What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 165 added, 121 removed, 363 unchanged (44% of the section changed)

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This Quarterly Report on Form 10-Q for the three

and six-month periods ended June 30, 2022 contains “forward-looking statements” within the meaning of the Securities Act of

1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

and nine-month periods ended September 30, 2022 contains “forward-looking statements” within the meaning of the Securities

Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

These forward-looking statements contain information about our expectations, beliefs or intentions regarding our product development and

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dollars, unless otherwise noted.

We are a clinical-stage biotechnology company dedicated to developing treatments for serious and life-threatening diseases.

two of our programs are focused on kidney diseases that we believe have the potential to offer medical benefit.

As we grow the Company

and build our team, we intend to focus on identifying medical conditions within and outside of kidney disease.

Our current development

programs are focused on the development of two novel therapies:

Renazorb, for treatment of hyperphosphatemia in patients with endstage

renal disease (ESRD), a latestage chronic kidney disease, and UNI-494, for treatment of acute kidney injury (AKI).

Based on the unique

mechanism of action of UNI-494 to restore mitochondrial function, UNI-494 has potential applications in several indications in which mitochondrial

dysfunction is implicated, such as chronic kidney disease (CKD), liver diseases and ophthalmic diseases.

We are a clinical-stage biotechnology company

dedicated to developing treatments for serious and life-threatening diseases.

Currently, two of our programs are focused on kidney diseases

that we believe have the potential to offer medical benefit.

As we grow the Company and build our team, we intend to focus on identifying

medical conditions within and outside of kidney disease.

Our current development programs are focused on the development of two novel

Renazorb, for treatment of hyperphosphatemia in patients with endstage renal disease (ESRD), a latestage chronic kidney disease,

and UNI-494, for treatment of acute kidney injury (AKI).

Based on the unique mechanism of action of UNI-494 to restore mitochondrial function,

UNI-494 has potential applications in several indications in which mitochondrial dysfunction is implicated, such as chronic kidney disease

(CKD), liver diseases and ophthalmic diseases.

Chronic kidney disease (CKD) is the gradual loss

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and is caused by multiple etiologies.

Our business model is to license drugs and technologies, and pursue development, regulatory approval, and commercialization of those products

in global markets.

Many biotechnology companies utilize similar strategies of in-licensing and then developing and commercializing drugs.

We believe, however, that our management team’s broad network and extensive drug development expertise in the biopharmaceutical

industry, and successful track record, gives us an advantage in identifying and bringing these assets into the Company at an attractive

price with limited upfront cost.

Since our formation we have devoted substantial resources to developing our product candidates.

incurred significant operating losses to date.

Our net losses were $2.0 million and $7.2 million for the six months ended June 30, 2021,

and for the six months ended June 30, 2022, respectively.

As of June 30, 2022, we had an accumulated deficit of $23.1 million.

that our operating expenses will increase significantly as we continue to advance our product candidates through pre-clinical and clinical

development, seek regulatory approval, and prepare for and, if approved, proceed to commercialization;

acquire, discover, validate, and

develop additional product candidates;

obtain, maintain, protect, and enforce our intellectual property portfolio;

and hire additional

personnel to execute our plans.

In addition, we expect to incur additional costs associated with operating as a public company.

Our business model is to license drugs and technologies,

and pursue development, regulatory approval, and commercialization of those products in global markets.

Many biotechnology companies utilize

similar strategies of in-licensing and then developing and commercializing drugs.

We believe, however, that our management team’s

broad network and extensive drug development expertise in the biopharmaceutical industry, and successful track record, gives us an advantage

in identifying and bringing these assets into the Company at an attractive price with limited upfront cost.

Since our formation we have devoted substantial

resources to developing our product candidates.

We have incurred significant operating losses to date.

Our net losses were $7.3 million

and $12.7 million for the nine months ended September 30, 2021, and for the nine months ended September 30, 2022, respectively.

September 30, 2022, we had an accumulated deficit of $28.7 million.

We expect that our operating expenses will increase significantly

as we continue to advance our product candidates through pre-clinical and clinical development, seek regulatory approval, and prepare

for and, if approved, proceed to commercialization;

acquire, discover, validate, and develop additional product candidates;

obtain, maintain,

protect, and enforce our intellectual property portfolio;

and hire additional personnel to execute our plans.

In addition, we expect to

incur additional costs associated with operating as a public company.

We have funded our operations primarily from the

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Components of Results of Operations

Operating Expenses

We recognize revenue from product sales or services

rendered when control of the promised goods are transferred to a counterparty in an amount that reflects the consideration to which we

expect to be entitled in exchange for those goods and services.

To achieve this core principle, we apply the following five steps:

the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction

price to performance obligations in the contract and recognize revenues when or as we satisfy a performance obligation.

We may earn licensing

revenue in the future if we negotiate business development arrangements with third parties.

Research and Development Expenses

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officer insurance premiums associated with being a public company.

Other Expenses

Other Income (Expenses)

Other expenses consist primarily of interest expense

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Results of Operations

Comparison of the Three Months Ended June 30,

Comparison of the Three Months Ended September 30,

2021 and 2022

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Three Months Ended

September 30,

Licensing revenues:

Operating expenses:

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Interest expense

Loss on debt conversion

Total other income (expenses)

Licensing Revenues

Licensing revenues of $1.0 million were recorded

for the three months ended September 30, 2022 due to a licensing agreement entered into with Lee’s Pharmaceutical (HK) Limited in July

We received an upfront payment of $1.0 million.

There was no comparable revenue earned in the prior period.

We may earn additional

licensing revenue in the future if we negotiate business development arrangements with third parties.

Research and Development Expenses

Research and development expenses increased by

approximately $1.4 million, or 277%, from approximately $493,000 for the three months ended June 30, 2021 to approximately $1.9 million

for the three months ended June 30, 2022.

The increase in research and development expenses was primarily due to a $895,000 increase in

drug development costs.

approximately $1.0 million, or 27%, from approximately $3.8 million for the three months ended September 30, 2021 to approximately $4.8

million for the three months ended September 30, 2022.

The increase in research and development expenses was primarily due to a $826,000

increase in drug development costs.

Labor costs increased $213,000 from the prior period.

Other costs increased $53,000.

Non-cash stock compensation

decreased $170,000.

Non-cash stock

compensation decreased $65,000.

General and Administrative Expenses

General and administrative expenses increased

by $1.5 million, or 521%, from approximately $286,000 for the three months ended June 30, 2021 to approximately $1.8 million for the three

months ended June 30, 2022 primarily due to an increase of $389,000 in insurance expense for directors and officers.

by $763,000, or 81%, from approximately $939,000 for the three months ended September 30, 2021 to approximately $1.7 million for the three

months ended September 30, 2022 primarily due to an increase of $415,000 in consulting and professional services.

Labor costs increased

$306,000 from the prior period.

Consulting and professional services costs increased $299,000.

Stock compensation increased $169,000,

and travel, rent, and other costs increased $327,000.

Stock compensation increased $92,000, and travel, rent, and other costs increased $105,000.

Other Income (Expenses)

Other income (expenses) decreased by $483,000,

or 100% from approximately $321,000 for the three months ended June 30, 2021 to $0 for the three months ended June 30, 2022.

was due to the conversion to equity in July 2021 of our outstanding convertible notes, including accrued interest, as a result of our

initial public offering.

Comparison of the Six Months Ended June 30,

or 99% from approximately $486,000 for the three months ended September 30, 2021 to $3,000 for the three months ended September 30, 2022.

The decrease was due primarily to the conversion to equity in July 2021 of our outstanding convertible notes, including accrued interest,

as a result of our initial public offering.

Comparison of the Nine Months Ended September 30,

2021 and 2022

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operations for the periods indicated (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Licensing revenues:

Operating expenses:

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Interest expense

Loss on debt conversion

Gain on extinguishment of debt

Total other income (expenses)

Licensing Revenues

Licensing revenues of $1.0 million were recorded

for the nine months ended September 30, 2022 due to a licensing agreement entered into with Lee’s Pharmaceutical (HK) Limited in July

We received an upfront payment of $1.0 million.

There was no comparable revenue earned in the prior period.

We may earn additional

licensing revenue in the future if we negotiate business development arrangements with third parties.

Research and Development Expenses

Research and development expenses increased by

approximately $2.9 million, or 303%, from approximately $942,000 for the six months ended June 30, 2021 to approximately $3.8 million

for the six months ended June 30, 2022.

The increase in research and development expenses was primarily due to a $1.9 million increase

in drug development costs.

approximately $3.8 million, or 82%, from approximately $4.7 million for the nine months ended September 30, 2021 to approximately $8.6

million for the nine months ended September 30, 2022.

The increase in research and development expenses was primarily due to a $2.7 million

increase in drug development costs.

Labor costs increased $1.4 million from the prior period.

Other costs increased $74,000.

Non-cash stock compensation

decreased $255,000.

stock compensation decreased $320,000.

General and Administrative Expenses

General and administrative expenses increased

by $2.8 million, or 495%, from approximately $568,000 for the six months ended June 30, 2021 to approximately $3.4 million for the six

months ended June 30, 2022 primarily due to an increase of $778,000 in insurance expense for directors and officers.

Labor costs increased

$597,000 from the prior period.

Consulting and professional services costs increased $626,000.

by $3.6 million, or 238%, from approximately $1.5 million for the nine months ended September 30, 2021 to approximately $5.1 million for

the nine months ended September 30, 2022 primarily due to an increase of $684,000 in insurance expense for directors and officers.

and professional services costs increased $1.0 million, and labor costs increased $748,000 from the prior period.

Stock compensation increased

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Other Income (Expenses)

Other income (expenses) decreased by $554,000,

or 100% from approximately $554,000 for the six months ended June 30, 2021 to $0 for the six months ended June 30, 2022.

was due primarily to the conversion to equity in July 2021 of our outstanding convertible notes, including accrued interest, as a result

of our initial public offering.

The decrease was partially offset by a gain on debt extinguishment of $19,000 during the six months ended

June 30, 2021.

Other income (expenses) decreased by $1.0 million,

or 99% from approximately $1.0 million for the nine months ended September 30, 2021 to $3,000 for the nine months ended September 30,

The decrease was due primarily to the conversion to equity in July 2021 of our outstanding convertible notes, including accrued

interest, as a result of our initial public offering.

The decrease was partially offset by a gain on debt extinguishment of $19,000 during

the nine months ended September 30, 2021.

Liquidity and Capital Resources

Sources of Liquidity

Since our formation through June 30, 2022, we

have funded our operations with the sale of common stock, convertible notes and from a loan from our Chief Executive Officer and principal

During 2020, we raised additional funds through private placements by issuing common stock for $141,000 and by issuing $1.3

million in convertible notes to investors.

During the year ended December 31, 2021, we raised $1.1 million through the issuance of convertible

notes to investors.

Since our formation through September 30, 2022, we have funded our

operations with the sale of common stock, convertible notes, a loan from our Chief Executive Officer and principal stockholder, and during

2022, with licensing revenue of $1.0 million.

During 2020, we raised additional funds through private placements by issuing common stock

for $141,000 and by issuing $1.3 million in convertible notes to investors.

During the year ended December 31, 2021, we raised $1.1 million

through the issuance of convertible notes to investors.

As a result of our initial public offering (“IPO”),

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We have incurred net losses since our inception.

For the six months ended June 30, 2022, we had a net loss of $7.2 million, and we expect to incur substantial additional losses in

future periods.

As of June 30, 2022, we had an accumulated deficit of $23.1 million.

For the nine months ended September 30, 2022, we had a net loss of $12.7 million, and we expect to incur substantial additional losses

in future periods.

As of September 30, 2022, we had an accumulated deficit of $28.7 million.

We expect to continue incurring losses for the

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in order to conserve our cash in amounts sufficient to sustain operations and meet our obligations.

Based on the Company’s current

level of expenditures, after receiving the net proceeds of $22.3 million on July 15, 2021 as a result of the Company’s IPO

and given the Company’s cash balance of approximately $10.6 million as of June 30, 2022, the Company believes that it will need

funding before the end of the second quarter 2023 to continue operations, satisfy its obligations and fund the future expenditures that

will be required to conduct the clinical and regulatory work to develop its product candidates.

Based on our current level of expenditures,

after receiving the net proceeds of $22.3 million on July 15, 2021 as a result of our IPO and given our cash balance of approximately

$7.0 million as of September 30, 2022, we believe that we will need funding before the end of the first quarter 2023 to continue operations,

satisfy our obligations and fund the future expenditures that will be required to conduct the clinical and regulatory work to develop

our product candidates.

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.

There is substantial doubt about the Company’s ability to continue

as a going concern for one year after the date that these financial statements are available to be issued.

The financial statements do

not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary from

the outcome of this uncertainty.

prepared assuming that we 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.

There is substantial doubt about our ability to continue as a going concern for one

year after the date that these financial statements are available to be issued.

The financial statements do not reflect any adjustments

relating to the recoverability and reclassification of assets and liabilities that might be necessary from the outcome of this uncertainty.

We anticipate that we will need to raise substantial

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Related Party Payable

We entered into a Service Agreement on July 1, 2017, as amended on

April 6, 2020 (“Service Agreement”), with Globavir Biosciences, Inc.

We entered into a Service Agreement on July 1,

2017, as amended on April 6, 2020 (“Service Agreement”), with Globavir Biosciences, Inc.

(“Globavir”).

Our Chief Executive Officer

is also the Chief Executive Officer of Globavir.

Pursuant to the Service Agreement, we receive administrative, consulting services, shared

office space and other services in connection with our drug development programs.

The initial amended term of the Service Agreement expired

on December 31, 2020, and the agreement automatically renews for successive one-month periods after the initial termination date.

to the Service Agreement, we paid Globavir $50,000 per month through December 31, 2019 and $10,000 per month commencing on January 1,

During the fourth quarter of 2021, we determined that future services under the Service Agreement were no longer required, and we

wrote off the $28,000 remaining prepaid balance due from Globavir as of December 31, 2021.

During the six months ended June 30, 2022,

after determining that although a shared office space is no longer utilized, consulting services continued to be provided, we amended

the Service Agreement to reflect the consulting services at a reduced service fee of $6,000 per month and a termination date of June 30,

Executive Officer is also the Chief Executive Officer of Globavir.

Pursuant to the Service Agreement, we receive administrative, consulting

services, shared office space and other services in connection with our drug development programs.

The initial amended term of the Service

Agreement expired on December 31, 2020, and the agreement automatically renews for successive one-month periods after the initial termination

Pursuant to the Service Agreement, we paid Globavir $50,000 per month through December 31, 2019 and $10,000 per month commencing

on January 1, 2020.

During the fourth quarter of 2021, we determined that future services under the Service Agreement were no longer required,

and we wrote off the $28,000 remaining prepaid balance due from Globavir as of December 31, 2021.

During the nine months ended September

30, 2022, after determining that although a shared office space is no longer utilized, consulting services continued to be provided, we

amended the Service Agreement to reflect the consulting services at a reduced service fee of $6,000 per month and a termination date of

June 30, 2022.

Convertible Notes

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annum, payable at maturity, and mature between July and November 2021.

The 2020 Notes shall automatically convert into shares of our

common stock upon the closing of a financing pursuant to which we receive gross proceeds of at least $500,000 (a “Qualified Financing”)

The 2020 Notes shall automatically convert into shares of our common

stock upon the closing of a financing pursuant to which we receive gross proceeds of at least $500,000 (a “Qualified Financing”)

or upon a change of control.

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and uses of cash for each of the periods presented below (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Net cash (used in) provided by:

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Net cash used in operating activities was $9.6

million for the six months ended June 30, 2022.

million for the nine months ended September 30, 2022.

Cash used in operating activities was primarily due to the use of funds for development

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compensation and amortization of lease asset.

The net loss was partially offset by $1.0 million of revenues received from a licensing

agreement entered into with Lee’s Pharmaceutical (HK) Limited in July 2022.

Net cash used in operating activities was $4.4

for the six months ended June 30, 2021.

Cash used in operating activities was primarily due to the use of funds in our operations for

labor costs, accounting services, and consulting services to develop drug candidates, resulting in a net loss of $2.1 million.

million for the nine months ended September 30, 2021.

Cash used in operating activities was primarily due to the use of funds for director

and officer insurance premiums, development costs associated with our drug candidates, labor costs, consulting and accounting services,

and other corporate expenditures for investor relations, compliance, and legal services.

We incurred a net loss of $7.3 million after

including the effect of non-cash adjustments for stock issuance, stock compensation, and a loss on the conversion of our convertible debt.

Cash Flows from Investing Activities

Net cash used in investing activities was $2,000

for the six months ended June 30, 2022 and was due to the purchase of furniture and fixtures for our corporate office.

There were no comparable

fixed asset purchases during the prior year.

for the nine months ended September 30, 2022 and was due to the purchase of furniture and fixtures for our corporate office.

no comparable fixed asset purchases during the prior year.

Cash Flows from Financing Activities

There were no cash flows provided by financing

activities during the six months ended June 30, 2022.

activities during the nine months ended September 30, 2022.

Net cash provided by financing activities was

$891,000 for the six months ended June 30, 2021 and was primarily related to the issuance of convertible notes to investors for $1.0 million

as well as the receipt of $119,000 in proceeds from the exercise of options.

Net repayments on loans from our chief executive officer

offset the cash inflows by $223,000.

$22.4 million for the nine months ended September 30, 2021 and was primarily related to proceeds received from our initial public offering,

net of issuance and deferred offering costs.

In addition, we issued convertible notes to investors for $1.1 million as well as the receipt

of $0.1 million in proceeds from the exercise of options.

Net repayments on loans from our chief executive officer offset the cash inflows

by $1.1 million.

Critical Accounting Policies, Significant Judgments

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policies and estimates to be related to research and development accruals, stock-based compensation and common stock valuations.

have been no material changes to our critical accounting policies and estimates during the six months ended June 30, 2022 from those used

for the year ended December 31, 2021.

have been no material changes to our critical accounting policies and estimates during the nine months ended September 30, 2022 from those

used for the year ended December 31, 2021.

The below policies are listed to provide a list of our policies for the most significant critical

Revenue Recognition

We implemented ASC 606, Revenue from Contracts

with Customers.

This included the development of new policies based on the five-step model provided in the new revenue standard, ongoing

contract review requirements, and gathering of information provided for disclosures.

We recognize revenue from product sales or services

rendered when control of the promised goods are transferred to a counterparty in an amount that reflects the consideration to which we

expect to be entitled in exchange for those goods and services.

To achieve this core principle, we apply the following five steps:

the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction

price to performance obligations in the contract and recognize revenues when or as we satisfy a performance obligation.

Research and Development

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis