What changed in this filing

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Item 1. Financial Statements

2025-08-12 compared with 2025-05-06 · 64 added, 40 removed, 403 unchanged (21% of the section changed)

22 unchanged sentences

200,000,000 shares authorized;

12,755,348 and 12,660,590 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

12,843,434 and 12,660,590 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Common stock, Class B, $ 0.0001 par value;

10,000,000 shares authorized;

686,527 shares issued and outstanding at both March 31, 2025 and December 31, 2024

686,527 shares issued and outstanding at both June 30, 2025 and December 31, 2024

Additional paid-in capital

6 unchanged sentences

Three Months Ended

(in thousands, except share

and per share amounts)

Six Months Ended

(in thousands, except share and per share amounts)

Operating expenses:

5 unchanged sentences

Interest income

Interest and other expense

Total other income and (expense)

Net loss and comprehensive loss

38 unchanged sentences

Balance, March 31, 2025

Vesting of restricted stock units

Share-based compensation

Balance, June 30, 2025

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

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

(in thousands)

Cash flows from operating activities:

4 unchanged sentences

Amortization of right-of-use asset - operating

Amortization of debt issuance costs

Change in operating assets and liabilities:

10 unchanged sentences

Payment of reverse recapitalization transaction costs

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

34 unchanged sentences

The Board and the management of the Company are carefully monitoring these developments and the resulting economic impact on the Company’s financial condition and results of operations.

The Company had recurring losses from operations, an accumulated deficit of $ 170.6 million and cash and cash equivalents of $ 96.7 million as of March 31, 2025.

The Company had recurring losses from operations, an accumulated deficit of $ 186.0 million and cash and cash equivalents of $ 83.4 million as of June 30, 2025.

The Company’s ability to fund its ongoing operations is

25 unchanged sentences

As a result of the adoption of ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, the Company has presented the three months ended March 31, 2024 amounts consistent with the corresponding 2025 period presentation.

Improvements to Reportable Segment Disclosures, the Company has presented the three and six months ended June 30, 2024 amounts consistent with the corresponding 2025 period presentation.

Use of Estimates

1 unchanged sentence

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 units .

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

Comprehensive Loss

40 unchanged sentences

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 $ 96.7 million and $ 110.8 million as of March 31, 2025 and December 31, 2024, respectively, which approximates fair value and was determined based upon Level 1 inputs.

The carrying amount of cash and cash equivalents was $ 83.4 million and $ 110.8 million as of June 30, 2025 and December 31, 2024, 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 .

18 unchanged sentences

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.

Recently Issued Accounting Pronouncemen ts

Recently Issued Accounting Pronouncements

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

3 unchanged sentences

This ASU may be applied either prospectively or retrospectively.

The Company is currently evaluating the impact of this pronouncement.

The Company is currently evaluating the impact of this pronouncement and will apply ASU 2023-09 to its annual tax disclosures for the fiscal year ended December 31, 2025.

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

29 unchanged sentences

clinical research .

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

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

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

6 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

5 unchanged sentences

General corporate expenses

Interest and other expense

Segment net loss

5 unchanged sentences

In January 2025, the Company entered into a sublease on the Irvine lease for all of the leased square footage, which expires in November 2026.

Payments under the sublease for the three months ended March 31, 2025 were $ 53 thousand and were netted against operating lease costs in the Statement of Operations.

Payments under the sublease for the three and six months ended June 30, 2025 were $ 59 thousand and $ 113 thousand and were netted against operating lease costs in the Statement of Operations.

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

5 unchanged sentences

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

Ended March 31,

Ended June 30,

Operating lease cost

1 unchanged sentence

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

Three Months Ended

As of June 30,

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

3 unchanged sentences

Operating cash flows for operating leases

The aggregate maturities of the Company’s operating lease liabilities were as follows as of March 31, 2025 (in thousands):

The aggregate maturities of the Company’s operating lease liabilities were as follows as of June 30, 2025 (in thousands):

Remaining in 2025

6 unchanged sentences

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 if-converted method for the convertible Series C Preferred Stock, exercise of all outstanding stock options and restricted stock units were excluded from the diluted net loss per share calculation for the three months ended March 31, 2024 because such shares are anti-dilutive.

Common stock shares to be issued upon exercise of all outstanding stock options and restricted stock units were excluded from the diluted net loss per share calculation for the three months ended March 31, 2025 because such shares are anti-dilutive.

For purposes of this calculation, common stock shares to be issued upon if-converted method for the convertible Series C Preferred Stock, exercise of all outstanding stock options and restricted stock units were excluded from the diluted net loss per share calculation for the six months ended June 30, 2024 because such shares are anti-dilutive.

Common stock shares to be issued upon exercise of all outstanding stock options and restricted stock units were excluded from the diluted net loss per share calculation for the six months ended June 30, 2025 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 :

15 unchanged sentences

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.

No assets or liabilities were transferred into or out of their classifications during the three months ended March 31, 2025 and 2024.

No assets or liabilities were transferred into or out of their classifications during the six months ended June 30, 2025 and 2024.

As part of the Merger, the Company acquired, and disposed of shortly thereafter, 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.

The Company had no available-for-sale securities as of March 31, 2025 or December 31, 2024.

The Company had no available-for-sale securities as of June 30, 2025 or December 31, 2024.

Property and Equipment, Net

8 unchanged sentences

Property and equipment, net

Depreciation and amortization expense for the three months ended March 31, 2025 and 2024 was $ 118,000 and $ 114,000 , respectively .

Depreciation and amortization expense for the three and six months ended June 30, 2025 was $ 117,000 and $ 235,000 , respectively.

Depreciation and amortization expense for the three and six months ended June 30, 2024 was $ 115,000 and $ 226,000 , respectively.

Accrued Expenses

17 unchanged sentences

Options outstanding - December 31, 2024

Options outstanding - March 31, 2025

Options exercisable - March 31, 2025

All outstanding options as of March 31, 2025 are expected to vest.

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 March 31, 2025.

Options outstanding - June 30, 2025

Options exercisable - June 30, 2025

All outstanding options as of June 30, 2025 are expected to vest.

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 June 30, 2025.

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

There was no performance-based compensation expense for the three months ended March 31, 2025.

The company recognized $ 21,000 in performance-based compensation expense for the three months ended March 31, 2024.

There was no performance-based compensation expense for the six months ended June 30, 2025 .

The Company recognized $ 9,000 and $ 30,000 in performance-based compensation expense for the three and six months ended June 30, 2024.

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

RSUs vest based on a service requirement and a liquidity event plus service requirement.

The following table summarizes RSU activities during the three months ended March 31, 2025:

The following table summarizes RSU activities during the six months ended June 30, 2025:

Unvested balance as of December 31, 2024

Vested and released

RSUs outstanding - March 31, 2025

Unvested balance as of March 31, 2025

RSUs outstanding - June 30, 2025

Unvested balance as of June 30, 2025

During the three months ended March 31, 2025, 4,481 shares were used to settle grantee's tax withholding obligations for vesting of restricted stock units.

4 unchanged sentences

In October 2024, the Board adopted the 2024 Employee Stock Purchase Plan (the “2024 ESPP”), which became effective immediately upon completion of the Merger.

As of March 31, 2025, no shares have been issued under the 2024 ESPP.

As of June 30, 2025, no shares have been issued under the 2024 ESPP.

The Company recorded $ 55,000 of share-based compensation expense during the three and six months ended June 30, 2025 related to the 2024 ESPP, which is reflected in the Share-Based Compensation Expense table below.

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) :

Ended March 31,

Ended June 30,

Research and development

General and administrative

There were no modifications during the six months ended June 30, 2025.

The Company recorded accelerated share-based compensation expenses related to modifications of RSUs under certain separation agreements of $ 1.7 million during the three and six months ended June 30, 2024, which is reflected in the above table.

See Note 12 for further discussion on severance.

In accordance with GAAP, a valuation allowance should be provided if it is more likely than not that some or all of the Company’s deferred tax assets will not be realized.

The Company’s ability to realize the benefit of its

deferred tax assets will depend on the generation of future taxable income.

The Company’s ability to realize the benefit of its deferred tax assets will depend on the generation of future taxable income.

Due to the uncertainty of future profitable operations and taxable income, the Company has recorded a full valuation allowance against its net deferred tax assets.

The Company believes its tax filing positions and deductions related to tax periods subject to examination will be sustained upon audit and, therefore, has no reserve for uncertain tax positions.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States, which contains a broad range of tax reform provisions affecting businesses.

The Company is evaluating the full effects of the legislation on its estimated annual effective tax rate, but it expects that the legislation will likely not have a material impact on the consolidated financial statements given its full valuation allowance against its net deferred tax assets.

As the legislation was signed into law in the third quarter, the impacts are not included in the operating results for the six months ended June 30, 2025.

Commitments and Contingencies

17 unchanged sentences

In addition, the Company has entered into indemnification agreements with its officers and 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.

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 March 31, 2025.

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 June 30, 2025.

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.

As of March 31, 2025 and December 31, 2024, $ 170,000 and $ 326,000 , respectively, remained unpaid and was included in accrued compensation.

As of June 30, 2025 and December 31, 2024, $ 43,000 and $ 326,000 , respectively, remained unpaid and was included in accrued compensation.

The related RSU shares were released in January 2025.

No expense was recorded for these severance benefits for the three months ended March 31, 2025 or 2024.

No expense was recorded for these severance benefits for the three or six months ended June 30, 2025.

During the three months ended June 30, 2024, the Company recorded an expense of $ 622,000 for these severance benefits in research and development expense.

See Note 10 for discussion of stock-based compensation recorded for the modifications of equity awards discussed above.

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

As of March 31, 2025, the December 31, 2024 balance of $ 154,000 was fully paid .

No expense was recorded for these severance benefits for the three months ended March 31, 2025 or 2024.

As of June 30, 2025 , the December 31, 2024 balance of $ 154,000 was fully paid.

No expense was recorded for these severance benefits for the three or six months ended June 30, 2025 or 2024.

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

What changed 10-Q

Item 1. Financial Statements