Forward Looking Statements
This Quarterly Report on Form 10-Q for the three and six-month periods ended
Actual results could differ materially from those contained in forward-looking
statements. Many factors could cause actual results to differ materially from
those in forward-looking statements, including those matters discussed below.
Readers are urged to read the risk factors set forth in the Company's recent
filings with the
Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. Given these risks and uncertainties, the forward-looking statements discussed in this report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of the Company's management as of the date of this report. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations, except as required by law.
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our financial statements and the
related notes to those statements included elsewhere in this quarterly report
and in our previously filed Form 10-K. In addition to historical financial
information, the following discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results
and timing of selected events may differ materially from those anticipated in
these forward-looking statements as a result of many factors, including those
discussed under "Risk Factors" and elsewhere in this quarterly report. See
"Information Regarding Forward-Looking Statements." All amounts in this report
are in
19 Overview
We are a clinical-stage biotechnology company dedicated to developing treatments for serious and life-threatening diseases. Currently, two of our programs are focused on kidney diseases that we believe 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 the development of two novel therapies: Renazorb, for treatment of hyperphosphatemia in patients with endstage renal disease (ESRD), a latestage chronic kidney disease, and UNI-494, for treatment of acute kidney injury (AKI). Based on the unique mechanism of action of UNI-494 to restore mitochondrial function, UNI-494 has potential applications in several indications in which mitochondrial dysfunction is implicated, such as chronic kidney disease (CKD), liver diseases and ophthalmic diseases.
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 to partner with global
biopharmaceutical companies in the rest of the world. According to estimates by
The
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 over 2 million US patients and costs the healthcare system
over
Our business model is to license drugs and technologies, 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 and extensive drug development 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.
Since our formation we have devoted substantial resources to developing our
product candidates. We have incurred significant operating losses to date. Our
net losses were
We have funded our operations primarily from the sale and issuance of common stock, convertible promissory notes and from a loan, including cash and deferred salary from our Chief Executive Officer and principal stockholder.
Our ability to generate product revenue will depend on the successful development, regulatory approval and eventual commercialization of our current product candidates and future product candidates. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through private or public equity or debt financings, collaborative or other arrangements with corporate sources, or through other sources of financing. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into agreements to raise capital as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our current product candidates and future product candidates.
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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.
The Impact of the COVID-19 Pandemic and Climate Change on Our Business
In
Our suppliers and service providers may also experience a disruption in their business as a result of natural or man-made disasters. A significant natural or man-made disaster, such as an earthquake, prolonged or repeated power outage, fire, drought or other extreme weather events and changing weather patterns, which are increasing in frequency due to the impacts of climate change, could severely damage our facilities or the facilities of our suppliers or service providers, which could have a material adverse effect on our business and financial condition. At the current time, we are unable to quantify the potential effects of climate change on our future financial statements.
Components of Results of Operations
Operating Expenses
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.
We do not allocate our costs by product candidate, as a significant amount of research and development expenses include internal costs, such as payroll and other personnel expenses, laboratory supplies and allocated overhead, and external costs, such as fees paid to third parties to conduct research and development activities on our behalf, are not tracked by product candidate.
We expect our research and development expenses to increase substantially for at least the next few years, as we seek to initiate additional clinical trials for our product candidates, complete our clinical programs, pursue regulatory approval of our product candidates and prepare for the possible commercialization of such product candidates. Predicting the timing or cost to complete our clinical programs or validation of our commercial manufacturing and supply processes is difficult and delays may occur because of many factors, including factors outside of our control. For example, if the FDA or other regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate, we could be required to expend significant additional financial resources and time on the completion of clinical development. Furthermore, we are unable to predict when or if our product candidates will receive regulatory approval with any certainty.
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General and Administrative Expenses
General and administrative expenses consist principally of payroll and personnel expenses, including salaries and bonuses, benefits and stock-based compensation expenses, professional fees 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.
We anticipate that our general and administrative expenses will increase as a
result of increased personnel costs, expanded infrastructure and higher
consulting, legal and accounting services costs associated with complying with
the applicable stock exchange and the
Other Expenses
Other expenses consist primarily of interest expense related to convertible notes and a loss on conversion of convertible notes.
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the periods indicated (in thousands): Three Months Ended June 30, 2021 2022 Change % Change (unaudited) (unaudited) Operating expenses: Research and development $ 493$ 1,860 $ 1,367 277 % General and administrative 286 1,776 1,490 521 % Total operating expenses 779 3,636 2,857 367 % Loss from operations (779 ) (3,636 ) (2,857 ) 367 % Other income (expenses): Interest expense (321 ) - 321 (100 )% Total other income (expenses) (321 ) - 321 (100 )% Net loss$ (1,100 ) $ (3,636 ) $ (2,536 ) 231 %
Research and Development Expenses
Research and development expenses increased by approximately
General and Administrative Expenses
General and administrative expenses increased by
Other Income (Expenses)
Other income (expenses) decreased by
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Comparison of the Six Months Ended
The following table summarizes our results of operations for the periods indicated (in thousands): Six Months Ended June 30, 2021 2022 Change % Change (unaudited) (unaudited) Operating expenses: Research and development $ 942$ 3,793 $ 2,851 303 % General and administrative 568 3,380 2,812 495 % Total operating expenses 1,510 7,173 5,663 375 % Loss from operations (1,510 ) (7,173 ) (5,663 ) 375 % Other income (expenses): Interest expense (573 ) - 573 (100 )% Gain on extinguishment of debt 19 - (19 ) (100 )% Total other income (expenses) (554 ) - 554 (100 )% Net loss$ (2,064 ) $ (7,173 ) $ (5,109 ) 248 %
Research and Development Expenses
Research and development expenses increased by approximately
General and Administrative Expenses
General and administrative expenses increased by
Other Income (Expenses)
Other income (expenses) decreased by
Liquidity and Capital Resources
Sources of Liquidity
Since our formation through
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As a result of our initial public offering ("IPO"), on
Future Funding Requirements
We have incurred net losses since our inception. For the six months ended
We expect to continue incurring losses for the foreseeable 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 the
Company's current level of expenditures, after receiving the net proceeds of
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. There is substantial doubt about the Company's ability to continue as a going concern for one year after the date that these financial statements are available to be issued. The financial statements do not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary from the outcome of this uncertainty.
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; 24 ? 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; and
? the costs associated with being a public company.
A change in the outcome of any of these or other variables with respect to the development of any of our current product candidates or future product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we will continue to require additional capital to meet operational needs and capital requirements associated with such operating plans. If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments or engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.
Adequate funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. 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. If 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.
Related Party Payable
We entered into a Service Agreement on
25 Convertible Notes
In January through
We accounted for the 2021 Notes as stock-settled debt and were accreting the carrying amount of the 2021 Notes to the settlement amount through maturity.
In July through
We accounted for the 2020 Notes as stock-settled debt and were accreting the
carrying amount of the 2020 Notes to the settlement amount through maturity. As
of
As a result of our initial public offering on
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