Unity Biotechnology(UBX) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the company's unaudited financial statements and related disclosures Item 1. Condensed Financial Statements This section presents Unity Biotechnology's unaudited condensed financial statements and notes, detailing Q1 2023 financial changes Condensed Balance Sheets This section summarizes the company's financial position at March 31, 2023, and December 31, 2022 Condensed Balance Sheets | Metric | March 31, 2023 (Unaudited, in thousands) | December 31, 2022 (Audited, in thousands) | Change (3M) | | :-------------------------------- | :--------------------------------------- | :-------------------------------------- | :---------- | | Cash and cash equivalents | $22,972 | $12,736 | +$10,236 | | Short-term marketable securities | $60,420 | $82,059 | -$21,639 | | Total current assets | $86,381 | $96,535 | -$10,154 | | Total assets | $114,255 | $124,350 | -$10,095 | | Total current liabilities | $21,858 | $19,620 | +$2,238 | | Total liabilities | $55,627 | $57,502 | -$1,875 | | Total stockholders' equity | $58,628 | $66,848 | -$8,220 | Condensed Statements of Operations and Comprehensive Loss This section details the company's financial performance and comprehensive loss for Q1 2023 and Q1 2022 Condensed Statements of Operations and Comprehensive Loss | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (YoY) | | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Research and development | $5,835 | $12,461 | -$6,626 | | General and administrative | $4,818 | $5,806 | -$988 | | Total operating expenses | $10,653 | $18,267 | -$7,614 | | Loss from operations | $(10,653) | $(18,267) | +$7,614 | | Interest income | $855 | $29 | +$826 | | Interest expense | $(1,002) | $(808) | -$194 | | Net loss | $(10,865) | $(18,915) | +$8,050 | | Net loss per share, basic and diluted | $(0.76) | $(2.80) | +$2.04 | Condensed Statements of Stockholders' Equity This section outlines changes in stockholders' equity from December 31, 2022, to March 31, 2023 Condensed Statements of Stockholders' Equity | Metric | December 31, 2022 (in thousands) | March 31, 2023 (in thousands) | Change (3M) | | :-------------------------- | :------------------------------- | :------------------------------ | :---------- | | Total Stockholders' Equity | $66,848 | $58,628 | -$8,220 | | Additional paid-in capital | $527,049 | $529,593 | +$2,544 | | Accumulated deficit | $(459,951) | $(470,816) | -$10,865 | | Common Stock Shares (Dec 31, 2022) | 14,215,302 | 14,359,214 | +143,912 | Condensed Statements of Cash Flows This section presents the company's cash flow activities for Q1 2023 and Q1 2022 Condensed Statements of Cash Flows | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (YoY) | | :------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Cash used in operating activities | $(11,316) | $(14,972) | +$3,656 | | Cash provided by (used in) investing activities | $21,278 | $(5,817) | +$27,095 | | Cash provided by financing activities | $274 | $4,330 | -$4,056 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $10,236 | $(16,459) | +$26,695 | | Cash, cash equivalents and restricted cash at end of period | $23,868 | $17,892 | +$5,976 | Notes to Condensed Financial Statements This section provides an overview of Notes to Condensed Financial Statements 1. Organization Unity Biotechnology, Inc. develops senolytic medicines for aging diseases, facing going concern doubt due to losses, partially alleviated by expenditure reductions - Unity Biotechnology, Inc. is a biotechnology company engaged in the research and development of therapeutics to slow, halt, or reverse diseases of aging, with a focus on senolytic medicines[25] Metric | Metric | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :--------------------- | :--------------------------- | :------------------------------ | | Accumulated Deficit | $470.8 | $460.0 | | Net Loss (Q1) | $10.9 | $18.9 | | Net Cash Used in Ops (Q1) | $11.3 | $15.0 | | Cash, Equivalents, Marketable Securities | $83.4 | N/A | - The company's financial condition raised substantial doubt about its ability to continue as a going concern, which has been partially alleviated by a 29% reduction in force and reduced clinical program spending. Future viability depends on raising additional capital[27] 2. Summary of Significant Accounting Policies Condensed financial statements follow GAAP and SEC rules, retroactively applying a 1-for-10 reverse stock split and adopting new ASUs with no material impact - A 1-for-10 reverse stock split was effected on October 19, 2022, and all share and per share amounts have been retroactively restated[31] - The company adopted ASU 2016-13 (Financial Instruments—Credit Losses) and ASU 2021-10 (Government Assistance) on January 1, 2023, with no material impact on its condensed consolidated financial statements[35][36] 3. Fair Value Measurements The company measures financial assets and liabilities using a three-level fair value hierarchy, with $80.226 million in assets primarily in Level 1 and Level 2 securities - The company uses a fair value hierarchy (Level 1, 2, 3) for financial instruments, prioritizing observable inputs[37] Asset Category | Asset Category | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :----------------------------- | :---------------------------- | :----------------------------- | | Total assets subject to fair value measurements | $80,226 | $87,142 | | Money market funds (Level 1) | $18,910 | $5,083 | | Long-term certificates of deposits (Level 2) | $896 | — | | U.S. treasuries (Level 2) | $8,728 | $30,758 | | U.S. government debt securities (Level 2) | $51,692 | $51,301 | 4. Marketable Securities Marketable securities, primarily short-term, decreased to $79.330 million, with the company intending to hold unrealized losses until maturity or recovery Metric | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :----------------------------- | :---------------------------- | :----------------------------- | | Total Marketable Securities (Fair Value) | $79,330 | $87,142 | | Unrealized Gains | $13 | $7 | | Unrealized Losses | $(163) | $(259) | | Net Unrealized Loss | $(150) | $(252) | - All available-for-sale securities have remaining contractual maturities of less than one year. The company has the ability and intent to hold securities in a continuous loss position until maturity or recovery, and no significant credit losses were recorded[40] 5. License Revenue and Agreements The company holds various license agreements, including with Jocasta Neuroscience, Inc., but recognized no license revenue in Q1 2023 or Q1 2022 - In December 2021, the company signed a License Agreement with Jocasta Neuroscience, Inc. for the α-Klotho asset, receiving a $5.0 million upfront cash payment. Additional payments are contingent on development milestones, approval milestones, and sales-based royalties[44] - No license revenue was recognized for the three months ended March 31, 2023, and 2022, related to the Jocasta Agreement[47] - Commercial Agreements with Ascentage Pharma include potential cash payments up to $70.3 million and equity payments (up to 133,333 common shares) based on preclinical, clinical development, and sales milestones, plus tiered low-single digit royalties. No shares were issued or royalties due in Q1 2023[52] 6. Government Assistance Program The company received a $1.5 million refundable employee retention credit under the CARES Act, recorded as contra-expense and a receivable - The company was approved for a $1.5 million refundable employee retention credit under the CARES Act[53] Expense Category | Expense Category | Q1 2023 Contra-Expense (in millions) | | :----------------------- | :--------------------------------- | | General and administrative | $0.4 | | Research and development | $1.1 | | Total | $1.5 | - A $1.5 million employee retention credit receivable was included in other current assets as of March 31, 2023[54] 7. Commitments and Contingencies Operating lease costs decreased due to sublease income, with future minimum payments totaling $35.876 million; officers and directors are indemnified Lease Metric | Lease Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :----------------------- | :----------------------------------------------- | :----------------------------------------------- | | Operating lease cost | $930 | $1,078 | | Variable lease cost | $203 | $296 | | Sublease income | $(963) | $(1,048) | | Total lease cost | $170 | $326 | Maturity Period | Maturity Period | Amount (in thousands) | | :---------------------- | :-------------------- | | 2023 (remaining 9 months) | $3,610 | | 2024 | $4,964 | | 2025 | $5,123 | | 2026 | $5,287 | | 2027 | $5,457 | | Thereafter | $11,435 | | Total future minimum lease payments | $35,876 | - The company indemnifies its officers and directors for certain events, with the maximum potential future indemnification being unlimited; however, the company holds director and officer liability insurance[62][63] 8. Term Loan Facility The company has a $20.0 million Term Loan Facility with Hercules Capital, Inc., with an extended amortization date and a 14.10% interest rate - The company has a Term Loan Facility with Hercules Capital, Inc., with an aggregate principal amount of up to $80.0 million. As of March 31, 2023, the carrying value of the term loan was $20.0 million principal outstanding less debt discount and issuance costs of approximately $0.9 million[64][73] - The amortization date was extended from March 1, 2023, to April 1, 2023, with principal and interest repayments expected in equal monthly installments through August 1, 2024[68] Metric | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :------------------- | :----------------------------------------------- | :----------------------------------------------- | | Interest Expense | $1,002 | $808 | | Interest Rate (March 31, 2023) | 14.10% (effective 20.37%) | N/A | - The company was in compliance with all covenants under the Loan Agreement as of March 31, 2023[72] 9. Equity Financing The company effected a 1-for-10 reverse stock split, raised capital through offerings, and had 14,359,214 common shares outstanding as of March 31, 2023 - A 1-for-10 reverse stock split of outstanding common stock was effected on October 19, 2022[77] Metric | Metric | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Common Stock Shares Outstanding | 14,359,214 | 14,215,302 | | Convertible Preferred Stock | 0 | 0 | - The company closed a Follow-On Offering in August 2022, issuing 6,428,571 common shares and warrants, generating approximately $41.7 million in net proceeds[80] - Under the March 2022 ATM Offering Program, 106,781 shares were sold in Q1 2023, yielding approximately $0.4 million in net proceeds. $15.2 million of shares remained available for sale as of March 31, 2023[83] - No shares were sold under the October 2022 ATM Offering Program during the three months ended March 31, 2023[84] - The Equity Purchase Agreement with Lincoln Park Capital Fund, LLC, which allows for the sale of up to $30.0 million in common stock, requires a new prospectus supplement to continue using the facility[85][89] 10. Stock-Based Compensation Stock-based compensation expense decreased to $2.270 million in Q1 2023, with 9,000 stock options granted and 37,131 RSUs vested Metric | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Research and development | $757 | $1,004 | | General and administrative | $1,513 | $1,656 | | Total Stock-Based Compensation | $2,270 | $2,660 | - During the three months ended March 31, 2023, 9,000 stock options were granted and 37,131 restricted stock units (RSUs) vested[90] 11. Net Loss per Common Share Net loss per share improved to $(0.76) in Q1 2023, with dilutive securities excluded due to the company's net loss position Metric | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(10,865) | $(18,915) | | Weighted-average shares outstanding | 14,312,887 | 6,752,855 | | Net loss per share—basic and diluted | $(0.76) | $(2.80) | - Potentially dilutive securities, including options, warrants, and RSUs, totaling 8,210,257 in Q1 2023, were excluded from diluted EPS calculations as their effects were anti-dilutive due to the net loss position[96][98] 12. Defined Contribution Plan The company's 401(k) matching contributions decreased to $0.1 million in Q1 2023 Metric | Metric | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | | 401(k) Matching Contributions | $0.1 | $0.2 | 13. Subsequent Events The company implemented a 29% workforce reduction and approved an option repricing to align strategy and incentivize key personnel - On May 4, 2023, the company implemented a 29% reduction in its workforce (9 employees) to focus on resource optimization and key data readouts for UBX1325[100] - A one-time employee benefits and severance charge of approximately $0.8 million is expected in the first half of 2023 due to the workforce reduction[100] - On May 4, 2023, the Board of Directors approved an option repricing for employees and service providers not affected by the reduction, reducing the exercise price of certain outstanding options to the closing price on May 11, 2023, to aid retention and motivation[101][402][404] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operations, and strategic focus on senolytic medicines, particularly UBX1325 Overview Unity Biotechnology focuses on senolytic medicines, particularly UBX1325 for ophthalmologic diseases, with recent restructuring extending capital runway despite ongoing net losses - Unity Biotechnology is a biotechnology company focused on researching and developing therapeutics to slow, halt, or reverse diseases of aging, with an initial focus on creating senolytic medicines for ophthalmologic diseases[103] - Positive 48-week data from the Phase 2 BEHOLD study of UBX1325 in DME showed a statistically significant and clinically meaningful improvement in vision (+6.2 ETDRS letters from baseline, +5.6 ETDRS letters compared to sham). Approximately 50% of UBX1325-treated patients did not require additional injections through 48 weeks[109] - In the ENVISION study for nAMD, UBX1325 monotherapy did not achieve non-inferiority through 24 weeks, but maintained visual acuity. Part B 48-week data, including combination efficacy with anti-VEGF therapy, is expected in Q3 2023[111][112] - Restructuring actions in February 2022 and May 2023, including a 29% headcount reduction, aim to prioritize ophthalmology programs (UBX1325), optimize resource allocation, and extend the capital runway into the fourth quarter of 2024[113] - The company incurred net losses of $10.9 million and $18.9 million for the three months ended March 31, 2023 and 2022, respectively, with an accumulated deficit of $470.8 million as of March 31, 2023. No product revenue has been generated to date, and additional capital will be needed[114][115] COVID-19 Update The company adapted UBX1325 clinical protocols for remote data collection, mitigating COVID-19 impacts without supply chain disruptions - Clinical study protocols for UBX1325 were amended to enable remote data collection and source verification to mitigate COVID-19 impacts[119] - No disruptions in the supply chain of drug manufacturers for UBX1325 have occurred, and sufficient drug inventories are available for current Phase 1 and Phase 2 studies[120] Reverse Stock Split A 1-for-10 reverse stock split was effected on October 19, 2022, to regain Nasdaq compliance, with all share data retroactively adjusted - A 1-for-10 reverse stock split of common stock was effected on October 19, 2022, to regain compliance with Nasdaq Global Select Market's continued listing standards[121] - All share and per share information in this Quarterly Report on Form 10-Q has been adjusted to give effect to the reverse stock split[123] Components of Our Results of Operations This section outlines the primary components of the company's operating results, including R&D, G&A, interest income/expense, and other income/expense - Research and development expenses include personnel, laboratory, clinical trial, third-party contract, license, and facilities expenses, expected to increase with drug candidate advancement[124] - General and administrative expenses primarily consist of personnel costs, facilities, and professional services, expected to increase due to public company operations[125] - Interest income is mainly from marketable securities, while interest expense relates to the Loan Agreement with Hercules Capital, Inc. Other income (expense), net, includes property taxes and gains/losses from debt extinguishment[126][127][128] Results of Operations Total operating expenses decreased by $7.614 million in Q1 2023, driven by reduced R&D and G&A, leading to a lower net loss Metric | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (YoY) | | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Research and development | $5,835 | $12,461 | -$6,626 | | General and administrative | $4,818 | $5,806 | -$988 | | Total operating expenses | $10,653 | $18,267 | -$7,614 | | Loss from operations | $(10,653) | $(18,267) | +$7,614 | | Interest income | $855 | $29 | +$826 | | Interest expense | $(1,002) | $(808) | -$194 | | Net loss | $(10,865) | $(18,915) | +$8,050 | - The decrease in R&D expenses was primarily due to a $3.9 million reduction in personnel costs and a $1.7 million decrease in direct R&D expenses as the UBX1325 Phase 2 DME study neared completion[130] - The increase in interest income was primarily attributable to higher market yields on cash equivalents and marketable securities[132] Liquidity, Capital Resources and Capital Requirements The company faces going concern doubt due to historical losses, requiring substantial additional capital despite recent expenditure reductions extending runway into Q4 2024 - The company had an accumulated deficit of $470.8 million as of March 31, 2023, and expects operating losses and negative operating cash flows to continue, raising substantial doubt about its ability to continue as a going concern[134] - Implementation of expenditure reductions, including a 29% reduction in force, has alleviated substantial doubt regarding going concern within one year and is expected to fund planned operating expenses into the fourth quarter of 2024[134] - The company will need to raise substantial additional capital to finance operations and complete pivotal trials, with no assurance of obtaining such financing on acceptable terms, especially given current economic uncertainty and financial institution liquidity concerns[135][136][144][145] - Financing activities include proceeds from the March 2022 ATM Offering Program ($0.4 million net in Q1 2023) and the August 2022 Follow-On Offering ($41.7 million net). The company's ability to raise capital via shelf registration statements is limited by the "baby shelf rule" if its public float is less than $75.0 million[140][141][142][191] Cash Flow Activity | Cash Flow Activity | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Cash used in operating activities | $(11,316) | $(14,972) | | Cash provided by (used in) investing activities | $21,278 | $(5,817) | | Cash provided by financing activities | $274 | $4,330 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $10,236 | $(16,459) | - Contractual obligations relate primarily to the Term Loan Agreement and operating leases. The company has not entered into any off-balance sheet arrangements[154][158] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk on its $20.0 million variable-rate term loan, though its $83.4 million in short-term investments has insignificant risk - As of March 31, 2023, the company had $83.4 million in cash, cash equivalents, and marketable securities. Due to the short-term duration of investments, exposure to interest rate risk is not significant[162] - The outstanding principal of the term loan under the Hercules Loan Agreement was $20.0 million as of March 31, 2023, with an interest rate of 14.10% (effective 20.37%). A hypothetical 1% change in interest rates would increase annual expense by approximately $0.2 million, which is not considered a material impact[163] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during Q1 2023 - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023[164] - There were no changes in internal control over financial reporting during the quarter ended March 31, 2023, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[165] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other relevant disclosures Item 1. Legal Proceedings The company is not currently involved in any material litigation or other material legal proceedings - The company is not currently a party to any material litigation or other material legal proceedings[167] Item 1A. Risk Factors This section details various forward-looking statements and associated risks that could materially affect the company's actual results Risk Factor Summary This summary outlines principal factors making an investment in the company's common stock speculative or risky - Key risks include limited operating history, significant losses, substantial need for additional financing, and substantial doubt about the ability to continue as a going concern[173] - The company's core therapeutic approach (senolytic molecules) is novel and exposes it to unforeseen risks, with business success dependent on UBX1325 development[176] - Other risks include potential Nasdaq delisting, reliance on third-party suppliers, significant competition, intellectual property infringement, and ongoing regulatory scrutiny[176] Risks Related to Our Limited Operating History, Financial Condition, and Capital Requirements The company faces risks from its limited operating history, significant losses, going concern doubt, and substantial need for additional financing - The company has a limited operating history, no products approved for commercial sale, and has incurred significant losses since inception, with an accumulated deficit of $470.8 million as of March 31, 2023[174][178] - The company's financial condition has raised substantial doubt about its ability to continue as a going concern, although recent expenditure reductions and a 29% workforce reduction are expected to fund operations into Q4 2024[179][180][185] - Substantial additional financing is required to achieve goals, and failure to obtain it on acceptable terms could force delays, reductions, or termination of product development programs[181][186][192] - The ability to raise additional funds is dependent on financial, economic, and other factors, including current macroeconomic trends and the "baby shelf rule", which limits equity sales to one-third of the public float if it is less than $75.0 million[189][191] Risks Related to Our Business and Product Development Risks include the novel therapeutic approach, dependence on UBX1325, clinical trial uncertainties, and reliance on third-party suppliers - The company's core therapeutic approach using senolytic molecules to treat diseases of aging is novel and has limited human data, exposing it to unforeseen risks and making drug development time and cost difficult to predict[201][203] - The business is currently dependent on the successful development and regulatory approval of UBX1325; failure could lead to significant delays or abandonment of its development[204][205] - Clinical development is a lengthy, expensive, and uncertain process, with results of earlier studies not necessarily predictive of future trial results. Delays or failures can occur at any stage due to various factors, including patient enrollment difficulties, regulatory disagreements, or unforeseen events like pandemics[210][212][225] - Undesirable side effects from drug candidates could delay or prevent regulatory approval, lead to restrictive labeling, or result in significant negative consequences post-approval, including product recalls or lawsuits[237][238][240] - The company relies heavily on third-party suppliers for raw materials and contract manufacturers for drug candidates, as well as CROs for preclinical and clinical studies. Loss or failure of these parties, or disruptions (e.g., COVID-19), could materially and adversely affect the business[253][255][263][264][267] - The company faces significant competition from pharmaceutical and biotechnology companies with greater resources, and its drug candidates, if approved, will compete against existing therapies and other treatments for diseases of aging[268][269] - Commercial success depends on obtaining adequate coverage and reimbursement from governmental and private health insurers, which is uncertain and subject to challenges over pricing and policies[273][274] Risks Related to Intellectual Property The company faces risks from potential intellectual property infringement, challenges to patent protection, and reliance on confidentiality agreements - The company's commercial success depends on its ability to develop and market products without infringing third-party patent rights, and it faces the risk of costly intellectual property litigation and potential substantial damages[287][289] - There is no certainty that pending patent applications will issue, or that issued patents will be broad enough, withstand challenges, or prevent others from designing around them. Patent terms may also be shortened or lengthened by various factors[296][303][308] - The company relies on confidentiality agreements to protect proprietary know-how, but these may be breached, or information independently discovered by competitors. Enforcing claims of misappropriation is difficult and expensive[309][315] - Filing, prosecuting, and defending patents globally is expensive, and intellectual property rights in some foreign countries may be less extensive or difficult to enforce, potentially harming business prospects[306][379][380] Risks Related to Government Regulation Approved drug candidates face ongoing regulatory scrutiny, competition from generics, healthcare legislation impacts, and fraud and abuse law compliance - Approved drug candidates will be subject to ongoing regulatory requirements for manufacturing (cGMP), labeling, promotion, and post-marketing studies. Failure to comply can lead to severe penalties, including withdrawal of regulatory approval[316][317][319][320] - Small molecule drug candidates, if approved, may face competition from generic versions under the Hatch-Waxman Act. Biologic drug candidates may face competition from biosimilar products, potentially sooner than anticipated[324][328] - Enacted and future healthcare legislation (e.g., Affordable Care Act, state pricing controls) may increase costs, limit pricing, and hinder commercialization efforts, impacting the company's ability to generate revenue[331][334][335] - The company's business operations are subject to various healthcare regulatory laws, including federal Anti-Kickback Statute, False Claims Act, HIPAA, and state equivalents, as well as international data privacy laws like GDPR and CCPA. Non-compliance could result in significant civil, criminal, and administrative penalties[338][340][341][382][385][386] Risks Related to Ownership of Our Common Stock Stock ownership risks include price volatility, delisting potential, dilution from future financings, and limitations on NOL carryforwards - The trading price of the common stock has been and may continue to be highly volatile due to factors such as clinical trial results, regulatory announcements, competition, and general economic conditions[344][345] - A 1-for-10 reverse stock split was effected on October 19, 2022, to regain Nasdaq compliance, but there is no assurance that compliance will be maintained, and delisting risk could adversely affect stock price and liquidity[347][348] - Future equity financings, including through ATM Offering Programs, could result in immediate dilution to stockholders, and sales of substantial amounts of common stock by existing stockholders or large investors could lower the market price[350][354] - The company's ability to use its net operating loss carryforwards (NOLs) and other tax attributes may be limited by ownership changes under Sections 382 and 383 of the Internal Revenue Code[355] - Anti-takeover provisions in the company's charter documents and under Delaware law, such as a classified board and prohibition on stockholder action by written consent, could discourage takeovers[356][357] - The company does not intend to pay cash dividends on its common stock, so investment return will depend on appreciation in the stock price[360] General Risk Factors General risks include unfavorable economic conditions, natural disasters, cybersecurity breaches, employee misconduct, and hazardous material handling - Unfavorable global economic or political conditions, including high interest rates, rising inflation, and liquidity concerns at financial institutions, could adversely affect demand for products and the ability to raise capital[361] - The company is vulnerable to natural disasters (e.g., earthquakes, wildfires) and public health emergencies (e.g., COVID-19), which could severely disrupt operations. Existing disaster recovery and business continuity plans are limited[362][363] - Significant disruptions of information technology systems or cybersecurity breaches could materially adversely affect business, leading to data loss, operational interruptions, reputational damage, and potential litigation[365][367][371] - Misconduct or improper activities by employees or third-party contractors, including non-compliance with regulatory standards, could lead to significant penalties, reputational harm, and operational curtailment[372][373] - The business involves the use of hazardous materials, requiring compliance with environmental laws and regulations, which can be expensive and pose risks of contamination and liability[374][376] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no sales of unregistered equity securities or repurchases of company equity securities during the three months ended March 31, 2023 Sales of Unregistered Securities This section confirms no unregistered equity securities were sold during Q1 2023 - There were no sales of unregistered securities during the three months ended March 31, 2023[395] Repurchase of Shares or of Company Equity Securities This section confirms no company equity securities were repurchased during Q1 2023 - There were no repurchases of shares or of company equity securities during the three months ended March 31, 2023[396] Item 3. Default Upon Senior Securities This section confirms no default occurred on senior securities during Q1 2023 - There was no default upon senior securities during the three months ended March 31, 2023[397] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[398] Item 5. Other Information The Board approved a 29% workforce reduction and an option repricing to align strategy and incentivize key personnel - On May 4, 2023, the Board of Directors approved a reduction in workforce, decreasing headcount by approximately 29% (nine employees), to align operations with corporate strategy and focus on UBX1325[399] - A one-time employee benefits and severance charge of approximately $0.8 million is expected in the first half of 2023 due to the workforce reduction[400] - An option repricing was approved on May 4, 2023, for non-affected employees and service providers, reducing the exercise price of certain outstanding options to the closing price on May 11, 2023, to help retain and incentivize them[402][404] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate documents, agreements, and certifications - The exhibits include corporate documents (e.g., Amended and Restated Certificate of Incorporation, Bylaws), various agreements (e.g., Separation Agreement, Consulting Agreement, Loan and Security Agreement Amendment, Sales Agreement Amendment), and certifications (e.g., Principal Executive Officer and Principal Financial Officer certifications)[407][409] SIGNATURES The report was signed by the Chief Executive Officer and Chief Financial Officer on May 9, 2023, certifying its submission - The report was signed by Anirvan Ghosh, Ph.D., Chief Executive Officer, and Lynne Sullivan, Chief Financial Officer, on May 9, 2023[411]