What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-08-11 · 64 added, 59 removed, 177 unchanged (41% of the section changed)

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Increases in PPAR δ activity also correlate with a shift in muscle tissue towards oxidative, fat-consuming type I fibers that are associated with endurance as opposed to glycolytic, type II fibers.

In preclinical and clinical studies, increased PPAR δ activity through transgenic overexpression or pharmacological activation increases muscular strength and endurance across a variety of functional measures.

In preclinical and clinical studies, increased PPAR δ activity through transgenic overexpression or pharmacological activation increases

muscular strength and endurance across a variety of functional measures.

REN001 was studied in healthy volunteers with one leg immobilized to produce muscle atrophy.

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REN001 was well-tolerated in this trial.

Compared to baseline, patients receiving REN001 once-daily for 12 weeks experienced an average increase in a 12-minute walk test (12MWT) of 104 meters, and an average increase of 1.7mL/kg/min in oxygen consumption ( V O 2 ), as well as a reduction in patient-reported fatigue and pain.

Compared to baseline, patients receiving REN001 once-daily for 12 weeks experienced an average increase in a 12-minute walk test (12MWT) of 104 meters, and an average increase of 1.7mL/kg/min in oxygen consumption (VO2), as well as a reduction in patient-reported fatigue and pain.

Based on these results, we initiated the STRIDE study, a global, randomized, double-blind, placebo-controlled Phase 2b clinical trial of REN001 in patients with PMM.

In July 2021, we announced that the first patient was dosed in the STRIDE study, and we expect to announce topline results from this study in 2023.

We also plan to conduct an open-label, long-term safety trial outside the United States in a subset of patients from the STRIDE

study, with preliminary data anticipated to be available in 2023.

We also plan to conduct an open-label, long-term safety trial outside the United States in a subset of patients from the STRIDE study, with preliminary data anticipated to be available in 2023.

Following our interactions with the U.S.

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We completed enrollment of the McArdle study in July 2021, and expect to announce results in the first quarter of 2022.

The LC-FAOD study is continuing to enroll patients, and we also expect to announce results from this study in the first half of 2022.

We are also enrolling an observational, non-international study of REN001 in patients with LC-FAOD to better understand disease characteristics of patients through exercise tests and symptom questionnaires (FORWARD study).

We completed enrollment of the LC-FAOD study in November 2021 and we expect to announce results from this study in the second quarter of 2022.

We are also enrolling an observational, non-interventional study of REN001 in patients with LC-FAOD to better understand the natural history and disease characteristics of these patients through exercise tests and symptom questionnaires (FORWARD study).

The FORWARD study will also include work for validation of a new Reneo-developed patient questionnaire focused on muscle symptoms in LC-FAOD, which we plan to use in future trials.

We anticipate the results of this study in the second half of 2022.

We expect to complete enrollment in this study by year-end 2021, and announce results in the second quarter of 2022.

Since our inception in 2014, our operations have 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 REN001.

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Since inception, we have incurred significant operating losses.

Our net losses were $16.4 million and $19.5 million for the six months ended June 30, 2021 and the year ended December 31, 2020, respectively.

As of June 30, 2021, we had an accumulated deficit of $61.4 million, and cash, cash equivalents and short-term investments of $167.3 million.

Our net losses were $29.2 million and $19.5 million for the nine months ended September 30, 2021 and the year ended December 31, 2020, respectively.

As of September 30, 2021, we had an accumulated deficit of $74.1 million, and cash, cash equivalents and short-term investments of $157.7 million.

We have funded our operations primarily through the issuance and sale of equity securities.

From our inception through June 30, 2021, we have raised an aggregate of $230.6 million in net proceeds primarily through equity financings, including the net proceeds from our initial public offering (IPO).

From our inception through September 30, 2021, we have raised an aggregate of $230.6 million in net proceeds primarily through equity financings, including the net proceeds from our initial public offering (IPO).

We expect to continue to incur net operating losses for at least the next several years, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase as we conduct our ongoing and planned clinical trials and preclinical studies, engage in other research and development activities, seek regulatory approvals for any product candidates that successfully complete clinical trials, incur development milestone payments related to our research and development activities, prepare for commercialization, hire additional personnel, protect our intellectual property and incur additional expenses as a result of operating as a public company.

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If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.

Based upon our current operating plan, we believe that our cash, cash equivalents, and short-term investments as of June 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements through our planned near-term clinical milestones.

Based upon our current operating plan, we believe that our cash, cash equivalents, and short-term investments as of September 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements through our planned near-term clinical milestones.

We do not own or operate manufacturing facilities.

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The COVID-19 pandemic continues to evolve, and we will continue to monitor the COVID-19 situation closely.

The extent of the impact of the COVID-19 on our business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the pandemic, including new variants of the virus, and its impact on our clinical trial enrollment, trial sites, contract research organizations, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

The extent of the impact of COVID-19 on our business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the pandemic, including new variants of the virus, and its impact on our clinical trial enrollment, trial sites, contract research organizations, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

For example, our Phase 1b clinical trial of REN001 in PMM patients was closed early as a result of COVID-19, and we may face future clinical trial disruptions.

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As a result of COVID-19, we have taken precautionary measures in order to minimize the risk of the virus to our employees and the communities in which we operate.

To date, there has been a minimal disruption in our ability to ensure the effective operation of our business.

While we have experienced impacts to our clinical development activities as a result of COVID-19 as set forth in this Quarterly Report on Form 10-Q, there has been a minimal disruption to date in our ability to ensure the effective operation of our business.

We will continue to actively monitor the rapidly evolving situation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business.

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In December 2017, we entered into a License Agreement with vTv Therapeutics (the vTv License Agreement), under which we 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 REN001, for any therapeutic, prophylactic or diagnostic application in humans.

Under the terms of the vTv License Agreement, we paid vTv Therapeutics an initial upfront license fee payment of $3.0 million and issued to vTv Therapeutics shares of our common stock subject to antidilution provisions under the agreement.

Under the terms of the vTv License

Agreement, we paid vTv Therapeutics an initial upfront license fee payment of $3.0 million and issued to vTv Therapeutics shares of our common stock subject to antidilution provisions under the agreement.

Upon the achievement of certain pre-specified development and regulatory milestones, we are also required to pay vTv Therapeutics up to an aggregate of $64.5 million.

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In addition, we are obligated to pay vTv Therapeutics tiered royalty payments 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.

In July 2021, a milestone under the vTv License Agreement was achieved, and we became obligated to make a payment of $2.0 million to vTv Therapeutics.

In July 2021, a milestone under the vTv License Agreement was achieved, and we made a payment of $2.0 million to vTv Therapeutics.

Components of Our Results of Operations

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

Costs for certain

activities, such as manufacturing and preclinical studies and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and collaborators.

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

We expense 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.

The following table summarizes our research and development expenses for the three and six months ended June 30, 2021 and 2020:

The following table summarizes our research and development expenses for the three and nine months ended September 30, 2021 and 2020:

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(in thousands)

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The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming.

The actual probability of success for our product candidate may be affected by a variety of factors including:

The actual probability of success for our product candidate may be affected by a variety of

factors including:

the safety and efficacy of our product candidate, early clinical data, investment in our clinical program, competition, manufacturing capability and commercial viability.

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● the number of patients that participate in the trials;

● uncertainties in patient enrollment or drop out or discontinuation rates, particularly in light of the current COVID-19 pandemic environment;

● uncertainties in patient enrollment or drop out or discontinuation rates, particularly in light of the evolving COVID-19 pandemic environment;

● potential additional safety monitoring requested by regulatory agencies;

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We expect our general and administrative expenses to increase significantly for the foreseeable future to support continued research and development activities, including our ongoing and planned research and development of our product candidate for multiple indications.

We also anticipate incurring additional expenses associated with operating as a public company, including increased expenses related to audit, legal, regulatory, and tax-related services associated

with maintaining compliance with the rules and regulations of the SEC and standards applicable to companies listed on a national securities exchange, additional insurance expenses, investor relations activities and other administrative and professional services.

Other income consists of interest income on our cash, cash equivalents and short-term investments.

Results of Operations

Comparison of Three and Six Months Ended June 30, 2021 and 2020

The following table summarizes our results of operations for the three and six months ended June 30, 2021 and 2020 (in thousands):

Comparison of Three and Nine Months Ended September 30, 2021 and 2020

The following table summarizes our results of operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):

THREE MONTHS ENDED

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Operating expenses:

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Research and Development Expenses

Research and development expenses for the three months ended June 30, 2021 were $6.3 million, compared to $2.8 million for the three months ended June 30, 2020.

This increase of $3.5 million was primarily due to an increase of $2.3 million related to clinical trial costs associated with the launch of our STRIDE and FORWARD studies as well as the restart of our Phase 1b clinical trials of LC-FAOD and McArdle disease and $0.4 million in employee and personnel related costs due to additional headcount required to support our clinical and CMC programs, offset by a $0.7 million decrease in expense related to completion of preclinical studies.

The net increase was further offset by a reduction in credits to research and development expenses related to tax rebates paid in cash by the United Kingdom (UK) government, as we did not receive a credit in the three months ended June 30, 2021, but received a $1.5 million tax rebate in the three months ended June 30, 2020.

Research and development expenses for the six months ended June 30, 2021 were $11.8 million, compared to $6.4 million for the six months ended June 30, 2020.

This increase of $5.4 million was primarily due to an increase of $3.8 million related to clinical trial costs associated with the launch of our STRIDE and FORWARD studies as well as the restart of our Phase 1b clinical trials of LC-FAOD and McArdle disease and $1.5 million in employee and personnel related costs due to additional headcount required to support our clinical and CMC programs, offset by a $0.9 million decrease in expense related to completion of preclinical studies and a net decrease of $0.5 million in various other expense items.

The net increase was further offset by a reduction in credits to research and development expenses related to tax rebates paid in cash by the UK government, as we received a $32,000 tax rebate in the six months ended June 30, 2021, as compared to a $1.5 million tax rebate received in the six months ended June 30, 2020.

Research and development expenses for the three months ended September 30, 2021 were $9.3 million, compared to $4.4 million for the three months ended September 30, 2020.

This increase of $4.9 million was primarily due to an increase of $2.1 million related to clinical trial and manufacturing costs associated with the launch of our STRIDE and FORWARD studies as well as the restart of our Phase 1b clinical trials of LC-FAOD and McArdle disease.

In addition, there was a $2.0 million increase in licensing costs and a $0.7 million increase in employee and personnel related costs due to additional headcount required to support our clinical and CMC programs.

Research and development expenses for the nine months ended September 30, 2021 were $21.1 million, compared to $10.8 million for the nine months ended September 30, 2020.

This increase of $10.3 million was primarily due to an increase of $4.6 million related to clinical trial and manufacturing costs associated with the launch of our STRIDE and FORWARD studies as well as the restart of our Phase 1b clinical trials of LC-FAOD and McArdle disease, $1.6 million in employee and personnel related costs due to additional headcount required to support our clinical and CMC programs and a $2.0 million increase in licensing expense.

In addition, there was a $1.5 million tax rebate received in cash by the United Kingdom (UK) government during the nine months ended September 30, 2020.

For the nine months ended September 30, 2021, we received a nominal amount of a tax rebate from the UK government.

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2021 were $2.9 million, compared to $0.9 million during the three months ended June 30, 2020.

This increase of $2.0 million was primarily attributable to an increase of $1.0 million in employee and personnel related expenses, an increase of $0.4 million of directors and officers insurance premiums following our IPO, an increase of $0.4 million of compensation expense related to the Performance Award (Note 7), and a net increase of $0.2 million of various other expense items.

General and administrative expenses for the six months ended June 30, 2021 were $4.7 million, compared to $1.8 million during the six months ended June 30, 2020.

This increase of $2.9 million was primarily attributable to an increase of $1.9 million in employee and personnel related expenses, an increase of $0.4 million of directors and officers insurance premiums following our IPO, an increase of $0.4 million of compensation expense related to the Performance Award (Note 7), and a net increase of $0.2 million of various other expense items.

Other income for the three months ended June 30, 2021 and 2020 was $12,000, and represents interest and dividends on cash balances.

While cash balances increased, the earnings rate substantially decreased in accordance with the decline in the federal funds rate.

Other income for the six months ended June 30, 2021 was $14,000 compared to $84,000 during the six months ended June 30, 2020.

This decrease of $70,000 was primarily attributable to lower interest income earned on deposits in money market accounts indexed to the federal funds rates, which declined significantly during the six months ended June 30, 2021.

General and administrative expenses for the three months ended September 30, 2021 were $3.4 million, compared to $0.7 million during the three months ended September 30, 2020.

This increase of $2.7 million was primarily attributable to an increase of $1.8 million in employee and personnel related expenses, consisting of $1.0 million of stock-based compensation and $0.8 million of employee compensation as a result of increased headcount, an increase of $0.4 million of directors and officers insurance premiums following our IPO and an increase of $0.6 million for outside professional services.

General and administrative expenses for the nine months ended September 30, 2021 were $8.1 million, compared to $2.5 million during the nine months ended September 30, 2020.

This increase of $5.6 million was primarily attributable to an increase of $3.8 million in employee and personnel related expenses, consisting of $2.0 million of stock-based compensation and $1.8 million of employment compensation as a result of increased headcount, an increase of $0.7 million of directors and officers insurance premiums following our IPO, a $0.7 million increase in outside professional services and a net increase of $0.5 million of various other expense items.

Other income for the three months ended September 30, 2021 and 2020 was $17,000 and $5,000, respectively, and represents interest and dividends on cash balances.

While cash balances increased, the earnings rate substantially decreased which is consistent with the decline in the federal funds rate.

Other income for the nine months ended September 30, 2021 was $31,000 compared to $88,000 during the nine months ended September 30, 2020.

This decrease of $57,000 was primarily attributable to lower interest income earned on deposits in money market accounts indexed to the federal funds rates, which declined significantly during the nine months ended September 30, 2021.

Liquidity and Capital Resources

To date, we have incurred operating losses and negative cash flows from operations.

As of June 30, 2021, we had an accumulated deficit of $61.4 million.

As of September 30, 2021, we had an accumulated deficit of $74.1 million.

We anticipate that we will continue to incur net losses for the foreseeable future as we continue research efforts and the development of our product candidates, hire additional staff, including clinical, scientific, operational, financial and management personnel, and incur additional costs associated with being a public company.

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We received net proceeds of $84.6 million, after deducting underwriting discounts, commissions and offering expenses.

Through June 30, 2021, we have raised net cash proceeds of approximately $230.6 million primarily through equity financings, including the net proceeds from our IPO.

As of June 30, 2021, we had cash, cash equivalents and short-term investments of $167.3 million.

We expect our cash, cash equivalents and short-term investments as of June 30, 2021 will be sufficient to fund our operations through our planned near-term clinical milestones .

The following table summarizes our cash flows for the six months ended June 30, 2021 and 2020:

SIX MONTHS ENDED

Since inception, we have raised net cash proceeds of approximately $230.6 million primarily through equity financings, including the net proceeds from our IPO.

As of September 30, 2021, we had cash, cash equivalents and short-term investments of $157.7 million.

We expect our cash, cash equivalents and short-term investments as of September 30, 2021 will be sufficient to fund our operations through our planned near-term clinical milestones .

The following table summarizes our cash flows for the nine months ended September 30, 2021 and 2020:

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SEPTEMBER 30,

(in thousands)

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Operating Activities

Net cash used in operating activities for the six months ended June 30, 2021 was $18.3 million, consisting primarily of our net loss of $16.4 million and a $3.6 million net decrease in operating assets and liabilities, partially offset by $1.7 million in non-cash charges primarily consisting of stock-based compensation expense.

Net cash used in operating activities for the six months ended June 30, 2020 was $7.4 million, consisting primarily of our net loss of $8.1 million and a $0.5 million net increase in operating assets and liabilities, partially offset by $0.2 million of stock-based compensation expense.

Net cash used in operating activities for the nine months ended September 30, 2021 was $28.0 million, consisting primarily of our net loss of $29.2 million and a $1.7 million net decrease in operating assets and liabilities, partially offset by $2.9 million in non-cash charges primarily consisting of stock-based compensation expense.

Net cash used in operating activities for the nine months ended September 30, 2020 was $13.1 million, consisting primarily of our net loss of $13.2 million and a $0.2 million net increase in operating assets and liabilities, partially offset by $0.3 million of stock-based compensation expense.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2021 was $27.0 million consisting primarily of purchase of available-for-sale short-term investments.

Net cash provided by investing activities for the six months ended June 30, 2020 was $6.2 million, consisting primarily of maturities of available-for-sale short-term investments.

Net cash used in investing activities for the nine months ended September 30, 2021 was $31.5 million consisting primarily of the purchase of available-for-sale short-term investments.

Net cash provided by investing activities for the nine months ended September 30, 2020 was $7.4 million, consisting primarily of maturities of available-for-sale short-term investments.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2021 was $132.1 million, consisting primarily of $93.8 million of gross proceeds, net of issuance costs of $9.2 million paid during the six months ended June 30, 2021, raised from our IPO, $47.2 million of proceeds from the issuance of shares of Series B convertible preferred stock, and $0.2 million of proceeds from the exercise of stock options.

Net cash provided by financing activities for the six months ended June 30, 2020 was $26,000, consisting of proceeds from the exercise of stock options.

Net cash provided by financing activities for the nine months ended September 30, 2021 was $132.3 million, consisting primarily of $93.8 million of gross proceeds, net of issuance costs of $9.2 million paid during the nine months ended September 30, 2021, raised from our IPO, as well as $47.2 million of proceeds from the issuance of shares of Series B convertible preferred stock, and $0.4 million of proceeds from the exercise of stock options.

Net cash provided by financing activities for the nine months ended September 30, 2020 was $75,000, consisting of proceeds from the exercise of stock options.

Funding Requirements

To date, we have not generated any revenue from product sales.

We do not expect to generate revenue from product sales unless and until we obtain regulatory approval and commercialize REN001 or any future product candidates, and we do not know when, or if at all, that will occur.

We will continue to require additional capital to develop REN001 and fund operations for the foreseeable future.

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We expect our expenses to continue to increase in connection with our ongoing activities as we continue to advance REN001 through clinical development and regulatory approval.

Furthermore, we expect to incur additional costs associated with operating as a public company.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

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In April 2021, we raised net proceeds of approximately $84.6 million in connection with our IPO.

As of June 30, 2021, we had $167.3 million in cash, cash equivalents and short-term investments.

We believe, based upon our current operating plan, that our cash, cash equivalents and short-term investments as of June 30, 2021 will be sufficient to fund our operations through our planned near-term clinical milestones .

As of September 30, 2021, we had $157.7 million in cash, cash equivalents and short-term investments.

We believe, based upon our current operating plan, that our cash, cash equivalents and short-term investments as of September 30, 2021 will be sufficient to fund our operations through our planned near-term clinical milestones .

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive, and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales.

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Contractual Obligations & Commitments

During the six months ended June 30, 2021, there were no material changes to our contractual obligations as set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Prospectus , except the following:

During the nine months ended September 30, 2021, there were no material changes to our contractual obligations as set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Prospectus , except the following:

In June 2021, we began leasing 5,137 square feet of office space for our U.S.

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generally accepted accounting principles.

The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses, and the disclosure of our contingent liabilities in our condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods.

The preparation of our condensed consolidated financial statements and related disclosures

requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses, and the disclosure of our contingent liabilities in our condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods.

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

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Our 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 the Prospectus and the notes to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

During the three months ended June 30, 2021, there were no material changes to our critical accounting policies from those discussed in the Prospectus.

During the three months ended September 30, 2021, there were no material changes to our critical accounting policies from those discussed in the Prospectus.

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-Q

Item 2. Management’s Discussion and Analysis