| Basis of Presentation and Summary of Significant Accounting Policies | 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of Mural Oncology plc and its wholly-owned subsidiaries. For the periods prior to the Separation, the accompanying combined financial statements of the Company have been prepared on a standalone basis and are derived from the Former Parent’s consolidated financial statements and accounting records. All intercompany transactions and accounts within the Company have been eliminated. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and, for the periods prior to the Separation, reflect the historical results of operations, financial position and cash flows of Mural, as included in the consolidated financial statements of the Former Parent and using the Former Parent’s historical accounting policies. These consolidated financial statements do not purport to reflect what the Company’s results of operations, financial position or cash flows would have been had the Company operated as a standalone public company prior to the separation, nor are they necessarily indicative of the Company’s future results of operations, financial position, or cash flows. As the Company’s operations were not historically held by a single legal entity or separate legal entities, net parent investment is shown in lieu of stockholders’ equity in the historical combined financial statements for the periods prior to the Separation. Net parent investment represents the cumulative investment by the Former Parent in the Company through the dates presented, inclusive of operating results. All transactions between the Company and the Former Parent are considered to be effectively settled in the consolidated financial statements at the time the transaction is recorded. The effects of the settlement of these transactions between the Company and the Former Parent are reflected in the consolidated statements of cash flows as “Net transfers from Former Parent” within financing activities and in the consolidated balance sheets and consolidated statements of equity (deficit) as “Net parent investment”. Historically, the Company was dependent upon the Former Parent for all of its working capital and financing requirements, as the Former Parent used a centralized approach to cash management and financing its operations. There were no cash amounts specifically attributable to the Company for the historical periods presented prior to the Separation; therefore, cash and cash equivalents have not been included in the consolidated financial statements for the year ended December 31, 2022. Financing transactions prior to the Separation related to the Former Parent are accounted for as a component of net parent investment in the consolidated balance sheet as of December 31, 2022 and as a financing activity on the accompanying consolidated statements of cash flows through the date of the Separation. In connection with the Separation, certain assets and liabilities that were included on the consolidated balance sheet prior to the Separation were retained by the Former Parent and were therefore adjusted through net parent investment in the Company’s consolidated financial statements. The consolidated financial statements of the Company include, for the periods prior to the Separation, the assets, liabilities, and expenses of the Former Parent that management has determined are specifically identifiable to the Company, such as those related to direct internal and external R&D activities as well as leases and fixed assets specifically identifiable to the oncology business. Based on the nature of the Company as a pre-revenue, development-stage biotechnology company, the consolidated financial statements of the Company do not include any revenue or commercial expenses of the Former Parent. The consolidated financial statements of the Company also include, for the periods prior to the Separation, an allocation of costs that were not directly attributable to the operations of the Company, including the costs of general and administrative support functions that were provided by the Former Parent, such as senior management, information technology, legal, accounting and finance, human resources, facility, and other corporate services. In addition, the Company’s consolidated financial statements include, for the periods prior to the Separation, an allocation of certain R&D costs not directly attributable to individual programs. These costs have been allocated to the Company for the purposes of preparing the consolidated financial statements based on proportional cost allocation methods using headcount, square footage or proportional hours worked supporting the Company and other organizational activities, as applicable, which are considered to be reasonable reflections of the utilization of services provided or benefit received by the Company during the periods presented. Management considers that such allocations have been made on a reasonable basis; however, these allocations may not necessarily be indicative of the costs that would have been incurred if the Company had operated on a standalone basis for the periods presented and, therefore, may not reflect the Company’s results of operations, financial position, and cash flows had the Company operated as a standalone entity during the periods presented. See Note 11, Related Parties , for additional information regarding related-party transactions with the Former Parent. The Company expects to incur additional operating expenses to operate as an independent publicly traded company, including various corporate functions, incremental information technology-related costs and incremental costs to operate standalone accounting, legal and other administrative functions. These functions were provided to the Company prior to the Separation by the Former Parent and will continue under a transition services agreement or will be performed using the Company’s own resources. Use of Estimates The preparation of the Company’s consolidated financial statements in accordance with GAAP requires the Company to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities and expenses and the related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates and judgments and methodologies, including but not limited to, those related to allocations of expenses, assets and liabilities from the Former Parent’s historical financials to the Company, the impairment of long-lived assets, share-based compensation, leases, and income taxes including the valuation allowance for deferred tax assets. The Company bases its estimates on historical experience of the Former Parent and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Cash and Cash Equivalents and Restricted Cash The Company considers cash equivalents only those investments that are highly liquid, readily convertible into cash and so near their maturity, generally three months from the date of purchase, that they present insignificant risk of change in value because of interest rate changes. At December 31, 2023, the Company also had a long-term restricted cash balance of $ 0.3 million for cash restricted for use pertaining to corporate credit cards. There were no cash or cash equivalents specifically attributable to the Company prior to the Separation; therefore, there are no cash or cash equivalents reflected in the combined financial statements as of December 31, 2022 . Fair Value Measurements The Company’s financial assets and liabilities are recorded at fair value and are classified as Level 1, 2 or 3 within the fair value hierarchy, as described in the accounting standards for fair value measurement. Financial assets and liabilities are classified within the fair value hierarchy as follows: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying amounts reflected in the consolidated balance sheets for prepaid expenses, receivable from Former Parent, other current assets, accounts payable, and accrued expenses approximate fair value due to their short-term nature. Other current assets consists of interest receivable of $ 0.8 million as of December 31, 2023 and of rebates from a clinical research organization of $ 1.8 million as of December 31, 2022 . The Company has elected to exclude accrued interest receivable from the amortized cost of its financial assets and has included those balances within Other current assets on the consolidated balance sheet. Receivable from Former Parent The Company makes judgments as to its ability to collect outstanding receivables and provides an allowance for estimated amounts of receivables that will not be collected, if any. The Company believes that the credit risks associated with its receivables are not significant and, therefore, the Company did not have an allowance for doubtful receivables as of December 31, 2023 . Property and Equipment Property and equipment are recorded at cost, subject to assessment for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Expenditures for repairs and maintenance are charged to expense as incurred and major renewals and improvements are capitalized. Depreciation is calculated using the straight-line method over the following estimated useful lives of the assets:
Asset group Term
Furniture, fixtures and equipment 3 - 10 years
Leasehold improvements Shorter of useful life or lease term Leases The Company accounts for leases under Accounting Standards Codification (“ASC”) 842, Leases . At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the relevant facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. The Company does not have material financing leases. Leases contain both lease and non-lease components. Non-lease components may include maintenance, utilities, and other operating costs. The Company combines the lease and non-lease components in its lease arrangements as a single lease component. Variable costs, such as utilities or maintenance costs, are not included in the measurement of right-of-use assets and lease liabilities, but rather are expensed when the event determining the amount of variable consideration to be paid occurs. Operating lease liabilities and their corresponding right-of-use assets are initially recorded at the lease commencement date based on the present value of lease payments over the expected remaining lease term. Certain adjustments to right-of-use assets may be required for items such as prepaid or accrued lease payments as well as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes an incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. To estimate the incremental borrowing rate, a credit rating applicable to us is estimated using a synthetic credit rating analysis since the Company does not currently have a rating agency-based credit rating. Operating lease payments are expensed using the straight line method as an operating expense over the lease term. The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. Assumptions that the Company made at the commencement date are re-evaluated upon occurrence of certain events, including a lease modification. A lease modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original lease and when lease payments increase commensurate with the standalone price for the additional right of use. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease. Impairment of Long-Lived Assets The Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset; a significant change in the extent or manner in which an asset is used; a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; a current-period operating or cash flow loss combined with a history of operating or cash-flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset; or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written-down to their estimated fair values. Long-lived assets to be disposed of are carried at fair value less costs to sell them. The Company has no t recorded any impairment charges for the years ended December 31, 2023 and 2022 . Research and Development Expenses For each of its R&D programs, the Company incurs both external and internal expenses. External R&D expenses include fees related to clinical and non-clinical activities performed by contract research organizations, consulting fees and costs related to laboratory services, purchases of drug product materials, and third-party manufacturing development costs. Internal R&D expenses include employee-related expenses, including share-based compensation, occupancy costs, depreciation, and general R&D overhead. Prior to the Separation, these expenses included allocations from the Former Parent. Clinical Trial and Preclinical Study Expenses The Company makes estimates of prepaid and/or accrued expenses as of each balance sheet date in its consolidated financial statements based on certain facts and circumstances at that time. The Company’s accrued expenses for preclinical studies and clinical trials are based on estimates of costs incurred for services provided by contract research organizations (“CROs”), manufacturing organizations, and for other trial- and study-related activities. Payments under the Company’s agreements with external service providers depend on a number of factors such as site initiation, patient screening, enrollment, delivery of reports, and other events. In accruing for these activities, the Company obtains information from various sources and estimates the level of effort or expense allocated to each period. Adjustments to R&D expenses may be necessary in future periods as the Company’s estimates change. As these activities are generally material to the Company’s financial statements, subsequent changes in estimates may result in a material change in accruals. No material changes in estimates were recognized in either of the years ended December 31, 2023 and 2022 . General and Administrative Expenses General and administrative expenses are primarily comprised of employee-related expenses associated with finance, human resources, legal, information technology and other administrative personnel, and occupancy costs, depreciation and third-party expenses related to financial, legal and other general and administrative functions. Prior to the Separation, these expenses included allocations from the Former Parent. Share-Based Compensation Certain employees of the Company participate in the Company’s share-based compensation plans and, prior to the Separation, participated in the Former Parent’s share-based compensation plans. Share-based compensation expense of the Company related to the Former Parent’s plans was recognized through allocations based on methodologies that management believes are consistent and reasonable, utilizing headcount or proportional hours worked supporting the Company and other organizational activities, as appropriate. Share-based compensation expense is recognized over the requisite service period of the awards, which is generally the vesting period. Subsequent to the Separation, option awards granted to employees generally vest over a four year period, with 25 % vesting on the first anniversary of the date of grant and the remaining 75 % vesting quarterly over the remaining three years , provided the employee remains continuously employed by the Company during the applicable vesting period; option awards granted to non-employee directors generally vest over a three-year period, provided that the director continues to serve on the Company’s board of directors during the applicable vesting period; and restricted stock unit (“RSU”) awards generally vest in four equal annual installments, commencing on the first anniversary of the date of grant, provided the employee remains continuously employed by the Company during the applicable vesting period. See Note 6, Share-Based Compensation , for more information. Due to its limited operating history and a limited trading history of its ordinary shares in relation to the life of its stock option grants, the Company estimates the volatility of its ordinary shares based on the volatility of comparable public companies. The expected life of a stock option is based on the average of the contractual term (generally ten years) and the vesting period. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The assumed dividend yield is based on the Company’s expectation of not paying dividends in the foreseeable future. Income Taxes Prior to the Separation, the Company was included in the Former Parent’s income tax returns, and all income taxes were paid by the Former Parent. Income tax expense and other income tax related information contained in these consolidated financial statements prior to the Separation are presented on a separate return approach as if the Company filed its own tax returns for those periods. Under this approach, the provision for income taxes represents income tax paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year calculated as if the Company were a standalone taxpayer filing hypothetical income tax returns, where applicable. Current income tax liabilities were assumed to be immediately settled with the Former Parent and were relieved through “Net parent investment” account and reflected as “Net transfers from Former Parent” within financing activities in the historical combined statements of cash flows for periods prior to the Separation. Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation. The Company recognizes income taxes under the asset and liability method. Deferred income taxes are recognized for differences between the financial reporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence including its past operating results, the existence of cumulative losses in the most recent fiscal years, changes in the business in which the Company operates and its forecast of future taxable income. In determining future taxable income, the Company is responsible for assumptions utilized, including the amount of U.S. and non-U.S pre-tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is using to manage the underlying business. The Company accounts for uncertain tax positions using a more-likely-than-not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company also accrues for potential interest and penalties related to unrecognized tax benefits in income tax expense. Comprehensive Loss and Loss per Share Comprehensive loss is comprised of net loss and other comprehensive loss. The Company has no components of other comprehensive loss. Therefore, net loss equals comprehensive loss for all periods presented. Basic net loss per share is computed by dividing the net loss in each period by the weighted average number of ordinary shares outstanding during such period. Diluted net loss per share is computed similarly to basic net loss per share except that the denominator is increased to include the number of additional ordinary shares that would have been outstanding if the potential ordinary shares had been issued and if the additional ordinary shares were dilutive. For the periods presented, ordinary share equivalents, consisting of share-based awards, were not included in the calculation of the diluted net loss per share because to do so would be anti-dilutive. The number of shares distributed to the Former Parent’s shareholders of record on the effective date of the Distribution was used for the calculation of basic and diluted earnings per share for periods prior to the Separation as the Company had no shares outstanding prior to the Separation. Segment Information The Company operates as one business segment, which is the business of developing medicines designed to address unmet medical needs of patients in the area of oncology. The Company’s chief operating decision maker reviews the Company’s operating results on an aggregate basis and manages operations as a single operating unit. Prior to the Separation, the Company’s chief operating decision maker was the Chairman and Chief Executive Officer of the Former Parent. After the Separation, the Company’s chief operating decision maker is the Company’s Chief Executive Officer. All of the Company’s long-lived assets are held in Massachusetts. 401(k) Plan The Company maintains a 401(k) retirement savings plan (the “401(k) Plan”), which covers substantially all of its U.S.-based employees. Eligible employees may contribute up to 100 % of their eligible compensation, subject to certain IRS limitations. The Company matches 100 % of employee contributions up to the first 5 % of employee pay, up to IRS limits. Employee and employer contributions are fully vested when made. Prior to the Separation, the Former Parent included in its 401(k) retirement savings plan substantially all of the employees of the Former Parent who would become employees of the Company. During the years ended December 31, 2023 and 2022 , expenses related to the 401(k) Plan that were incurred by the Company after the Separation or that were allocated to Mural prior to the Separation totaled $ 1.9 million and $ 1.6 million, respectively. Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”) or other standard-setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 280”). ASU 280 requires public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and to disclose how reported measures of segment profit or loss are used in assessing segment performance and allocating resources. The amendments in ASU-280 are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU-280 on its consolidated financial statements and related disclosures and does not expect the adoption of ASU-280 to have a material impact on the Company’s consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU-740”). ASU-740 requires public entities to provide enhanced disclosure of specific categories of reconciling items included in the rate reconciliation; disclosure of the nature, effect and underlying causes of each reconciling item in the rate reconciliation and the judgment used in the categorization of such items; and enhanced disclosures for income taxes paid. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU-740 on its consolidated financial statements and disclosures. |
