Unicycive Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Financial statement amounts below are in U.S. dollars; unless stated otherwise, figures are in thousands. The company is a pre-revenue biotechnology business developing Renazorb for hyperphosphatemia in chronic kidney disease and UNI 494 for acute kidney injury.
Financial results and position
| Metric | Q2 2020 | Q2 2021 | Six months 2020 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $182 | $493 | $329 | $942 |
| General and administrative expense | $154 | $286 | $349 | $568 |
| Total operating expenses | $336 | $779 | $678 | $1,510 |
| Operating loss | $(336) | $(779) | $(678) | $(1,510) |
| Net loss | $(338) | $(1,100) | $(682) | $(2,064) |
| Basic and diluted loss per share | $(0.04) | $(0.13) | $(0.08) | $(0.24) |
No gross profit or operating margin is reported because the company had no revenue. For the six months ended June 30, 2021, operating cash use was $890, compared with $215 in 2020; financing provided $891, compared with $201. Cash was $1 at June 30, 2021.
At June 30, 2021, total assets were $913, current liabilities were $5,115, and stockholders’ deficit was $4,202. Current liabilities included $3,199 of convertible notes and a $901 loan from the CEO/stockholder. Accumulated deficit was $7,986. The company reported no material off-balance-sheet arrangements.
Changes versus prior comparable periods
- Q2 net loss increased by $762, or 225%, year over year; six-month net loss increased by $1,382, or 203%.
- R&D expense rose 171% in Q2 and 186% for the first half. Management attributed the increases mainly to higher stock-based compensation and product formulation and consulting costs.
- G&A expense rose 86% in Q2 and 63% for the first half, primarily reflecting increased accounting and professional-services costs.
- Interest expense increased substantially as convertible notes were issued and accrued; six-month interest expense was $573 versus $4 in 2020. A $19 gain from forgiveness of a PPP loan partly offset other expense in 2021.
Outlook, financing, risks, and unusual items
- IPO after quarter-end: The company began Nasdaq trading under UNCY in July 2021 and received approximately $23.212 million in net proceeds on July 15. It expects to use proceeds for preclinical and clinical studies, FDA filings, and general corporate purposes. Management said the IPO proceeds, together with the June cash balance, were expected to fund operations for at least one year after the financial statements became available. The company also expects continuing losses and says further capital will be needed.
- Convertible notes: Outstanding notes converted in connection with the IPO at 70% of the IPO price per unit, resulting in 736,773 common shares and warrants for 184,193 additional shares. The conversion and IPO increased the potential share count.
- Operating outlook: Management expects R&D spending to increase as programs advance and G&A to rise with hiring and public-company costs. Development timing and costs remain uncertain; inadequate future funding could force delays, reductions, or termination of programs.
- Principal risks: Product candidates remain subject to clinical and regulatory uncertainty and have not received marketing approval. Other disclosed risks include competition, reliance on contract research and manufacturing providers, intellectual-property and licensing exposure, COVID-19 disruption, and the need for additional financing.
- Controls and governance: Management concluded disclosure controls and internal control over financial reporting were not effective at June 30, 2021 because of a material weakness involving insufficient accounting staffing and inadequate formal controls. The company planned to add accounting personnel and strengthen controls, targeting remediation by year-end 2021. The filing said the weakness had not caused a material misstatement of previously issued financial statements.
- Other items: The filing reports no pending material legal proceedings. It also discloses related-party arrangements, including service fees with Globavir and a demand loan from the CEO/stockholder. A 1-for-4.3 reverse stock split took effect in June 2021; share and per-share figures reflect it.
Most important facts for investors to verify
- Whether the IPO proceeds and actual spending support the stated minimum one-year runway, and when additional financing may be required.
- Clinical, regulatory, and manufacturing milestones, costs, and timelines for Renazorb and UNI 494.
- Post-IPO fully diluted share count, including converted notes, warrants, options, and any Spectrum anti-dilution shares issued after quarter-end.
- Progress and evidence of remediation of the disclosed material weakness in financial reporting controls.
- Terms and ongoing implications of related-party arrangements and the company’s dependence on external service providers.