SEC Filing - Unity Biotechnology

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10-Q

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, 2023

☐ 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, a 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 November 8, 2023, the registrant had 14,620,671 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, 2023 (unaudited) and December 31, 2022	2
	Condensed Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	3
	Condensed Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	4
	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)	6
	Notes to Condensed Financial Statements (unaudited)	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4	Controls and Procedures	34

PART II. OTHER INFORMATION

Item 1	Legal Proceedings	35
Item 1A	Risk Factors	35
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	80
Item 3	Default Upon Senior Securities	80
Item 4	Mine Safety Disclosures	80
Item 5	Other Information	80
Item 6	Exhibits	81
Signatures		82

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, 2023			December 31, 2022(1)
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	7,876		$	12,736
Short-term marketable securities		38,063			82,059
Prepaid expenses and other current assets		3,599			1,740
Total current assets		49,538			96,535
Property and equipment, net		5,314			7,825
Operating lease right-of-use assets		13,522			19,042
Long-term restricted cash		896			896
Other long-term assets		—			52
Total assets	$	69,270		$	124,350
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,149		$	1,790
Accrued compensation		2,226			3,020
Accrued and other current liabilities		5,258			5,334
Current portion of long-term debt		—			9,476
Total current liabilities		8,633			19,620
Operating lease liability, net of current portion		24,431			26,991
Long-term debt, net of current portion		—			10,891
Total liabilities		33,064			57,502
Commitments and contingencies (Note 8)
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, 2023 and December 31, 2022; 14,614,890 and 14,215,302 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively(2)		1			1
Additional paid-in capital		534,570			527,049
Accumulated other comprehensive loss		(55	)		(251	)
Accumulated deficit		(498,310	)		(459,951	)
Total stockholders’ equity		36,206			66,848
Total liabilities and stockholders’ equity	$	69,270		$	124,350

(1) The balance sheet as of December 31, 2022 is derived from the audited financial statements as of that date.

(2) The Company effected a reverse stock split of its outstanding shares of common stock on October 19, 2022 where every ten shares of its common stock issued and outstanding was converted into one share of common stock. Any fractional post-split shares as a result of the reverse split were rounded down to the nearest whole post-split share. Shareholders of the Company previously authorized the Board of Directors to approve a reverse stock split at the annual meeting on October 18, 2022. All share amounts and per share amounts disclosed in this Quarterly Report on Form 10-Q have been restated to reflect the reverse stock split on a retroactive basis in all periods presented.

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,
	2023			2022			2023			2022
Licensing revenue - related party	$	—		$	—		$	—		$	236

Operating expenses:
Research and development		4,901			8,208			17,266			28,222
General and administrative		4,428			4,922			14,681			15,669
Impairment of long-lived assets		5,602			—			5,602			—
Total operating expenses		14,931			13,130			37,549			43,891
Loss from operations		(14,931	)		(13,130	)		(37,549	)		(43,655	)
Interest income		689			329			2,349			416
Interest expense		(470	)		(866	)		(2,451	)		(2,568	)
Other income (expense), net		(577	)		(41	)		(711	)		49
Net loss		(15,289	)		(13,708	)		(38,362	)		(45,758	)
Other comprehensive (loss) gain
Unrealized gain (loss) on marketable debt securities		81			(88	)		196			(231	)
Comprehensive loss	$	(15,208	)	$	(13,796	)	$	(38,166	)	$	(45,989	)
Net loss per share, basic and diluted	$	(1.05	)	$	(1.36	)	$	(2.66	)	$	(5.77	)
Weighted-average number of shares used in computing net loss per share, basic and diluted(1)		14,598,218			10,072,077			14,446,672			7,928,729

(1) The Company effected a reverse stock split of its outstanding shares of common stock on October 19, 2022 where every ten shares of its common stock issued and outstanding was converted into one share of common stock. Any fractional post-split shares as a result of the reverse split were rounded down to the nearest whole post-split share. Shareholders of the Company previously authorized the Board of Directors to approve a reverse stock split at the annual meeting on October 18, 2022. All share amounts and per share amounts disclosed in this Quarterly Report on Form 10-Q have been restated to reflect the reverse stock split on a retroactive basis in all periods presented.

See accompanying notes to the condensed financial statements.

Unity Biotechnology, Inc.

Condensed Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)


	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Gain (Loss)			Deficit			Equity
Balances at December 31, 2022		14,215,302	$	1	$	527,049		$	(251	)	$	(459,951	)	$	66,848
Issuance of common stock, net of issuance costs, under at-the-market (“ATM”) offering program		106,781		—		274			—			—			274
Vesting of restricted stock units		37,131		—		—			—			—			—
Stock-based compensation		—		—		2,270			—			—			2,270
Unrealized gain on available-for-sale marketable securities		—		—		—			101			—			101
Net loss		—		—		—			—			(10,865	)		(10,865	)
Balances at March 31, 2023		14,359,214	$	1	$	529,593		$	(150	)	$	(470,816	)	$	58,628
Issuance of common stock, net of issuance costs, under ATM offering program		168,000		—		518			—			—			518
Issuance of common stock under 2018 ESPP		41,497		—		91			—			—			91
Vesting of restricted stock units		26,766		—		—			—			—			—
Stock-based compensation		—		—		2,361			—			—			2,361
Unrealized gain on available-for-sale marketable securities		—		—		—			14			—			14
Net loss		—		—		—			—			(12,205	)		(12,205	)
Balances at June 30, 2023		14,595,477	$	1	$	532,563		$	(136	)	$	(483,021	)	$	49,407
Fees related to the ATM offering program		—		—		(48	)		—			—			(48	)
Vesting of restricted stock units		19,413		—		—			—			—			—
Stock-based compensation		—		—		2,055			—			—			2,055
Unrealized gain on available-for-sale marketable securities		—		—		—			81			—			81
Net loss		—		—		—			—			(15,289	)		(15,289	)
Balances at September 30, 2023		14,614,890	$	1	$	534,570		$	(55	)	$	(498,310	)	$	36,206

Unity Biotechnology, Inc.

Condensed Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)


	Common Stock(1)				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital		(Loss)			Deficit			Equity
Balances at December 31, 2021		6,299,158	$	1	$	459,636	$	(44	)	$	(400,024	)	$	59,569
Issuance of common stock, net of issuance costs, under ATM offering program		232,500		—		3,420		—			—			3,420
Issuance of common stock to Lincoln Park Capital Fund		90,000		—		910		—			—			910
Issuance of common stock to Hercules Capital		262,761		—		3,179		—			—			3,179
Vesting of restricted stock units		30,358		—		—		—			—			—
Stock-based compensation		—		—		2,660		—			—			2,660
Unrealized loss on available-for-sale marketable securities		—		—		—		(132	)		—			(132	)
Net loss		—		—		—		—			(18,915	)		(18,915	)
Balances at March 31, 2022		6,914,777	$	1	$	469,805	$	(176	)	$	(418,939	)	$	50,691
Issuance of common stock, net of issuance costs, under ATM offering program		—		—		13		—			—			13
Issuance of common stock under 2018 ESPP		18,202		—		125		—			—			125
Vesting of restricted stock units		25,481		—		—		—			—			—
Stock-based compensation		—		—		2,250		—			—			2,250
Unrealized loss on available-for-sale marketable securities		—		—		—		(11	)		—			(11	)
Net loss		—		—		—		—			(13,137	)		(13,137	)
Balances at June 30, 2022		6,958,460	$	1	$	472,193	$	(187	)	$	(432,076	)	$	39,931
Issuance of common stock, net of issuance costs, under ATM offering program		633,464		—		8,570		—			—			8,570
Sale of common stock and warrants to purchase common shares under follow-on offering, net of issuance costs		6,428,571		—		41,650		—			—			41,650
Vesting of restricted stock units		15,720		—		—		—			—			—
Stock-based compensation		—		—		2,210		—			—			2,210
Unrealized loss on available-for-sale marketable securities		—		—		—		(88	)		—			(88	)
Net loss		—		—		—		—			(13,708	)		(13,708	)
Balances at September 30, 2022		14,036,215	$	1	$	524,623	$	(275	)	$	(445,784	)	$	78,565

See accompanying notes to the condensed financial statements.

Unity Biotechnology, Inc.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2023			2022
Operating activities
Net loss	$	(38,362	)	$	(45,758	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		951			1,771
Amortization of debt issuance costs		705			989
Debt extinguishment loss upon paydown of principal		491			—
Debt extinguishment gain upon conversion to equity		—			(199	)
Net accretion and amortization of premium and discounts on marketable securities		(1,199	)		155
Gain on disposal of property and equipment		—			(247	)
Stock-based compensation		6,686			7,120
Non-cash rent expense		(811	)		(1,891	)
Impairment of long-lived assets		5,602			—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(1,858	)		(1,355	)
Other long-term assets		52			15
Accounts payable		(642	)		459
Accrued compensation		(793	)		(1,067	)
Accrued liabilities and other current liabilities		(335	)		(632	)
Other long-term liabilities		—			(23	)
Net cash used in operating activities		(