Unicycive Therapeutics, Inc. — Q1 2022 Form 10-Q
Business context and reporting period
Quarter ended March 31, 2022. Unicycive is a pre-revenue biotechnology company developing Renazorb for hyperphosphatemia in chronic kidney disease and UNI 494 for acute kidney injury. The company reported no product revenue and operates as one segment.
Key financial metrics
| Metric | Q1 2021 | Q1 2022 / March 31, 2022 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $450,000 | $1.933 million |
| General and administrative expense | $281,000 | $1.604 million |
| Total operating expenses / operating loss | $731,000 / $(731,000) | $3.537 million / $(3.537) million |
| Net loss | $(964,000) | $(3.537) million |
| Net loss per share, basic and diluted | $(0.11) | $(0.24) |
| Operating cash used | $673,000 | $2.957 million |
| Cash | — | $13.620 million |
| Total assets / total liabilities | — | $15.760 million / $2.516 million |
Amounts are in U.S. dollars; financial statement amounts are in thousands unless stated otherwise. At March 31, 2022, current assets were $15.464 million and current liabilities were $2.402 million. The company had $269,000 of operating lease liabilities and no convertible notes outstanding; the notes converted to equity in 2021. No gross margin is meaningful because the company had no revenue.
Material changes versus the prior comparable period
- Operating expenses rose $2.806 million, or 384%, and net loss increased $2.573 million, or 267%, year over year.
- R&D expense increased $1.483 million, primarily from $843,000 more drug development costs and $604,000 more labor costs. G&A increased $1.323 million, including higher D&O insurance, labor, and professional-service costs.
- Interest expense and the debt-extinguishment gain recorded in Q1 2021 were absent in Q1 2022, following conversion of the notes in connection with the 2021 IPO.
- Operating cash use increased from $673,000 to $2.957 million. There was no financing cash flow in Q1 2022, compared with $820,000 provided in Q1 2021.
Outlook, risks, and unusual items
- Management expects continued losses and negative operating cash flow as development advances. Based on its spending and $13.6 million cash balance, it said it expects to need funding before the end of Q2 2023. The filing states that substantial doubt exists about the company’s ability to continue as a going concern for one year after the financial statements became available to be issued.
- Additional capital may be required to complete clinical and regulatory work. If financing is unavailable or unfavorable, the company may need to delay, reduce, or discontinue development programs; equity financing could dilute shareholders.
- Development depends on clinical results, regulatory approval, third-party providers, manufacturing and supply, intellectual property protection, and market acceptance. The company also cited possible COVID-19-related delays and costs, whose financial effects it could not quantify.
- Q1 development agreements included initial study budgets of approximately $3.2 million for UNI 494 services with Quotient and $1.4 million for Renazorb services with CBCC. The filing reports payments and prepaid balances but does not establish that these budgets are recognized liabilities in full.
- Management concluded disclosure controls and internal control over financial reporting were ineffective, citing inadequate accounting staffing and related control deficiencies that constituted a material weakness. It planned to hire accounting personnel, obtain expert assistance, and enhance procedures, with remediation expected by year-end 2022. Management said the weakness had not caused a material misstatement of previously issued financial statements.
- The company reported no pending material legal proceedings and no material changes to the risk factors in its 2021 Form 10-K. No off-balance-sheet arrangements were reported.
Important facts for investors to verify
- Cash burn, spending assumptions, access to additional capital, and the stated funding need before the end of Q2 2023.
- Clinical and regulatory progress, timing, and costs for Renazorb and UNI 494, including reliance on external service and manufacturing providers.
- Progress and evidence supporting remediation of the material weakness in financial reporting controls.
- Potential dilution: 4,784,193 outstanding warrants and 1,187,085 outstanding options at March 31, 2022; basic and diluted loss per share excluded potentially dilutive securities as antidilutive.
- Related-party service arrangements and the terms and status of the planned Globavir agreement amendment, including the proposed $6,000 monthly fee.