Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 03, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Entity File Number | 001-40315 | |
Entity Registrant Name | Reneo Pharmaceuticals, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-2309515 | |
Entity Address, Address Line One | 18575 Jamboree Road, Suite 275-S | |
Entity Address, City or Town | Irvine | |
Entity Address State Or Province | CA | |
Entity Address, Postal Zip Code | 92612 | |
City Area Code | 858 | |
Local Phone Number | 283-0280 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | RPHM | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 24,529,646 | |
Entity Central Index Key | 0001637715 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 62,132 | $ 124,660 |
Short-term Investments | 53,948 | 23,010 |
Prepaid expenses and other current assets | 4,918 | 6,064 |
Total current assets | 120,998 | 153,734 |
Property and equipment, net | 241 | 212 |
Right-of-use assets | 1,186 | |
Other non-current assets | 79 | 78 |
Total assets | 122,504 | 154,024 |
Current liabilities: | ||
Accounts payable | 2,189 | 2,022 |
Accrued expenses | 6,851 | 4,180 |
Operating lease liabilities, current portion | 410 | |
Total current liabilities | 9,450 | 6,202 |
Operating lease liabilities, less current portion | 943 | |
Other long-term liabilities | 167 | |
Performance award | 66 | 444 |
Total liabilities | 10,459 | 6,813 |
Stockholders' equity (deficit): | ||
Common stock, $0.0001 par value; 200,000,000 shares authorized at September 30, 2022 and December 31, 2021; 24,529,646 shares issued and outstanding at September 30, 2022; and 24,457,838 and 24,455,390 shares issued and outstanding at December 31, 2021, respectively | 3 | 3 |
Additional paid-in capital | 235,151 | 231,902 |
Accumulated deficit | (123,083) | (84,728) |
Accumulated other comprehensive (loss) income | (26) | 34 |
Total stockholders' equity | 112,045 | 147,211 |
Total liabilities and stockholders' equity | $ 122,504 | $ 154,024 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Common stock, Par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 200,000,000 | 200,000,000 |
Common stock, issued | 24,529,646 | 24,457,838 |
Common stock, outstanding | 24,529,646 | 24,455,390 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Operating expenses: | ||||
Research and development | $ 9,938 | $ 9,318 | $ 27,348 | $ 21,069 |
General and administrative | 3,902 | 3,434 | 11,938 | 8,125 |
Total operating expenses | 13,840 | 12,752 | 39,286 | 29,194 |
Loss from operations | (13,840) | (12,752) | (39,286) | (29,194) |
Other income: | ||||
Other income | 833 | 17 | 931 | 31 |
Net loss | (13,007) | (12,735) | (38,355) | (29,163) |
Unrealized (loss) gain on short-term investments | (194) | 12 | (60) | 17 |
Comprehensive loss | $ (13,201) | $ (12,723) | $ (38,415) | $ (29,146) |
Net loss per share attributable to common stockholders, basic | $ (0.53) | $ (0.52) | $ (1.57) | $ (1.82) |
Net loss per share attributable to common stockholders, diluted | $ (0.53) | $ (0.52) | $ (1.57) | $ (1.82) |
Weighted-average shares used in computing net loss per share, basic | 24,496,313 | 24,396,798 | 24,472,974 | 16,025,813 |
Weighted-average shares used in computing net loss per share, diluted | 24,496,313 | 24,396,798 | 24,472,974 | 16,025,813 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities | ||
Net loss | $ (38,355) | $ (29,163) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 3,103 | 2,470 |
Depreciation and amortization | 63 | 33 |
Amortization/accretion on short-term investments | (169) | 113 |
Changes in the fair value of performance award | (378) | 284 |
Non-cash lease expense | 338 | |
Loss on disposal of fixed asset | 3 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | 1,146 | (3,577) |
Accounts payable and accrued expenses | 2,838 | 1,816 |
Operating lease liabilities | (338) | |
Other current and long-term liabilities | 62 | |
Net cash used in operating activities | (31,749) | (27,962) |
Cash flows from investing activities | ||
Purchase of property and equipment | (96) | (108) |
Purchase of available-for-sale short-term investments | (67,329) | (31,421) |
Proceeds from maturities of available-for-sale short-term investments | 36,500 | |
Net cash used in investing activities | (30,925) | (31,529) |
Cash flows from financing activities | ||
Proceeds from initial public offering, net of offering costs | 84,641 | |
Proceeds from issuance of common stock in connection with equity plans | 146 | 407 |
Net cash provided by financing activities | 146 | 132,287 |
Net (decrease) increase in cash and cash equivalents | (62,528) | 72,796 |
Cash and cash equivalents, beginning of period | 124,660 | 53,613 |
Cash and cash equivalents, end of period | 62,132 | 126,409 |
Supplemental cash flow information: | ||
Right-of-use assets obtained in exchange for lease obligations | $ 1,524 | |
Property and equipment in accounts payable | 56 | |
Vesting of unvested exercised options | 19 | |
Series B convertible preferred stock | ||
Cash flows from financing activities | ||
Proceeds from issuance of Series B convertible preferred stock, net of issuance costs | $ 47,239 |
Consolidated Statements Changes
Consolidated Statements Changes in Convertible Preferred Stock and Stockholders' Deficit - USD ($) $ in Thousands | Total | Common Stock options outstanding | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Series A convertible preferred stock | Series B convertible preferred stock |
Beginning Balance at Dec. 31, 2020 | $ (42,115) | $ 2,843 | $ (44,958) | ||||
Beginning Balance (in shares) at Dec. 31, 2020 | 2,053,070 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation | 471 | 471 | |||||
Issuance of common stock in connection with equity plans | $ 139 | 139 | |||||
Issuance of common stock in connection with equity plans (in shares) | 70,663 | ||||||
Net loss | $ (7,212) | (7,212) | |||||
Ending Balance at Mar. 31, 2021 | (48,717) | 3,453 | (52,170) | ||||
Ending Balance (in shares) at Mar. 31, 2021 | 2,123,733 | ||||||
Beginning Balance at Dec. 31, 2020 | $ 45,652 | $ 47,068 | |||||
Beginning Balance (in shares) at Dec. 31, 2020 | 24,302,472 | 23,440,514 | |||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Issuance of convertible preferred stock net of issuance cost | $ 47,356 | ||||||
Issuance of convertible preferred stock net of issuance cost (in shares) | 23,440,514 | ||||||
Ending Balance at Mar. 31, 2021 | $ 45,652 | $ 94,424 | |||||
Ending Balance (in shares) at Mar. 31, 2021 | 24,302,472 | 46,881,028 | |||||
Beginning Balance at Dec. 31, 2020 | (42,115) | 2,843 | (44,958) | ||||
Beginning Balance (in shares) at Dec. 31, 2020 | 2,053,070 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (29,163) | ||||||
Ending Balance at Sep. 30, 2021 | 156,208 | $ 3 | 230,309 | $ 17 | (74,121) | ||
Ending Balance (in shares) at Sep. 30, 2021 | 24,407,772 | ||||||
Beginning Balance at Dec. 31, 2020 | $ 45,652 | $ 47,068 | |||||
Beginning Balance (in shares) at Dec. 31, 2020 | 24,302,472 | 23,440,514 | |||||
Beginning Balance at Mar. 31, 2021 | (48,717) | 3,453 | (52,170) | ||||
Beginning Balance (in shares) at Mar. 31, 2021 | 2,123,733 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Conversion of convertible preferred stock into common stock upon initial public offering | 140,078 | $ 2 | 140,076 | ||||
Stock based compensation | 854 | 854 | |||||
Issuance of common stock in initial public offering, net of offering costs | 84,533 | $ 1 | 84,532 | ||||
Issuance of common stock in initial public offering, net of offering costs (in shares) | 6,250,000 | ||||||
Issuance of common stock in connection with equity plans | 14 | 14 | |||||
Issuance of common stock in connection with equity plans (in shares) | 7,337 | ||||||
Other comprehensive income (loss) | 5 | 5 | |||||
Net loss | (9,216) | (9,216) | |||||
Ending Balance at Jun. 30, 2021 | 167,551 | $ 3 | 228,929 | 5 | (61,386) | ||
Ending Balance (in shares) at Jun. 30, 2021 | 24,288,699 | ||||||
Beginning Balance at Mar. 31, 2021 | $ 45,652 | $ 94,424 | |||||
Beginning Balance (in shares) at Mar. 31, 2021 | 24,302,472 | 46,881,028 | |||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Conversion of convertible preferred stock into common stock | $ (45,652) | $ (94,424) | |||||
Conversion of convertible preferred stock into common stock (in shares) | (24,302,472) | (46,881,028) | |||||
Conversion of convertible preferred stock into common stock upon initial public offering (in shares) | 15,907,629 | ||||||
Stock based compensation | 1,145 | 1,145 | |||||
Issuance of common stock in connection with equity plans | 235 | 235 | |||||
Issuance of common stock in connection with equity plans (in shares) | 119,073 | ||||||
Other comprehensive income (loss) | 12 | 12 | |||||
Net loss | (12,735) | (12,735) | |||||
Ending Balance at Sep. 30, 2021 | 156,208 | $ 3 | 230,309 | 17 | (74,121) | ||
Ending Balance (in shares) at Sep. 30, 2021 | 24,407,772 | ||||||
Beginning Balance at Dec. 31, 2021 | 147,211 | $ 3 | 231,902 | 34 | (84,728) | ||
Beginning Balance (in shares) at Dec. 31, 2021 | 24,455,390 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation | 1,107 | 1,107 | |||||
Issuance of common stock in connection with equity plans | 6 | 6 | |||||
Issuance of common stock in connection with equity plans (in shares) | 3,160 | ||||||
Other comprehensive income (loss) | 30 | 30 | |||||
Net loss | (13,036) | (13,036) | |||||
Ending Balance at Mar. 31, 2022 | 135,318 | $ 3 | 233,015 | 64 | (97,764) | ||
Ending Balance (in shares) at Mar. 31, 2022 | 24,458,550 | ||||||
Beginning Balance at Dec. 31, 2021 | 147,211 | $ 3 | 231,902 | 34 | (84,728) | ||
Beginning Balance (in shares) at Dec. 31, 2021 | 24,455,390 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (38,355) | ||||||
Ending Balance at Sep. 30, 2022 | 112,045 | $ 3 | 235,151 | (26) | (123,083) | ||
Ending Balance (in shares) at Sep. 30, 2022 | 24,529,646 | ||||||
Beginning Balance at Mar. 31, 2022 | 135,318 | $ 3 | 233,015 | 64 | (97,764) | ||
Beginning Balance (in shares) at Mar. 31, 2022 | 24,458,550 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation | 1,006 | 1,006 | |||||
Issuance of common stock in connection with equity plans | 41 | 41 | |||||
Issuance of common stock in connection with equity plans (in shares) | 21,096 | ||||||
Other comprehensive income (loss) | 104 | 104 | |||||
Net loss | (12,312) | (12,312) | |||||
Ending Balance at Jun. 30, 2022 | 124,157 | $ 3 | 234,062 | 168 | (110,076) | ||
Ending Balance (in shares) at Jun. 30, 2022 | 24,479,646 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation | 990 | 990 | |||||
Issuance of common stock in connection with equity plans | 99 | 99 | |||||
Issuance of common stock in connection with equity plans (in shares) | 50,000 | ||||||
Other comprehensive income (loss) | (194) | (194) | |||||
Net loss | (13,007) | (13,007) | |||||
Ending Balance at Sep. 30, 2022 | $ 112,045 | $ 3 | $ 235,151 | $ (26) | $ (123,083) | ||
Ending Balance (in shares) at Sep. 30, 2022 | 24,529,646 |
Consolidated Statements Chang_2
Consolidated Statements Changes in Convertible Preferred Stock and Stockholders' Deficit (Parenthetical) $ in Thousands | 3 Months Ended |
Mar. 31, 2021 USD ($) | |
Series B convertible preferred stock | |
Stock Issuance costs | $ 29 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2022 | |
Organization and Business | |
Organization and Business | 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 REN001, a novel oral peroxisome proliferator-activated receptor (PPAR) agonist. Initial Public Offering On April 13, 2021, the Company completed an initial public offering (IPO) of its common stock. In connection with its IPO, the Company issued and sold 6,250,000 shares of its common stock at a price to the public of $ 15.00 per share. The gross proceeds from the IPO were approximately $ 93.8 million before deducting underwriting discounts and commissions of $ 6.6 million and offering expenses of approximately $ 2.6 million payable by the Company. At the closing of the IPO, 71,183,500 shares of outstanding convertible preferred stock were automatically converted into 15,907,629 shares of common stock. Following the IPO, there were no shares of preferred stock outstanding. Liquidity Since inception in 2014, the Company has incurred significant losses and negative cash flows from operations. As of September 30, 2022, the Company had cash, cash equivalents and short-term investments of $ 116.1 million and an accumulated deficit of $ 123.1 million. Due to the Company’s continuing research and development activities, the Company expects to continue to incur net losses into the foreseeable future and may never become profitable. As a result, the Company will need to raise capital through public or private equity or debt financings, government or other third-party funding, collaborations, strategic alliances and licensing arrangements or a combination of these. In May 2022, the Company entered into an at-the-market equity offering sales agreement with SVB Securities LLC (ATM facility) under which the Company may offer and sell, from time to time at its sole discretion, up to $ 20.0 million in shares of its common stock. The Company has no t sold shares of common stock under the ATM facility as of September 30, 2022. 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 materially harm 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, as well as 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 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 latest Annual Report on Form 10-K. 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 September 30, 2022 ; 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 nine months ended September 30, 2022 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, 2021. New Accounting Pronouncements Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (ASC 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheets for those leases classified as operating leases under previous GAAP. ASU 2016-02 requires a lessee to recognize a liability for lease payments (lease liability) and a right-of-use (ROU)assets (representing its right to use the underlying asset for the lease term) on the balance sheet. In July 2018, the FASB issued ASU 2018-11, Leases (ASC 842): Targeted Improvements , which provides entities an optional transition method to apply the new guidance as of the adoption date, rather than as of the earliest period presented. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the effective date, unless the lease was modified, to not reassess (a) whether a contract is or contains a lease, (b) lease classification or (c) determination of initial direct costs, which effectively allows entities to carryforward accounting conclusions under previous GAAP. The Company early adopted this standard on January 1, 2022 , using the optional transitional method and elected the package of practical expedients in transition for leases that commenced prior to January 1, 2022. As a result of implementing ASC 842, the Company recognized operating lease ROU assets of $ 1.5 million and lease liabilities of $ 1.7 million on January 1, 2022, with no impact on its beginning retained earnings, consolidated statements of operations and comprehensive loss, or cash flows. See Note 6, Leases, for further details. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes . The standard simplifies the accounting for income taxes, eliminates certain exceptions within Accounting Standards Codification (ASC) 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The new guidance was effective for the Company as of January 1, 2022. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company adopted this standard on January 1, 2022 . Adoption of this standard had no material impact on the Company’s consolidated financial position, results of operations or cash flows. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued 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 aren’t 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 is effective for the Company as of January 1, 2023. The Company is currently evaluating the impact of this ASU and does not expect that adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. 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. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Net Loss Per Share [Abstract] | |
Net Loss Per Share | 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 and nine months ended September 30, 2022 and 2021 because such shares are anti-dilutive. Reverse Stock Split On April 5, 2021, in connection with the IPO, the Company effected a 1-for-4.4748 reverse stock split of its common stock. The par value and the authorized number of shares of the common stock were not adjusted as a result of the reverse stock split. The reverse stock split resulted in an adjustment to the Series A and Series B convertible preferred stock conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion. The accompanying consolidated financial statements and notes to the consolidated financial statements give retroactive effect to the reverse stock split for all periods presented. Historical outstanding anti-dilutive securities not included in the diluted net loss per share calculation include the following: As of September 30, 2022 2021 Common stock options outstanding 4,470,120 3,215,904 Unvested restricted stock units 309,500 — Total 4,779,620 3,215,904 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements ASC 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 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 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, that 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 categorized its money market funds as Level 1, using the quoted prices in active markets. U.S. treasury securities and commercial paper are valued using Level 2 significant other observable inputs. The Company’s Level 2 securities are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly. The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. 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. In connection with the Company's chief executive officer's (CEO) employment agreement, he is entitled to receive a special performance award 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 nine months ended September 30, 2022. The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at September 30, 2022 consisted of the following (in thousands): Quoted Prices in Significant Other Significant Total Assets Cash and cash equivalents: Money market investments $ 15,634 $ — $ — $ 15,634 U.S. treasury securities — 37,907 — 37,907 Short-term Investments: U.S. treasury securities — 53,923 — 53,923 Commercial paper — 22,484 — 22,484 Total $ 15,634 $ 114,314 $ — $ 129,948 Liabilities Performance award $ — $ — $ 66 $ 66 Total $ — $ — $ 66 $ 66 The following table summarizes changes in fair value measurements of the Performance Award during the nine months ended September 30, 2022 (in thousands): Performance Balance as of January 1, 2022 $ 444 Change in fair value ( 378 ) Balance as of September 30, 2022 $ 66 T he recurring fair value measurement of the Company’s assets and liabilities measured at fair value at December 31, 2021 consisted of the following (in thousands): Quoted Prices in Significant Other Significant Total Assets Cash and cash equivalents: Money market investments $ 118,535 $ — $ — $ 118,535 Short-term Investments: Commercial paper — 23,010 — 23,010 Total $ 118,535 $ 23,010 $ — $ 141,545 Liabilities Performance award $ — $ — $ 444 $ 444 Total $ — $ — $ 444 $ 444 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Expenses. | |
Accrued Expenses | . Accrued Expenses Accrued expenses consisted of the following (in thousands): As of September 30, 2022 As of December 31, 2021 Accrued clinical and regulatory $ 1,955 $ 1,236 Accrued contract manufacturing cost 2,088 1,482 Accrued compensation 2,287 1,027 Accrued research and development-other 521 435 Total accrued expenses $ 6,851 $ 4,180 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Leases | 6. 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 December 20, 2022, respectively. On October 20, 2022, the Company and Discovery Park Limited entered into a lease agreement (2022 Lease Agreement) for approximately 2,600 square feet of office space located in Sandwich, United Kingdom, with a term of 5 years and a termination option after three years . The Company did not have control of the space as of September 30, 2022. Therefore, no ROU or lease liabilities were recorded in connection with the 2022 Lease Agreement as of September 30, 2022. The Company adopted ASU 2016-02 on January 1, 2022, which requires it to recognize a liability for lease payments and a ROU asset on the balance sheet. The Company elected the package of practical expedients permitted within the standard, which allows an entity to forego reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs. Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient to allow the Company to not have to separate lease and non-lease components. At September 30, 2022 , the weighted average incremental borrowing rate was 5 % and the weighted average remaining lease term was 3.8 years for the operating leases held by the Company. During the three and nine months ended September 30, 2022, cash paid for amounts included for the measurement of lease liabilities was $ 0.1 million and $ 0.4 million, respectively. During the three and nine months ended September 30, 2022, the Company recorded operating lease expense of $ 0.1 million and $ 0.4 million, respectively. Maturities of lease liabilities by fiscal year for the Company's operating leases are as follows: As of September 30, 2022 2022 (remaining three months) $ 132 2023 414 2024 323 2025 332 2026 285 Total lease payments 1,486 Less: Imputed interest ( 133 ) Present value of lease liabilities $ 1,353 |
Convertible Preferred Stock
Convertible Preferred Stock | 9 Months Ended |
Sep. 30, 2022 | |
Convertible Preferred Stock and Stockholders' Deficit | |
Convertible Preferred Stock | 7. Convertible Preferred Stock Series A Convertible Preferred Stock As of September 30, 2022 , there were no shares of Series A convertible preferred stock outstanding. In connection with the IPO (Note 1) in April 2021, all outstanding shares of Series A convertible preferred stock were converted into 5,430,957 shares of common stock. Series B Convertible Preferred Stock As of September 30, 2022 , there were no shares of Series B convertible preferred stock outstanding. In March 2021, the Company completed the milestone closing of its the Series B convertible preferred stock financing and sold a total of 23,440,514 shares of Series B convertible preferred stock, at $ 2.0215 per share, for aggregate net proceeds of approximately $ 47.4 million. In connection with the IPO in April 2021, all outstanding shares of Series B convertible preferred stock were converted into 10,476,672 shares of common stock. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Stock-Based Compensation | |
Stock-Based Compensation | 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 effectiveness 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 employees and consultants of the Company’s 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 September 30, 2022 , there were no shares subject to stock options that have been early exercised. Shares Reserved for Future Issuance As of September 30, 2022, the Company had reserved shares of its common stock for future issuance as follows: Shares Common stock options outstanding 4,470,120 Unvested restricted stock units 309,500 Available for future grants under the 2021 Equity Incentive Plan 1,977,969 Available for future grants under the 2021 Employee Stock Purchase Plan 457,916 Total shares of common stock reserved 7,215,505 Stock Options A summary of the Company’s stock option activity and related information during the nine months ended September 30, 2022 is as follows: Options Weighted- Weighted- Aggregate Outstanding at December 31, 2021 4,215,643 $ 5.49 8.5 $ 13,530 Granted 555,576 4.36 Exercised ( 50,712 ) 1.99 Forfeited/Expired ( 250,387 ) 6.09 Outstanding at September 30, 2022 4,470,120 $ 5.36 7.7 $ 729 Vested at September 30, 2022 1,991,029 $ 5.02 6.4 $ 479 Exercisable at September 30, 2022 2,898,534 $ 4.98 6.9 $ 479 Options exercisable as of September 30, 2022 include vested options and options eligible for early exercise. All outstanding options as of September 30, 2022 are expected to vest. Unrecognized stock-based compensation expense at September 30, 2022 was $ 9.0 million, which is expected to be recognized over a weighted-average vesting term of 2.6 years. The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Risk-free interest rate 3.1 % 1.0 % 2.5 % 0.7 % Expected volatility 93.6 % 90.7 % 87.2 % 72.9 % Expected term (in years) 6.0 6.1 5.9 5.9 Expected dividend yield — % — % — % — % Risk-free interest rate. The Company bases the risk-free interest rate assumption on the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. Expected volatility. Since the Company does not have sufficient trading history for its common stock the expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biotechnology industry. Expected term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period. Expected dividend yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends. Fair value of common stock. For periods prior to the Company's IPO in April 2021, since there had been no public market for the Company’s common stock, the Company’s board of directors, with input from management, determined the fair value of the Company’s common stock on each grant date by considering a number of objective and subjective factors, including the most recent independent third-party valuations of the Company’s common stock, sales of the Company’s convertible preferred stock to unrelated third-parties, operating and financial performance of the Company, the lack of liquidity of capital stock and general and industry-specific economic outlook, and the Company’s board of directors’ assessment of additional objective and subjective factors that it believed were relevant. Performance-Based Restricted Stock Units (PSUs) The following table summarizes PSU activity as of September 30, 2022: Number of Weighted-Average Unvested at December 31, 2021 299,500 $ 6.32 Granted 40,000 4.43 Cancelled ( 30,000 ) 6.69 Unvested at September 30, 2022 309,500 $ 6.04 The PSUs vest based on the Company achieving certain regulatory milestones and are subject to the employee’s continued employment with the Company through the achievement date. The fair value of the awards was based on the value of the Company’s common stock at the grant date of the award and expense recognition is based on the probability of achieving the performance conditions. Stock-based compensation expense is adjusted in future periods for subsequent changes in the expected outcome of the performance conditions. The Company concluded that achievement of the performance conditions was not probable as of September 30, 2022 , and therefore no stock-based compensation expense was recognized for the three and nine months ended September 30, 2022 in connection with the PSUs. As of September 30, 2022, unrecognized stock-based compensation expense related to the PSUs that were deemed not probable was $ 1.4 million. Market-Based Awards Restricted Stock Units In December 2021, the Company granted 100,000 market-based restricted stock units (MRSUs) to its CEO pursuant to the 2021 Plan. The MRSUs vest based on the Company’s closing stock price trading above $ 20 per share for 30 consecutive trading days subject to the employee’s continued employment with the Company through the date of achievement. The share price of the Company’s common stock on the date of issuance of the MRSUs was $ 6.69 per share. The fair value was $ 0.4 million based on Monte Carlo simulation model on the grant date. Stock-based compensation expense is recognized over the derived service period of 3 years . Stock-based compensation expense in connection with the MRSUs was $ 0.1 million for the nine months ended September 30, 2022. As of September 30, 2022, there was $ 0.3 million of unrecognized stock-based compensation expense related to this MRSU. Performance Award In connection with the CEO’s employment agreement, he is entitled to receive a Performance Award in the amount of $ 7.5 million, payable in cash, common stock or a combination of cash and common stock, at the election of the Company, in the event that (i) the Company’s market value exceeds $ 750 million utilizing the volume-weighted average of the closing sale price of its common stock on the Nasdaq Stock Market or other principal exchange for each of the 30 trading days immediately prior to the measurement date, or (ii) the fair market value of the net proceeds available for distribution to the Company’s stockholders in connection with a change in control as defined in the Company’s severance benefit plan, as determined in good faith by its board of directors, exceeds $ 750 million. The Company has determined that the Performance Award is subject to ASC 718, Compensation – Stock Compensation and includes both market and performance conditions. Since the IPO, neither of the events have yet been satisfied. The Company estimated the fair value of the Performance Award at each reporting period using the Monte Carlo simulation (Note 4), which is recognized as stock-based compensation expense over the derived service period. During the nine months ended September 30, 2022 , the Company reversed approximately $ 0.4 million in stock-based compensation expenses as a direct result of decreased value of the Performance Award caused by a decline in the Company’s common stock price. 2021 Employee Stock Purchase Plan (ESPP) In March 2021, the Company’s board of directors adopted the ESPP, which became effective immediately prior to the execution of the underwriting agreement in connection with the Company’s IPO. As of September 30, 2022 , 29,720 shares have been issued under the ESPP. In September 2021, the Company’s board of directors adopted the Company’s 2021 UK Sharesave Sub-plan (SAYE). An allocation of 25,875 shares of common stock from the ESPP reserve pool was approved and reserved for issuance under the SAYE. No shares have been issued under the SAYE through September 30, 2022. The stock-based compensation expense related to the ESPP and SAYE for the three and nine months ended September 30, 2022 and 2021, was immaterial. The following table summarizes stock-based compensation expense, including expense associated with award modifications for unvested options, reflected in the unaudited consolidated statements of operations and comprehensive loss (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Research and development $ 411 $ 1,001 $ 1,184 $ 2,093 General and administrative 579 144 1,919 377 Total $ 990 $ 1,145 $ 3,103 $ 2,470 |
License Agreement
License Agreement | 9 Months Ended |
Sep. 30, 2022 | |
License Agreement | |
License Agreement | 9. License Agreement In December 2017, the Company entered into a License Agreement with vTv Therapeutics LLC (vTv Therapeutics) (the vTv License Agreement), under which the Company 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. To date, the Company has paid a $ 3.0 million upfront payment and $ 2.0 million in milestone payments and issued an aggregate of 576,443 shares of its common stock to vTv Therapeutics. Upon the achievement of certain pre-specified development and regulatory milestones, the Company is also required to pay vTv Therapeutics milestone payments totaling up to $ 64.5 million. The Company is also required to pay vTv Therapeutics up to $ 30.0 million in total sales-based milestones upon achievement of certain sales thresholds of the licensed product. In addition, the Company is obligated to make royalty payments to vTv Therapeutics 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. There were no milestone payments achieved or recorded for the three and nine months ended September 30, 2022 and 2021 . |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Consolidation | 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 latest Annual Report on Form 10-K. 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 September 30, 2022 ; all intercompany transactions and balances have been eliminated. |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (ASC 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheets for those leases classified as operating leases under previous GAAP. ASU 2016-02 requires a lessee to recognize a liability for lease payments (lease liability) and a right-of-use (ROU)assets (representing its right to use the underlying asset for the lease term) on the balance sheet. In July 2018, the FASB issued ASU 2018-11, Leases (ASC 842): Targeted Improvements , which provides entities an optional transition method to apply the new guidance as of the adoption date, rather than as of the earliest period presented. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the effective date, unless the lease was modified, to not reassess (a) whether a contract is or contains a lease, (b) lease classification or (c) determination of initial direct costs, which effectively allows entities to carryforward accounting conclusions under previous GAAP. The Company early adopted this standard on January 1, 2022 , using the optional transitional method and elected the package of practical expedients in transition for leases that commenced prior to January 1, 2022. As a result of implementing ASC 842, the Company recognized operating lease ROU assets of $ 1.5 million and lease liabilities of $ 1.7 million on January 1, 2022, with no impact on its beginning retained earnings, consolidated statements of operations and comprehensive loss, or cash flows. See Note 6, Leases, for further details. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes . The standard simplifies the accounting for income taxes, eliminates certain exceptions within Accounting Standards Codification (ASC) 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The new guidance was effective for the Company as of January 1, 2022. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company adopted this standard on January 1, 2022 . Adoption of this standard had no material impact on the Company’s consolidated financial position, results of operations or cash flows. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued 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 aren’t 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 is effective for the Company as of January 1, 2023. The Company is currently evaluating the impact of this ASU and does not expect that adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. 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. |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Net Loss Per Share [Abstract] | |
Schedule of Anti-dilutive securities not included in diluted net loss per share calculation | Historical outstanding anti-dilutive securities not included in the diluted net loss per share calculation include the following: As of September 30, 2022 2021 Common stock options outstanding 4,470,120 3,215,904 Unvested restricted stock units 309,500 — Total 4,779,620 3,215,904 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements [Abstract] | |
Schedule of recurring fair value measurement of the Company's assets and liabilities | The recurring fair value measurement of the Company’s assets and liabilities measured at fair value at September 30, 2022 consisted of the following (in thousands): Quoted Prices in Significant Other Significant Total Assets Cash and cash equivalents: Money market investments $ 15,634 $ — $ — $ 15,634 U.S. treasury securities — 37,907 — 37,907 Short-term Investments: U.S. treasury securities — 53,923 — 53,923 Commercial paper — 22,484 — 22,484 Total $ 15,634 $ 114,314 $ — $ 129,948 Liabilities Performance award $ — $ — $ 66 $ 66 Total $ — $ — $ 66 $ 66 he recurring fair value measurement of the Company’s assets and liabilities measured at fair value at December 31, 2021 consisted of the following (in thousands): Quoted Prices in Significant Other Significant Total Assets Cash and cash equivalents: Money market investments $ 118,535 $ — $ — $ 118,535 Short-term Investments: Commercial paper — 23,010 — 23,010 Total $ 118,535 $ 23,010 $ — $ 141,545 Liabilities Performance award $ — $ — $ 444 $ 444 Total $ — $ — $ 444 $ 444 |
Schedule Changes in fair value measurements of the performance award | The following table summarizes changes in fair value measurements of the Performance Award during the nine months ended September 30, 2022 (in thousands): Performance Balance as of January 1, 2022 $ 444 Change in fair value ( 378 ) Balance as of September 30, 2022 $ 66 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Expenses | |
Schedule of Accrued expenses | Accrued expenses consisted of the following (in thousands): As of September 30, 2022 As of December 31, 2021 Accrued clinical and regulatory $ 1,955 $ 1,236 Accrued contract manufacturing cost 2,088 1,482 Accrued compensation 2,287 1,027 Accrued research and development-other 521 435 Total accrued expenses $ 6,851 $ 4,180 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Schedule of Maturities of lease liabilities by fiscal year for operating leases | Maturities of lease liabilities by fiscal year for the Company's operating leases are as follows: As of September 30, 2022 2022 (remaining three months) $ 132 2023 414 2024 323 2025 332 2026 285 Total lease payments 1,486 Less: Imputed interest ( 133 ) Present value of lease liabilities $ 1,353 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stock-Based Compensation | |
Summary of common stock reserved for future issuance | As of September 30, 2022, the Company had reserved shares of its common stock for future issuance as follows: Shares Common stock options outstanding 4,470,120 Unvested restricted stock units 309,500 Available for future grants under the 2021 Equity Incentive Plan 1,977,969 Available for future grants under the 2021 Employee Stock Purchase Plan 457,916 Total shares of common stock reserved 7,215,505 |
Summary of the Company's stock option activity | A summary of the Company’s stock option activity and related information during the nine months ended September 30, 2022 is as follows: Options Weighted- Weighted- Aggregate Outstanding at December 31, 2021 4,215,643 $ 5.49 8.5 $ 13,530 Granted 555,576 4.36 Exercised ( 50,712 ) 1.99 Forfeited/Expired ( 250,387 ) 6.09 Outstanding at September 30, 2022 4,470,120 $ 5.36 7.7 $ 729 Vested at September 30, 2022 1,991,029 $ 5.02 6.4 $ 479 Exercisable at September 30, 2022 2,898,534 $ 4.98 6.9 $ 479 |
Summary of weighted-average assumptions to determine the fair value of the employee stock option | The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Risk-free interest rate 3.1 % 1.0 % 2.5 % 0.7 % Expected volatility 93.6 % 90.7 % 87.2 % 72.9 % Expected term (in years) 6.0 6.1 5.9 5.9 Expected dividend yield — % — % — % — % |
Summary of PSU activity | Performance-Based Restricted Stock Units (PSUs) The following table summarizes PSU activity as of September 30, 2022: Number of Weighted-Average Unvested at December 31, 2021 299,500 $ 6.32 Granted 40,000 4.43 Cancelled ( 30,000 ) 6.69 Unvested at September 30, 2022 309,500 $ 6.04 |
Summary of Non-cash stock-based compensation expense recorded | The following table summarizes stock-based compensation expense, including expense associated with award modifications for unvested options, reflected in the unaudited consolidated statements of operations and comprehensive loss (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Research and development $ 411 $ 1,001 $ 1,184 $ 2,093 General and administrative 579 144 1,919 377 Total $ 990 $ 1,145 $ 3,103 $ 2,470 |
Organization and Business (Narr
Organization and Business (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Apr. 13, 2021 | Jun. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | May 31, 2022 | Dec. 31, 2021 | Apr. 14, 2021 | |
Proceeds from issuance initial public offering | $ 84,641,000 | ||||||
Cash, cash equivalents at carrying value and short term investments | $ 116,100,000 | ||||||
Accumulated deficit | $ 123,083,000 | $ 84,728,000 | |||||
Common stock, authorized | 200,000,000 | 200,000,000 | |||||
Common stock sold, value | $ 84,533,000 | ||||||
IPO [Member] | |||||||
Common stock issued, Shares | 6,250,000 | ||||||
Share price | $ 15 | ||||||
Proceeds from issuance initial public offering | $ 93,800,000 | ||||||
Initial public offering underwriting discounts and commissions | 6,600,000 | ||||||
Initial public offering offering expenses | $ 2,600,000 | ||||||
ATM facility [Member] | SVB Securities LLC [Member] | |||||||
Common stock, authorized | 20,000,000 | ||||||
Common stock sold, value | $ 0 | ||||||
Convertible preferred stock [Member] | |||||||
Preferred stock, shares outstanding | 71,183,500 | 0 | |||||
Convertible preferred stock [Member] | IPO [Member] | |||||||
Shares issued from conversion of convertible stock | 15,907,629 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Jan. 01, 2022 |
Right-of-use assets | $ 1,186 | |
Operating Lease, Liability | $ 1,353 | |
Accounting Standards Update 2016-02 [Member] | ||
Right-of-use assets | $ 1,500 | |
Operating Lease, Liability | $ 1,700 | |
Change in accounting principle, accounting standards update, adopted | true | |
Change in accounting principle, accounting standards update, early adoption | true | |
Change in accounting principle, accounting standards update, adoption date | Jan. 01, 2022 | |
Accounting Standards Update 2019-12 [Member] | ||
Change in accounting principle, accounting standards update, adopted | true | |
Change in accounting principle, accounting standards update, adoption date | Jan. 01, 2022 | |
Change in accounting principle, accounting standards update, immaterial effect | true |
Net Loss Per Share - Anti-dilut
Net Loss Per Share - Anti-dilutive securities not included in diluted net loss per share calculation (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 4,779,620 | 3,215,904 |
Common stock options outstanding | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 4,470,120 | 3,215,904 |
Unvested Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 309,500 |
Net Loss Per Share - Narratives
Net Loss Per Share - Narratives (Details) | Apr. 05, 2021 |
Net Loss Per Share [Abstract] | |
Stock split reverse description | On April 5, 2021, in connection with the IPO, the Company effected a 1-for-4.4748 reverse stock split of its common stock. The par value and the authorized number of shares of the common stock were not adjusted as a result of the reverse stock split. The reverse stock split resulted in an adjustment to the Series A and Series B convertible preferred stock conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion. The accompanying consolidated financial statements and notes to the consolidated financial statements give retroactive effect to the reverse stock split for all periods presented. |
Stock split reverse conversion ratio | 0.2235 |
Fair Value Measurements - Narra
Fair Value Measurements - Narratives (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Assets transferred into L3 | $ 0 |
Assets transferred out of L3 | 0 |
Liabilities transferred into L3 | 0 |
Liabilities transferred out of L3 | 0 |
Performance Shares [Member] | Chief executive officer | |
Special performance bonus payable | $ 7,500 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring fair value measurement of the Company's assets and liabilities (Detail) - Fair Value, Recurring [Member] - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | $ 129,948 | $ 141,545 |
Total | 66 | 444 |
Quoted Prices in Active Markets For Identical Items (Level 1) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 15,634 | 118,535 |
Significant Other Observable Inputs (Level 2)[Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 114,314 | 23,010 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 66 | 444 |
Performance Award Liability [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 66 | 444 |
Performance Award Liability [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 66 | 444 |
Money market investments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 15,634 | 118,535 |
Money market investments [Member] | Quoted Prices in Active Markets For Identical Items (Level 1) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 15,634 | 118,535 |
US Treasury Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 37,907 | |
Short-term investments | 53,923 | |
US Treasury Securities [Member] | Significant Other Observable Inputs (Level 2)[Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 37,907 | |
Short-term investments | 53,923 | |
Commercial Paper [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 22,484 | 23,010 |
Commercial Paper [Member] | Significant Other Observable Inputs (Level 2)[Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | $ 22,484 | $ 23,010 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule Changes in fair value measurements of the performance award (Detail) - Performance Award [Member] $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning Balance | $ 444 |
Change in fair value | (378) |
Ending Balance | $ 66 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued Expenses | ||
Accrued clinical and regulatory | $ 1,955 | $ 1,236 |
Accrued contract manufacturing cost | 2,088 | 1,482 |
Accrued compensation | 2,287 | 1,027 |
Accrued research and development-other | 521 | 435 |
Total accrued expenses | $ 6,851 | $ 4,180 |
Leases (Details)
Leases (Details) | 3 Months Ended | 9 Months Ended | |
Oct. 20, 2022 ft² | Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
Lessee, Lease, Description [Line Items] | |||
Lease, Practical Expedients, Package [true false] | true | ||
Lease, Practical Expedient, Use of Hindsight [true false] | true | ||
Weighted average incremental borrowing rate | 5% | 5% | |
Weighted average remaining lease term | 3 years 9 months 18 days | 3 years 9 months 18 days | |
Payments for operating leases liabilities | $ 100,000 | $ 400,000 | |
Operating lease expense | 100,000 | 400,000 | |
Right-of-use assets | 1,186,000 | 1,186,000 | |
Lease liabilities | 1,353,000 | 1,353,000 | |
2022 Lease Agreement | Discovery Park Limited | |||
Lessee, Lease, Description [Line Items] | |||
Area of land | ft² | 2,600 | ||
Term of contract | 5 years | ||
Contract termination period | 3 years | ||
Lessee, operating lease, existence of option to terminate [true false] | true | ||
Right-of-use assets | 0 | 0 | |
Lease liabilities | $ 0 | $ 0 |
Leases - Maturities of lease li
Leases - Maturities of lease liabilities (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Leases | |
2022 (remaining six months) | $ 132 |
2023 | 414 |
2024 | 323 |
2025 | 332 |
2026 | 285 |
Total lease payments | 1,486 |
Less: Imputed interest | (133) |
Present value of lease liabilities | $ 1,353 |
Convertible Preferred Stock (Na
Convertible Preferred Stock (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Apr. 30, 2021 | Mar. 31, 2021 | Mar. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2022 | Apr. 14, 2021 | Apr. 13, 2021 | |
Convertible preferred stock [Member] | |||||||
Temporary Equity [Line Items] | |||||||
Preferred stock, shares outstanding | 0 | 71,183,500 | |||||
Series A convertible preferred stock | |||||||
Temporary Equity [Line Items] | |||||||
Shares issued from conversion of convertible stock | 5,430,957 | ||||||
Preferred stock, shares outstanding | 0 | ||||||
Series B convertible preferred stock | |||||||
Temporary Equity [Line Items] | |||||||
Issuance of convertible preferred stock net of issuance cost (in shares) | 23,440,514 | 23,440,514 | |||||
Temporary equity, share price | $ 2.0215 | $ 2.0215 | |||||
Shares issued from conversion of convertible stock | 10,476,672 | ||||||
Proceeds from issuance of Series B convertible preferred stock, net of issuance costs | $ 47,239 | ||||||
Net Proceeds from temporary equity | $ 47,400 | ||||||
Preferred stock, shares outstanding | 0 |
Stock-Based Compensation - Equi
Stock-Based Compensation - Equity Incentive Plans (Details) | 9 Months Ended |
Sep. 30, 2022 shares | |
Equity Incentive Plan 2014 | |
Stock-Based Compensation | |
Share options exercised unvested | 0 |
Stock-Based Compensation - Shar
Stock-Based Compensation - Shares Reserved for Future Issuance (Details) | Sep. 30, 2022 shares |
Class of Stock [Line Items] | |
Total shares of common stock reserved | 7,215,505 |
Unvested Restricted Stock Units | |
Class of Stock [Line Items] | |
Total shares of common stock reserved | 309,500 |
Common stock options outstanding | |
Class of Stock [Line Items] | |
Total shares of common stock reserved | 4,470,120 |
Equity Incentive Plan 2021 | |
Class of Stock [Line Items] | |
Total shares of common stock reserved | 1,977,969 |
Employee Stock Purchase Plan (ESPP) 2021 | |
Class of Stock [Line Items] | |
Total shares of common stock reserved | 457,916 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Options Outstanding | ||
Outstanding at beginning of period (in shares) | 4,215,643 | |
Granted (in shares) | 555,576 | |
Exercised (in shares) | (50,712) | |
Forfeited/Expired (in shares) | (250,387) | |
Outstanding at end of period (in shares) | 4,470,120 | 4,215,643 |
Vested (in shares) | 1,991,029 | |
Exercisable (in shares) | 2,898,534 | |
Weighted-Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 5.49 | |
Granted (in dollars per share) | 4.36 | |
Exercised (in dollars per share) | 1.99 | |
Forfeited/Expired (in dollars per share) | 6.09 | |
Outstanding at end of period (in dollars per share) | 5.36 | $ 5.49 |
Vested (in dollars per share) | 5.02 | |
Exercisable (in dollars per share) | $ 4.98 | |
Weighted-Average Remaining Contractual Term (in years) / Aggregate Intrinsic Value | ||
Weighted Average Remaining Contractual Term (in years), Options Outstanding | 7 years 8 months 12 days | 8 years 6 months |
Weighted Average Remaining Contractual Term (in years), Vested | 6 years 4 months 24 days | |
Weighted Average Remaining Contractual Term (in years), Exercisable | 6 years 10 months 24 days | |
Aggregate Intrinsic Value, Outstanding | $ 729 | $ 13,530 |
Aggregate Intrinsic Value, Vested | 479 | |
Aggregate Intrinsic Value, Exercisable | 479 | |
Unrecognized compensation expense | $ 9,000 | |
Weighted-average vesting term | 2 years 7 months 6 days |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Weighted-average assumptions | ||||
Risk-free interest rate | 3.10% | 1% | 2.50% | 0.70% |
Expected volatility | 93.60% | 90.70% | 87.20% | 72.90% |
Expected term (in years) | 6 years | 6 years 1 month 6 days | 5 years 10 months 24 days | 5 years 10 months 24 days |
Expected dividend yield | 0% | 0% | 0% | 0% |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance-Based Restricted Stock Units (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Weighted Average Grant Date Fair Value | ||||
Stock-based compensation expense | $ 990,000 | $ 1,145,000 | $ 3,103,000 | $ 2,470,000 |
Unrecognized compensation expense | $ 9,000,000 | $ 9,000,000 | ||
Performance Based Restricted Stock Units R S U [Member] | Equity Incentive Plan 2021 | ||||
Number of PSUs | ||||
Unvested at Beginning | 299,500 | |||
Granted | 40,000 | |||
Cancelled | (30,000) | |||
Unvested at End | 309,500 | 309,500 | ||
Weighted Average Grant Date Fair Value | ||||
Unvested at Beginning | $ 6.32 | |||
Granted | 4.43 | |||
Cancelled | 6.69 | |||
Unvested at End | $ 6.04 | $ 6.04 | ||
Stock-based compensation expense | $ 0 | $ 0 | ||
Unrecognized compensation expense | $ 1,400,000 | $ 1,400,000 |
Stock-Based Compensation - Mark
Stock-Based Compensation - Market-Based Awards (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2021 USD ($) Days $ / shares shares | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | |
Stock-Based Compensation | |||||
Stock-based compensation expense | $ 990 | $ 1,145 | $ 3,103 | $ 2,470 | |
Unrecognized compensation expense | 9,000 | 9,000 | |||
Equity Incentive Plan 2021 | Market Based Restricted Stock Units | |||||
Stock-Based Compensation | |||||
Stock-based compensation expense | 100 | 100 | |||
Unrecognized compensation expense | $ 300 | $ 300 | |||
Equity Incentive Plan 2021 | Market Based Restricted Stock Units | Employee | |||||
Stock-Based Compensation | |||||
Number of shares granted | shares | 100,000 | ||||
Threshold share price for vesting of shares | $ / shares | $ 20 | ||||
Consecutive trading days | Days | 30 | ||||
Share price | $ / shares | $ 6.69 | ||||
Fair value of share-based awards granted | $ 400 | ||||
Service period | 3 years |
Stock-Based Compensation - Appo
Stock-Based Compensation - Appointment of CEO (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) Days | Sep. 30, 2021 USD ($) | |
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 990 | $ 1,145 | $ 3,103 | $ 2,470 |
Chief executive officer | ||||
Stock-Based Compensation | ||||
Threshold market value | 750,000 | $ 750,000 | ||
Number of trading days | Days | 30 | |||
Threshold fair market value of the net proceeds | 750,000 | $ 750,000 | ||
Allocated share based compensation income | 400 | |||
Chief executive officer | Performance Shares [Member] | ||||
Stock-Based Compensation | ||||
Special performance bonus payable | $ 7,500 | $ 7,500 |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Employee Stock Purchase Plan (ESPP) 2021 | ||
Stock-Based Compensation | ||
Number of shares issued | 29,720 | |
UK Sharesave Sub-plan (SAYE) | ||
Stock-Based Compensation | ||
Options authorized | 25,875 | |
Number of shares issued | 0 |
Stock-Based Compensation - Non-
Stock-Based Compensation - Non-cash stock-based compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 990 | $ 1,145 | $ 3,103 | $ 2,470 |
Research and development | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | 411 | 1,001 | 1,184 | 2,093 |
General and administrative | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 579 | $ 144 | $ 1,919 | $ 377 |
License Agreement (Details)
License Agreement (Details) - vTv Therapeutics - USD ($) | 1 Months Ended | 58 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2017 | Sep. 30, 2022 | Sep. 30, 2021 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||
Milestone payments | $ 0 | $ 0 | ||
Milestone payments paid | $ 2,000,000 | |||
Milestone payments payable on achievement of sales thresholds of the licensed product | $ 30,000,000 | |||
Research and development | ||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||
Upfront license fee payment | 3,000,000 | |||
Common stock issued, Shares | 576,443 | |||
Milestone payments payable on achievement of development and regulatory milestones | $ 64,500,000 |