What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-14 compared with 2023-05-16 · 263 added, 206 removed, 250 unchanged (65% of the section changed)

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

This Quarterly Report on Form 10-Q for the three-month

period ended March 31, 2023 contains “forward-looking statements” within the meaning of the Securities Act of 1933, as amended

period ended June 30, 2023 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 commercialization

efforts, business, financial condition, results of operations, strategies or prospects, and other similar matters.

These forward-looking

statements are based on management’s current expectations and assumptions about future events, which are inherently subject to

uncertainties, risks and changes in circumstances that are difficult to predict.

These statements may be identified by words such as

“expects,” “plans,” “projects,” “will,” “may,” “anticipates,”

“believes,” “should,” “intends,” “estimates,” and other words of similar meaning.

statements contain information about our expectations, beliefs or intentions regarding our product development and commercialization efforts,

business, financial condition, results of operations, strategies or prospects, and other similar matters.

These forward-looking statements

are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties,

risks and changes in circumstances that are difficult to predict.

These statements may be identified by words such as “expects,”

“plans,” “projects,” “will,” “may,” “anticipates,” “believes,”

“should,” “intends,” “estimates,” and other words of similar meaning.

Actual results could differ materially from those

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also adversely affect our business, financial condition and results of operations may arise from time to time.

Given these risks and

uncertainties, the forward-looking statements discussed in this report may not prove to be accurate.

Accordingly, you should not place

undue reliance on these forward-looking statements, which only reflect the views of the Company’s management as of the date of

We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence

of unanticipated events or changes to future operating results or expectations, except as required by law.

Given these risks and uncertainties,

the forward-looking statements discussed in this report may not prove to be accurate.

Accordingly, you should not place undue reliance

on these forward-looking statements, which only reflect the views of the Company’s management as of the date of this report.

undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated

events or changes to future operating results or expectations, except as required by law.

The following discussion and analysis of our

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of two novel therapies:

Renazorb, for treatment of hyperphosphatemia in patients with chronic kidney disease, and UNI 494, for treatment

of acute kidney injury (AKI).

Oxylanthanum Carbonate, for treatment of hyperphosphatemia in patients with chronic kidney disease, and UNI 494,

for treatment of acute kidney injury (AKI).

Chronic kidney disease (CKD) is the gradual loss

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According to estimates

by The Centers for Disease Control and Prevention (CDC) in 2019, 37 million (approximately 15%) adults in the United States have CKD

and, of these, approximately 2 million patients with CKD stage 3-5, and around 400 thousand patients with end-stage renal disease (ESRD)

have hyperphosphatemia.

by The Centers for Disease Control and Prevention (CDC) in 2019, 37 million (approximately 15%) adults in the United States have CKD and,

of these, approximately 2 million patients with CKD stage 3-5, and around 400 thousand patients with end-stage renal disease (ESRD) have

hyperphosphatemia.

In the European Union (EU), around 20 million (approximately 8%) adults have CKD, more than 1 million CKD stage 3-5

patients, and approximately 180 thousand patients with ESRD have hyperphosphatemia.

The number of patients with ESRD is increasing

steadily and is projected to reach between 971,000 and 1,259,000 in 2030.

AKI is a sudden episode of kidney failure or

kidney damage (within the first 90 days of injury).

The number of patients with ESRD is increasing steadily

and is projected to reach between 971,000 and 1,259,000 in 2030.

AKI is a sudden episode of kidney failure or kidney

damage (within the first 90 days of injury).

After 90 days, the patient is considered to have progressed into CKD.

over 2 million US patients and costs the healthcare system over $9 billion per year.

AKI kills more than 300,000 patients per year in

the US and is caused by multiple etiologies.

AKI affects over 2

million US patients and costs the healthcare system over $9 billion per year.

AKI kills more than 300,000 patients per year in the US

and is caused by multiple etiologies.

Our business model is to license technologies

and drugs 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, 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.

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, 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 substantially

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Our net losses were

$3.5 million and $14.6 million for the three months ended March 31, 2022 and 2023.

As of March 31, 2023, we had an accumulated deficit

of $48.6 million.

We expect that our operating expenses will increase significantly as we advance our product candidates through

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

discover, validate and develop additional product candidates;

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

$7.2 million and $15.4 million for the six months ended June 30, 2022 and 2023, respectively.

As of June 30, 2023, we had an accumulated

deficit of $49.3 million.

We expect that our operating expenses will increase significantly as we 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

and hire additional personnel.

We have funded our operations primarily from

the sale and issuance of common stock, convertible promissory notes and from a loan, including cash and deferred salary from our Chief

Executive Officer and principal stockholder.

We have funded our operations primarily from the

sale and issuance of common stock, convertible promissory notes and from a loan, including cash and deferred salary from our Chief Executive

Officer and principal stockholder.

Our ability to generate

product revenue will depend on the successful development, regulatory approval and eventual commercialization of our current product

candidates and future product candidates.

Until such time as we can generate significant revenue from product sales, if ever, we expect

to finance our operations through private or public equity or debt financings, collaborative or other arrangements with corporate sources,

or through other sources of financing.

product revenue will depend on the successful development, regulatory approval and eventual commercialization of our current product candidates

and future product candidates.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance

our operations through private or public equity or debt financings, collaborative or other arrangements with corporate sources, or through

other sources of financing.

Adequate funding may not be available to us on acceptable terms, or at all.

If we fail to raise

capital or enter into agreements to raise capital as and when needed, we may have to significantly delay, scale back or discontinue the

development and commercialization of our current product candidates and future product candidates.

If we fail to raise capital or

enter into agreements to raise capital as and when needed, we may have to significantly delay, scale back or discontinue the development

and commercialization of our current product candidates and future product candidates.

Recent Developments

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consisting of (i) shares of common stock, par value $0.001 per share (the “Common Stock”) and, if applicable, shares of Series

A-2 Convertible Preferred Stock, par value $0.001 per share (the “Series A-2 Preferred Stock”), in lieu of Common Stock,

(ii) a tranche A warrant to acquire shares of Series A-3 Convertible Preferred Stock (the “Tranche A Warrant”), (iii) a tranche

A-2 Convertible Preferred Stock, par value $0.001 per share (the “Series A-2 Preferred Stock”), in lieu of Common Stock, (ii)

a tranche A warrant to acquire shares of Series A-3 Convertible Preferred Stock (the “Tranche A Warrant”), (iii) a tranche

B warrant to acquire shares of Series A-4 Convertible Preferred Stock (the “Tranche B Warrant”), and (iv) a tranche C warrant

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and the Tranche B Warrant, the “Warrants”).

The shares of Series A-3 Convertible Preferred Stock, Series A-4 Convertible

Preferred Stock and Series A-5 Convertible Preferred Stock issuable upon exercise of the Warrants collectively are referred to herein

as the “Preferred Warrant Shares”.

The Tranche A warrants for an aggregate exercise price of approximately $25 million are

exercisable until 21 days following our announcement of receipt of FDA approval for Renazorb, the Tranche B warrants for an aggregate

exercise price of approximately $25 million are exercisable until 21 days following our announcement of receipt of Transitional Drug

Add-On Payment Adjustment (“TDAPA”) approval for Renazorb, and the Tranche C Warrant for an aggregate exercise price of approximately

$50 million are exercisable until 21 days following four quarters of commercial sales of Renazorb following receipt of TDAPA approval.

The shares of Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred

Stock and Series A-5 Convertible Preferred Stock issuable upon exercise of the Warrants collectively are referred to herein as the “Preferred

Warrant Shares”.

The Tranche A warrants for an aggregate exercise price of approximately $25 million are exercisable until 21 days

following our announcement of receipt of FDA approval for Oxylanthanum Carbonate, the Tranche B warrants for an aggregate exercise price

of approximately $25 million are exercisable until 21 days following our announcement of receipt of Transitional Drug Add-On Payment Adjustment

(“TDAPA”) approval for Oxylanthanum Carbonate, and the Tranche C Warrant for an aggregate exercise price of approximately

$50 million are exercisable until 21 days following four quarters of commercial sales of Oxylanthanum Carbonate following receipt of TDAPA

Subject to the terms and limitations contained

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of the Series A Preferred Stock (as defined below), among other items (the “Stockholder Approval”).

On the tenth (10th) Trading

Day (as defined in the Certificate of Designation) following the announcement of the Stockholder Approval, each share of Series A-1 Preferred

Stock shall automatically convert into a Unit.

Subject to the limitations set forth in the Certificate of Designation, at the option

of the holder, each share of Series A-2 Preferred Stock, Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock

or Series A-5 Convertible Preferred Stock shall be convertible into one share of Common Stock.

On June 26, 2023, the

Company held its annual shareholder meeting, and as a result, shareholder approval for the issuance of common shares upon the conversion

of the Series A-1 Preferred Stock was obtained.

On the tenth (10th) Trading Day (as defined in the Certificate of Designation) following

the announcement of the Stockholder Approval, each share of Series A-1 Preferred Stock shall automatically convert into a Unit.

to the limitations set forth in the Certificate of Designation, at the option of the holder, each share of Series A-2 Preferred Stock,

Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock shall be convertible

into one share of Common Stock.

In addition, in connection with the Offering,

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Stock on an as-if-converted-to-Common-Stock basis, on a quarterly basis in an amount of which the aggregate of all quarterly dividends

shall equal at least seventy-five percent (75%) of our annual net cash flow from operations following approval of Renazorb by the FDA,

if obtained, and the commencement of commercial sales.

shall equal at least seventy-five percent (75%) of our annual net cash flow from operations following approval of Oxylanthanum Carbonate

by the FDA, if obtained, and the commencement of commercial sales.

The COVID-19 Pandemic and its Impacts on Our

In March 2020, the World Health Organization

declared the outbreak of COVID-19 a global pandemic.

This pandemic could result in difficulty securing clinical trial site locations,

CROs, and/or trial monitors and other critical vendors and consultants supporting our trial.

These situations, or others associated with

COVID-19, could cause delays in our clinical trial plans and could increase expected costs, all of which could have a material adverse

effect on our business and financial condition.

At the current time, we are unable to quantify the potential effects of this pandemic

on our future financial statements.

In March 2020, the World Health Organization declared

the outbreak of COVID-19 a global pandemic.

This pandemic could result in difficulty securing clinical trial site locations, CROs, and/or

trial monitors and other critical vendors and consultants supporting our trial.

These situations, or others associated with COVID-19,

could cause delays in our clinical trial plans and could increase expected costs, all of which could have a material adverse effect on

our business and financial condition.

At the current time, we are unable to quantify the potential effects of this pandemic on our future

financial statements.

Components of Results of Operations

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expenses consist of expenses incurred in connection with the development of our product candidates.

These expenses include fees paid

to third parties to conduct certain research and development activities on our behalf, consulting costs, costs for laboratory supplies,

product acquisition and license costs, certain payroll and personnel-related expenses, including salaries and bonuses, employee benefit

costs and stock-based compensation expenses for our research and product development employees and allocated overheads, including information

These expenses include fees paid to

third parties to conduct certain research and development activities on our behalf, consulting costs, costs for laboratory supplies, product

acquisition and license costs, certain payroll and personnel-related expenses, including salaries and bonuses, employee benefit costs

and stock-based compensation expenses for our research and product development employees and allocated overheads, including information

technology costs and utilities and expenses for the issuance of shares pursuant to the anti-dilution clause in the purchase of in process

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General and administrative expenses consist principally

of payroll and personnel expenses, including salaries and bonuses, benefits and stock-based compensation expenses, professional fees

for legal, consulting, accounting and tax services, including information technology costs and utilities, and other general operating

expenses not otherwise classified as research and development expenses.

of payroll and personnel expenses, including salaries and bonuses, benefits and stock-based compensation expenses, professional fees for

legal, consulting, accounting and tax services, including information technology costs and utilities, and other general operating expenses

not otherwise classified as research and development expenses.

We anticipate that our general and administrative

expenses will increase as a result of increased personnel costs, expanded infrastructure and higher consulting, legal and accounting

services costs associated with complying with the applicable stock exchange and the SEC requirements, investor relations costs and director

and officer insurance premiums associated with being a public company.

expenses will increase as a result of increased personnel costs, expanded infrastructure and higher consulting, legal and accounting services

costs associated with complying with the applicable stock exchange and the SEC requirements, investor relations costs and director and

officer insurance premiums associated with being a public company.

Other Expenses

Other expenses consist of the change in fair value of our warrant liability,

interest income and interest expense.

Other expenses consist of the change in fair value

of our warrant liability, interest income and interest expense.

Results of Operations

Comparison of the Three Months Ended March 31,

Comparison of the Three Months Ended June

30, 2022 and 2023

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Three Months Ended

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expenses):

Interest income

Interest expense

Change in fair value of warrant liability

Total other income (expenses)

Research and Development Expenses

Research and development expenses increased by

approximately $407,000, or 22%, from approximately $1.9 million for the three months ended June 30, 2022 to approximately $2.3 million

for the three months ended June 30, 2023.

The increase in research and development expenses was primarily due to a $295,000 increase in

drug development costs.

Labor costs increased $107,000 from the prior period.

Consulting and other costs increased $24,000.

Non-cash stock

compensation decreased $20,000.

General and Administrative Expenses

General and administrative expenses increased

by $279,000, or 16%, from approximately $1.8 million for the three months ended June 30, 2022 to approximately $2.1 million for the three

months ended June 30, 2023 primarily due to an increase of $483,000 in consulting and professional services costs.

Insurance expense for

directors and officers decreased $164,000.

Stock compensation costs decreased $131,000 from the prior period.

Labor, travel, rent, and

other costs increased $91,000.

Other Income (Expenses)

Other income (expenses) increased by $0.5 million,

or 100%, from $0 in the three months ended June 30, 2022 to $0.5 million for the three months ended June 30, 2023 due primarily to the

change in fair value of our warrant liability.

In addition, we earned interest income of $234,000 on our cash balance during the three

months ended June 30, 2023.

Comparison of the Six Months Ended June

30, 2022 and 2023

The following table summarizes our results of

operations for the periods indicated (in thousands):

Six Months Ended

Licensing revenues:

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Licensing Revenues

Licensing revenues increased approximately $0.7 million, or 100%, from

the three months ended March 31, 2022 due to an upfront payment of approximately $0.7 million associated with a licensing agreement entered

into with Lotus International Pte Ltd.

Licensing revenues increased approximately $0.7

million, or 100%, from the six months ended June 30, 2022 due to an upfront payment of approximately $0.7 million associated with a licensing

agreement entered into with Lotus International Pte Ltd.

in February 2023.

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.

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 $1.1 million, or 57%, from approximately $1.9 million for the three months ended March 31, 2022 to approximately $3.0 million

for the three months ended March 31, 2023.

The increase in research and development expenses was primarily due to a $962,000 increase

approximately $1.5 million, or 40%, from approximately $3.8 million for the six months ended June 30, 2022 to approximately $5.3 million

for the six months ended June 30, 2023.

The increase in research and development expenses was primarily due to a $1.3 million increase

in drug development costs.

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General and administrative expenses increased

by $243,000, or 15%, from approximately $1.6 million for the three months ended March 31, 2022 to approximately $1.8 million for the three

months ended March 31, 2023 primarily due to an increase of $448,000 in consulting and professional services costs.

Insurance expense

for directors and officers decreased $166,000.

by $522,000, or 15%, from approximately $3.4 million for the six months ended June 30, 2022 to approximately $3.9 million for the six

months ended June 30, 2023 primarily due to an increase of $931,000 in consulting and professional services costs.

Insurance expense for

directors and officers decreased $330,000.

Stock compensation costs decreased $260,000 from the prior period.

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Other Income (Expenses)

Other income (expenses) increased by $10.4 million,

or 100%, from $0 in the three months ended March 31, 2022 to $10.4 million for the three months ended March 31, 2023 due primarily to

a change in fair value of our warrant liability.

Other income (expenses) decreased by $9.9 million,

or 100%, from $0 in the six months ended June 30, 2022 to $9.9 million for the six months ended June 30, 2023 due primarily to the change

in fair value of our warrant liability.

In addition, we earned interest income of $248,000 on our cash balance during the six months ended

June 30, 2023.

Liquidity and Capital Resources

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During 2021 we raised $1.1 million through the issuance of convertible notes to investors.

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

on July 13, 2021 we began trading on the Nasdaq Capital Market under the symbol “UNCY”, and on July 15, 2021 we received

approximately $22.3 million in net proceeds after deducting the underwriting discounts, commissions and offering expenses.

the net proceeds from the IPO to complete pre-clinical and clinical studies, submit regulatory filings to the FDA, and for general and

corporate purposes, including hiring additional management and conducting market research and other commercial planning.

In connection with our initial public offering

(“IPO”), on July 13, 2021 we began trading on the Nasdaq Capital Market under the symbol “UNCY”, and on July 15,

2021 we received approximately $22.3 million in net proceeds after deducting the underwriting discounts, commissions and offering expenses.

We have used the net proceeds from the IPO to complete pre-clinical and clinical studies, submit regulatory filings to the FDA, and for

general and corporate purposes, including hiring additional management and conducting market research and other commercial planning.

Future revenue streams may consist of collaboration

or licensing revenue as well as product sales.

We have generated approximately $0.7 million in licensing revenue during the three months ended March 31, 2023.

On March 3, 2023, we entered into a

securities purchase agreement with certain healthcare-focused institutional investors that will provide up to $130.0 million in

gross proceeds through a private placement and that includes initial upfront funding of $30.0 million.

Proceeds from the offering

will be used to support our NDA submission with the FDA for approval of Renazorb for the treatment of hyperphosphatemia in the U.S.

and, if approved, for the commercial launch of Renazorb in the U.S.

We have generated approximately $0.7 million in licensing revenue during the six months

ended June 30, 2023.

On March 3, 2023, we entered into a securities

purchase agreement with certain healthcare-focused institutional investors that will provide up to $130.0 million in gross proceeds through

a private placement and that includes initial upfront funding of $30.0 million.

Proceeds from the offering will be used to support our

NDA submission with the FDA for approval of Oxylanthanum Carbonate for the treatment of hyperphosphatemia in the U.S.

and, if approved,

for the commercial launch of Oxylanthanum Carbonate in the U.S.

Future Funding Requirements

We have incurred net losses since our inception.

For the three months ended March 31, 2023, we had a net loss of $14.6 million, and we expect to incur substantial additional losses

For the six months ended June 30, 2023, we had a net loss of $18.4 million, and we expect to incur substantial additional losses

in future periods.

As of March 31, 2023, we had an accumulated deficit of $48.6 million.

As of June 30, 2023, we had an accumulated deficit of $52.4 million.

We expect to continue incurring losses in the

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equity offerings, debt financings, corporate collaborations or other means.

There can be no assurance that we will be able to obtain

additional financing on terms acceptable to us, on a timely basis or at all.

If we are unable to secure additional capital, we may be

required to curtail any clinical trials and development of new or existing products and take additional measures to reduce expenses in

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

Based on our current level of expenditures,

and after receiving the net proceeds of $28.0 million from a private placement financing, we believe that we have sufficient resources

such that there is not substantial doubt about our ability to continue operations for at least one year after the date that these financial

statements are available to be issued.

There can be no assurance that we will be able to obtain additional

financing on terms acceptable to us, on a timely basis or at all.

If we are unable to secure additional capital, we may be required to

curtail any clinical trials and development of new or existing products and take additional measures to reduce expenses in order to conserve

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

The financial impact associated with the clinical trial

we will be required to run based on recent FDA feedback is uncertain, and we expect to obtain clarifying feedback from the FDA regarding

the scope of the trial in the Fall of 2023.

Based on the Company’s currently anticipated level of expenditures, the Company believes

that it will need funding before the end of the second quarter of 2024 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.

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.

We anticipate that we will need to raise substantial

additional capital, the requirements for which will depend on many factors, including:

scope, timing, rate of progress and costs of our drug discovery efforts, pre-clinical development activities, laboratory testing and

clinical trials for our current product candidates and future product candidates;

number and scope of clinical programs we decide to pursue;

cost, timing and outcome of preparing for and undergoing regulatory review of our current product candidates and future product candidates;

scope and costs of development and commercial manufacturing activities;

cost and timing associated with commercializing our current product candidates and future product candidates, if they receive marketing

extent to which we acquire or in-license other product candidates and technologies;

costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending

intellectual property-related claims;

ability to establish and maintain collaborations on favorable terms, if at all;

efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support

the development of our current product candidates and future product candidates and, ultimately, the sale of our products, following

FDA approval;

impact, if any, of the coronavirus pandemic on our business operations;

ability to access capital;

implementation of operational, financial and management systems;

costs associated with being a public company.

the scope, timing, rate of progress and costs of our drug discovery efforts, pre-clinical development activities, laboratory testing and clinical trials for our current product candidates and future product candidates;

the number and scope of clinical programs we decide to pursue;

the cost, timing and outcome of preparing for and undergoing regulatory review of our current product candidates and future product candidates;

the scope and costs of development and commercial manufacturing activities;

the cost and timing associated with commercializing our current product candidates and future product candidates, if they receive marketing approval;

the extent to which we acquire or in-license other product candidates and technologies;

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

our ability to establish and maintain collaborations on favorable terms, if at all;

our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our current product candidates and future product candidates and, ultimately, the sale of our products, following FDA approval;

the impact, if any, of the coronavirus pandemic on our business operations;

our ability to access capital;

our implementation of operational, financial and management systems;

the costs associated with being a public company.

A change in the outcome of any of these or other

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Furthermore, our operating plans may change in the future,

and we will continue to require additional capital to meet operational needs and capital requirements associated with such operating

and we will continue to require additional capital to meet operational needs and capital requirements associated with such operating plans.

If we raise additional funds by issuing equity securities, our stockholders may experience dilution.

Any future debt financing

into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur

liens or additional debt, pay dividends, repurchase our common stock, make certain investments or engage in certain merger, consolidation

or asset sale transactions.

Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our

stockholders.

Any future debt financing into which

we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or

additional debt, pay dividends, repurchase our common stock, make certain investments or engage in certain merger, consolidation or asset

sale transactions.

Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.

Adequate funding may not be available to us on

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2019 and $10,000 per month commencing on January 1, 2020.

During the fourth quarter of 2021, after initially determining that future

services under the Service Agreement were no longer required, the Company wrote off the $28,000 remaining prepaid balance due from Globavir

as of December 31, 2021.

During the year ended December 31, 2022, after determining that although a shared office space is no longer

utilized, consulting services continued to be provided, the Company 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.

During the fourth quarter of 2021, after initially determining that future services

under the Service Agreement were no longer required, the Company wrote off the $28,000 remaining prepaid balance due from Globavir as

of December 31, 2021.

During the year ended December 31, 2022, after determining that although a shared office space is no longer utilized,

consulting services continued to be provided, the Company 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.

The Company has not entered into any additional agreements with

Globavir during the six months ended June 30, 2023.

Summary of Cash Flows

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

Three Months Ended

Six Months Ended

Net cash (used in) provided by:

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Net cash used in operating activities was $9.4

million for the three months ended March 31, 2023.

million for the six months ended June 30, 2023.

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

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compliance, and legal services.

The increase in cash used compared to the same period in the prior year is due primarily to increased

research and development activities in 2023, and we expect to continue to incur substantial costs related to our drug candidates.

Net cash used in operating activities was $6.0

million for the three months ended March 31, 2022.

million for the six months ended June 30, 2022.

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

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Net cash used in investing activities was $12,000

for the three months ended March 31, 2022 and was due to the purchase of furniture and fixtures for our corporate office.

no comparable fixed asset purchases during the current three month period.

for the six months ended June 30, 2023 and was due to the purchase of furniture and fixtures for our corporate office.

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.

Cash Flows from Financing Activities

Net cash provided by financing activities

was $27.8 million during the three months ended March 31, 2023 due primarily to the private placement financing agreement we signed

on March 3, 2023.

Net cash provided by financing activities was

$27.8 million during the six months ended June 30, 2023 due primarily to the private placement financing agreement we signed on March

There were no cash flows provided by financing

activities during the three months ended March 31, 2022.

Critical Accounting Policies, Significant Judgments and Use of

Our financial statements have been prepared in accordance with U.S.

activities during the six months ended June 30, 2022.

Critical Accounting Policies, Significant Judgments and Use of Estimates

Our financial statements have been prepared in

accordance with U.S.

generally accepted accounting principles (“GAAP”).

The preparation of these financial statements requires us to make estimates

and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the

date of the financial statements and the reported expenses incurred during the reporting periods.

Our estimates are based on our historical

experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for

making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may

differ from these estimates under different assumptions or conditions.

We consider our critical accounting policies and estimates to be

related to revenue, research and development, stock-based compensation, and warrant liabilities.

The fair value of warrants contingently

issued as part of our March 2023 private placement financing represent a material addition to our critical accounting policies and estimates.

There have been no other material changes to our critical accounting policies and estimates during the three months ended March 31, 2023

from those used for the year ended December 31, 2022.

The below policies represent our critical accounting policies.

The preparation of these financial statements requires

us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and

liabilities at the date of the financial statements and the reported expenses incurred during the reporting periods.

Our estimates are

based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of

which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other

Actual results may differ from these estimates under different assumptions or conditions.

We consider our critical accounting

policies and estimates to be related to revenue, research and development, stock-based compensation, and warrant liabilities.

value of warrants contingently issued as part of our March 2023 private placement financing represent a material addition to our critical

accounting policies and estimates.

There have been no other material changes to our critical accounting policies and estimates during

the three months ended June 30, 2023 from those used for the year ended December 31, 2022.

The below policies represent our critical accounting

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.

We apply ASC 606, Revenue from Contracts with

Customers, for our revenue recognition guidance.

This includes the development of new policies based on the five-step model provided in

the 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:

identify 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

Warrant Liabilities

In conjunction with the issuance of Series A-1 Preferred Stock (see

Note 10), we established a warrant liability as of March 3, 2023, representing the fair value of warrants that may be issued, subject

to shareholder approval, upon conversion of the Series A-1 Preferred Stock.

We account for these warrants as liabilities (in accordance

with ASC 480) on the balance sheets as a result of certain redemption clauses that are not within the control of the Company.

The warrant liabilities are initially measured at fair value, resulting in an implied discount on the related preferred stock financing

arrangement (recognized as a partial offset to the carrying value of the Series A-1 Preferred Stock), and are remeasured at fair value

each reporting period.

In conjunction with the issuance of Series A-1

Preferred Stock (see Note 10), we established a warrant liability as of March 3, 2023, representing the fair value of warrants that may

be issued, subject to shareholder approval, upon conversion of the Series A-1 Preferred Stock.

We account for these warrants as liabilities

(in accordance with ASC 480) on the balance sheets as a result of certain redemption clauses that are not within the control

of the Company.

The warrant liabilities are initially measured at fair value, resulting in an implied discount on the related preferred

stock financing arrangement (recognized as a partial offset to the carrying value of the Series A-1 Preferred Stock), and are remeasured

at fair value each reporting period.

Changes in the fair value of the warrant liabilities are recognized in earnings during each period.

liabilities are measured using Level 3 fair value inputs.

See Note 11 for a description of warrant liabilities and the related valuations.

The warrant liabilities are measured using Level 3 fair value inputs.

See Note 11 for a description of warrant liabilities and the related

Research and Development

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What changed 10-Q

Item 2. Management’s Discussion and Analysis