Unity Biotechnology(UBX) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed financial statements and management's analysis for the period Item 1. Condensed Financial Statements The unaudited condensed financial statements for Q1 2022 reflect decreased total assets, an increased net loss, and a significant going concern disclosure due to insufficient capital Condensed Balance Sheets The condensed balance sheets show a decline in total assets and stockholders' equity, alongside a growing accumulated deficit Condensed Balance Sheet Summary (in thousands) | Account | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $16,446 | $32,905 | | Total current assets | $81,483 | $90,504 | | Total assets | $112,469 | $124,712 | | Liabilities & Equity | | | | Total current liabilities | $17,905 | $16,617 | | Total liabilities | $61,778 | $65,143 | | Total stockholders' equity | $50,691 | $59,569 | | Accumulated deficit | $(418,939) | $(400,024) | Condensed Statements of Operations and Comprehensive Loss The statements of operations reveal an increase in total operating expenses, leading to a larger net loss for the period Condensed Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Research and development | $12,461 | $8,717 | | General and administrative | $5,806 | $6,226 | | Total operating expenses | $18,267 | $14,943 | | Loss from operations | $(18,267) | $(14,943) | | Net loss | $(18,915) | $(15,756) | | Net loss per share, basic and diluted | $(0.28) | $(0.29) | Condensed Statements of Stockholders' Equity Stockholders' equity decreased due to the net loss, partially offset by proceeds from common stock issuance - Total stockholders' equity decreased from $59.6 million to $50.7 million, primarily due to the net loss of $18.9 million, partially offset by common stock issuance proceeds[15] - The company raised approximately $7.5 million before costs through its At-The-Market (ATM) offering program, Lincoln Park Capital Fund, and Hercules Capital common stock issuance[15] Condensed Statements of Cash Flows Cash flows show a net decrease in cash and equivalents, driven by operating and investing activities Condensed Statement of Cash Flows Summary (in thousands) | Activity | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,972) | $(15,091) | | Net cash (used in) provided by investing activities | $(5,817) | $14,062 | | Net cash provided by financing activities | $4,330 | $10,064 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(16,459) | $9,035 | Notes to Condensed Financial Statements The notes detail accounting policies, a 'going concern' warning, financing activities, and a corporate restructuring that reduced the workforce - Management concluded that existing cash and equivalents of $79.2 million are insufficient to fund operations for at least 12 months, raising substantial doubt about the company's ability to continue as a going concern[24] - A corporate restructuring in February 2022 eliminated approximately 32 positions (50% of the workforce), resulting in a $2.0 million one-time charge[91] - Hercules Capital converted the remaining $2.7 million of convertible debt into common stock, reducing the outstanding term loan principal to $20.0 million[67] - In Q1 2022, the company raised approximately $3.4 million in net proceeds through its ATM offering program and $0.9 million in gross proceeds from its equity purchase agreement with Lincoln Park Capital Fund[83][85] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on UBX1325 in Phase 2 trials, increased R&D expenses, and reiterates the going concern warning due to limited capital Overview The company's primary focus is on its lead candidate, UBX1325, for ophthalmologic diseases, following a corporate restructuring - The company's primary focus is on its lead candidate, UBX1325, a small molecule inhibitor of Bcl-xL, for treating ophthalmologic diseases like Diabetic Macular Edema (DME) and neovascular Age-related Macular Degeneration (nAMD)[114][115] - A Phase 2 proof-of-concept study for UBX1325 in DME was initiated in May 2021, with 12-week data expected by mid-2022 and 24-week data by the end of 2022[116] - A Phase 2 proof-of-concept study for UBX1325 in nAMD began in March 2022, with 8 and 16-week data expected in Q4 2022[117] - In February 2022, the company restructured to prioritize ophthalmology programs and implement cost-saving measures, pausing all other pipeline programs[118] Results of Operations Operating expenses increased primarily due to higher research and development costs, leading to a larger net loss Comparison of Operations (in thousands) | Line Item | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $12,461 | $8,717 | $3,744 | | General and administrative | $5,806 | $6,226 | $(420) | | Total operating expenses | $18,267 | $14,943 | $3,324 | | Net loss | $(18,915) | $(15,756) | $(3,159) | - Research and development expenses increased by $3.8 million year-over-year, primarily due to a $3.5 million increase in direct R&D expenses for UBX1325 studies and $1.2 million in personnel costs related to the reduction in force[134] - General and administrative expenses decreased by $0.4 million, mainly due to lower facilities-related and professional fees, partially offset by increased personnel costs from the reduction in force[135] Liquidity, Capital Resources and Capital Requirements Existing capital is insufficient to fund operations beyond Q1 2023, raising substantial doubt about going concern and requiring additional financing - The company's existing capital resources are expected to fund planned operating expenses only through Q1 2023, raising substantial doubt about its ability to continue as a going concern[140] - Additional capital is required to continue operations, as failure to secure it could lead to significant reductions in operating expenses or program elimination[140] - Approximately $44.6 million remained available for sale under the Additional ATM Offering Program as of March 31, 2022[144] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on short-term investments and a variable-rate term loan, with minimal impact from rate changes - The company's main market risk is interest rate sensitivity; investments are short-term, so exposure is not significant, and a 1% change in the term loan's variable rate would increase annual expense by approximately $0.3 million[165][166] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - As of March 31, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[167] - No changes in internal control over financial reporting during the quarter materially affected, or are reasonably likely to materially affect, internal controls[168] PART II. OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, and other required disclosures Item 1. Legal Proceedings As of the reporting date, the company is not a party to any material litigation or other material legal proceedings - The company is not currently a party to any material legal proceedings[170] Item 1A. Risk Factors This section details significant risks including limited operating history, substantial doubt about going concern, dependence on UBX1325, and various operational, IP, and regulatory challenges Risks Related to Limited Operating History, Financial Condition, and Capital Requirements Risks include a limited operating history, significant losses, and substantial doubt about the company's ability to continue as a going concern without additional financing - The company is a clinical-stage biopharmaceutical with a history of significant losses ($418.9 million accumulated deficit) and no approved products, making future viability difficult to assess[175][176] - The company's financial condition raises substantial doubt about its ability to continue as a going concern, with existing capital expected to fund operations only through Q1 2023[177] - Substantial additional financing is required, and failure to obtain it could force the company to delay, reduce, or terminate development programs[181] Risks Related to Our Business and Product Development Risks include the novel therapeutic approach, dependence on a single clinical candidate, potential for clinical trial failures, and reliance on third-party manufacturers - The company's core therapeutic approach using senolytic molecules is novel and unproven in humans, exposing it to unforeseen development and regulatory risks[190][191] - The business is currently dependent on the success of a single clinical candidate, UBX1325; its failure would severely impact the company's prospects[194][195] - The COVID-19 pandemic could adversely impact business operations, including delays or difficulties in patient enrollment and clinical trial conduct[210][215] - The company relies on third-party suppliers for manufacturing, and their loss or non-compliance could materially affect operations[246] Risks Related to Intellectual Property Risks include potential infringement allegations, costly litigation, and the failure to obtain, maintain, and enforce its own intellectual property protection - The company may face allegations of infringing third-party patent rights, leading to costly litigation, substantial damages, and limitations on product commercialization[279][281] - Failure to obtain, maintain, and enforce its own intellectual property protection could allow competitors to create similar products, harming the company's competitive position[286][290] Risks Related to Government Regulation Approved products face ongoing regulatory scrutiny, potential generic competition, and impacts from healthcare legislation and cost-containment initiatives - Even if approved, products will remain subject to ongoing and extensive regulatory scrutiny regarding manufacturing, labeling, advertising, and post-marketing studies[309][310] - Approved small molecule drugs could face competition from generic versions under the Hatch-Waxman Act, potentially leading to a material decline in sales[317] - Healthcare legislation, such as the Affordable Care Act, and other cost-containment initiatives could increase the difficulty and cost of obtaining marketing approval and affect product pricing[324] Risks Related to Ownership of Our Common Stock Risks include stock price volatility, future dilution from equity sales, and limitations on using net operating loss carryforwards due to ownership changes - The company's stock price may be highly volatile due to factors such as clinical trial results, regulatory decisions, and market conditions[335][336] - Future sales of common stock through financing arrangements may cause immediate dilution to existing stockholders and could cause the stock price to decline[340][344][346] - The company's ability to use its net operating loss carryforwards (NOLs) to offset future taxable income may be limited by ownership changes under Section 382 of the Internal Revenue Code[347] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no sales of unregistered securities during the three months ended March 31, 2022 - There were no sales of unregistered securities during the three months ended March 31, 2022[386] Default Upon Senior Securities The company reported no defaults upon senior securities during the period - None[388] Mine Safety Disclosures This item is not applicable to the company - Not applicable[389] Other Information The company reported no other information for this period - None[390] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and Inline XBRL documents[393]