Reneo Pharmaceuticals(RPHM) - 2024 Q3 - Quarterly Report

Part I. Financial Information This section presents the unaudited consolidated financial statements and management's discussion for Reneo Pharmaceuticals, Inc. Item 1. Reneo Consolidated Financial Statements (Unaudited) This section presents OnKure Therapeutics' unaudited consolidated financial statements, covering balance sheets, operations, equity, cash flows, and related notes. Consolidated Balance Sheets This section details the Company's financial position, including assets, liabilities, and equity, as of September 30, 2024 Financial Position (in thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | Change (2024 vs 2023) | | :--------------------------- | :----------- | :----------- | :-------------------- | | Cash and cash equivalents | $60,689 | $27,632 | +$33,057 | | Short-term investments | $15,979 | $75,331 | -$59,352 | | Total current assets | $76,999 | $106,622 | -$29,623 | | Total assets | $77,645 | $107,436 | -$29,791 | | Total current liabilities | $3,248 | $18,177 | -$14,929 | | Total liabilities | $3,627 | $18,826 | -$15,199 | | Total stockholders' equity | $74,018 | $88,610 | -$14,592 | | Accumulated deficit | $(235,953) | $(218,474) | -$17,479 | Consolidated Statements of Operations and Comprehensive Loss This section presents the Company's operating results, including expenses and net loss, for the periods ended September 30, 2024 Operating Results (in thousands) | Metric | 3 Months Sep 30, 2024 | 3 Months Sep 30, 2023 | Change (YoY) | 9 Months Sep 30, 2024 | 9 Months Sep 30, 2023 | Change (YoY) | | :------------------------------------------ | :-------------------- | :-------------------- | :----------- | :-------------------- | :-------------------- | :----------- | | Research and development | $904 | $13,622 | -$12,718 | $6,436 | $39,009 | -$32,573 | | General and administrative | $3,760 | $7,266 | -$3,506 | $14,155 | $19,038 | -$4,883 | | Total operating expenses | $4,664 | $20,888 | -$16,224 | $20,591 | $58,047 | -$37,456 | | Loss from operations | $(4,664) | $(20,888) | +$16,224 | $(20,591) | $(58,047) | +$37,456 | | Other income | $972 | $1,692 | -$720 | $3,112 | $4,213 | -$1,101 | | Net loss | $(3,692) | $(19,196) | +$15,504 | $(17,479) | $(53,834) | +$36,355 | | Net loss per share, basic and diluted | $(1.10) | $(5.68) | +$4.58 | $(5.23) | $(18.11) | +$12.88 | Consolidated Statements of Changes in Stockholders' Equity This section outlines changes in stockholders' equity, including additional paid-in capital and accumulated deficit, across reporting periods Stockholders' Equity Changes (in thousands) | Metric | Dec 31, 2023 | Mar 31, 2024 | Jun 30, 2024 | Sep 30, 2024 | | :--------------------------- | :----------- | :----------- | :----------- | :----------- | | Additional Paid-In Capital | $307,076 | $308,154 | $309,143 | $309,969 | | Accumulated Deficit | $(218,474) | $(226,900) | $(232,261) | $(235,953) | | Total Stockholders' Equity | $88,610 | $81,242 | $76,869 | $74,018 | - Key activities impacting equity for the nine months ended September 30, 2024, include $2.893 million in stock-based compensation and a net loss of $(17.479) million[14][55] Consolidated Statements of Cash Flows This section summarizes the Company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (in thousands) | Activity | 9 Months Sep 30, 2024 | 9 Months Sep 30, 2023 | Change (YoY) | | :------------------------------------------ | :-------------------- | :-------------------- | :----------- | | Net cash used in operating activities | $(30,102) | $(43,929) | +$13,827 | | Net cash provided by (used in) investing activities | $61,248 | $(29,254) | +$90,502 | | Net cash provided by financing activities | $1,911 | $64,993 | -$63,082 | | Net increase (decrease) in cash and cash equivalents | $33,057 | $(8,190) | +$41,247 | | Cash and cash equivalents, end of period | $60,689 | $11,737 | +$48,952 | Notes to Consolidated Financial Statements This section provides detailed explanations of the Company's accounting policies, significant transactions, and other financial disclosures 1. Organization and Business This note describes the Company's corporate structure, recent merger, and strategic focus as a clinical-stage biopharmaceutical entity - Reneo Pharmaceuticals, Inc. completed a merger with OnKure, Inc. on October 4, 2024, becoming OnKure Therapeutics, Inc. and effecting a 1:10 reverse stock split[3][22] - A concurrent private placement raised approximately $65.0 million through the sale of 2,839,005 shares of Class A Common Stock[22] - Post-Merger, Legacy OnKure stockholders own ~53.6%, pre-Merger Reneo stockholders ~25.1%, and PIPE Investors ~21.3% of the Combined Company's outstanding common stock[22] - OnKure Therapeutics, Inc. is now a clinical-stage biopharmaceutical company focused on precision medicines for cancer, with lead product candidate OKI-219 in a Phase 1 trial, anticipating early clinical data in Q4 2024[22] Liquidity This note discusses the Company's cash position, historical losses, and management's assessment of future funding sufficiency - Reneo has incurred significant losses and negative cash flows from operations since its inception in 2014[25] - As of September 30, 2024, Reneo had $76.7 million in cash, cash equivalents, and short-term investments[25] - Management believes the Company's cash resources, post-Merger, will be sufficient to fund its operating plan for at least the next 12 months[25] 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the consolidated financial statements - The unaudited consolidated financial statements are prepared in accordance with GAAP, with certain information condensed or omitted[26] - All share and per share amounts are retroactively adjusted for the Reverse Stock Split, excluding authorized shares and par value[26] - No recently issued accounting standards or interpretations are expected to have a material impact on Reneo's financial position, operations, or cash flows[28] 3. Net Loss Per Share This note explains the calculation of basic and diluted net loss per share and identifies anti-dilutive securities - Basic loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding[29] - Diluted net loss per share excludes anti-dilutive common stock equivalents, such as stock options and unvested restricted stock units, from the calculation[30] Anti-Dilutive Securities (as of Sep 30, 2024) | Category | Amount | | :--------------------------- | :----- | | Common stock options outstanding | 467,129 | | Unvested restricted stock units | 29,658 | | Total | 496,787 | 4. Fair Value Measurements This note details the fair value hierarchy and measurement of financial assets and liabilities - Reneo categorizes financial assets and liabilities measured at fair value into a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[32] Assets Measured at Fair Value (Sep 30, 2024, in thousands) | Asset | Level 1 | Level 2 | Level 3 | Total | | :------------------------- | :------ | :------ | :------ | :------- | | Money market investments | $57,629 | — | — | $57,629 | | U.S. treasury securities | — | $15,979 | — | $15,979 | | Total Assets | $57,629 | $15,979 | — | $73,608 | - The Performance Award liability, measured using Level 3 inputs, was reduced from $7 thousand at January 1, 2024, to $0 at September 30, 2024, as its conditions were not probable of being achieved[32][35] 5. Marketable Debt Securities This note describes the Company's available-for-sale debt securities and their fair market value - Reneo's debt securities are classified as current assets available-for-sale and are carried at fair value[36] Available-for-Sale Securities (Sep 30, 2024, in thousands) | Metric | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value | | :--------------------- | :------------- | :--------------------- | :---------------------- | :---------------- | | U.S. treasury securities | $15,976 | $2 | — | $15,978 | | Total | $15,976 | $2 | — | $15,978 | - Unrealized losses in the investment portfolio were considered temporary as of September 30, 2024, with no realized gains or losses for the three and nine months ended September 30, 2024 and 2023[38] 6. Accrued Expenses This note provides a breakdown of accrued expenses, including clinical, manufacturing, and compensation costs Accrued Expenses (in thousands) | Accrued Expense | Sep 30, 2024 | Dec 31, 2023 | Change (2024 vs 2023) | | :-------------------------------- | :----------- | :----------- | :-------------------- | | Accrued clinical and regulatory | — | $3,661 | -$3,661 | | Accrued contract manufacturing cost | — | $1,100 | -$1,100 | | Accrued compensation | $361 | $3,948 | -$3,587 | | Accrued other | $364 | $420 | -$56 | | Total accrued expenses | $725 | $9,129 | -$8,404 | 7. Leases This note details the Company's operating lease commitments and related financial information - Reneo leases office space in Irvine, California (expires November 2026) and previously in Sandwich, United Kingdom, which was terminated early in January 2024[40] Operating Lease Information (as of Sep 30, 2024) | Metric | Value | | :------------------------------------------------------------------------------------------ | :---- | | Weighted incremental borrowing rate | 5% | | Weighted average remaining lease term (in years) | 2.1 | | Cash paid for amounts included in the measurement of lease liabilities (in thousands) | $291 | | Lease expense (in thousands) | $214 | Maturities of Lease Liabilities (in thousands) | Fiscal Year | Amount (Sep 30, 2024) | | :------------------------- | :-------------------- | | 2024 (remaining three months) | $98 | | 2025 | $371 | | 2026 | $285 | | Total lease payments | $754 | | Less: Imputed interest | $(89) | | Present value of lease liabilities | $665 | 8. Stock-Based Compensation This note outlines the Company's stock-based compensation plans, reserved shares, and related expenses Shares Reserved for Future Issuance (as of Sep 30, 2024) | Category | Shares Reserved | | :-------------------------------------------------------------------------- | :-------------- | | Common stock options outstanding | 467,129 | | Unvested restricted stock units | 29,658 | | Available for future grants under the 2021 Equity Incentive Plan | 442,366 | | Available for future grants under the 2021 Employee Stock Purchase Plan | 78,009 | | Total shares of common stock reserved | 1,017,162 | - Upon the close of the Merger, all shares available for issuance under the 2021 Plan and 2021 ESPP were cancelled, and new equity plans (2024 Plan and 2024 ESPP Plan) were adopted[45][58] Stock-Based Compensation Expense (in thousands) | Expense Category | 3 Months Sep 30, 2024 | 3 Months Sep 30, 2023 | 9 Months Sep 30, 2024 | 9 Months Sep 30, 2023 | | :------------------------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Research and development | $245 | $537 | $742 | $1,504 | | General and administrative | $581 | $892 | $2,151 | $2,289 | | Total | $826 | $1,429 | $2,893 | $3,793 | 9. License Agreement This note describes the Company's license agreement with vTv Therapeutics and its recent termination - Reneo entered into a License Agreement with vTv Therapeutics in December 2017 for PPARδ agonists, including mavodelpar, but has suspended all development activity related to mavodelpar[56] - On October 30, 2023, Reneo repurchased 576,443 shares of its common stock from vTv Therapeutics for approximately $4.4 million[56] - The Company provided notice on October 22, 2024, to terminate the vTv License Agreement, effective 90 days from the notice date[56] 10. Subsequent Events This note discloses significant events occurring after the balance sheet date, including the merger and new equity plans - On October 4, 2024, Reneo completed its merger, changed its name to OnKure Therapeutics, Inc., and reclassified its common stock as Class A Common Stock[57] - Post-Merger, approximately 12,652,811 shares of Class A Common Stock and 686,527 shares of Class B Common Stock were outstanding[58] - The Company adopted the 2024 Equity Incentive Plan (2,480,000 shares reserved) and 2024 Employee Stock Purchase Plan (137,500 shares reserved)[58] - Class A Common Stock began trading on the Nasdaq Global Market under the symbol "OKUR" on October 7, 2024[58] - The Company paid approximately $4.3 million in severance and retention bonuses and recognized $3.0 million in stock-based compensation due to vesting acceleration post-Merger[58] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses OnKure Therapeutics' financial condition and results, focusing on the merger's impact, cessation of Reneo's business, and new biopharmaceutical focus Forward-Looking Statements This section cautions that the discussion contains forward-looking statements subject to substantial risks and uncertainties - This discussion contains forward-looking statements based on current expectations, involving substantial risks and uncertainties[61] - Actual results could differ materially from those anticipated, and investors are cautioned not to unduly rely on these statements[61] - Various factors, including those in the "Risk Factors" section, could cause actual results to differ[61] Merger This section details the consummation of the merger, name change, reverse stock split, and concurrent private placement - Reneo consummated its merger with Legacy OnKure on October 4, 2024, changing its name to OnKure Therapeutics, Inc., effecting a reverse stock split, and reclassifying common stock to Class A[62] - A concurrent private placement raised approximately $65.0 million through the sale of 2,839,005 shares of Class A Common Stock[62] - Post-Merger, Legacy OnKure stockholders own ~53.6%, pre-Merger Reneo stockholders ~25.1%, and PIPE Investors ~21.3% of the Combined Company's outstanding common stock[63] - The Class A Common Stock began trading on the Nasdaq Global Market under the symbol "OKUR" on October 7, 2024[63] Post-Merger Business This section describes the Company's new focus as a clinical-stage biopharmaceutical entity and its lead product candidate - Reneo's historic business operations ceased following the Merger, and the Company's go-forward operations are now those of Legacy OnKure[64] - The Company is a clinical-stage biopharmaceutical company focused on discovering and developing precision medicines for cancer[64] - Its lead product candidate, OKI-219, a highly selective PI3Kα inhibitor, is currently in a first-in-human Phase 1 trial, with early clinical data anticipated in Q4 2024[64] License Agreement This section discusses the termination of Reneo's vTv License Agreement related to mavodelpar development - Reneo's vTv License Agreement, related to mavodelpar, was terminated on October 22, 2024, following the suspension of all mavodelpar development activities[65] - Reneo had previously repurchased 576,443 shares of its common stock from vTv Therapeutics for approximately $4.4 million on October 30, 2023[65] Components of Reneo's Results of Operations This section explains the primary drivers of Reneo's research and development, general and administrative expenses, and other income - Research and Development expenses primarily related to preclinical and clinical development of mavodelpar, including personnel, CROs, manufacturing, and regulatory activities[67] - General and Administrative expenses consisted mainly of costs related to the Merger, personnel, professional fees (accounting, legal, commercial development), insurance, and corporate facility costs[68] - Other income was derived from interest income on Reneo's cash, cash equivalents, and short-term investments[69] Reneo's Results of Operations This section analyzes Reneo's operating results, including expenses and net loss, for the periods ended September 30, 2024 Comparison of Three Months Ended September 30, 2024 and 2023 This section compares Reneo's operating results for the three months ended September 30, 2024, and 2023 Operating Results (in thousands) | Metric | 3 Months Sep 30, 2024 | 3 Months Sep 30, 2023 | Change (YoY) | | :--------------------------- | :-------------------- | :-------------------- | :----------- | | Research and development | $904 | $13,622 | $(12,718) | | General and administrative | $3,760 | $7,266 | $(3,506) | | Total operating expenses | $4,664 | $20,888 | $(16,224) | | Loss from operations | $(4,664) | $(20,888) | $16,224 | | Other income | $972 | $1,692 | $(720) | | Net loss | $(3,692) | $(19,196) | $15,504 | - The decrease in R&D expenses was primarily due to the suspension of mavodelpar development activities and workforce reductions[72] - The decrease in G&A expenses was mainly due to reduced commercial development and consulting costs, and lower facility and personnel-related costs from workforce reductions[73] Comparison of Nine Months Ended September 30, 2024 and 2023 This section compares Reneo's operating results for the nine months ended September 30, 2024, and 2023 Operating Results (in thousands) | Metric | 9 Months Sep 30, 2024 | 9 Months Sep 30, 2023 | Change (YoY) | | :--------------------------- | :-------------------- | :-------------------- | :----------- | | Research and development | $6,436 | $39,009 | $(32,573) | | General and administrative | $14,155 | $19,038 | $(4,883) | | Total operating expenses | $20,591 | $58,047 | $(37,456) | | Loss from operations | $(20,591) | $(58,047) | $37,456 | | Other income | $3,112 | $4,213 | $(1,101) | | Net loss | $(17,479) | $(53,834) | $36,355 | - The $32.6 million decrease in R&D expenses was primarily due to the suspension of mavodelpar development and workforce reductions[76] - The $4.9 million decrease in G&A expenses was driven by reduced commercial development/consulting costs and facility/personnel costs, partially offset by a $2.1 million increase in legal and advisory fees related to the Merger[77] Liquidity and Capital Resources This section discusses Reneo's historical losses, current cash position, and future capital requirements for operations - Reneo has incurred significant losses and negative cash flows since inception, financing operations primarily through equity sales[79] - As of September 30, 2024, the Company had $76.7 million in cash, cash equivalents, and short-term investments[79] - Post-Merger, the Company expects to incur significant expenses for clinical development and will require additional capital, but believes current resources are sufficient for at least the next 12 months[79][80] - Future funding requirements depend on the scope, timing, and costs of R&D, clinical trials, regulatory review, commercialization, manufacturing, intellectual property, and public company operations[81][82] Reneo's Cash Flows This section analyzes Reneo's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2024 Cash Flow Summary (in thousands) | Activity | 9 Months Sep 30, 2024 | 9 Months Sep 30, 2023 | Change (YoY) | | :------------------------------------------ | :-------------------- | :-------------------- | :----------- | | Net cash used in operating activities | $(30,102) | $(43,929) | +$13,827 | | Net cash provided by (used in) investing activities | $61,248 | $(29,254) | +$90,502 | | Net cash provided by financing activities | $1,911 | $64,993 | -$63,082 | | Net increase (decrease) in cash and cash equivalents | $33,057 | $(8,190) | +$41,247 | - Net cash used in operating activities decreased to $30.1 million in 2024, primarily due to a lower net loss and changes in operating assets and liabilities[85] - Net cash provided by investing activities significantly increased to $61.2 million in 2024, mainly from maturities of available-for-sale short-term investments[86] - Net cash provided by financing activities decreased to $1.9 million in 2024, primarily from private placement deposits, compared to $65.0 million in 2023 from public and private offerings[87] Reneo's Material Cash Requirements This section outlines the Company's significant future cash obligations, including lease payments and potential license agreement payments - Material cash requirements include future operating lease minimum payments (detailed in Note 7) and potential milestone/royalty payments under the vTv License Agreement, which was terminated in October 2024 (detailed in Note 9)[88] Critical Accounting Policies and Estimates This section highlights the key accounting policies and estimates that require significant management judgment - Reneo's financial statements rely on estimates and judgments, but no material changes to critical accounting policies occurred during the nine months ended September 30, 2024, compared to the 2023 Annual Report on Form 10-K[89] Recent Accounting Pronouncements This section refers to disclosures regarding recently issued accounting standards and their expected impact - Refer to Note 2 of the Consolidated Financial Statements for a description of recent accounting pronouncements applicable to Reneo's consolidated financial statements[90] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section is not required for smaller reporting companies, and therefore no disclosures about market risk are provided - This item is not required for smaller reporting companies[91] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures as of September 30, 2024, and states that there were no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures This section confirms management's conclusion on the effectiveness of the Company's disclosure controls and procedures - Management concluded that the Company's disclosure controls and procedures were effective as of September 30, 2024[92] - These controls provide reasonable assurance that required information is recorded, processed, summarized, and reported within specified time periods[92] Changes in Internal Control over Financial Reporting This section reports on any material changes in the Company's internal control over financial reporting during the quarter - There were no changes in internal control over financial reporting during the three months ended September 30, 2024, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[93] Part II. Other Information This section covers legal proceedings, risk factors, equity sales, and other miscellaneous disclosures Item 1. Legal Proceedings This section details legal proceedings related to the merger, including complaints alleging misrepresentation, which the Company intends to defend Merger Proceedings This section describes the legal complaints filed concerning alleged misrepresentations in the merger's Proxy Statement/Prospectus - Two complaints were filed in New York (Thomas v. Reneo Pharmaceuticals, Inc., et al., and Kent v. Reneo Pharmaceuticals, Inc., et al.) on September 5-6, 2024, related to the Merger[95] - Allegations include misrepresentation and/or omission of material information in the Proxy Statement/Prospectus concerning financial projections, the fairness opinion, and potential conflicts of interest[95] - The Company and individual defendants intend to vigorously defend against these complaints[95] Other Proceedings This section confirms the absence of other material adverse legal proceedings affecting the Company - The Company is not currently a party to or aware of any other legal proceedings that are expected to have a material adverse effect on its business, financial condition, or results of operations[96] Item 1A. Risk Factors This section outlines significant risks for OnKure Therapeutics, covering its early development, financial needs, product commercialization, intellectual property, and stock ownership Summary of Risk Factors This section provides an overview of the Company's key risks, including its early development stage, financial needs, and product development challenges - The Company is in early development, has no approved products, and has incurred significant net losses, requiring substantial additional funding[98][101][102] - Success is highly dependent on OKI-219, facing risks in clinical development, regulatory approval, and commercialization, including intense competition and market acceptance challenges[99][107][127][129] - Intellectual property protection is critical but uncertain, with risks of infringement claims and challenges to patent validity[99][137][148] - Reliance on third parties for clinical trials and manufacturing, ongoing regulatory obligations, and the volatile market price of Class A Common Stock are also significant risks[99][172][186][197] Risks Related to Our Operating History, Financial Position and Need for Additional Capital This section details risks associated with the Company's historical losses, lack of revenue, and ongoing need for substantial additional funding - The Company is an early-stage biopharmaceutical company with no products approved for commercial sale and has never generated revenue[101][103] - It has incurred significant net losses since inception (Legacy OnKure: $35.3 million in 2023, $29.5 million in 2022) and expects to continue incurring losses for the foreseeable future[102] - Substantial additional funding will be required to complete product development, with current cash expected to fund operations into Q4 2026[105] - Raising additional capital through equity could lead to significant stockholder dilution, while debt financing may involve restrictive covenants[105] Risks Related to Our Development and Commercialization of Our Product Candidates This section outlines risks concerning clinical trial success, regulatory approval, market acceptance, and competition for product candidates - The Company is substantially dependent on OKI-219, currently in a Phase 1 clinical trial, and its ability to obtain regulatory approval and commercialize it[107] - Clinical trials may fail to demonstrate safety and efficacy, leading to additional costs, delays, or inability to complete development[109] - The regulatory approval processes are lengthy, time-consuming, and unpredictable, with no guarantee of approval or broad indication[111] - Difficulties in patient enrollment or retention in clinical trials could delay or prevent necessary regulatory approvals[115] - The Company faces substantial competition from companies with greater resources and established market presence, potentially leading to competitors developing products more successfully or earlier[127] - Even if approved, product candidates may fail to achieve market acceptance among physicians, patients, and third-party payors due to various factors including efficacy, price, and side effects[129] Risks Related to Our Intellectual Property This section addresses risks in obtaining, maintaining, and defending intellectual property rights, including patent challenges and infringement claims - The Company relies on patents, trademarks, and trade secrets, but faces risks in obtaining and maintaining sufficient patent protection, as patents may be challenged, invalidated, or have inadequate terms[137][138][142] - There is a significant risk of becoming involved in third-party claims of intellectual property infringement, which could delay development, lead to substantial damages, or require costly licenses[148] - Changes in U.S. or foreign patent laws and the inability to protect intellectual property rights globally could diminish the value of patents and impair the business[154][156] - Failure to protect the confidentiality of trade secrets or claims that employees used confidential information of former employers could harm the Company's competitive position[157][159] - Future collaboration or license agreements may not be successful, or non-compliance could lead to termination and loss of critical intellectual property rights[166][168] Risks Related to Our Regulatory Approval and Other Legal Compliance Matters This section covers risks related to ongoing regulatory obligations, healthcare legislation, and compliance with anti-kickback and privacy laws - Even with regulatory approval, the Company will be subject to ongoing, costly regulatory obligations and oversight, with potential for significant penalties for non-compliance[172][174] - Disruptions at regulatory agencies (e.g., FDA, SEC) due to funding shortages or global health concerns could hinder product development and approval timelines[175][177] - Healthcare legislative measures, such as the Inflation Reduction Act of 2022, and state-level regulations aimed at reducing healthcare costs, could adversely affect pricing and revenue prospects[178][179] - The Company is subject to federal and state anti-kickback, false claims, and privacy laws (HIPAA), with risks of significant civil, criminal, and administrative penalties for violations[180][182] - Misconduct by employees, contractors, or other third parties, as well as compliance with environmental, health, and safety laws, pose additional risks[183] Risks Related to Our Reliance on Third Parties This section highlights risks associated with dependence on third parties for clinical trials, manufacturing, and supply chain management - The Company relies heavily on third parties, including independent clinical investigators and CROs, to conduct preclinical studies and clinical trials, increasing risks of delays, non-compliance, and compromised data[186] - Reliance on single-source third-party manufacturers for drug substance and drug product increases the risk of supply disruptions, cost increases, and failure to comply with cGMP regulations[188][189] - Manufacturing drugs is complex, and difficulties in production by third-party manufacturers could delay or prevent the adequate supply of product candidates for clinical trials or commercialization[190] Risks Related to Our Business Operations This section discusses risks concerning talent retention, future acquisitions, and vulnerabilities in computer systems and data security - The Company's success is highly dependent on its ability to attract and retain highly skilled executive officers and employees, facing intense competition for talent[191][193] - Future acquisitions, in-licensing, or strategic partnerships may increase capital requirements, dilute stockholders, incur debt, and divert management attention[194] - The Company's computer systems and those of its contractors are vulnerable to damage from cyberattacks, natural disasters, and other system failures, potentially disrupting operations and compromising data[195][196] Risks Related to Ownership of Our Class A Common Stock This section addresses risks related to stock price volatility, SEC reporting requirements, potential dilution, and concentrated ownership - The market price of the Company's Class A Common Stock is expected to be volatile due to various factors, including clinical trial results, regulatory actions, competition, and general market conditions[197][198] - The Company is subject to stringent SEC requirements applicable to reporting shell company business combinations, which will increase costs, limit capital raising, and restrict resale of securities[215][216] - Future sales of shares by existing stockholders, particularly after lock-up agreements expire, could cause the Class A Common Stock price to decline[217] - Concentrated ownership by executive officers, directors, and principal stockholders (approximately 49.8%) gives them significant influence over matters submitted to stockholders for approval[218] - The Company's ability to use net operating loss carryforwards and other tax attributes may be limited due to ownership changes, including those resulting from the Merger, under Sections 382 and 383 of the Code[222] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms no unregistered equity sales and details the use of proceeds from Reneo's 2021 IPO, with most funds utilized Unregistered Sales of Equity Securities This section confirms that there were no unregistered sales of equity securities during the reporting period - There were no unregistered sales of equity securities[227] Use of Proceeds This section details the allocation and remaining balance of net proceeds from the Company's initial public offering - Reneo completed its IPO in April 2021, generating $84.6 million in net proceeds from the sale of 6,250,000 shares at $15.00 per share[228] - As of September 30, 2024, approximately $83.5 million of the net IPO proceeds have been used[229] - The remaining net proceeds are invested in highly liquid money market funds and short-term investments to fund operations[229] Item 3. Defaults Upon Senior Securities This section confirms that there were no defaults upon senior securities - There were no defaults upon senior securities[230] Item 4. Mine Safety Disclosures This section states that no mine safety disclosures are applicable to the Company - No mine safety disclosures are applicable[230] Item 5. Other Information This section indicates that no other information is reported - No other information is reported in this section[230] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including merger agreements and executive officer certifications - Key exhibits include the Agreement and Plan of Merger (2.1), Amended and Restated Certificate of Incorporation (3.1), Amended and Restated Bylaws (3.2), and Certifications of Principal Executive and Financial Officers (31.1, 31.2, 32.1)[233] Signatures The report is officially signed by the President, CEO, and CFO of Reneo Pharmaceuticals, Inc. on November 7, 2024 - The report was signed by Nicholas A. Saccomano, Ph.D., President and Chief Executive Officer, and Jason Leverone, Chief Financial Officer[235] - The signing date for the report was November 7, 2024[235]