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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-03-10 · 42 added, 38 removed, 146 unchanged (35% of the section changed)

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Our actual results may differ materially from those contained in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or in other parts of this Annual Report.

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.

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.

Unless otherwise indicated or the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to “the Company,” “we,” “us,” “our” and other similar terms refer to the business and operations of Legacy OnKure prior to the Merger and to the Combined Company following the Merger.

While the legal acquirer in the Merger was Reneo, for financial accounting and reporting purposes under U.S.

GAAP, Legacy OnKure was the accounting acquirer and the Merger was accounted for as a “reverse recapitalization.” 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.

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

Using a structure-based drug design platform, we are committed to improving clinical outcomes for patients by building a pipeline of small molecule drugs designed to achieve optimal efficacy and tolerability by selectively targeting specific mutations shown to be key drivers of cancer and other diseases.

By selectively sparing the wild-type enzyme and preferentially targeting the mutated form of the protein, which is oncogenic and drives disease processes in both cancer and vascular overgrowth syndromes, 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 principle 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.

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 .

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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.”

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

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.

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As of December 31, 2025, we had an accumulated deficit of $214.2 million, and cash and cash equivalents of $59.1 million.

In November 2025, we entered into a sales agreement with a placement agent to sell, from time to time, our common stock having an aggregate offering price of up to $16.0 million, in an “at the market offering.” No shares have been issued under this sales agreement.

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

As of December 31, 2024, 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.

The significant uncertainties surrounding the clinical development timelines and costs and the ability to raise a significant amount of capital raises substantial doubt about our ability to continue as a going concern from one year after the Company’s consolidated financial statements have been issued.

Components of Our Results of Operations

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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.

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

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Interest and Other Expense

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

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

Results of Operations

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Research and development expenses were $48.3 million for the year ended December 31, 2025 compared to $43.8 million for the year ended December 31, 2024, an increase of $4.5 million.

This increase was primarily due to an increase in research and development costs, consisting of a $6.3 million increase in clinical trial and manufacturing expenses and a $6.2 million increase in personnel-related costs due to an increase in headcount, and higher severance, and share-based compensation charges.

These increases were partially offset by a decrease in outsourced research of $0.9 million.

This increase was primarily due to a $3.6 million increase in personnel-related costs, including $2.6 million of increased share-based compensation charges, and $1.0 million increase in clinical trial expenses and outsourced research of $0.7 million.

These increases were partially offset by a decrease in manufacturing expenses of $1.0 million.

We expect research and development expenses in 2026 to be higher than 2025 due to the continued efforts to advance of our clinical and preclinical programs.

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General and administrative expenses were $14.7 million for the year ended December 31, 2025 and $10.6 million for the year ended December 31, 2024, an increase of $4.1 million.

The increase was primarily related to increased personnel-related and consulting costs of $3.0 million, increased professional service costs, which includes legal, audit and tax services, of $2.1 million, and a $0.4 million increase related to insurance and outside director compensation during 2024.

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.

The increase was primarily related to increased personnel-related costs of $3.8 million, including $3.6 million of increased share-based compensation charges.

In addition, director compensation, consulting, filing fees and franchise taxes and other professional service fees, including audit and tax services and insurance, increased by $1.3 million.

These increases were partially offset by a decrease in legal costs of $1.2 million, as 2024 included certain non-recurring legal costs related to the Merger.

We expect general and administrative expenses in 2026 to be higher than 2025.

Other Income (Expense)

Other income (expense) was $3.4 million for the year ended December 31, 2025 compared to $1.7 million for the year ended December 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 year ended December 31, 2024 and increased interest expense related to convertible notes payable issued in 2024.

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

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 year ended December 31, 2025 and decreased interest expense related to convertible notes payable issued in 2024.

We expect other income (expense) in 2026 to be lower than 2025 with lower average available cash available to invest during 2026 and lower interest rates.

Liquidity and Capital Resources

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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.

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, cash equivalents and marketable securities will be sufficient to fund our planned operations for at least the next 12 months from the date of filing this Annual Report.

Funding Requirements

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

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.

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.

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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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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.

The following table summarizes our cash flows for the years ended December 31, 2025 and 2024 (in thousands):

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Financing activities

Net increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash Flows from Operating Activities

Net cash used in operating activities during the year ended December 31, 2025 was $51.8 million.

This consisted primarily of a net loss of $52.7 million, a net decrease in operating assets and liabilities of $4.0 million, and an increase in non-cash share-based compensation of $4.3 million.

This consisted primarily of a net loss of $59.5 million, a net decrease in operating assets and liabilities of $4.8 million, and non-cash share-based compensation of $11.6 million.

Net cash used in operating activities during the year ended December 31, 2024 was $51.1 million.

This consisted primarily of a net loss of $35.3 million, reduced by non-cash charges for share-based compensation, depreciation and amortization.

This consisted primarily of a net loss of $52.7 million, a net decrease in operating assets and liabilities of $4.0 million, and an increase in non-cash share-based compensation of $4.3 million.

Cash Flows from Investing Activities

Net cash used in investing activities for the year ended December 31, 2025 was $46.0 thousand and related to purchase of property and equipment.

Net cash provided by investing activities for the year ended December 31, 2024 was $15.9 million and consisted primarily of $15.9 million of proceeds from the sale of available-for-sale securities.

Net cash used in investing activities for the year ended December 31, 2023 was $0.2 million for the purchase of property and equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities was $0.2 million during the year ended December 31, 2025 and primarily consisted of $240 thousand of proceeds from the sale of stock under the employee stock purchase plan.

These amounts were partially offset by $77 thousand related to payment of issuance costs from the private placement completed by Reneo concurrently with the closing of the Merger (the “Concurrent Financing”) and reverse recapitalization transaction costs in connection with the Merger.

Net cash provided by financing activities was $116.1 million during the year ended December 31, 2024 and primarily consisted of $54.6 million of net proceeds from the Concurrent Financing, $57.7 million of cash acquired in connection with the Merger, and $5.9 million of net proceeds from the issuance of convertible notes payable.

These amounts were partially offset by payment of $2.0 million of reverse recapitalization transaction costs in connection with the Merger.

Net cash provided by financing activities during the year ended December 31, 2023 was $53.1 million.

This consisted primarily of proceeds of $53.8 million from the sale of shares of Legacy OnKure's preferred stock, partially offset by the payment of $0.7 million of issuance costs.

Material Cash Requirements

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

We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and

liabilities that are not readily apparent from other sources.

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

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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.

We reflect research and development expenses in our financial statements by matching those expenses with the period in which services and efforts are expended.

We reflect research and development expenses

in our consolidated financial statements by matching those expenses with the period in which services and efforts are expended.

We account 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.

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

Stock-based compensation expenses year-over-year have increased due to more equity grants awarded in 2024 to attract and retain key scientific or management personnel.

Stock-based compensation expenses year-over-year have increased due to more equity grants awarded in 2024 to attract and retain key scientific or management personnel having a full year of recognized expense.

Recent Accounting Pronouncements

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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 7. Management’s Discussion and Analysis