What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-28 compared with 2023-03-31 · 224 added, 243 removed, 232 unchanged (67% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and

analysis of our financial condition and plan of operations together with and our accompanying financial statements and the related notes

analysis of our financial condition and plan of operations together with our accompanying financial statements and the related notes

appearing elsewhere in this Annual Report on Form 10-K.

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dollars, unless otherwise noted.

We are a biotechnology company dedicated to developing

treatments for kidney disease that have the potential to offer medical benefit.

Our development programs are focused on the development

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).

Chronic kidney disease (CKD) is the gradual loss

of kidney function that can get worse over time leading to lasting damage.

Our initial focus is developing drugs and getting them approved

in the US, and then look to partner with the other global biopharmaceutical companies in the rest of the world.

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.

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).

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.

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.

We are a biotechnology company dedicated to developing treatments for certain medical conditions.

Currently, two of our programs are focused

on kidney disease, an area we believe we have the potential to offer medical benefit.

As we grow the company and build our team, we intend

to focus on identifying medical conditions within and outside of kidney disease.

Our current development programs are focused on two novel

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

for treatment of acute kidney injury (AKI).

Oxylanthanum Carbonate and UNI 494 were initially developed by and licensed to us from Spectrum

Pharmaceuticals (“Spectrum”) and Sphaera Pharma, respectively.

Spectrum conducted a Phase 1 clinical trial with Oxylanthanum

Carbonate in 2012, prior to the grant of our license in 2018.

Sphaera conceived and performed initial characterization of various potential

pro-drug linkers, including the initial patent application, and performed some initial physiochemical characterization and preliminary

animal pharmacokinetic studies.

As discussed herein, after completing IND enabling preclinical studies, we have conducted a Phase I clinical

study in healthy volunteers with UNI 494 in 2023.

Chronic kidney disease (CKD) is the gradual loss of kidney (renal) function that can get worse over time leading to lasting damage and

possibly Stage 5 or end-stage renal disease (ESRD).

Our initial focus is on developing drugs and getting them approved in the U.S., and

then to partner with global biopharmaceutical companies in the rest of the world.

According to the United States Renal Data System (USRDS)

2022 Annual Data Report, 30 million (14%) of adults in the United States are estimated to have CKD and, of these, approximately 13 million

patients have advanced CKD (stage 3-5).

Approximately 550,000 patients (ESRD) are on dialysis and of those, approximately 450,000 patients

(~80%) take phosphate binders to control hyperphosphatemia hyperphosphatemia (too much phosphorus in their blood).

The number of patients

with ESRD in the U.S.

is increasing steadily and is projected to reach between 971,000 and 1,259,000 patients 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.

AKI affects more than 2 million U.S.

patients and costs the healthcare system in excess of $9 billion per

More than 300,000 patients per year in the U.S.

die due to AKI that has many causes.

Our business model is to license technologies and drugs in order to 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

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 our company.

Since our formation we have devoted substantially

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$18.1 million and $30.5 million for the years ended December 31, 2022 and 2023.

As of December 31, 2022, we had an accumulated

deficit of $34.0 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.

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

of $64.5 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 portfolio;

additional personnel.

We have funded our operations primarily from

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

We plan to continue

to use third-party service providers, including contract manufacturing organizations, to carry out our pre-clinical and clinical development

and to manufacture and supply the materials to be used during the development and commercialization of our product candidates.

We plan to continue to use third-party service

providers, including contract manufacturing organizations, to carry out our pre-clinical and clinical development and to manufacture

and supply the materials to be used during the development and commercialization of our product candidates.

Recent Developments

On March 13, 2024, the Company signed a securities purchase agreement

with certain healthcare-focused institutional investors that will provide $50 million in gross proceeds to us through a private placement.

Pursuant to the securities purchase agreement,

the Company issued to institutional purchasers $50 million in shares of the Company’s Series B Convertible Preferred Stock.

50,000 Shares of Series B Convertible Preferred

Stock were issued at a price of $1,000.00 per share and are convertible into common stock at $1.00 per share.

On March 3, 2023, we entered into a securities

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which we agreed to issue and sell, in a private placement (the “Offering”), 30,190 shares of Series A-1 Convertible Preferred

Stock, par value $0.001 per share (the “Series A-1 Preferred Stock”), which offering will result in up to $130 million in

gross proceeds and initial upfront funding of $30 million.

Stock, par value $0.001 per share (the “Series A-1 Preferred Stock”), with initial upfront funding of $30 million and an

additional $100 million possible if warrants issued in the Offering are exercised.

Pursuant to the Certificate of Designation of

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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.

Subject to the terms and limitations contained

in the Certificate of Designation, the Series A-1 Preferred Stock issued in the Offering will not become convertible until our stockholders

approve the issuance of the Units upon conversion of the Series A-1 Preferred Stock and the issuance of all Common Stock upon conversion

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.

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 approval.

On June 26, 2023, we held our 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 automatically converted into a Unit.

Subject to the limitations set forth in the Certificate

of Designation, at the option of the holder, shares 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 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

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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

rendered when control of the promised goods is 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.

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Research and Development Expenses

Substantially all of our research and development

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

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

research and development technology (“IPR&D”).

We expense both internal and external research and development expenses

as they are incurred.

Substantially all of our research and development 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 technology costs

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

development technology.

We expense both internal and external research and development expenses as they are incurred.

We do not allocate our costs by product candidate,

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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, as well as services incurred pursuant to a services agreement

with Globavir Biosciences Inc., a related party.

expenses not otherwise classified as research and development expenses.

We anticipate that our general and administrative

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Other income (expenses):

Interest Income

Interest expense

Loss on debt conversion

Gain on extinguishment of debt

Change in fair value of warrant liability

Total other income (expenses)

Licensing Revenues

Licensing revenues increased approximately $1.0

million, or 100%, from the prior year due to a licensing agreement entered into with Lee’s Pharmaceutical (HK) Limited in July

We received an upfront payment of approximately $1.0 million.

There was no comparable revenue earned in the prior period.

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

Licensing revenues decreased approximately $0.3

million or 29% from 2022 due to a smaller upfront payment of approximately $0.7 million associated with a licensing agreement entered

into with Lotus International PTE Ltd in February 2023.

We received an upfront payment of approximately $1.0 million associated with

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

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 $6.4 million, or 105%, from $6.1 million for the year ended December 31, 2021 to $12.4 million for the year ended

December 31, 2022.

The increase in research and development expenses was primarily due to an increase in development costs of $6.5 million

due to product formulation, clinical study, and preclinical study services in the current period.

New employee hires increased labor

costs $1.6 million, and consulting and other costs increased $756,000 from the prior period.

The increase was partially offset by a $2.2

million decrease in non-cash expense from the issuance of common stock in 2021 pursuant to the anti-dilution clause in the purchase of

in process research and development technology from Spectrum Pharmaceuticals, Inc.

In addition, non-cash stock compensation costs decreased

$338,000 from the prior period.

approximately $0.4 million, or 4% from $12.4 million for the year ended December 31, 2022 to $12.9 million for the year ended December

The increase in research and development expenses was primarily due to a $662,000 increase in labor costs.

Non-cash stock compensation

increased $465,000.

The increases were partially offset by a decrease in drug development costs of $671,000.

General and Administrative Expenses

General and administrative expenses increased by approximately $3.7

million, or 127%, from $2.9 million for the year ended December 31, 2021 to $6.6 million for the year ended December 31, 2022 primarily

due to an increase of $1.4 million in consulting and professional services costs.

Labor costs increased $747,000 due to hiring of new

General and administrative expenses increased

by approximately $1.9 million, or 30%, from $6.6 million for the year ended December 31, 2022 to $8.5 million for the year ended December 31,

2023 primarily due to an increase of $1.4 million in consulting and professional services costs.

Labor costs increased $473,000 due to

hiring of new employees, and rent, travel, supplies and other costs increased $353,000.

Non-cash stock compensation costs increased $256,000.

Insurance expense for directors and officers increased $525,000, and

rent, travel, supplies and other costs increased $567,000.

The increases were partially offset by a decrease in insurance expense for directors and officers of $528,000.

Other Income (Expenses)

Other income (expenses) decreased by approximately

$1.0 million, or 99% from $1.0 million for the year ended December 31, 2021 to approximately $6,000 for the year ended December 31, 2022.

The decrease was due primarily to decreased interest expense incurred on our convertible notes of $0.6 million as well as conversion

to equity of our outstanding convertible notes as a result of our IPO in 2021 which resulted in a non-cash loss on debt conversion of

$0.4 million.

Other income (expenses) increased by approximately

$9.8 million, or 162,733% from $6,000 for the year ended December 31, 2022 to approximately $9.8 million for the year ended December

The increase was due primarily to the change in fair value of our warrant liability.

We earned interest income of $615,000

on our cash balance during the year that was partially offset by a $76,000 increase in interest expense.

Liquidity and Capital Resources

Sources of Liquidity

Since our formation through December 31,

2020, we have funded our operations with the sale of common stock, convertible notes and from a loan from our Chief Executive Officer

and principal stockholder.

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.

Since our formation through June 2021, we have

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

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

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 employees and conducting market research and other commercial

Future revenue streams may consist of collaboration

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We have generated approximately $1.6 million in licensing revenue to date.

On March 3, 2023, we entered into a securities

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 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.

On March 13, 2024, the Company entered into a securities purchase agreement

with certain accredited investors pursuant to which we agreed to issue and sell, in a private placement 50,000 shares of our Series B

Convertible Preferred Stock, par value $0.001 per share at a purchase price of $1,000 per share with an initial conversion price of $1.00

per share, subject to adjustment for an aggregate purchase price of $50 million.

Future Funding Requirements

We have incurred net losses since our inception.

For the year ended December 31, 2022, we had a net loss of $18.1 million, and we expect to incur substantial additional losses in

future periods.

For the year ended December 31, 2023, we had a net loss of $30.5 million, and we expect to incur substantial additional losses in future

As of December 31, 2023, we had an accumulated deficit of $64.5 million.

On March 6, 2023, we announced completion of

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 expect to continue incurring losses in the

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

and penetrate markets for the sale of our products.

We believe that we will continue to have access to capital resources through possible

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 $28.1 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.

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

initiatives and penetrate markets for the sale of our products.

Management believes that we will continue to have access to capital resources

through possible equity offerings, debt financing, 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,

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

Based on our currently anticipated

level of expenditures, and after receiving the proceeds from the private placement in March 2024, we believe that we have sufficient

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

these financial statements are available to be issued.

We anticipate that we will need to raise substantial

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

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,

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;

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.

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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If we are unable to raise additional funds when needed, we may be required to delay, reduce,

or terminate some or all of our development programs and clinical trials or we may also be required to sell or license to others rights

to our product candidates in certain territories or indications that we would prefer to develop and commercialize ourselves.

required to enter into collaborations and other arrangements to supplement our funds, we may have to give up certain rights that limit

our ability to develop and commercialize our product candidates or may have other terms that are not favorable to us or our stockholders,

or terminate some or all of our development programs and clinical trials or we may also be required to sell or license to others’

rights to our product candidates in certain territories or indications that we would prefer to develop and commercialize ourselves.

we are required to enter into collaborations and other arrangements to supplement our funds, we may have to give up certain rights that

limit our ability to develop and commercialize our product candidates or may have other terms that are not favorable to us or our stockholders,

which could materially affect our business and financial condition.

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at a reduced service fee of $6,000 per month and a termination date of June 30, 2022.

Convertible Notes

In January through May 2021, we issued convertible

notes (the “2021 Notes”) in the aggregate principal amount of $1,098,000.

The 2021 Notes bear interest at a rate of 12% per

annum, payable at maturity, and mature between January and May, 2022.

The 2021 Notes shall automatically convert into shares of common

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

or upon a change of control.

The 2021 Notes shall convert into such numbers of shares of common stock equal to the conversion amount

divided by the Conversion Price.

“Conversion Price” means (i) in the event of a Qualified Financing, 70% of the price per

share (or conversion price, as applicable) of common stock (or securities convertible into common stock, as applicable) sold in such

financing or (ii) in the event of a change of control, the price per share reflected in such transaction.

We accounted for the 2021 Notes as stock-settled

debt and we were accreting the carrying amount of the 2021 Notes to the settlement amount through maturity.

In July and through November 2020, we issued

convertible notes (the “2020 Notes”) in the aggregate principal amount of $1,290,000.

The 2020 Notes bear interest at a rate

of 12% per annum, payable at maturity, and mature between July and November 2021.

The 2020 Notes shall automatically convert into shares

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

Financing”) or upon a change of control.

The 2020 Notes shall convert into such numbers of shares of common stock equal to the

conversion amount divided by the Conversion Price.

“Conversion Price” means (i) in the event of a Qualified Financing, 70%

of the price per share (or conversion price, as applicable) of common stock (or securities convertible into common stock, as applicable)

sold in such financing or (ii) in the event of a change of control, the price per share reflected in such transaction.

We accounted for the 2020 Notes as stock-settled

debt and we are accreting the carrying amount of the 2020 Notes to the settlement amount through maturity.

As of December 31, 2020, unpaid

and accrued interest of $53,000 as well as debt discount accretion expense of approximately $186,000 was included with the convertible

notes on the balance sheet.

Interest expense, including discount accretion

expense for the 2021 and 2020 Notes was $238,000 and $627,000 for the years ended December 31, 2020 and 2021, respectively.

As a result of our initial public offering on

July 13, 2021, approximately $2,387,000 of principal and $191,000 of unpaid accrued interest related to the 2021 and 2020 Notes was converted

into shares of common stock.

The conversion resulted in a loss of $431,000 that is included as loss on debt conversion in the accompanying

statements of operations for the year ended December 31, 2021.

Private Placement

On March 3, 2023, we entered into a securities

purchase agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to

which we issued and sold, in a private placement, 30,190 shares of Series A-1 Convertible Preferred Stock, par value $0.001 per share,

which offering will result in up to $130 million in gross proceeds and initial upfront funding of $30 million.

For more information on

the private placement offering, please refer to the section titled “Item 1.

Business – Recent Developments”.

We have not entered into any additional agreements

with Globavir during the year ended December 31, 2023.

Summary of Cash Flows

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million for the year ended December 31, 2023.

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

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

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

We incurred a net loss of $18.1 million

after including the effect of non-cash adjustments for stock compensation.

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

costs associated with our drug candidates, labor costs, consulting services, and other corporate expenditures for investor relations,

compliance, and legal services.

We incurred a net loss of $30.5 million after including the effect of non-cash adjustments for stock

compensation and change in fair value of our warrant liability.

Net cash used in operating activities was $15.7

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

We incurred a net loss of $10.0 million

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

We incurred a net loss of $18.1 million after

including the effect of non-cash adjustments for stock compensation.

Cash Flows from Investing Activities

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for the year ended December 31, 2023 and was due to the purchase of furniture and fixtures for our corporate office.

Net cash used

in investing activities was $29,000 for the year ended December 31, 2021 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 year ended December 31, 2022 and was due to the purchase of furniture and fixtures for our corporate office.

Cash Flows from Financing Activities

Net cash used by financing activities was $471,000

for the year ended December 31, 2022 and was due primarily to payments made pursuant to our financed director and officer insurance policies.

Net cash provided by financing activities was

$22.4 million for the year ended December 31, 2021 and was primarily related to proceeds received from our initial public offering,

net of issuance and deferred offering costs.

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

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

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

by $1.1 million.

$27.5 million for the year ended December 31, 2023 and was due primarily to the private placement financing agreement we closed on March

Net cash used by financing activities was $471,000

for the year ended December 31, 2022 and was primarily due to payments made pursuant to our financed director and officer insurance

Critical Accounting Policies, Significant

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We consider our critical accounting

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

There have been no material changes

to our critical accounting policies and estimates during the year ended December 31, 2022 from those used for the year ended December

The below policies represent our critical accounting policies.

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 represents 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 year ended December 31, 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 is 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 obligation.

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 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.

The warrant liabilities are measured using Level 3 fair

value inputs.

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

Research and Development

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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 issuance

of shares pursuant to anti-dilution clause in the purchase of IPR&D technology.

We expense both internal and external research and

development expenses as they are incurred.

and product development employees.

We expense both internal and external research and development expenses as they are incurred.

Stock-Based Compensation

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found elsewhere in this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our financial

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

As a smaller reporting company, we are not required

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

What changed 10-K

Item 7. Management’s Discussion and Analysis