale of the shares of Common Stock issued pursuant to the Concurrent Financing, which was filed in October 2024.

Immediately after the effective time of the Merger, following the consummation of the Concurrent Financing, shares received by Legacy OnKure stockholders represented approximately 53.6%, pre-Merger Reneo shares outstanding represented approximately 25.1%, and the shares purchased in the Concurrent Financing represented approximately 21.3% of our outstanding Common Stock.

As of the open of trading on October 7, 2024, our Common Stock began trading on Nasdaq under the symbol “OKUR.”

Macroeconomic and Geopolitical Considerations

Our business and operations may be negatively affected by macroeconomic, geopolitical, and regulatory developments, including inflation, instability in the banking and financial services sector, tightening of the credit markets, international conflicts, cybersecurity, tariffs, sanctions, export controls, government policy positions, and changes in regulatory agencies with oversight of our operations.

These developments could affect our supply chain, manufacturing processes, regulatory compliance costs, regulatory approval timelines, and cross-border operations.

Further, it is possible that U.S.

government policy changes and related uncertainty about policy changes could increase market volatility and our operating expenses.

The extent, severity, and duration of the impacts of these events and conditions on our business cannot be predicted and may not be fully reflected in our results of operations until future periods.

If economic uncertainty continues or increases, or if the global economy worsens, our business, financial condition, and results of operations may be harmed.

For further discussion of the potential impacts of macroeconomic events and conditions on our business, financial condition, and operating results, see the section titled “Risk Factors” included in this Quarterly Report.

Financial Overview

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

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

Since inception, we have incurred significant operating losses.

Our net losses were $15.9 million and $52.7 million for the three months ended March 31, 2025 and the year ended December 31, 2024, respectively.

As of March 31, 2025, we had an accumulated deficit of $170.6 million and cash and cash equivalents of $96.7 million.

We have funded our operations primarily through private placements of our common stock and preferred stock and issuance of convertible debt.

As of March 31, 2025, we believe our cash resources are sufficient to fund our planned operations for at least the next 12 months from the date of issuance of these financial statements.

Components of Our Results of Operations

Operating Expenses

Research and Development Expenses

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

Research and development expenses included:

• personnel expenses, including severance payments, salaries, benefits, and stock-based compensation expense;

• external expenses incurred under agreements with contract research organizations (CROs), investigative sites and consultants to conduct and support our preclinical studies and clinical trials;

• raw materials related to manufacturing of Reneo’s product candidate for clinical trials and preclinical studies, including fees paid to third-party manufacturers;

• expenses related to regulatory activities, including filing fees paid to regulatory agencies;

• expenses related to medical affairs activities, including field teams to initiate relevant disease education and publications;

• depreciation and maintenance expenses;

• fees for maintaining licenses under Reneo’s third-party licensing agreements.

Reneo recognized research and development expenses as incurred and capitalized payments made prior to the receipt of goods or services to be used in research and development until receipt of the goods or services.

Costs for certain activities, such as manufacturing and preclinical studies and clinical trials, were generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to Reneo by its vendors and collaborators.

Reneo expensed amounts paid to acquire licenses associated with products under development when the ultimate recoverability of the amounts paid was uncertain and the technology had no alternative future use when acquired.

General and Administrative Expenses

General and administrative expenses consisted primarily of costs related to the Merger, personnel expenses, including severance payments, salaries, benefits, and stock-based compensation expenses for personnel in executive, finance and administrative functions.

General and administrative expenses also include professional fees for accounting, legal, and commercial development, insurance and corporate facility costs not otherwise included in research and development expenses.

Other income consisted of interest income on Reneo’s cash, cash equivalents and short-term investments.

Reneo’s Results of Operations

Comparison of Three Months Ended September 30, 2024 and 2023 (Unaudited)

The following table summarizes Reneo’s results of operations for the three months ended September 30, 2024 and 2023 (unaudited and in thousands):

Three Months Ended September 30,

Operating expenses:

Research and development

Research and development expenses primarily relate to expenses incurred in connection with the discovery and development of our product candidates.

Research and development expenses include:

• employee-related expenses, including salaries, severance, retention, benefits, insurance, and share-based compensation expense;

• expenses incurred under agreements with CROs, which are investigative sites that conduct our clinical trials, other clinical trial-related vendors, and clinical consultants;

• the costs of acquiring, developing, and manufacturing and testing clinical and preclinical materials, including costs incurred under agreements with CMOs;

• costs associated with non-clinical activities and regulatory operations;

• facilities, depreciation, market research, and other expenses, which include allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment, and laboratory supplies.

We make non-refundable advance payments for goods and services that will be used in future research and development activities.

These payments are recorded as expenses in the period in which we receive or take ownership of the goods or when the services are performed.

At any one time, we are working on multiple research or drug discovery programs and internal resources.

Employees and infrastructure are not directly tied to any one program and are typically deployed across multiple programs;

therefore, we do not track our research and development expenses on a program-specific basis.

Conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time-consuming.

As we initiate new clinical trials, our research and development expenses may increase.

Product candidates in later stages of development generally have higher development costs than those in earlier stages.

As a result, we expect that our research and development expenses will increase substantially over the next several years as we advance product candidates through preclinical studies into and through clinical trials, continue to discover and develop additional product candidates, undertake activities to expand, maintain, protect, and enforce our intellectual property portfolio, and hire additional research and development personnel.

Successful development of product candidates is highly uncertain and may not result in approved products.

The probability of success for each product candidate may be affected by numerous factors, including clinical data, preclinical data, competition, manufacturability, and commercial viability.

Completion dates and completion costs can vary significantly for each product candidate and are difficult to predict.

We anticipate that we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to our ability to enter strategic alliances with respect to each program or product candidate, the scientific and clinical success of each product candidate, and ongoing assessments as to each product candidate’s commercial potential.

We will need to raise additional capital and may seek strategic alliances in the future to advance our various programs.

General and Administrative

Total operating expenses

Loss from operations

Operating Expenses

Research and Development Expenses

Research and development expenses decreased by $12.7 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

This decrease was primarily due to the suspension of development activities for mavodelpar and cash preservation activities, including workforce reductions in December 2023 and February 2024.

General and Administrative Expenses

General and administrative expenses decreased by $3.5 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

This decrease was primarily due to a decrease of $2.1 million in commercial development and consulting costs due to the suspension of mavodelpar development activities and a decrease of $1.3 million in facility and personnel-related costs related to Reneo’s workforce reductions in December 2023 and February 2024.

The decrease in other income for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, relates to a decrease in Reneo’s short-term investment balance during 2024.

Comparison of Nine Months Ended September 30, 2024 and 2023 (Unaudited)

The following table summarizes Reneo’s results of operations for the nine months ended September 30, 2024 and 2023 (unaudited and in thousands):

Nine Months Ended September 30,

General and administrative expenses consist primarily of salaries, bonuses and related benefits, share-based compensation, and severance and retention benefits related to our executive, finance, and administrative functions, professional fees for auditing, tax, consulting, and legal services, as well as insurance, board of director compensation, consulting, and other administrative expenses.

We recognize general and administrative expenses in the periods in which they are incurred.

We expect that our general and administrative expenses will increase over the next several years as we hire additional personnel to support the growth of our business.

In addition, we will incur significant additional expenses associated with being a public company, including expenses related to accounting, audit, legal, regulatory, public company reporting and compliance, director and officer insurance, investor and public relations, and other administrative and professional services.

Interest Income

Interest income primarily consists of interest income generated from our cash equivalents in interest-bearing money market accounts.

Interest Expense

Interest expense consists primarily of interest expense generated from our convertible notes payable, which were issued in 2024 and converted at the time of the Merger in 2024.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

The following table summarizes our results of operations for the periods indicated:

Three Months Ended

(in thousands, except share

and per share amounts)

Operating expenses:

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Loss from operations

Operating Expenses

Other income:

Interest income

Net loss and comprehensive loss

Research and Development Expenses

Research and development expenses decreased by $32.6 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

This decrease was primarily due to the suspension of development activities for mavodelpar and cash preservation activities, including workforce reductions in December 2023 and February 2024.

Research and development expenses were $13.0 million for the three months ended March 31, 2025 compared to $8.6 million for the three months ended March 31, 2024.

The increase of $4.4 million was primarily due to a $1.9 million increase in personnel-related costs, including $1.2 million of increased share-based compensation charges.

The increase was also the result of a $1.7 million increase in clinical trial and outsourced manufacturing expenses, and a $0.8 million increase in outsourced research expenses.

We expect research and development expenses in 2025 to be higher than 2024 due to continued efforts to advance our clinical and preclinical programs.

General and Administrative Expenses

General and administrative expenses decreased by $4.9 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

This decrease was primarily due to a decrease of $3.4 million in commercial development and consulting costs due to the suspension of mavodelpar development activities and a decrease of $3.3 million in facility and personnel-related costs related to Reneo’s workforce reductions in December 2023 and February 2024, offset by an increase of $2.1 million in legal and advisory fees related to the proposed Merger.

The decrease in other income for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, relates to a decrease in Reneo’s short-term investment balance during 2024.

General and administrative expenses were $4.0 million for the three months ended March 31, 2025 and $1.3 million for the three months ended March 31, 2024.

The increase of $2.7 million was primarily due to $1.6 million in increased personnel-related costs, including $1.2 million of increased share-based compensation charges.

In addition, legal expenses and director compensation, consulting, and other professional service fees, including audit fees and insurance, increased by $0.9 million.

We expect general and administrative expenses in 2025 to be higher than 2024 as we operate as a public company for the full year in 2025.

Other income was $1.1 million for the three months ended March 31, 2025 compared to $0.3 million of interest income for the three months ended March 31, 2024.

The change was primarily due to an increase in interest

income due to an increase in cash and cash equivalents available to invest during the quarter ended March 31, 2025 as compared to the quarter ended March 31, 2024.

We expect other income in 2025 to be higher than 2024 with higher average available cash available to invest during 2025.

Liquidity and Capital Resources

Since inception, Reneo has incurred significant losses and negative cash flows from operations, and financed its operations primarily through the sale of equity securities.

Reneo has not generated any revenue from the sale of any products.

As of September 30, 2024, Reneo had available cash, cash equivalents and short-term investments of approximately $76.7 million.

As a result of the Merger, Reneo’s historic business operations ceased and our go-forward operations will be those of Legacy OnKure.

Since inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations.

We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our product candidates.

We expect that our research and development and general and administrative costs will continue to increase significantly, including in connection with conducting clinical trials and manufacturing our product candidates to support commercialization and providing general and administrative support for our operations, including the costs associated with operating

as a public company following the Closing.

As a result, we will need additional capital to fund our operations, which we may seek to obtain from equity or debt financings, collaborations, licensing arrangements or other sources.

After giving effect to the Merger and the PIPE Financing in October 2024, we believe the resulting cash resources are sufficient to fund our planned operations for at least the next 12 months from the date of issuance of these unaudited condensed financial statements.

We have funded our operations primarily through private placements of equity and convertible debt.

Based on our current operating plan, we believe that our existing cash and cash equivalents will be sufficient to fund our planned operations for at least the next 12 months from the date of issuance of our unaudited condensed consolidated financial statements for the quarter ended March 31, 2025.

Funding Requirements

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Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, including restricting our operations and limiting our ability to incur liens, issue additional debt, pay dividends, repurchase our own Common Stock, make certain investments, or engage in merger, consolidation, licensing or asset sale transactions.

If we raise capital through collaborations, partnerships and other similar arrangements with third parties, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

If we raise capital through collaborations, partnerships, or other similar arrangements with third parties, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

We may be unable to raise additional capital from these sources on favorable terms, or at all.

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The failure to obtain sufficient capital on acceptable terms when needed could have a material adverse effect on our business, results of operations, or financial condition, including requiring us to delay, reduce, or curtail our research, product development, or future commercialization efforts.

We may also be required to license rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose.

We may also be required to license rights to product candidates at an earlier stage of development or on less favorable terms than we would

otherwise choose.

We cannot provide assurance that we will ever generate positive cash flow from operating activities.

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• the costs, timing, and outcome of regulatory review of our product candidates;

• the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution for our product candidates for which it receives marketing approval;

• the costs of future activities, including product sales, medical affairs, marketing, manufacturing, and distribution for our product candidates for which we receive marketing approval;

• the costs of manufacturing commercial-grade products and producing sufficient inventory to support commercial launch;

• the revenue, if any, received from commercial sales of our products, should its product candidates receive marketing approval;

• the revenue, if any, received from commercial sales of our products, should our product candidates receive marketing approval;

• the cost and timing of attracting, hiring, and retaining skilled personnel to support our operations and continued growth;

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Furthermore, our operating plans may change in the future, and we may need additional capital to meet the capital requirements associated with such operating plans.

Reneo’s Cash Flows

The following table summarizes Reneo’s cash flows for the nine months ended September 30, 2024 and 2023 (unaudited and in thousands):

Nine Months Ended September 30,

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

The following table summarizes our cash flows for the periods indicated, in thousands:

Three Months Ended March 31,

(in thousands)

Net cash provided by (used in):

Operating activities

Net cash used in operating activities for the nine months ended September 30, 2024 was $30.1 million, consisting primarily of Reneo’s net loss of $17.5 million adjusted for non-cash items of $1.2 million primarily due to $2.9 million of stock-based compensation expense, offset by $1.9 million of amortization/accretion on short-term investments and a $13.8 million net change in operating assets and liabilities.

The change in Reneo’s net operating assets and liabilities was primarily due to a decrease in prepaid and other current assets of $3.4 million, offset by a decrease in accounts payable and accrued expenses of $16.9 million due to timing of payments.

Net cash used in operating activities for the nine months ended September 30, 2023 was $43.9 million, consisting primarily of Reneo’s net loss of $53.8 million adjusted for non-cash items of $1.8 million primarily due to $3.8 million of stock-based compensation expense and $1.0 million in fair value of a performance award, offset by $3.6 million of amortization/accretion on short term investments and an $8.1 million net change in operating assets and liabilities.

The change in Reneo’s net operating assets and liabilities was primarily due to a decrease in prepaid and other current assets of $2.1 million and an increase in accounts payable and accrued expenses of $6.4 million due to timing of receipt of invoices and payments.

Investing activities

Net cash provided by investing activities for the nine months ended September 30, 2024 was $61.2 million, consisting primarily of the net proceeds from maturities of available-for-sale short-term investments.

Net cash used in investing activities for the nine months ended September 30, 2023 was $29.3 million, consisting primarily of the net purchase of available-for-sale short-term investments.

Financing activities

Net cash provided by financing activities for the nine months ended September 30, 2024 was $0.1 million consisting primarily of cash deposits received in connection with the Concurrent PIPE Investments.

Net cash provided by financing activities for the nine months ended September 30, 2023 was $65.0 million, consisting primarily of the net proceeds of $58.9 million, $4.7 million, and $1.0 million from the sale of common stock in Reneo’s May 2023 public offering, Reneo’s May 2023 private placement, and Reneo’s May 2022 at-the-market equity offering sales agreement, respectively.

Reneo’s Material Cash Requirements

The discussion below summarizes Reneo’s significant contractual obligations and commitments as of September 30, 2024.

See Note 7 of Notes to Reneo’s Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding our leases, including the future operating lease minimum payments.

vTv License Agreement .

See Note 9 of Notes to Reneo’s Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding the vTv License Agreement terminated in October 2024, including potential milestone and royalty payments.

Net decrease in cash and cash equivalents

Cash Flows from Operating Activities

Cash used in operating activities during the three months ended March 31, 2025 was $14.0 million.

This consisted primarily of a net loss of $15.9 million, a net decrease in operating assets and liabilities of $1.0 million, and non-cash share-based compensation of $2.7 million.

Cash used in operating activities during the three months ended March 31, 2024 was $10.6 million.

This consisted primarily of a net loss of $9.5 million, and a net decrease in our operating assets and liabilities of $1.4 million, partially offset for share-based compensation and depreciation and amortization.

Cash Flows from Investing Activities

Cash used in investing activities was $18 thousand and $9 thousand for the three months ended March 31, 2025 and 2024, respectively, and related to purchase of property and equipment.

Cash Flows from Financing Activities

Cash used in financing activities during the three months ended March 31, 2025 was $77 thousand and related to payment of issuance costs from the Concurrent Financing and reverse recapitalization transaction costs in connection with the Merger.

Cash provided by financing activities during the three months ended March 31, 2024 was $10 thousand and related to proceeds from the sale of shares of Common Stock in connection with equity plans.

Material Cash Requirements

The discussion below summarizes our significant contractual obligations and commitments as of March 31, 2025.

See Note 5 of Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding our leases, including the future operating lease minimum payments.

Critical Accounting Policies and Estimates

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

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

Reneo based its estimates on historical experience, known trends and events, and various other factors that it believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

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

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

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

Actual results may differ materially from these estimates under different assumptions or conditions.

Reneo’s critical accounting policies are described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in its Annual Report on Form 10-K for the year ended December 31, 2023, and the notes to the consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

During the nine months ended September 30, 2024, there were no material changes to Reneo’s critical accounting policies from those discussed in its Annual Report on Form 10-K for the year ended December 31, 2023.

Our critical accounting policies are described in our audited financial statements and the related notes for the years ended December 31, 2024 and 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2024, and the notes to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

During the three months ended March 31, 2025, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Recent Accounting Pronouncements

See Note 2 of Notes to Reneo’s Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to Reneo’s consolidated financial statements.

See Note 2 of Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our condensed consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

We are a smaller reporting company, as defined by Rule 12b-2 under the Exchange Act and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis