Unicycive Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. The company is a pre-revenue biotechnology business developing Renazorb for hyperphosphatemia in chronic kidney disease and UNI 494 for acute kidney injury.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0 reported | $0 reported | $0 reported | $0 reported |
| Research and development | $3.776 million | $0.304 million | $4.719 million | $0.633 million |
| General and administrative | $0.939 million | $0.322 million | $1.506 million | $0.670 million |
| Net loss | $5.201 million | $0.702 million | $7.265 million | $1.384 million |
| Basic and diluted loss per share | $0.37 | $0.08 | $0.69 | $0.16 |
| Net cash used in operating activities | — | $4.364 million | $0.921 million |
At September 30, 2021, cash was $18.011 million, total current assets $19.782 million, total liabilities $0.785 million, and stockholders’ equity $18.997 million. Current liabilities included a $0.103 million loan from the CEO/stockholder; convertible notes had been converted into equity. The filing does not report operating margins, and margins are not meaningful given the absence of revenue.
Material changes and unusual items
- Q3 operating expenses increased 653% year over year; nine-month expenses rose 378%. R&D growth reflected development and preclinical work, hiring, stock compensation, and a $2.191 million noncash charge for final anti-dilution shares issued to Spectrum.
- Q3 net loss included a $0.431 million noncash loss on conversion of convertible notes. Nine-month interest expense was $0.628 million, versus $0.081 million in 2020.
- The July 2021 IPO generated approximately $22.271 million in net proceeds. Approximately $2.387 million of note principal and $0.191 million of accrued interest converted into 736,773 common shares; noteholders also received 184,193 warrants. The company issued 5 million IPO shares and had 14,972,552 shares outstanding at September 30.
- Operating cash use was $4.364 million for the first nine months, compared with $22.375 million of net financing cash flow, primarily from the IPO. Management stated that September cash was expected to fund operations for at least one year after the financial statements became available for issuance.
Outlook, risks, and contingencies
- No revenue or earnings guidance was provided. Management expects continued losses and negative operating cash flow, with R&D spending expected to increase as programs advance. It anticipates needing additional capital; financing may be unavailable or unfavorable, potentially requiring development delays, reductions, or licensing arrangements.
- IPO proceeds are intended for preclinical and clinical studies, FDA submissions, and general and corporate purposes. Product candidates require regulatory approval, and clinical outcomes, development costs, manufacturing, market acceptance, financing access, and the COVID-19 environment are identified risks.
- Manufacturing and potential commercial supply arrangements include contingent payments to Shilpa Medicare only after FDA approval and specified Renazorb sales. The company also owes Spectrum a share of certain sublicense income. No pending legal proceedings were reported.
- Management concluded disclosure controls and internal control over financial reporting were ineffective because of a material weakness involving insufficient accounting staffing, expertise, formal controls, and segregation of duties. Remediation plans include hiring accounting personnel and strengthening procedures; completion was expected by the end of 2022.
Key facts for investors to verify
- Development and regulatory milestones, trial plans, and associated costs for Renazorb and UNI 494.
- Cash burn and runway assumptions, and the timing and terms of any additional financing.
- Potential dilution from outstanding warrants and options, and the effect of the completed Spectrum anti-dilution issuance.
- Progress in remediating the disclosed material weakness in financial reporting controls.