ubx-10q_20190630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission File Number: 001-38470

 

Unity Biotechnology, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

26-4726035

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

3280 Bayshore Blvd. Suite 100

Brisbane, CA

94005

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 416-1192

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001

UBX

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No 

As of August 1, 2019, the registrant had 43,203,111 shares of common stock outstanding.

 


UNITY BIOTECHNOLOGY, INC.

QUARTERLY REPORT ON FORM 10-Q

Table of Contents

 

PART I. FINANCIAL INFORMATION

 

Item 1

Condensed Financial Statements

2

 

Condensed Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018

2

 

Condensed Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2019 and 2018 (unaudited)

3

 

Condensed Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2019 and 2018 (unaudited)

4

 

Condensed Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018 (unaudited)

6

 

Notes to Condensed Financial Statements (unaudited)

7

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4

Controls and Procedures

28

 

 

 

PART II. OTHER INFORMATION

 

 

 

Item 1

Legal Proceedings

29

Item 1A

Risk Factors

29

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

72

Item 3

Default Upon Senior Securities

72

Item 4

Mine Safety Disclosures

72

Item 5

Other Information

72

Item 6

Exhibits

73

Signatures

74

 

 

1


PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

 

Unity Biotechnology, Inc.

Condensed Balance Sheets

(In thousands, except share and per share amounts)

 

 

 

June 30,

2019

 

 

December 31,

2018

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

23,113

 

 

$

15,399

 

Short-term marketable securities

 

 

104,889

 

 

 

155,736

 

Prepaid expenses and other current assets

 

 

2,775

 

 

 

1,830

 

Tenant improvement receivable

 

 

10,650

 

 

 

 

Total current assets

 

 

141,427

 

 

 

172,965

 

Property and equipment, net

 

 

5,658

 

 

 

6,238

 

Long-term marketable securities

 

 

4,040

 

 

 

 

Restricted cash

 

 

1,446

 

 

 

550

 

Other long-term assets

 

 

1,639

 

 

 

1,622

 

Total assets

 

$

154,210

 

 

$

181,375

 

Liabilities, convertible preferred stock, and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,381

 

 

$

4,847

 

Accrued compensation

 

 

2,741

 

 

 

3,791

 

Accrued and other current liabilities

 

 

4,840

 

 

 

4,990

 

Settlement liability

 

 

 

 

 

2,059

 

Contingent consideration liability

 

 

2,270

 

 

 

895

 

Total current liabilities

 

 

15,232

 

 

 

16,582

 

Deferred rent, net of current portion

 

 

11,921

 

 

 

2,467

 

Contingent consideration liability, net of current portion

 

 

 

 

 

1,588

 

Other non-current liabilities

 

 

7

 

 

 

45

 

Total liabilities

 

 

27,160

 

 

 

20,682

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

 

Convertible preferred stock, $0.0001 par value; 10,000,000 shares authorized;

   no shares issued and outstanding

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; 300,000,000 shares

   authorized as of June 30, 2019 and December 31, 2018; 43,203,599 and

   42,414,294 shares issued and outstanding as of June 30, 2019 and

   December 31, 2018, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

333,252

 

 

 

324,663

 

Related party promissory notes for purchase of common stock

 

 

(201

)

 

 

(201

)

Employee promissory notes for purchase of common stock

 

 

(400

)

 

 

(400

)

Accumulated other comprehensive loss

 

 

113

 

 

 

(95

)

Accumulated deficit

 

 

(205,718

)

 

 

(163,278

)

Total stockholders’ equity

 

 

127,050

 

 

 

160,693

 

Total liabilities, convertible preferred stock, and stockholders’ equity

 

$

154,210

 

 

$

181,375

 

 

See accompanying notes to the condensed financial statements.

2


Unity Biotechnology, Inc.

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

18,468

 

 

$

15,198

 

 

$

34,973

 

 

$

28,223

 

General and administrative

 

 

4,970

 

 

 

3,842

 

 

 

9,447

 

 

 

7,299

 

Change in fair value of contingent consideration

 

 

1,032

 

 

 

1,758

 

 

 

(213

)

 

 

1,758

 

Total operating expenses

 

 

24,470

 

 

 

20,798

 

 

 

44,207

 

 

 

37,280

 

Loss from operations

 

 

(24,470

)

 

 

(20,798

)

 

 

(44,207

)

 

 

(37,280

)

Interest income (expense), net

 

 

900

 

 

 

826

 

 

 

1,906

 

 

 

1,178

 

Other expense, net

 

 

(103

)

 

 

(30

)

 

 

(139

)

 

 

(33

)

Net loss

 

 

(23,673

)

 

 

(20,002

)

 

 

(42,440

)

 

 

(36,135

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities,

   net of tax

 

 

94

 

 

 

61

 

 

 

208

 

 

 

27

 

Comprehensive loss

 

$

(23,579

)

 

$

(19,941

)

 

$

(42,232

)

 

$

(36,108

)

Net loss per share, basic and diluted

 

$

(0.56

)

 

$

(0.76

)

 

$

(1.00

)

 

$

(2.41

)

Weighted-average number of shares used in

   computing net loss per share, basic and diluted

 

 

42,442,886

 

 

 

26,298,666

 

 

 

42,311,040

 

 

 

15,003,493

 

 

See accompanying notes to the condensed financial statements.


 

3


Unity Biotechnology, Inc.

Statements of Stockholders’ Equity

(In thousands, except share and per share amounts)

(Unaudited)

 

For the Six Months Ended June 30, 2019

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Related Party

Promissory Notes

for Purchase of

 

 

Employee Promissory Notes for Purchase of

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Common Stock

 

 

Common Stock

 

 

(Gain) Loss

 

 

Deficit

 

 

Equity (Deficit)

 

Balances at December 31, 2018

 

 

 

 

$

 

 

 

 

42,414,294

 

 

$

4

 

 

$

324,663

 

 

$

(201

)

 

$

(400

)

 

$

(95

)

 

$

(163,278

)

 

$

160,693

 

Issuance of common stock upon exercise of stock options

 

 

 

 

 

 

 

 

 

340,731

 

 

 

 

 

 

300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

300

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

207

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,997

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,997

 

Common stock issued to third parties

 

 

 

 

 

 

 

 

 

133,334

 

 

 

 

 

 

2,059

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,059

 

Change in unrealized gain (loss) on available-for-sale marketable securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

114

 

 

 

 

 

 

114

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,767

)

 

 

(18,767

)

Balances at March 31, 2019

 

 

 

 

$

 

 

 

 

42,888,359

 

 

$

4

 

 

$

329,226

 

 

$

(201

)

 

$

(400

)

 

$

19

 

 

$

(182,045

)

 

$

146,603

 

Issuance of common stock upon exercise of stock options

 

 

 

 

 

 

 

 

 

147,832

 

 

 

 

 

 

494

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

494

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

218

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,944

 

Repurchased shares

 

 

 

 

 

 

 

 

 

(3,793

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee stock purchase plan (“ESPP”)

 

 

 

 

 

 

 

 

 

51,201

 

 

 

 

 

 

405

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

405

 

Common stock issued to third party for a license

 

 

 

 

 

 

 

 

 

120,000

 

 

 

 

 

 

965

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

965

 

Change in unrealized gain (loss) on available-for-sale marketable securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

94

 

 

 

 

 

 

94

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,673

)

 

 

(23,673

)

Balances at June 30, 2019

 

 

 

 

$

 

 

 

 

43,203,599

 

 

$

4

 

 

$

333,252

 

 

$

(201

)

 

$

(400

)

 

$

113

 

 

$

(205,718

)

 

$

127,050

 

4


 

For the Six Months Ended June 30, 2018

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Related Party

Promissory Notes

for Purchase of

 

 

Employee Promissory Notes for Purchase of

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Common Stock

 

 

Common Stock

 

 

(Gain) Loss

 

 

Deficit

 

 

Equity (Deficit)

 

Balances at December 31, 2017

 

 

28,159,724

 

 

$

173,956

 

 

 

 

4,830,389

 

 

$

1

 

 

$

4,072

 

 

$

(202

)

 

$

 

 

$

(104

)

 

$

(86,880

)

 

$

(83,113

)

Issuance of Series C convertible preferred stock at $15.3317 per share for cash, net of issuance costs of $100

 

 

3,590,573

 

 

 

54,950

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon exercise of stock options

 

 

 

 

 

 

 

 

 

400,587

 

 

 

 

 

 

31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,370

 

Change in unrealized gain (loss) on available-for-sale marketable securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34

)

 

 

 

 

 

(34

)

Receipt of promissory note from related party for purchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(390

)

 

 

 

 

 

 

 

 

 

 

 

(390

)

Receipt of promissory note from employee for purchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(400

)

 

 

 

 

 

 

 

 

(400

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,133

)

 

 

(16,133

)

Balances at March 31, 2018

 

 

31,750,297

 

 

$

228,906

 

 

 

 

5,230,976

 

 

$

1

 

 

$

5,511

 

 

$

(592

)

 

$

(400

)

 

$

(138

)

 

$

(103,013

)

 

$

(98,631

)

Issuance of Series C convertible preferred stock at $5.1972 per share for cash, net of issuance costs of $19

 

 

322,852

 

 

 

4,931

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of preferred stock to common stock

 

 

(32,073,149

)

 

 

(233,837

)

 

 

 

32,073,149

 

 

 

2

 

 

 

233,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

233,839

 

Issuance of common stock upon exercise of stock options

 

 

 

 

 

 

 

 

 

10,613

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

213

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,838

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,838

 

Change in unrealized gain (loss) on available-for-sale marketable securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61

 

 

 

 

 

 

61

 

Issuance of common stock at initial public offering, net of offering costs

 

 

 

 

 

 

 

 

 

5,000,000

 

 

 

1

 

 

 

75,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75,852

 

Repayment of promissory note from related party from purchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

504

 

 

 

391

 

 

 

 

 

 

 

 

 

 

 

 

895

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,002

)

 

 

(20,002

)

Balances at June 30, 2018

 

 

 

 

$

 

 

 

 

42,314,738

 

 

$

4

 

 

$

318,759

 

 

$

(201

)

 

$

(400

)

 

$

(77

)

 

$

(123,015

)

 

$

195,070

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the condensed financial statements.

 

5


Unity Biotechnology, Inc.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(42,440

)

 

$

(36,135

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,280

 

 

 

1,023

 

Amortization of premium and discounts on marketable securities

 

 

(766

)

 

 

(203

)

Stock-based compensation

 

 

3,941

 

 

 

4,208

 

Common stock issued to third party for a license

 

 

965

 

 

 

 

Accretion of tenant improvement allowance

 

 

(470

)

 

 

(305

)

Change in fair value of contingent consideration for license agreements

 

 

(213

)

 

 

1,758

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Contribution receivable

 

 

 

 

 

1,382

 

Prepaid expenses and other current assets

 

 

(766

)

 

 

(662

)

Other long-term assets

 

 

(17

)

 

 

(1,099

)

Accounts payable