What changed in this filing

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Item 1. Financial Statements

2023-11-14 compared with 2023-08-14 · 304 added, 250 removed, 974 unchanged (36% of the section changed)

FINANCIAL STATEMENTS

STATEMENTS (Condensed)

Unicycive Therapeutics, Inc.

1 unchanged sentence

(In thousands, except for share and per share

September 30,

Current assets:

4 unchanged sentences

Property, plant and equipment, net

Liabilities, mezzanine equity, and stockholders’ deficit

Liabilities and stockholders’ (deficit) equity

Current liabilities:

7 unchanged sentences

Commitments and contingencies (Note 8)

Mezzanine equity:

Series A-1 preferred stock, $ 0.001 par value per share– zero and 30,190 shares authorized at December 31, 2022 and June 30, 2023, respectively;

zero and 30,190 shares issued and outstanding, liquidation preference of zero and $ 31.0 million at December 31, 2022, and June 30, 2023, respectively

Stockholders’ deficit:

Preferred stock, $ 0.001 par value per share – 10,000,000 and 9,969,810 shares authorized at December 31, 2022 and June 30, 2023, respectively;

no shares issued and outstanding at December 31, 2022, and June 30, 2023

Common stock, $ 0.001 par value per share – 200,000,000 shares authorized at December 31, 2022 and June 30, 2023;

15,231,655 shares issued and outstanding at December 31, 2022, and 15,236,016 shares issued and outstanding at June 30, 2023

Stockholders’ (deficit) equity:

Series A-2 preferred stock, $ 0.001 par value per share – zero and 43,649 shares authorized at December 31, 2022 and September 30, 2023, respectively;

zero and 43,649 shares outstanding at December 31, 2022 and September 30, 2023, respectively

Preferred stock, $ 0.001 par value per share – 10,000,000 and 9,926,161 shares authorized at December 31, 2022 and September 30, 2023, respectively;

zero shares outstanding at December 31, 2022 and September 30, 2023

Common stock, $ 0.001 par value per share – 200,000,000 shares authorized at December 31, 2022 and September 30, 2023;

15,231,655 shares issued and outstanding at December 31, 2022, and 34,754,401 shares issued and outstanding at September 30, 2023

Additional paid-in capital

Accumulated deficit

Total stockholders’ deficit

Total liabilities, mezzanine equity, and stockholders’ deficit

Total stockholders’ (deficit) equity

Total liabilities and stockholders’ (deficit) equity

See accompanying notes to the financial statements.

3 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Licensing revenues:

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Unicycive Therapeutics, Inc.

Statements of Mezzanine Equity and Stockholders’

Statements of Stockholders’ (Deficit)

(In thousands, except share amounts)

1 unchanged sentence

Stockholders’

Balance at December 31, 2021

Balance, December 31, 2021

Issuance of common stock for exercise of options

Stock-based compensation expense

Balance at March 31, 2022

Balance, March 31, 2022

Issuance of common stock for exercise of options

Stock-based compensation expense

Balance at June 30, 2022

Balance, June 30, 2022

Issuance of common stock for vested restricted stock units

Issuance of common stock for exercise of options

Stock-based compensation expense

Balance, September 30, 2022

Series A-1 and Series A-2

Preferred Stock

Stockholders’

Balance at December 31, 2022

Balance, December 31, 2022

Issuance of Series A-1 preferred stock, net of issuance costs and allocated fair value of warrant liability

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Stock-based compensation expense

Balance at March 31, 2023

Balance, March 31, 2023

Deemed dividends on Series A-1 preferred stock

1 unchanged sentence

Stock-based compensation expense

Balance at June 30, 2023

See accompanying notes to the financial statements

Balance, June 30, 2023

Deemed dividends on Series A-1 preferred stock

Issuance of Series A-2 preferred stock and common stock upon conversion of Series A-1 preferred stock

Issuance of common stock from exercise of options

Stock-based compensation expense

Balance, September 30, 2023

Unicycive Therapeutics, Inc.

1 unchanged sentence

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

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was incorporated in the State of Delaware on August 18, 2016.

The Company was dormant until July 2017 when it began evaluating a number

of drug candidates for in-licensing.

The Company was dormant until July 2017 when it began evaluating several

drug candidates for in-licensing.

The Company in-licensed the drug candidate UNI

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revenue as well as product sales.

The Company has generated approximately $ 0.7 million in licensing revenue during the six months ended

June 30, 2023.

The Company has generated approximately $ 0.7 million in licensing revenue during the nine months ended

September 30, 2023.

The Company has incurred operating losses and

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relied on private equity offerings, debt financing and loans from a stockholder to fund its operations.

As of December 31, 2022 and June

As of December 31, 2022, and September

30, 2023, the Company had an accumulated deficit of $ 34.0 million and $ 56.7 million, respectively.

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On March 3, 2023, the Company 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 included initial upfront funding of $ 30.0 million.

The Company expects to continue incurring losses

in the future and will be required to raise additional capital in the future to complete its planned clinical trials, pursue product development

initiatives and penetrate markets for the sale of its products.

Management believes that the Company will continue to have access to capital

resources through possible equity offerings, debt financing, corporate collaborations, or other means.

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

a private placement and that included initial upfront funding of $ 28.0 million in net proceeds.

The Company expects to continue incurring losses in the future and

will be required to raise additional capital in the future to complete its planned clinical trials, pursue product development initiatives

and penetrate markets for the sale of its products.

Management believes that the Company will continue to have access to capital resources

through possible equity offerings, debt financing, corporate collaborations, or other means.

In 2021, the Company received approximately

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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.

need funding by the second half 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

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The accompanying unaudited financial statements

of the Company as of June 30, 2023 have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X

and, accordingly, they do not include all information and footnote disclosures required by accounting principles generally accepted in

of the Company as of September 30, 2023, have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation

S-X and, accordingly, they do not include all information and footnote disclosures required by accounting principles generally accepted

The Company believes the footnotes and other disclosures made in the financial statements are adequate

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stated contractual rate.

See Note 10 for information about the Series A-1 Preferred Stock conversion in July 2023.

Warrant Liabilities

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fair value at that time.

At June 30, 2023, management determined there were no impairments of the Company’s property and equipment.

On September 30, 2023, management determined there were no impairments of the Company’s property and equipment.

The Company determines whether a contract is,

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the exercise price for the warrants became fixed.

Therefore, as of June 30, 2023, the fair value of the warrants was determined using

Therefore, as of September 30, 2023, the fair value of the warrants was determined using

a Black Scholes model using parameters including (i) the exercise price of the warrant, (ii) the price of the underlying security, (iii)

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The following table summarizes the fair value

hierarchy of financial liabilities measured at fair value as of June 30, 2023 (in thousands).

hierarchy of financial liabilities measured at fair value as of September 30, 2023 (in thousands).

Warrant liability

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are attributable to unobservable inputs.

Six Months Ended

Fair value at January 1, 2023

Nine Months Ended

September 30,

Fair value, January 1, 2023

Issuance of Warrants (March 3, 2023)

Change in fair value of Warrants

Fair value at June 30, 2023

Fair value, September 30, 2023

The expense relating to the change in fair value

of the derivative liability of $ 10,093,000 for the six months ended June 30, 2023 is included in other income (expense) in the statements

of the derivative liability of $ 8,697,000 for the nine months ended September 30, 2023, is included in other income (expense) in the statements

of operations.

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estimate fair value.

As of December 31, 2022 and June 30, 2023, the recorded values of cash and cash equivalents, prepaid expenses, and

accounts payable approximated fair value due to the short-term nature of the instruments.

As of December 31, 2022, and September 30, 2023, the recorded values of cash and cash equivalents, prepaid expenses,

and accounts payable approximated fair value due to the short-term nature of the instruments.

Concentration of Credit Risk

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the Company to concentration of credit risk consist of cash and cash equivalents.

All of the Company’s cash was deposited in one

account at a financial institution during 2022, and cash balances may at times exceed federally insured limits.

Beginning in 2023, the

Company’s cash and cash equivalents are distributed across multiple financial institutions.

Cash and cash equivalents could be adversely

impacted, including the loss of uninsured deposits and other uninsured financial assets, if one or more of the financial institutions

in which the Company holds its cash or cash equivalents fails or is subject to other adverse conditions in the financial or credit markets.

All the Company’s cash was deposited in one account

at a financial institution during 2022, and cash balances may at times exceed federally insured limits.

Beginning in 2023, the Company’s

cash and cash equivalents are distributed across multiple financial institutions.

Cash and cash equivalents could be adversely impacted,

including the loss of uninsured deposits and other uninsured financial assets, if one or more of the financial institutions in which the

Company holds its cash or cash equivalents fails or is subject to other adverse conditions in the financial or credit markets.

Prepaid Expenses

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The Company recognizes revenue

from product sales or services rendered when control of the promised goods are transferred to a counterparty in an amount that reflects

from product sales or services rendered when control of the promised goods is transferred to a counterparty in an amount that reflects

the consideration to which the Company expects to be entitled in exchange for those goods and services.

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Research and Development Expenses

Substantially all of the Company’s research

Substantially all the Company’s research

and development expenses consist of expenses incurred in connection with the development of the Company’s product candidates.

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Current tax expense results from corporate tax payable at the

Federal and California jurisdictions for the Company, which relate to the current accounting period.

Federal and California jurisdictions for the Company, which relates to the current accounting period.

Deferred tax expense results primarily

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Net future tax benefits are subject to a valuation allowance when management expects

that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

that it is more-likely-than-not that some portion or all the deferred tax assets will not be realized.

Current and non-current tax assets and liabilities

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option to immediately deduct research and development expenditures in the year incurred under Section 174, which became effective January

The Company is monitoring legislation for any further changes to Section 174 and the impact, if any, to the financial statements

The Company is monitoring legislation for any further changes to Section 174 and the impact, if any, on the financial statements

Comprehensive Loss

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dilutive securities outstanding for the period.

As the Company has reported a net loss for all periods presented, diluted net loss per

As the Company has reported a net loss for all periods presented, a diluted net loss per

common share is the same as basic net loss per common share for those periods.

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The Company adopted the standard on January 1, 2022, using a modified retrospective approach, and the adoption did not result

in any adjustments on the Company’s financial statements.

in any adjustments to the Company’s financial statements.

Significant Agreements

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is generated.

On June 29, 2023, the Company entered into a services agreement with Shilpa related to NDA filing support for Oxylanthanum

The agreement provides for payments of up to $ 2.0 million, and the Company made a $ 1.0 million payment pursuant to the agreement

in June 2023.

In October 2017, the Company entered into an exclusive

license agreement with Sphaera, a stockholder, for the rights to further develop the drug candidate, UNI 494, for commercialization.

payments were made upon execution of the agreement but rather payments for $50,000 will be due commencing with the initiation by the Company

of a second clinical trial and $50,000 on completion of such trial.

payments were made upon execution of the agreement but payments of $50,000 will be due commencing with the initiation by the Company of

a second clinical trial and $50,000 on completion of such trial.

At the time the FDA accepts a NDA application submitted by the Company

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Upon commercialization and sale of the drug product, royalty payments will

also be payable quarterly to Sphaera equal to 2% of net sales on the preceding quarter.

also be payable quarterly to Sphaera equal to 2% of net sales in the preceding quarter.

In September 2018, the Company entered into an

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will expire on the twentieth (20 th ) anniversary of the Closing Date of the Oxylanthanum Carbonate Purchase Agreement.

2022, the Company received an upfront payment of approximately $ 1.0 million as a result of a sublicense development agreement with Lee’s

2022, the Company received an upfront payment of approximately $ 1.0 million resulting from a sublicense development agreement with Lee’s

Pharmaceutical (HK) Limited.

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has been accrued as an R&D expense in the accompanying statements of operations for the year ended December 31, 2022.

2023, the Company received an upfront payment of approximately $ 0.7 million as a result of a sublicense development agreement with Lotus

2023, the Company received an upfront payment of approximately $ 0.7 million resulting from a sublicense development agreement with Lotus

International Pte Ltd.

The payment represents sublicense income as described in the Spectrum Agreement, and 20 % of the amount received

has been accrued as an R&D expense in the accompanying statements of operations for the six months ended June 30, 2023.

has been accrued as an R&D expense in the accompanying statements of operations for the nine months ended September 30, 2023.

On July 19, 2021, the Company entered into an

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The initial budget for the study, which includes clinical pharmacology, translational sciences,

and bioanalytical services, was approximately $ 2.3 million.

Related payments totaling approximately $ 2.2 million have been paid to Syneos

as of June 30, 2023.

and bioanalytical services, was approximately $ 2.3 million, and the research was completed as of September 30, 2023.

On January 6, 2022, the Company entered into a

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Related payments totaling approximately $ 2.3 million

have been paid to Quotient as of June 30, 2023, approximately $ 1.2 million of related expense has been recorded, and approximately $ 1.0

million has been recorded as prepaid expense in the accompanying balance sheet as of June 30, 2023.

have been paid to Quotient as of September 30, 2023, approximately $ 1.4 million of related expense has been recorded, and approximately

$ 0.9 million has been recorded as prepaid expense in the accompanying balance sheet as of September 30, 2023.

On February 9, 2022, the Company entered into

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revised the remaining services budget to approximately $ 0.1 million, and the research was completed as of March 31, 2023.

On June 29, 2022, the Company entered into an

Agreement with Inotiv, an Indiana based company that provides preclinical trial and related services, for the purpose of performing research

in support of Oxylanthanum Carbonate.

The budget for these services is approximately $ 1.3 million.

On April 10, 2023, the Company entered

into an Agreement with Inotiv that provides preclinical trial and related services, for the purpose of performing research in support

On September 29, 2022, the Company entered into an Agreement with Inotiv,

an Indiana based company that provides preclinical trial and related services, for the purpose of performing research in support of Oxylanthanum

The budget for these services is approximately $ 1.3 million.

Approximately $ 1.4 million has been paid to Inotiv under these

agreements as of June 30, 2023.

On April 10, 2023, the Company entered into an Agreement with

Inotiv that provides preclinical trial and related services, for the purpose of performing research in support of UNI-494.

for these services is approximately $ 1.3 million.

Approximately $ 1.8 million has been paid to Inotiv under these agreements as of September

30, 2023, approximately $ 1.3 million of related expense has been recorded, and approximately $ 0.6 million has been recorded as prepaid

expense in the accompanying balance sheet as of September 30, 2023.

On July 14, 2022, the Company entered into a license

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paid to Celerion and the research was completed as of June 30, 2023.

On February 1, 2023, the Company entered into a license agreement with

Lotus International Pte Ltd.

On February 1, 2023, the Company entered into

a license agreement with Lotus International Pte Ltd.

(“Lotus”) (see Note 4).

Under the terms of the agreement, Lotus will be responsible for development,

registration filing and approval for Oxylanthanum Carbonate in the licensed territory of South Korea.

In addition, Lotus will have sole

responsibility for the importation of the drug product from the Company and for the costs of commercialization of Oxylanthanum Carbonate

in the licensed territory.

The Company has received an upfront payment of $ 0.7 million, may receive up to $ 3.7 million in future milestone

payments and will be eligible for tiered royalties upon achievement of specified commercial achievements.

Under the terms of the agreement, Lotus will

be responsible for development, registration filing and approval for Oxylanthanum Carbonate in the licensed territory of South Korea.

In addition, Lotus will have sole responsibility for the importation of the drug product from the Company and for the costs of commercialization

of Oxylanthanum Carbonate in the licensed territory.

The Company has received an upfront payment of $ 0.7 million, may receive up to $ 3.7

million in future milestone payments and will be eligible for tiered royalties upon achievement of specified commercial achievements.

On June 29, 2023, the Company entered into a services

agreement with Shilpa related to NDA filing support for Oxylanthanum Carbonate.

The agreement provides for payments of up to $ 2.0 million,

and the Company has made $ 2.0 million in payments pursuant to the agreement as of September 30, 2023.

Licensing Revenues

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revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Variable consideration

Variable considerations

consisting of milestone payments and sales-based royalties may be received based on the completion of certain clinical, regulatory, and

1 unchanged sentence

The Company has concluded that the future milestone payments should be excluded from the transaction price due

to the uncertainty of achievement as of June 30, 2023.

The Company will reassess this conclusion at each reporting date until the uncertainties

are resolved.

to the uncertainty of achievement as of September 30, 2023.

The Company will reassess this conclusion at each reporting date until the

uncertainties are resolved.

For the sales-based royalty payments, guidance

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The Company has concluded that the future sales-based royalties

should be excluded from the transaction price as of June 30, 2023.

should be excluded from the transaction price as of September 30, 2023.

The Company will reassess this conclusion at each reporting date.

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the Company has recognized $ 1.0 million in the accompanying statements of operations as licensing revenue for the year ended December

On February 1, 2023, the Company entered into a license agreement with

Lotus International Pte Ltd.

Under the terms of the agreement, Lotus will be responsible for development, registration

filing and approval for Oxylanthanum Carbonate in the licensed territory of South Korea.

In addition, Lotus will have sole responsibility

for the importation of the drug product from the Company and for the costs of commercialization of Oxylanthanum Carbonate in the licensed

The Company has agreed to complete development of the drug product, at its own expense, as required for obtaining regulatory

approval in the U.S.

Both parties agreed to enter into a separate manufacturing and supply agreement whereby Unicycive will supply Lotus

with Oxylanthanum Carbonate product.

The Company has received an upfront payment of $ 0.7 million, may receive up to $ 3.7 million in future

milestone payments and will be eligible for tiered royalties upon achievement of specified commercial achievements.

On February 1, 2023, the Company entered into

a license agreement with Lotus International Pte Ltd.

Under the terms of the agreement, Lotus will be responsible

for development, registration filing and approval for Oxylanthanum Carbonate in the licensed territory of South Korea.

In addition, Lotus

will have sole responsibility for the importation of the drug product from the Company and for the costs of commercialization of Oxylanthanum

Carbonate in the licensed territory.

The Company has agreed to complete development of the drug product, at its own expense, as required

for obtaining regulatory approval in the U.S.

Both parties agreed to enter into a separate manufacturing and supply agreement whereby

Unicycive will supply Lotus with Oxylanthanum Carbonate product.

The Company has received an upfront payment of $ 0.7 million, may receive

up to $ 3.7 million in future milestone payments and will be eligible for tiered royalties upon achievement of specified commercial achievements.

The Company has evaluated the Agreement in accordance

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revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Variable consideration

Variable considerations

consisting of milestone payments and sales-based royalties may be received based on the completion of certain clinical, regulatory, and

1 unchanged sentence

The Company has concluded that the future milestone payments should be excluded from the transaction price due

to the uncertainty of achievement as of June 30, 2023.

The Company will reassess this conclusion at each reporting date until the uncertainties

are resolved.

to the uncertainty of achievement as of September 30, 2023.

The Company will reassess this conclusion at each reporting date until the

uncertainties are resolved.

For the sales-based royalty payments, guidance

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The Company has concluded that the future sales-based royalties

should be excluded from the transaction price as of June 30, 2023.

should be excluded from the transaction price as of September 30, 2023.

The Company will reassess this conclusion at each reporting date.

The Company has concluded that at contract inception

the total transaction price is the $ 675,000 amount of the upfront payment.

the total transaction price is $ 675,000 amount of the upfront payment.

ASC 606 generally requires an entity to allocate the transaction

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services were determined to be immaterial to the contract.

The Company has recognized a total of $ 675,000 in the accompanying statements

of operations as licensing revenue for the six months ended year ended June 30, 2023.

The Company has recognized a total of $ 0 and $ 675,000 in the accompanying statements

of operations as licensing revenue for the three and nine months ended September 30, 2023, respectively.

Balance Sheet Components

Prepaid expenses and other current assets as of

December 31, 2022 and June 30, 2023 consisted of the following (in thousands):

Prepaid directors’ and officers’ liability insurance premiums

Prepaid preclinical services

December 31, 2022, and September 30, 2023, consisted of the following (in thousands):

September 30,

Directors’ and officers’ liability insurance premiums

Research and development services

Property, plant and equipment as of December 31,

2022 and June 30, 2023 consisted of the following (in thousands):

2022, and September 30, 2023, consisted of the following (in thousands):

September 30,

Leasehold improvements

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Less accumulated depreciation

Accounts payable as of December 31, 2022 and June

30, 2023 consisted of the following (in thousands):

Accounts payable as of December 31, 2022, and

September 30, 2023, consisted of the following (in thousands):

September 30,

Trade accounts payable

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Accrued liabilities as of December 31, 2022, and

June 30, 2023 consisted of the following (in thousands):

September 30, 2023, consisted of the following (in thousands):

September 30,

Accrued labor costs

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lease, and the Company evaluated the new agreement under ASC 842.

The Company classified the lease as an operating lease and, at March

The Company classified the lease as an operating lease and, on March

15, 2023, determined that the present value of the lease was approximately $ 1.0 million using a discount rate of 10.0 %.

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The Company determined that the option to

extend the lease for an additional three years was not considered reasonably certain at June 30, 2023.

During the three and six months

ended June 30, 2023, the Company reflected amortization of right-of-use asset of approximately $ 75,000 and $ 119,000 , respectively, resulting

in a right of use asset balance as of June 30, 2023 of approximately $ 0.9 million.

During the six months ended June 30, 2023, the

Company made cash payments on the lease of $ 142,000 towards the lease liabilities.

As of June 30, 2023, the total lease liability was

approximately $ 0.9 million.

ASC 842 requires recognition in the statement of operations of a single lease cost, calculated so that the

cost of the lease is allocated over the lease term, generally on a straight-line basis.

Rent expense for the lease for the three and six

months ended June 30, 2023 was $ 99,000 and $ 153,000 , respectively.

As of June 30, 2023, maturities of the Company’s

extend the lease for an additional three years was not considered reasonably certain on September 30, 2023.

During the three and nine

months ended September 30, 2023, the Company reflected amortization of right-of-use asset of approximately $ 77,000 and $ 196,000 , respectively,

resulting in a right of use asset balance as of September 30, 2023, of approximately $ 0.8 million.

During the nine months ended September 30, 2023,

the Company made cash payments on the lease of $ 236,000 towards the lease liabilities.

As of September 30, 2023, the total lease liability

was approximately $ 0.9 million.

ASC 842 requires recognition in the statement of operations of a single lease cost, calculated so that

the cost of the lease is allocated over the lease term, generally on a straight-line basis.

Rent expense for the lease for the three and

nine months ended September 30, 2023, was $ 100,000 and $ 253,000 , respectively.

As of September 30, 2023, maturities of the Company’s

lease liabilities are as follows (in thousands):

Operating Lease

Year ending December 31, 2023

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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,

The Company has not entered into any additional agreements with Globavir during the six months ended June 30, 2023.

The Company has not entered into any additional agreements with Globavir during the nine months ended September 30, 2023.

Commitments and Contingencies

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property infringement claim by any third party with respect to its technology.

The term of these indemnification agreements is generally

The terms of these indemnification agreements are generally

perpetual any time after the execution of the agreement.

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or been required to defend any action related to its indemnification obligations.

The Company believes that the likelihood of conditions

arising that would trigger these indemnities is remote and, historically, the Company had not made any significant payment under such

indemnification provisions.

The Company believes that the likelihood of conditions arising that

would trigger these indemnities is remote and, historically, the Company had not made any significant payment under such indemnification

Accordingly, the Company has not recorded any liabilities relating to these agreements.

However, the Company

may record charges in the future as a result of these indemnification obligations.

However, the Company may record charges

in the future because of these indemnification obligations.

Additionally, the Company has agreed to indemnify

its directors and officers for certain events or occurrences while the director or officer is, or was serving, at the Company’s

request in such capacity.

request in such a capacity.

The indemnification period covers all pertinent events and occurrences during the director’s or officer’s

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100 % vested.

The Company’s 401(k) Plan provides that the Company match each participant’s contribution at 100 % up to 4 % of

the employee’s eligible compensation.

Company contributions to the 401(k) Plan totaled approximately $ 36,000 and $ 51,000 for the

six months ended June 30, 2022 and 2023, respectively.

The Company’s 401(k) Plan provides that the Company matches each participant’s contribution at 100 % up to 4 %

of the employee’s eligible compensation.

Company matching contributions to the 401(k) Plan totaled approximately $ 51,000 and $ 80,000

for the nine months ended September 30, 2022, and 2023, respectively.

Stockholders’ Deficit

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Initial Public Offering

During July 2021, as a result of its initial public

offering, the Company issued 5,000,000 shares of common stock and 4,000,000 warrants to investors in exchange for cash at $ 5.00 per unit,

consisting of $ 4.99 per share of common stock and $ .0125 per four fifths of a warrant.

The warrants have a 5 -year term and an exercise

price of $ 6.00 per warrant.

The underwriters exercised their option to purchase an additional 600,000 warrants, and the Company received

$ 7,500 in proceeds.

During July 2021, due to its initial public offering,

the Company issued 5,000,000 shares of common stock and 4,000,000 warrants to investors in exchange for cash at $ 5.00 per unit, consisting

of $ 4.99 per share of common stock and $ .0125 per four fifths of a warrant.

The warrants have a 5 -year term and an exercise price of $ 6.00

The underwriters exercised their option to purchase an additional 600,000 warrants, and the Company received $ 7,500 in proceeds.

As a result of the initial public offering, the

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The following table summarizes activity for the

Company’s common stock warrants for the six months ended June 30, 2023:

Company’s common stock warrants for the nine months ended September 30, 2023:

(In thousands)

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Warrants exercised

Outstanding, June 30, 2023

See Note 11 for information on contingently issuable

preferred stock warrants associated with our sale in March 2023 of Series A-1 Preferred Stock.

Outstanding, September 30, 2023

See Note 11 for information on preferred stock

warrants associated with our sale in March 2023 of Series A-1 Preferred Stock.

Issuance of Common Stock Upon Conversion of

Series A-1 Preferred 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 (see Notes 10 and 11).

On July 11, 2023, pursuant to the Certificate of Designation of Preferences, Rights and Limitations

of the Series A Convertible Voting Preferred Stock (the “Certificate of Designation”), the Company issued a total of 19,516,205

shares of common stock in partial settlement of the auto-conversion of the Series A-1 Preferred Stock.

Voting Rights of Common Stock

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shares of preferred stock authorized, par value of $ 0.001 per share, and no shares of preferred stock were issued or outstanding.

June 30, 2023, as a result of the Company’s private placement financing in March 2023, there were 30,190 shares of Series A-1 Preferred

Stock issued and outstanding.

On March 3, 2023, the Company issued and sold,

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for the treatment of hyperphosphatemia and, if approved, for the commercial launch of Oxylanthanum Carbonate in the U.S.

Pursuant to the Certificate of Designation of

Preferences, Rights and Limitations of the Series A Convertible Voting Preferred Stock (the “Certificate of Designation”),

as of March 3, 2023, each share of Series A-1 Preferred Stock is, subject to approval of the Company’s stockholders, convertible

into a unit (“Unit”) consisting of:

Pursuant to the Certificate of Designation, as

of March 3, 2023, each share of Series A-1 Preferred Stock is, subject to approval of the Company’s stockholders, convertible into

a unit (“Unit”) consisting of:

(i) shares of common stock of the Company and, if applicable, shares of Series A-2 Preferred

Stock, in lieu of Common Stock, (ii) a tranche A warrant to acquire approximately 46,675,940 shares of Series A-3 Preferred Stock (the

“Tranche A Warrant”), (iii) a tranche B warrant to acquire approximately 42,432,672 shares of Series A-4 Preferred Stock (the

“Tranche B Warrant”), and (iv) a tranche C warrant to acquire approximately 67,892,276 shares of Series A-5 Preferred Stock

(the “Tranche C Warrant”, together with the Tranche A Warrant and the Tranche B Warrant, the “Warrants”).

Tranche A warrants for an aggregate exercise price of approximately $25 million are exercisable until 21 days following the Company’s

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 the Company’s 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

Stock, in lieu of common stock, (ii) a tranche A warrant to acquire approximately 46,675,940 shares (excluding deemed dividends) of Series

A-3 Preferred Stock (the “Tranche A Warrant”), (iii) a tranche B warrant to acquire approximately 42,432,672 shares (excluding

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

67,892,276 shares (excluding deemed dividends) of Series A-5 Preferred Stock (the “Tranche C Warrant”, together with the Tranche

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

The Tranche A warrants for an aggregate exercise price of approximately

$25 million are exercisable until 21 days following the Company’s 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 the Company’s

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 approval.

The Company has designated 30,190 shares of Series

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and Series A-5 preferred stock results in a beneficial ownership interest in excess of the maximum percentage of common stock upon conversion,

the holders will receive the as converted equivalent for the remaining shares in preferred stock on a one-for-one basis with common shares.

As the Company does not currently have sufficient authorized shares of preferred stock available to satisfy the one-for-one conversion

to Series A preferred stock, the Company may be required to seek shareholder approval for an increase in the number of authorized preferred

The Company determined that the holders can detach

the warrants from the Series A-1 preferred stock, because the stock will automatically convert into shares of common stock, and the holders

will be able to sell those shares while retaining the warrants.

Accordingly, the warrants are considered freestanding from the Series

the holders will receive the as converted equivalent for the remaining shares in preferred stock.

The Company determined that the holders could

detach the warrants from the Series A-1 preferred stock, because the stock will automatically convert into shares of common stock, and

the holders will be able to sell those shares while retaining the warrants.

Accordingly, the warrants are considered freestanding from

the Series A-1 preferred stock.

The Company noted that at contract inception, the warrants are contingently issuable upon the occurrence

of a specified event (shareholder approval).

In connection with the Series A-1 Preferred Stock issuance, the Company

recognized liabilities for the associated Warrants, which had an aggregate fair value of $ 2.8 million at the time of issuance.

costs of $ 0.2 million were allocated to the Warrants and expensed during the nine months ended September 30, 2023.

The fair value of the

Warrants was accounted for as a reduction to the net proceeds of the Preferred Stock Offering, which resulted in an initial carrying value

of $ 25.4 million for the Series A-1 Preferred Stock (net of $ 2.0 million of placement agent fees and offering costs allocated to the Series

A-1 Preferred Stock).

The Company noted that at contract inception, the warrants are contingently issuable upon the occurrence of a specified

event (shareholder approval).

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.

Once the warrants are legally issued as a result

of the automatic conversion of the Series A-1 preferred stock upon shareholder approval, they will become immediately exercisable at the

option of the holder.

The Company determined that the contingently issuable warrants qualify as derivative instruments pursuant to ASC

815-40 and that the warrants will be considered issued for accounting purposes concurrently with the Series A-1 Preferred Stock.

In connection with the Series A-1 Preferred Stock

issuance, the Company recognized liabilities for the associated Warrants, which had an aggregate fair value of $ 2.8 million at the time

Offering costs of $ 0.2 million were allocated to the Warrants and expensed during the six months ended June 30, 2023.

fair value of the Warrants were accounted for as a reduction to the net proceeds of the Preferred Stock Offering, which resulted in an

initial carrying value of $ 25.4 million for the Series A-1 Preferred Stock (net of $ 2.0 million of placement agent fees and offering costs

allocated to the Series A-1 Preferred Stock).

Refer to Note 11 for disclosures related to the Warrants.

On June 26, 2023, the Company held its annual

shareholder meeting, and as a result, shareholder approval for the conversion of the Series A-1 Preferred Stock was obtained.

11, 2023, pursuant to the Certificate of Designation, the Company issued shares of Series A-2 preferred stock in partial settlement of

the auto-conversion of the Series A-1 preferred shares.

As of September 30, 2023, there were zero shares of Series A-1 preferred stock

outstanding and there were 43,649 shares of Series A-2 Preferred Stock issued and outstanding.

The Series A-1 Preferred Stock have the following

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A-1 Preferred Stock.

As of June 30, 2023, the Company has recorded $ 0.8 million, or $ 26.30 per share, of deemed dividends on the outstanding

Series A-1 Preferred Stock.

As of September 30, 2023, the Company recorded $ 0.9 million, or $ 28.71 per share, of deemed dividends on the Series

A-1 Preferred Stock.

Holders of the Series A-1 Preferred Stock

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and Series A-5 Preferred Stock.

Once the warrants are legally issued as a result

of the automatic conversion of the Series A-1 Preferred Stock upon shareholder approval, they will become immediately exercisable at the

option of the holder.

The Company determined that the contingently issuable warrants qualify as derivative instruments pursuant to ASC

815-40 and that the warrants will be considered issued for accounting purposes concurrently with the Series A-1 Preferred Stock.

On June 26, 2023, the Company held its annual

shareholder meeting, and as a result, shareholder approval for the conversion of the Series A-1 Preferred Stock was obtained.

11, 2023, pursuant to the Certificate of Designation, the Company issued, in addition to common stock and Series A-2 Preferred Stock,

(i) a Tranche A Warrant to acquire 47,852,430 shares of Series A-3 Preferred Stock, (ii) a Tranche B Warrant to acquire 43,502,206 shares

of Series A-4 Preferred Stock, and (iii) a Tranche C Warrant to acquire 69,603,531 shares of Series A-5 Preferred Stock.

The Warrants are recognized as liabilities in

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The MCS valuation model was used for the valuation

performed as of the transaction inception at March 3, 2023 and at March 31, 2023 due to uncertainty in the timing of shareholder approval

performed as of the transaction inception on March 3, 2023, and on March 31, 2023, due to uncertainty in the timing of shareholder approval

and the potential variability in the Warrant exercise price.

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the exercise price for the Warrants became fixed.

Therefore, as of June 30, 2023, the fair value of the warrants was determined using

a Black Scholes model using parameters including (i) the exercise price of the warrant, (ii) the price of the underlying security, (iii)

the time to expiration, or expected term, (iv) the expected volatility of the underlying security, (v) the risk-free rate, and (vi) estimated

probability assumptions surrounding the achievement by the Company of technical milestones associated with regulatory and commercial progress.

Therefore, as of June 30, 2023 and September 30, 2023, the fair value of the Warrants

was determined using a Black Scholes model using parameters including (i) the exercise price of the warrant, (ii) the price of the underlying

security, (iii) the time to expiration, or expected term, (iv) the expected volatility of the underlying security, (v) the risk-free rate,

and (vi) estimated probability assumptions surrounding the achievement by the Company of technical milestones associated with regulatory

and commercial progress.

These valuation techniques involve management’s

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opposite impact on fair value measurement.

The Company uses a third-party valuation

expert to assist in the determination of the fair value of the Warrants.

The tables below summarize the valuation inputs into the

Black Scholes model for the derivative liability associated with the three tranches of warrants at June 30, 2023.

The Company uses a third-party valuation expert

to assist in the determination of the fair value of the Warrants.

The tables below summarize the valuation inputs into the Black Scholes

model for the derivative liability associated with the three tranches of Warrants at September 30, 2023.

Tranche A Warrant

September 30,

Fair value of underlying stock

Exercise price

113.5 % – 149.2 %

Risk free rate

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Tranche B Warrant

September 30,

Fair value of underlying stock

Exercise price

108.3 % – 120.5 %

Risk free rate

5.0 % – 5.4 %

Dividend yield

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Probability for TDAPA approval

0.01 % – 12.0 %

Tranche C Warrant

September 30,

Fair value of underlying stock

Exercise price

104.6 % – 105.4 %

Risk free rate

4.8 % – 5.0 %

Dividend yield

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Probability for commercialization

0.1 % – 12.5 %

As of the issuance date (March 3, 2023), the Company

estimated the fair value of the Warrants to be $ 2.8 million.

As of June 30, 2023, the Company estimated the fair value of the Warrants

As of September 30, 2023, the Company estimated the fair value of the Warrants

to be $ 11.5 million.

The following table summarizes activity for the

Company’s preferred stock warrants for the six months ended June 30, 2023 (includes the conversion effect in the liquidation preference

of accrued dividends):

Company’s preferred stock warrants for the nine months ended September 30, 2023 (includes the conversion effect in the liquidation

preference of accrued dividends):

(in thousands)

Outstanding, December 31, 2022

Warrants issuable

Warrants issued

Warrants exercised

Outstanding, June 30, 2023

Outstanding, September 30, 2023

Stock-based Compensation

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meeting on June 26, 2023.

Shareholders approved an increase to the number of shares reserved on June 26, 2023, and accordingly, at June

Shareholders approved an increase to the number of shares reserved on June 26, 2023, and accordingly, at September

30, 2023, approximately 12,775,996 shares are reserved for issuance.

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December 31, 2022, approximately 352,938 shares of common stock were available under the 2021 Plan.

As of June 30, 2023, there are approximately

11,874,108 shares of common stock available under the 2021 Plan.

As of September 30, 2023, there are

approximately 2,797,621 shares of common stock available under the 2021 Plan.

The following table summarizes activity for stock

options under all plans for the six months ended June 30, 2023:

options under all plans for the nine months ended September 30, 2023:

(in thousands)

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Options exercised

Outstanding, June 30, 2023

Options vested and exercisable as of June 30, 2023

As of June 30, 2023, the unrecognized compensation

Outstanding, September 30, 2023

Options vested and exercisable as of September 30, 2023

As of September 30, 2023, the unrecognized compensation

cost related to outstanding stock options was $ 5.6 million, which is expected to be recognized as expense over approximately 3.1 years.

During August 2023, the Company granted a consultant

10,000 restricted stock units with a grant date fair value of $ 7,500 , resulting in a fair value per share of $ 0.75 .

Subject to the consultant’s

continued service, the restricted stock units shall vest upon the two-year anniversary of the date of grant.

As of September 30, 2023,

the unrecognized compensation cost related to the grant was approximately $ 5,000 , which is expected to be recognized as expense over approximately

During the year ended December 31, 2021, employees

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A portion of these options were

exercised early (prior to vesting), and as of June 30, 2023, 5,185 of the options remained unvested.

Proceeds received related to the

unvested options of approximately $ 17,000 at June 30, 2023 were included in accrued liabilities on the accompanying balance sheet and

will be reclassified to equity as vesting occurs, provided the employees and consultants continue to provide services to the Company.

Proceeds received related to the vested portion of options of approximately $ 14,000 were reclassified to equity during the six months

ended June 30, 2023.

The vested portion of the exercises was 378,529 shares at June 30, 2023.

exercised early (prior to vesting), and as of September 30, 2023, 3,005 of the options remained unvested.

Proceeds received related to

the unvested options of approximately $ 10,000 at September 30, 2023 were included in accrued liabilities on the accompanying balance sheet

and will be reclassified to equity as vesting occurs, provided the employees and consultants continue to provide services to the Company.

Proceeds received related to the vested portion of options of approximately $ 21,000 were reclassified to equity during the nine months

ended September 30, 2023.

The vested portion of the exercises was 380,709 shares at September 30, 2023.

During May 2022, the Company granted a consultant

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continued service, the restricted stock units shall vest upon the two-year anniversary of the date of grant.

As of June 30, 2023, the

unrecognized compensation cost related to the grant was approximately $ 3,000 , which is expected to be recognized as expense over approximately

As of September 30, 2023,

the unrecognized compensation cost related to the grant was approximately $ 2,000 , which is expected to be recognized as expense over approximately

During July 2021, the Company granted a director

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The Company has recorded stock-based compensation

expense, which includes expense related to restricted stock units, allocated by functional cost as follows for the three and six months

ended June 30, 2022 and 2023, (in thousands):

expense, which includes expense related to restricted stock units, allocated by functional cost as follows for the three and nine months

ended September 30, 2022, and 2023, (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Research and development

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each vesting-tranche for awards with graded vesting.

The mid-point between the vesting date and the maximum contractual expiration

The midpoint between the vesting date and the maximum contractual expiration

date is used as the expected term under this method.

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Expected Dividend – Through

June 30, 2023, the Company has never declared nor paid any cash dividends.

The Company shall modify its dividend policy to state that

the Company intends to pay dividends to all stockholders, including holders of Series A Preferred Stock on an as-if-converted-to-common-stock

September 30, 2023, the Company has never declared nor paid any cash dividends.

The Company shall modify its dividend policy to state

that the Company intends to pay dividends to all stockholders, including holders of Series A Preferred 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 %)

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The following averaged assumptions were used to

calculate the fair value of awards granted to employees, directors and non-employees for the six months ended June 30, 2022:

Ended June 30,

calculate the fair value of awards granted to employees, directors and non-employees for the nine months ended September 30, 2022:

September 30,

Expected volatility

101.00 – 105.00 %

Risk-free interest rate

2.90 - 2.92 %

Dividend yield

Expected term

There were no equity awards granted to employees,

directors and non-employees for the six months ended June 30, 2023.

The following averaged assumptions were used to

calculate the fair value of awards granted to employees, directors and non-employees for the nine months ended September 30, 2023:

September 30,

Expected volatility

104.00 – 108.00 %

Risk-free interest rate

4.35 – 4.36 %

Dividend yield

Expected term

Net Loss Per Share

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Deemed dividends on Series A-1 Preferred Stock

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Options to purchase common stock

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Subsequent Events

On July 11, 2023, the Company completed the automatic

conversion of the Series A-1 convertible preferred stock whereby each share of Series A-1 preferred stock converted into a Unit consisting

of a combination of common stock, Series A-2 convertible preferred stock, and three tranches of warrants exercisable for additional preferred

The conversion resulted in the issuance of 19,516,205 shares of common stock.

After the conversion, there were a total of 34,752,221

shares of common stock outstanding.

See Note 10 for further details.

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 1. Financial Statements