SEC Filing - Unity Biotechnology

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ubx-10q_20200630.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, 2020

☐	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.)

285 East Grand Ave. South San Francisco, CA	94080
(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 July 27, 2020, the registrant had 52,040,018 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, 2020 (unaudited) and December 31, 2019	2
	Condensed Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	3
	Condensed Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	4
	Condensed Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019 (unaudited)	6
	Notes to Condensed Financial Statements (unaudited)	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4	Controls and Procedures	36

PART II. OTHER INFORMATION

Item 1	Legal Proceedings	37
Item 1A	Risk Factors	37
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	85
Item 3	Default Upon Senior Securities	85
Item 4	Mine Safety Disclosures	85
Item 5	Other Information	85
Item 6	Exhibits	87
Signatures		89

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

Unity Biotechnology, Inc.

Condensed Balance Sheets

(In thousands, except for share amounts and par value)

	June 30, 2020			December 31, 2019
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	39,592		$	37,473
Short-term marketable securities		72,176			84,508
Strategic investment		7,768			5,507
Prepaid expenses and other current assets		4,001			1,999
Total current assets		123,537			129,487
Property and equipment, net		14,226			16,636
Operating lease right of use asset		24,891			—
Long-term marketable securities		—			3,025
Restricted cash		1,446			1,446
Other long-term assets		598			627
Total assets	$	164,698		$	151,221
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,952		$	5,185
Accrued compensation		3,651			5,905
Accrued and other current liabilities		6,250			4,995
Contingent consideration liability		1,816			1,131
Total current liabilities		15,669			17,216
Operating lease liability, net of current portion		36,770			—
Deferred rent, net of current portion		—			13,298
Total liabilities		52,439			30,514
Commitments and contingencies (Note 6)
Stockholders’ equity:
Convertible preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.0001 par value; 300,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 51,729,511 and 47,227,065 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		5			5
Additional paid-in capital		404,754			366,695
Related party promissory notes for purchase of common stock		(210	)		(210	)
Employee promissory notes for purchase of common stock		(362	)		(418	)
Accumulated other comprehensive income		232			90
Accumulated deficit		(292,160	)		(245,455	)
Total stockholders’ equity		112,259			120,707
Total liabilities and stockholders’ equity	$	164,698		$	151,221

See accompanying notes to the condensed financial statements.

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,
	2020			2019			2020			2019
Operating expenses:
Research and development	$	16,123		$	18,468		$	35,388		$	34,973
General and administrative		6,320			4,970			12,273			9,447
Change in fair value of contingent consideration		906			1,032			685			(213	)
Impairment of long-lived assets		—			—			2,159			—
Total operating expenses		23,349			24,470			50,505			44,207
Loss from operations		(23,349	)		(24,470	)		(50,505	)		(44,207	)
Interest income		340			900			867			1,906
Other income (expense), net		4,342			(103	)		2,933			(139	)
Net loss		(18,667	)		(23,673	)		(46,705	)		(42,440	)
Other comprehensive loss
Unrealized gain (loss) on marketable debt securities		(141	)		94			142			208
Comprehensive loss	$	(18,808	)	$	(23,579	)	$	(46,563	)	$	(42,232	)
Net loss per share, basic and diluted	$	(0.38	)	$	(0.56	)	$	(0.96	)	$	(1.00	)
Weighted-average number of shares used in computing net loss per share, basic and diluted		49,659,153			42,442,886			48,606,768			42,311,040

See accompanying notes to the condensed financial statements.

Unity Biotechnology, Inc.

Condensed Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

For the Six Months Ended June 30, 2020

	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		Capital		Common Stock			Common Stock			Gain (Loss)			Deficit			Equity
Balances at December 31, 2019		47,227,065	$	5	$	366,695	$	(210	)	$	(418	)	$	90		$	(245,455	)	$	120,707
Issuance of common stock, net of issuance costs, under at-the-market ("ATM") equity offering program		1,513,840		—		8,763		—			—			—			—			8,763
Issuance of common stock upon exercise of stock options		73,049		—		249		—			—			—			—			249
Vesting of early exercised stock options		—		—		40		—			—			—			—			40
Stock-based compensation		—		—		3,225		—			—			—			—			3,225
Common stock issued for services		43,550		—		100		—			—			—			—			100
Change in unrealized gain on available-for-sale marketable debt securities		—		—		—		—			—			283			—			283
Net loss		—		—		—		—			—			—			(28,038	)		(28,038	)
Balances at March 31, 2020		48,857,504	$	5	$	379,072	$	(210	)	$	(418	)	$	373		$	(273,493	)	$	105,329
Issuance of common stock, net of issuance costs, under ATM equity offering program		2,594,030		—		20,731		—			—			—			—			20,731
Issuance of common stock upon exercise of stock options		105,142		—		355		—			—			—			—			355
Issuance of common stock from restricted stock units		103,020		—		—		—			—			—			—			—
Vesting of early exercised stock options		—		—		132		—			—			—			—			132
Stock-based compensation		—		—		4,079		—			—			—			—			4,079
Issuance of common stock under employee stock purchase plan ("2018 ESPP")		69,815		—		385		—			—			—			—			385
Repayment of promissory note from employee from purchase of common stock		—		—		—		—			56			—			—			56
Change in unrealized loss on available-for-sale marketable debt securities		—		—		—		—			—			(141	)		—			(141	)
Net loss		—		—		—		—			—			—			(18,667	)		(18,667	)
Balances at June 30, 2020		51,729,511	$	5	$	404,754	$	(210	)	$	(362	)	$	232		$	(292,160	)	$	112,259

For the Six Months Ended June 30, 2019

	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		Capital		Common Stock			Common Stock			Gain (Loss)			Deficit			Equity
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 on available-for-sale marketable debt 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 2018 ESPP		51,201			—		405		—			—			—			—			405
Common stock issued to third party for a license		120,000			—		965		—			—			—			—			965
Change in unrealized gain on available-for-sale marketable debt securities, net of tax		—			—		—		—			—			94			—			94
Net loss		—			—		—		—			—			—			(23,673	)		(23,673	)
Balances at June 30, 2019		43,203,599