Full Press Release Details
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Opinion on the Financial Statements
accompanying balance sheets of OnKure, Inc. (the Company) as of December 31, 2023 and 2022, the related statements of operations and comprehensive loss, changes in convertible preferred stock and stockholders deficit, and cash
flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with U.S. generally
accepted accounting principles.
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and an accumulated deficit
that raise substantial doubt about its ability to continue as a going concern. Management s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the relevant ethical
requirements relating to our audits.
We conducted our audits in accordance with the auditing standards of the PCAOB and in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or
fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company s auditor since 2021.
(in thousands, except share and per share data)
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 29,876 | $ | 11,543 | ||||
| Prepaid clinical trials | 3,192 | 1,240 | ||||||
| Prepaid expenses and other current assets | 698 | 840 | ||||||
| Total current assets | 33,766 | 13,623 | ||||||
| Property and equipment, net | 1,432 | 1,604 | ||||||
| Operating lease right-of-use asset | 478 | 443 | ||||||
| Other assets | 58 | 329 | ||||||
| Total assets | $ | 35,734 | $ | 15,999 | ||||
| Liabilities, Convertible Preferred Stock, and Stockholders Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,417 | $ | 2,520 | ||||
| Accrued expenses | 3,660 | 2,871 | ||||||
| Operating lease liability, current portion | 208 | 151 | ||||||
| Total current liabilities | 7,285 | 5,542 | ||||||
| Operating lease liability, net of current portion | 466 | 486 | ||||||
| Total liabilities | 7,751 | 6,028 | ||||||
| Commitments and contingencies | ||||||||
| Convertible preferred stock | 129,825 | 64,389 | ||||||
| Stockholders deficit: | ||||||||
| Common stock, Class A, $0.0001 par value; 78,000,000 and 40,000,000 shares authorized; 13,296,584 and 7,745,744 shares issued and outstanding as of December 31, 2023 and 2022, respectively. | 1 | 1 | ||||||
| Common stock, Class B, $0.0001 par value; 9,589,983 shares authorized; 0 shares issued and outstanding. | ||||||||
| Additional paid-in capital | 208 | 2,655 | ||||||
| Accumulated deficit | (102,051 | ) | (57,074 | ) | ||||
| Total stockholders deficit | (101,842 | ) | (54,418 | ) | ||||
| Total liabilities, convertible preferred stock, and stockholders deficit | $ | 35,734 | $ | 15,999 |
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and pre share data)
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Operating expenses: | ||||||||
| Research and development | $ | 32,115 | $ | 25,862 | ||||
| General and administrative | 4,819 | 3,904 | ||||||
| Total operating expenses | 36,934 | 29,766 | ||||||
| Loss from operations | (36,934 | ) | (29,766 | ) | ||||
| Other income: | ||||||||
| Interest income | 1,623 | 254 | ||||||
| Total other income | 1,623 | 254 | ||||||
| Net loss and comprehensive loss | $ | (35,311 | ) | $ | (29,512 | ) |
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT
(in thousands, except share information)
| Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders Deficit | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | 15,870,584 | $ | 38,264 | 6,917,439 | $ | 1 | $ | 2,267 | $ | (27,562 | ) | $ | (25,294 | ) | ||||||||||||||||||
| Issuance of Series B Preferred Stock under a stock purchase agreement, net of issuance costs of $1.4 million | 9,951,868 | 26,125 | ||||||||||||||||||||||||||||||
| Issuance of Class A Common Stock for cash upon the exercise of stock options | 828,305 | 340 | 340 | |||||||||||||||||||||||||||||
| Share-based compensation expense | 48 | 48 | ||||||||||||||||||||||||||||||
| Net loss | (29,512 | ) | (29,512 | ) | ||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | 25,822,452 | $ | 64,389 | 7,745,744 | $ | 1 | $ | 2,655 | $ | (57,074 | ) | $ | (54,418 | ) | ||||||||||||||||||
| Issuance of Series C Preferred Stock under a stock purchase agreement, net of issuance costs of $0.7 million | 19,463,456 | 53,059 | ||||||||||||||||||||||||||||||
| Issuance of Class A Common Stock and Series C Preferred Stock in exchange for Series A, A-1, and Series B Preferred Stock under a stock purchase agreement | 1,957,898 | 12,377 | 5,402,428 | (2,711 | ) | (9,666 | ) | (12,377 | ) | |||||||||||||||||||||||
| Issuance of Class A Common Stock for cash upon the exercise of stock options | 148,412 | 65 | 65 | |||||||||||||||||||||||||||||
| Share-based compensation expense | 199 | 199 | ||||||||||||||||||||||||||||||
| Net loss | (35,311 | ) | (35,311 | ) | ||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | 47,243,806 | $ | 129,825 | 13,296,584 | $ | 1 | $ | 208 | $ | (102,051 | ) | $ | (101,842 | ) |
See accompanying notes are an integral part of these financial statements.
STATEMENTS OF CASH FLOWS
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (35,311 | ) | $ | (29,512 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share-based compensation expense | 199 | 48 | ||||||
| Depreciation and amortization | 417 | 229 | ||||||
| Amortization of right-of-use asset | 143 | 158 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | (1,497 | ) | (332 | ) | ||||
| Accounts payable and accrued liabilities | 1,713 | 2,650 | ||||||
| Lease liability | (210 | ) | (194 | ) | ||||
| Net cash used in operating activities | (34,546 | ) | (26,953 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (246 | ) | (1,134 | ) | ||||
| Net cash used in investing activities | (246 | ) | (1,134 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from sale of Convertible Preferred Stock | 53,783 | 27,500 | ||||||
| Payment of issuance costs associated with the issuance of preferred stock | (723 | ) | (1,375 | ) | ||||
| Proceeds from issuance of common stock in connection with equity plans | 65 | 340 | ||||||
| Net cash provided by financing activities | 53,125 | 26,465 | ||||||
| Net increase (decrease) in cash and cash equivalents | 18,333 | (1,622 | ) | |||||
| Cash and cash equivalents at beginning of period | 11,543 | 13,165 | ||||||
| Cash and cash equivalents at end of period | $ | 29,876 | $ | 11,543 | ||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Right-of-use asset obtained in exchange for new operating lease liability | $ | 219 | $ | 562 | ||||
| Issuance of Series C Preferred Stock conversion | $ | 23,313 |
The accompanying notes are an integral part of these financial statements
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF BUSINESS
( OnKure or the Company ) is a clinical-stage biopharmaceutical company focused on the discovery and development of precision medicines that target biologically validated drivers of cancers that are underserved by available
therapies. The Company is using its structure-based drug design platform to build a robust pipeline of tumor-agnostic candidates that are designed to achieve optimal efficacy and tolerability. OnKure is currently developing OKI-219, a selective PI3K H1047R inhibitor, as its lead program. OnKure aims to become the leader in targeting oncogenic PI3K and has multiple
programs to enable optimal targeting of this critical oncogene.
Risks and Uncertainties
The board of directors of the Company discusses with management macroeconomic and geopolitical developments, including inflation, instability in the banking
and financial services sector, tightening of the credit markets, international conflicts, COVID-19, cybersecurity, and sanctions so that the Company can be prepared to react to new developments as they
arise. The board of directors and the management of the Company are carefully monitoring these developments and the resulting economic impact on its financial condition and results of operations.
Liquidity and Capital Resources
recurring losses from operations, an accumulated deficit of $102.1 million and cash and cash equivalents of $29.9 million as of December 31, 2023. The Company s ability to fund its ongoing operations is highly dependent upon
raising additional capital through the issuance of equity securities, issuing debt or other financing vehicles. As a result, the Company has determined that substantial doubt about the Company s ability to continue as a going concern for a
period of at least 12 months from the date of the issuance of these financial statements does exist.
The Company s ability to secure capital is
dependent upon success in discovering and developing its drug candidates. The Company cannot provide assurance that additional capital will be available on acceptable terms, if at all. The issuance of additional equity or debt securities will likely
result in substantial dilution to the Company s stockholders. Should additional capital not be available to the Company in the near term, or not be available on acceptable terms, the Company may be unable to realize value from the
Company s assets or discharge liabilities in the normal course of business, which may, among other alternatives, cause the Company to delay, substantially reduce, or discontinue operational activities to conserve cash, which could have a
material adverse effect on the Company s ability to achieve its intended business objectives.
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The financial statements do not reflect any
adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. The Company believes that the $29.9 million of cash and cash equivalents
on hand as of December 31, 2023, will not be sufficient to fund its operations in the normal course of business and meet its liquidity needs through at least the next 12 months from the issuance of these financial statements. As such, the
Company will need to raise additional capital to finance its operations and the ability to do so is uncertain. As a result, the Company has determined there is substantial doubt about the Company s ability to continue as a going concern for a
period of at least 12 months from the date of the issuance of these financial statements.
Failure to raise capital as and when needed, on favorable terms
or at all, would have a negative impact on the Company s financial condition and its ability to discover and develop its product candidates. Changing
circumstances may cause the Company to consume capital significantly faster or slower than currently anticipated. If the Company is unable to acquire additional capital or resources, it will be
required to modify its operational plans. The estimates included herein are based on assumptions that may prove to be wrong, and the Company could exhaust its available financial resources sooner than currently anticipated.
The financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be
necessary if the Company were unable to continue as a going concern.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial
statements as of and for the year ended December 31, 2023, and as of December 31, 2022, include the accounts of OnKure, Inc.
statements have been prepared in accordance with U.S. generally accepted accounting principles ( U.S. GAAP ) and include all adjustments necessary for the fair presentation of the Company s financial position, results of operations,
and cash flows for the periods presented.
The Company operates in one operating segment and, accordingly, no segment disclosures have been presented herein. All equipment and other fixed
assets are physically located within the United States.
The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. Although these estimates are based on the
Company s knowledge of current events and actions it may take in the future, actual results may ultimately differ from these estimates. The most significant estimates relate to external research and development expenses,and the fair value of
stock options and restricted stock awards and units.
Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from
non-owner sources. The Company s comprehensive loss was the same as its reported net loss for all periods presented.
Research and Development Expenses
development ( R&D ) costs are expensed as incurred in performing research and development activities. The costs include employee-related expense, including salaries, benefits, share-based compensation, fees for acquiring and
maintaining licenses under third-party license agreements, consulting fees, costs of research and development activities conducted by third parties on the Company s behalf, costs to manufacture or have manufactured clinical trial materials,
depreciation, and facilities and overhead costs.
Accrued Research and Development Expenses
The Company records research and development expenses in the period in which the Company receives or takes ownership of the applicable goods or when the
applicable services are performed. The Company is required to
estimate its expenses resulting from its obligations under contracts with vendors, consultants, and contract research organizations, in connection with conducting research and development
activities. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts.
The Company reflects research and development expenses in its financial statements by matching those expenses with the period in which services and efforts are expended. The Company accounts for these expenses according to the progress of the
preclinical studies or clinical trials, as measured by the timing of various aspects of the study or related activities. The Company determines accrual estimates through a review of the underlying contracts along with the preparation of financial
models considering discussions with research and other key personnel as to the progress of studies, trials, or other services being conducted. During a study or trial, the Company adjusts its rate of expense recognition if actual results differ from
its estimate. Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and
recognized as an expense in the period that the related goods are consumed, or services are performed.
The Company expenses all costs as incurred in connection with patent applications (including direct application fees and the legal and consulting expenses
related to making such applications) and such costs are included in general and administrative expenses in the statements of operations and comprehensive loss.
Share-Based Compensation
The Company maintains an equity
incentive compensation plan under which incentive stock options and nonqualified stock options to purchase common stock, and restricted stock units for common stock, are granted to employees, board of directors, and
non-employee consultants. Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service or performance period. The
fair value of stock options granted to employees is estimated using the Black-Scholes option pricing model.
The Black-Scholes valuation method requires
certain assumptions be used as inputs, such as the fair value of the underlying common stock, expected term of the option before exercise, expected volatility of the Company s common stock, risk-free interest rate and expected dividend. Options