0000950170-23-021234.txt : 20230511 0000950170-23-021234.hdr.sgml : 20230511 20230511161111 ACCESSION NUMBER: 0000950170-23-021234 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 62 CONFORMED PERIOD OF REPORT: 20230331 FILED AS OF DATE: 20230511 DATE AS OF CHANGE: 20230511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Reneo Pharmaceuticals, Inc. CENTRAL INDEX KEY: 0001637715 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 472309515 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-40315 FILM NUMBER: 23911110 BUSINESS ADDRESS: STREET 1: 18575 JAMBOREE ROAD STREET 2: SUITE 275-S CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: (858) 283-0280 MAIL ADDRESS: STREET 1: 18575 JAMBOREE ROAD STREET 2: SUITE 275-S CITY: IRVINE STATE: CA ZIP: 92612 10-Q 1 rphm-20230331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

or

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40315

 

 

img27525098_0.jpg 

Reneo Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Delaware

47-2309515

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

18575 Jamboree Road, Suite 275-S, Irvine, CA

(Address of Principal Executive Offices)

92612

(Zip Code)

(Registrant’s telephone number, including area code): (858) 283-0280

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

RPHM

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

Smaller reporting company

Non-accelerated filer

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 9, 2023, there were 33,655,123 shares of the registrant’s common stock, $0.0001 par value per share, outstanding.

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

Part I

 

Financial Information

3

 

 

 

 

Item 1.

 

Consolidated Financial Statements (Unaudited)

3

 

 

 

 

 

 

Consolidated Balance Sheets

3

 

 

 

 

 

 

Consolidated Statements of Operations and Comprehensive Loss

4

 

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity

5

 

 

 

 

 

 

Consolidated Statements of Cash Flows

6

 

 

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

7

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

25

 

 

 

 

Item 4.

 

Controls and Procedures

25

 

 

 

 

Part II

 

Other Information

26

 

 

 

 

Item 1.

 

Legal Proceedings

26

 

 

 

 

Item 1A.

 

Risk Factors

26

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

97

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

98

 

 

 

 

Item 4.

 

Mine Safety Disclosures

98

 

 

 

 

Item 5.

 

Other Information

98

 

 

 

 

Item 6.

 

Exhibits

99

 

 

 

 

Signatures

 

 

100

 

 

2


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

RENEO PHARMACEUTICALS, INC.

Consolidated Balance Sheets

(In thousands, except share and par value data)

 

 

March 31,
2023

 

 

December 31,
2022

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

30,395

 

 

$

19,927

 

Short-term investments

 

 

63,392

 

 

 

81,246

 

Prepaid expenses and other current assets

 

 

3,231

 

 

 

5,180

 

Total current assets

 

 

97,018

 

 

 

106,353

 

Property and equipment, net

 

 

581

 

 

 

453

 

Right-of-use assets

 

 

1,188

 

 

 

1,292

 

Other non-current assets

 

 

81

 

 

 

84

 

Total assets

 

$

98,868

 

 

$

108,182

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,802

 

 

$

1,893

 

Accrued expenses

 

 

8,316

 

 

 

4,827

 

Operating lease liabilities, current portion

 

 

363

 

 

 

404

 

Total current liabilities

 

 

10,481

 

 

 

7,124

 

Operating lease liabilities, less current portion

 

 

979

 

 

 

1,059

 

Performance award

 

 

324

 

 

 

29

 

Total liabilities

 

 

11,784

 

 

 

8,212

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized at
   March 31, 2023 and December 31, 2022;
25,107,430 and 24,699,553 shares
   issued and outstanding at March 31, 2023 and December 31, 2022,
   respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

238,859

 

 

 

236,693

 

Accumulated deficit

 

 

(151,790

)

 

 

(136,683

)

Accumulated other comprehensive income (loss)

 

 

12

 

 

 

(43

)

Total stockholders’ equity

 

 

87,084

 

 

 

99,970

 

Total liabilities and stockholders’ equity

 

$

98,868

 

 

$

108,182

 

 

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

3


 

RENEO PHARMACEUTICALS, INC.

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended March 31,

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

10,991

 

 

$

9,278

 

General and administrative

 

 

5,132

 

 

 

3,737

 

Total operating expenses

 

 

16,123

 

 

 

13,015

 

Loss from operations

 

 

(16,123

)

 

 

(13,015

)

Other income (loss)

 

 

1,016

 

 

 

(21

)

Net loss

 

 

(15,107

)

 

 

(13,036

)

Unrealized gain on short-term investments

 

 

55

 

 

 

30

 

Comprehensive loss

 

$

(15,052

)

 

$

(13,006

)

Net loss per share attributable to common stockholders, basic and diluted

 

$

(0.60

)

 

$

(0.53

)

Weighted-average shares used in computing net loss per share, basic and diluted

 

 

25,036,410

 

 

 

24,458,290

 

 

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

4


 

RENEO PHARMACEUTICALS, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated
Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances, December 31, 2022

 

 

24,699,553

 

 

$

3

 

 

$

236,693

 

 

$

(43

)

 

$

(136,683

)

 

$

99,970

 

Stock based compensation

 

 

 

 

 

 

 

 

1,157

 

 

 

 

 

 

 

 

 

1,157

 

Issuance of common stock in connection
   with the at-the-market facility, net of
   issuance costs

 

 

407,877

 

 

 

 

 

 

1,009

 

 

 

 

 

 

 

 

 

1,009

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

55

 

 

 

 

 

 

55

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,107

)

 

 

(15,107

)

Balances, March 31, 2023

 

 

25,107,430

 

 

$

3

 

 

$

238,859

 

 

$

12

 

 

$

(151,790

)

 

$

87,084

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated
Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balances, December 31, 2021

 

 

24,455,390

 

 

$

3

 

 

$

231,902

 

 

$

34

 

 

$

(84,728

)

 

$

147,211

 

Stock based compensation

 

 

 

 

 

 

 

 

1,107

 

 

 

 

 

 

 

 

 

1,107

 

Issuance of common stock in
   connection with equity plans

 

 

3,160

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

30

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,036

)

 

 

(13,036

)

Balances, March 31, 2022

 

 

24,458,550

 

 

$

3

 

 

$

233,015

 

 

$

64

 

 

$

(97,764

)

 

$

135,318

 

 

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

5


 

RENEO PHARMACEUTICALS, INC.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Three Months Ended
March 31,

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(15,107

)

 

$

(13,036

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation

 

 

1,157

 

 

 

1,107

 

Depreciation and amortization

 

 

41

 

 

 

19

 

Amortization/accretion on short-term investments

 

 

(770

)

 

 

1

 

Changes in the fair value of performance award

 

 

295

 

 

 

(387

)

Non-cash lease expense

 

 

120

 

 

 

143

 

Loss on disposal of fixed asset

 

 

3

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

1,952

 

 

 

2,011

 

Accounts payable and accrued expenses

 

 

3,398

 

 

 

1,251

 

Operating lease liabilities

 

 

(137

)

 

 

(108

)

Net cash used in operating activities

 

 

(9,048

)

 

 

(8,999

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(172

)

 

 

(44

)

Purchase of available-for-sale short-term investments

 

 

(28,321

)

 

 

(16,029

)

Proceeds from maturities of available-for-sale short-term investments

 

 

47,000

 

 

 

21,500

 

Net cash provided by investing activities

 

 

18,507

 

 

 

5,427

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from at-the-market facility, net of offering costs

 

 

1,009

 

 

 

6

 

Net cash provided by financing activities

 

 

1,009

 

 

 

6

 

Net increase (decrease) in cash and cash equivalents

 

 

10,468

 

 

 

(3,566

)

Cash and cash equivalents, beginning of period

 

 

19,927

 

 

 

124,660

 

Cash and cash equivalents, end of period

 

$

30,395

 

 

$

121,094

 

Noncash operating activities:

 

 

 

 

 

 

Right-of-use assets obtained in exchange for lease obligations

 

$

 

 

$

1,524

 

 

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

6


 

RENEO PHARMACEUTICALS, INC.

Notes to Consolidated Financial Statements

(Unaudited)

1. Organization and Business

Organization

Reneo Pharmaceuticals, Inc. (Reneo or the Company) commenced operations on September 22, 2014 as a clinical-stage pharmaceutical company focused on the development of therapies for patients with rare genetic mitochondrial diseases. In December 2017, the Company in-licensed mavodelpar (REN001), a novel oral peroxisome proliferator-activated receptor delta (PPARδ) agonist.

Liquidity

The Company follows Accounting Standards Codification (ASC) Topic 205-40, Presentation of Financial Statements—Going Concern, which requires that management perform a two-step analysis over its ability to continue as a going concern. Management must first evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern and to meet its obligations as they become due within one year after the date that the consolidated financial statements are issued (step 1). If management concludes that substantial doubt is raised, management is also required to consider whether its plans alleviate that doubt (step 2).

From its inception in 2014, the Company has incurred significant losses and negative cash flows from operations. As of March 31, 2023, the Company had cash, cash equivalents and short-term investments of $93.8 million and an accumulated deficit of $151.8 million. The Company had a net loss of $15.1 million and used cash of $9.0 million for operating activities for the three months ended March 31, 2023. Since inception through March 31, 2023, the Company has funded its operations primarily with the net proceeds from the issuance of convertible preferred stock and common stock.

The Company expects that its existing balance of cash, cash equivalents and short-term investments as of March 31, 2023, together with the net proceeds from the May 2023 public offering and May 2023 private placement (see Footnote 10), are sufficient to fund operations through the Company’s planned near-term clinical milestones, but not for more than one year after the date of the filing of this Quarterly Report on Form 10-Q and therefore management has concluded that substantial doubt exists about the Company's ability to continue as a going concern. Management plans to alleviate this risk by raising additional capital through public or private equity offerings or debt financings, credit or loan facilities, collaborations, strategic alliances, licensing arrangements or a combination of one or more of these funding sources. In addition, the Company has the ability to defer certain commercial activities until additional capital is received.

There can be no assurance that the Company will be successful in obtaining additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could negatively impact the Company’s business, results of operations, and future prospects. The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions, disruptions to, and volatility in, financial markets in the United States and worldwide, including those resulting from the coronavirus (COVID-19) pandemic, bank failures, actual or perceived changes in interest rates and economic inflation. The Company may not be able to secure additional financing in a timely manner or on favorable terms, if at all. In addition, successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support the Company’s cost structure.

7


 

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The Company has prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted, although the Company believes that the disclosures made are adequate to make the information not misleading. The Company recommends that the unaudited consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements, have been included in the accompanying unaudited financial statements. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year.

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of March 31, 2023; all intercompany transactions and balances have been eliminated.

Summary of Significant Accounting Policies

The significant accounting policies used in the preparation of these consolidated financial statements for the three months ended March 31, 2023 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standard Board (FASB) issued Accounting Standard Update (ASU) 2016-13, Financial Instruments - Credit Losses (ASC 326), Measurement of Credit Losses on Financial Instruments. The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in the carrying value of the asset. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. This new guidance was effective for the Company as of January 1, 2023. The Company adopted the guidance as of January 1, 2023, with no material impact on its financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The ASU clarifies that (1) a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value, (2) an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction, and (3) new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with ASC 820. The new guidance is effective for the Company for fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

8


 

3. Net Loss Per Share

The Company computes basic loss per share by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock shares to be issued upon exercise of all outstanding stock options and restricted stock units were excluded from the diluted net loss per share calculation for the three months ended March 31, 2023 and 2022 because such shares are anti-dilutive.

Historical outstanding anti-dilutive securities not included in the diluted net loss per share calculation include the following:

 

 

As of March 31,

 

 

2023

 

 

2022

 

Common stock options outstanding

 

 

6,013,345

 

 

 

4,262,702

 

Unvested restricted stock units

 

 

369,500

 

 

 

279,500

 

Total

 

 

6,382,845

 

 

 

4,542,202

 

 

4. Fair Value Measurements

ASC Topic 820, Fair Value Measurement, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC Topic 820 identifies fair value as the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a three-tier fair value hierarchy that distinguishes between the following:

Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs, other than quoted prices in active markets, which are observable for the asset or liability, either directly or indirectly.
Level 3 – Unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company’s financial assets are subject to fair value measurements on a recurring basis.

The Company categorizes its money market funds as Level 1, using the quoted prices in active markets. Commercial paper and U.S. treasury securities are categorized as Level 2, using significant other observable inputs. The fair value of the Company’s investments in certain money market funds is their face value and such instruments are classified as Level 1 and are included in cash and cash equivalents on the consolidated balance sheets.

9


 

In connection with the Company’s chief executive officer’s (CEO) employment agreement, he is entitled to receive a special performance bonus in the amount of $7.5 million (Performance Award), payable in cash, common stock or a combination of cash and common stock, at the election of the Company, based on achievement of certain conditions as described in more detail in Note 8. The Company estimated the fair value of the Performance Award using a Monte Carlo simulation, which incorporates the stock price at the date of the valuation and utilizes Level 3 inputs such as volatility, probabilities of success, and other inputs that are not observable in active markets. The Performance Award is required to be measured at fair value on a recurring basis each reporting period, with changes in the fair value recognized in general and administrative expense in the consolidated statements of operations and comprehensive loss over the derived service period of the award.

No assets or liabilities were transferred into or out of their classifications during the three months ended March 31, 2023.

The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at March 31, 2023 consisted of the following (in thousands):

 

 

Quoted Prices in
Active Markets
For Identical
Items
(Level 1)

 

 

Significant Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market investments

 

$

27,365

 

 

$

 

 

$

 

 

$

27,365

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury securities

 

 

 

 

 

63,392

 

 

 

 

 

 

63,392

 

Total

 

$

27,365

 

 

$

63,392

 

 

$

 

 

$

90,757

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Performance award

 

$

 

 

$

 

 

$

324

 

 

$

324

 

Total

 

$

 

 

$

 

 

$

324

 

 

$

324

 

 

10


 

 

The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at December 31, 2022 consisted of the following (in thousands):

 

 

Quoted Prices in
Active Markets
For Identical
Items
(Level 1)

 

 

Significant Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market investments

 

$

9,365

 

 

$

 

 

$

 

 

$

9,365

 

Commercial paper

 

 

 

 

 

4,978

 

 

 

 

 

 

4,978

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury securities

 

 

 

 

 

76,253

 

 

 

 

 

 

76,253

 

Commercial paper

 

 

 

 

 

4,993

 

 

 

 

 

 

4,993

 

Total

 

$

9,365

 

 

$

86,224

 

 

$

 

 

$

95,589

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Performance award

 

$

 

 

$

 

 

$

29

 

 

$

29

 

Total

 

$

 

 

$

 

 

$

29

 

 

$

29

 

 

The following table summarizes changes in fair value measurements of the Performance Award during the three months ended March 31, 2023 (in thousands):

 

 

 

Performance
Award

 

Balance as of January 1, 2023

 

$

29

 

Change in fair value

 

 

295

 

Balance as of March 31, 2023

 

$

324

 

 

5. Marketable Debt Securities

During the three months ended March 31, 2023, the Company invested its excess cash balances in marketable debt securities and, at each balance sheet date presented, the Company classified all of its investments in debt securities as available-for-sale and as current assets as they mature within 12 months and represent the investment of funds available for current operations.

The following tables summarize the gross unrealized gains and losses of the Company’s available-for-sale securities as of March 31, 2023 and 2022 (in thousands):

 

 

 

As of March 31, 2023

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Market
Value

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury securities

 

$

63,380

 

 

$

13

 

 

$

(1

)

 

$

63,392

 

Total

 

$

63,380

 

 

$

13

 

 

$

(1

)

 

$

63,392

 

 

 

11


 

 

 

As of December 31, 2022

 

Amortized
Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Fair
Market
Value

Available-for-sale securities:

 

 

 

 

 

 

 

 

U.S. treasury securities

 

$76,297

 

$2

 

$(46)

 

$76,253

Commercial paper

 

4,993

 

 

 

4,993

Total

 

$81,290

 

$2

 

$(46)

 

$81,246

 

6. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

 

 

As of March 31, 2023

 

 

As of December 31, 2022

 

Accrued clinical and regulatory

 

$

3,973

 

 

$

1,872

 

Accrued contract manufacturing cost

 

 

1,809

 

 

 

1,583

 

Accrued compensation

 

 

1,750

 

 

 

807

 

Accrued other

 

 

784

 

 

 

565

 

Total accrued expenses

 

$

8,316

 

 

$

4,827

 

 

7. Leases

The Company’s headquarters are located in Irvine, California, where it leases office space. The Company leases additional office space located in San Diego, California, and in Sandwich, United Kingdom. The lease terms for the Irvine, San Diego, and Sandwich offices extend through November 30, 2026, July 31, 2023, and October 23, 2027, respectively.

Other information related to the Company’s operating leases as of the balance sheet dates presented are as follows:

 

 

 

Three Months Ended
March 31,

 

2023

 

2022

Weighted incremental borrowing rate

 

5%

 

5%

Weighted average remaining lease term (in years)

 

3.8

 

4.1

Cash paid for amounts included in the measurement of lease liabilities (in thousands)

 

$142

 

$131

Lease expense (in thousands)

 

$120

 

$122

Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands):

 

 

As of March 31, 2023

 

2023 (remaining nine months)

 

$

331

 

2024

 

 

381

 

2025

 

 

381

 

2026

 

 

343

 

2027

 

 

34

 

Total lease payments

 

 

1,470

 

Less: Imputed interest

 

 

(128

)

Present value of lease liabilities

 

$

1,342

 

 

12


 

 

8. Stock-Based Compensation

In March 2021, the Company’s board of directors adopted the Company’s 2021 Equity Incentive Plan (2021 Plan), which is the successor to the Company’s 2014 Equity Incentive Plan (2014 Plan). As of the effective date of the 2021 Plan, awards granted under the 2014 Plan that are forfeited or otherwise become available under the 2014 Plan will be included and available for issuance under the 2021 Plan. Under the 2021 Plan, the Company may grant stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other awards to individuals who are employees, officers, directors or consultants of the Company and its affiliates.

Under the 2014 Plan, certain employees were granted the ability to early exercise their options. The shares of common stock issued pursuant to the early exercise of unvested stock options are restricted and continue to vest over the requisite service period after issuance. The Company has the option to repurchase any unvested shares at the original purchase price upon any voluntary or involuntary termination. The shares purchased by the employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding until those shares vest. As of March 31, 2023, there were no shares subject to stock options that have been early exercised.

Shares Reserved for Future Issuance

As of March 31, 2023, the Company had reserved shares of its common stock for future issuance as follows:

 

 

Shares
Reserved