Reneo Pharmaceuticals, Inc. — Form 10-Q Summary
Filing identity: The supplied filing is for Reneo Pharmaceuticals, Inc., not Onkure Therapeutics, Inc. Investors should verify the company and filing before relying on this summary. The report covers the quarter and nine months ended September 30, 2021 and was filed November 12, 2021.
Business context and reporting period
Reneo is a clinical-stage pharmaceutical company developing therapies for rare genetic mitochondrial diseases. Its sole product candidate is REN001, a PPAR-delta agonist being studied in primary mitochondrial myopathies, long-chain fatty acid oxidation disorders and McArdle disease. The company has no approved products and has generated no product revenue.
- The global Phase 2b STRIDE study in primary mitochondrial myopathies began dosing its first patient in July 2021; topline results were expected in 2023.
- Enrollment in the McArdle disease Phase 1b study was completed in July 2021, with results expected in the first quarter of 2022.
- The company stated that enrollment in the LC-FAOD Phase 1b study was completed in November 2021, after the reporting period, with results expected in the second quarter of 2022.
Financial performance and liquidity
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Research and development expense | $9.3 million in 2021; $4.4 million in 2020 | $21.1 million in 2021; $10.8 million in 2020 |
| General and administrative expense | $3.4 million in 2021; $0.7 million in 2020 | $8.1 million in 2021; $2.5 million in 2020 |
| Total operating expenses | $12.8 million in 2021; $5.1 million in 2020 | $29.2 million in 2021; $13.3 million in 2020 |
| Net loss | $12.7 million in 2021; $5.1 million in 2020 | $29.2 million in 2021; $13.2 million in 2020 |
| Net loss per share | $0.52 in 2021; $2.48 in 2020 | $1.82 in 2021; $6.54 in 2020 |
| Net cash used in operating activities | $28.0 million in 2021; $13.1 million in 2020 for the nine-month period |
- There was no revenue, gross profit or meaningful operating margin because the company had no commercial product sales.
- Cash and cash equivalents were $126.4 million at September 30, 2021, compared with $53.6 million at December 31, 2020. Short-term investments were $31.3 million, bringing cash, cash equivalents and short-term investments to $157.7 million.
- Accumulated deficit was $74.1 million; total assets were $162.9 million and stockholders’ equity was $156.2 million.
- The company had no reported debt. Total liabilities were $6.7 million, including $5.1 million of accrued expenses.
- Financing activities provided $132.3 million during the first nine months, primarily from $84.6 million of net IPO proceeds and $47.2 million from Series B preferred stock issuance.
- Investing activities used $31.5 million, primarily for purchases of short-term investments. Cash increased $72.8 million during the period.
Material changes versus the prior comparable period
- Research and development expense increased $4.9 million, or approximately 110%, in the third quarter and $10.2 million, or approximately 95%, for the nine-month period. The increases reflected clinical trial and manufacturing activity, additional personnel and a $2.0 million license milestone expense.
- General and administrative expense increased $2.8 million in the third quarter and $5.7 million for the nine-month period, primarily due to higher personnel and stock-based compensation, directors’ and officers’ insurance and professional fees following the IPO.
- Net loss increased $7.6 million in the third quarter and $16.0 million for the nine-month period.
- In April 2021, all outstanding convertible preferred stock converted into common stock in connection with the IPO. The company issued 6.25 million common shares at $15.00 per share and received approximately $84.6 million in net proceeds.
- In July 2021, a $2.0 million milestone under the vTv Therapeutics license agreement was achieved and paid.
- The company began leasing new Irvine, California headquarters space under a lease running through November 2026, with total minimum payments of approximately $1.6 million.
Guidance, outlook, risks and unusual items
- Management expects continuing net losses and higher research, development, administrative and capital expenditures for the foreseeable future. It expects existing liquidity to fund operations through planned near-term clinical milestones and, based on the filing date, for at least one year.
- The company will require additional capital to continue development and may use equity, debt, collaborations, strategic alliances or licensing arrangements. Additional funding may be unavailable or may dilute stockholders or require unfavorable terms.
- COVID-19 previously caused the PMM Phase 1b study to close early and temporarily paused enrollment in the LC-FAOD and McArdle studies. Future impacts could include enrollment delays, supply interruptions, site disruptions and regulatory delays.
- REN001 is the company’s only product candidate, making the business dependent on its clinical, regulatory and commercial success. Approval is uncertain, and early clinical results may not predict later-stage outcomes.
- The company relies on third-party contract research organizations and manufacturers, including single-source suppliers for certain clinical supplies.
- The vTv license requires up to $64.5 million of development and regulatory milestone payments, up to $30.0 million of sales-based milestones and tiered royalties ranging from mid-single-digit to low-teen percentages of annual net sales.
- Unusual items included $2.0 million of license-related research and development expense, $2.5 million of stock-based compensation for the nine months and a $0.3 million performance-award expense, partially offset by a $0.3 million change in the award’s fair value.
- Management reported effective disclosure controls and procedures and no material changes to internal control over financial reporting during the quarter. The company reported no material legal proceedings.
Important facts for investors to verify
- Confirm that the intended issuer is Reneo Pharmaceuticals, Inc.; the request metadata identifies Onkure Therapeutics, Inc.
- Verify the timing, enrollment status and topline-result dates for the STRIDE, LC-FAOD, McArdle and FORWARD studies.
- Reconcile the reported $157.7 million liquidity balance with operating cash burn and the timing of future clinical and regulatory spending.
- Review the terms, remaining obligations and termination provisions of the vTv Therapeutics license.
- Assess the potential impact of future equity financing, stock-option issuance and dilution.
- Evaluate clinical, regulatory, manufacturing, intellectual-property and COVID-19 risks, including the disclosed incipient cataract observed in one McArdle study patient.