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ubx-10q_20200930.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 September 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 October 30, 2020, the registrant had 52,913,180 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 September 30, 2020 (unaudited) and December 31, 2019	2
	Condensed Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2020 and 2019 (unaudited)	3
	Condensed Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019 (unaudited)	4
	Condensed Statements of Cash Flows for the Nine Months Ended September 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	27
Item 3	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4	Controls and Procedures	37

PART II. OTHER INFORMATION

Item 1	Legal Proceedings	38
Item 1A	Risk Factors	38
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	83
Item 3	Default Upon Senior Securities	83
Item 4	Mine Safety Disclosures	83
Item 5	Other Information	83
Item 6	Exhibits	84
Signatures		86

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

Unity Biotechnology, Inc.

Condensed Balance Sheets

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

	September 30, 2020			December 31, 2019
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	48,581		$	37,473
Short-term marketable securities		83,633			84,508
Strategic investment		—			5,507
Prepaid expenses and other current assets		3,476			1,999
Total current assets		135,690			129,487
Property and equipment, net		13,503			16,636
Operating lease right of use asset		24,330			—
Long-term marketable securities		—			3,025
Restricted cash		1,446			1,446
Other long-term assets		2			627
Total assets	$	174,971		$	151,221
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	4,255		$	5,185
Accrued compensation		5,730			5,905
Accrued and other current liabilities		6,940			4,995
Contingent consideration liability		—			1,131
Total current liabilities		16,925			17,216
Operating lease liability, net of current portion		35,632			—
Deferred rent, net of current portion		—			13,298
Long-term debt, net		24,313			—
Total liabilities		76,870			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 September 30, 2020 and December 31, 2019; 52,883,169 and 47,227,065 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		5			5
Additional paid-in capital		417,952			366,695
Related party promissory notes for purchase of common stock		(210	)		(210	)
Employee promissory notes for purchase of common stock		—			(418	)
Accumulated other comprehensive income		66			90
Accumulated deficit		(319,712	)		(245,455	)
Total stockholders’ equity		98,101			120,707
Total liabilities and stockholders’ equity	$	174,971		$	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 September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Operating expenses:
Research and development	$	18,830		$	17,777		$	54,218		$	52,750
General and administrative		6,530			5,692			18,803			15,139
Change in fair value of contingent consideration		(718	)		(1,115	)		(33	)		(1,327	)
Impairment of long-lived assets		—			—			2,159			—
Total operating expenses		24,642			22,354			75,147			66,562
Loss from operations		(24,642	)		(22,354	)		(75,147	)		(66,562	)
Interest income		226			756			1,093			2,663
Interest expense		(499	)		—			(499	)		—
Other income (expense), net		(2,637	)		(112	)		296			(251	)
Net loss		(27,552	)		(21,710	)		(74,257	)		(64,150	)
Other comprehensive loss
Unrealized gain (loss) on marketable debt securities		(166	)		(18	)		(24	)		190
Comprehensive loss	$	(27,718	)	$	(21,728	)	$	(74,281	)	$	(63,960	)
Net loss per share, basic and diluted	$	(0.52	)	$	(0.51	)	$	(1.49	)	$	(1.51	)
Weighted-average number of shares used in computing net loss per share, basic and diluted		52,482,200			42,965,945			49,926,396			42,584,835

See accompanying notes to the condensed financial statements.

Unity Biotechnology, Inc.

Condensed Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

For the Nine Months Ended September 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
Issuance of common stock, net of issuance costs, under ATM equity offering program		894,387			—		7,776		—			—			—			—			7,776
Issuance of common stock upon exercise of stock options		138,846			—		582		—			—			—			—			582
Stock-based compensation		—			—		3,742		—			—			—			—			3,742
Issuance of common stock in settlement of contingent consideration milestone		133,334			—		1,098		—			—			—			—			1,098
Repayment of promissory note from employee from purchase of common stock		—			—		—		—			318			—			—			318
Repayment of promissory note from employee through repurchase of early exercise shares		(12,909	)		—		—		—			44			—			—			44
Change in unrealized loss on available-for-sale marketable debt securities		—			—		—		—			—			(166	)		—			(166	)
Net loss		—			—		—		—			—			—			(27,552	)		(27,552	)
Balances at September 30, 2020		52,883,169		$	5	$	417,952	$	(210	)	$	—		$	66		$	(319,712	)	$	98,101

For the Nine Months Ended September 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		—		—		—		—			—			—