UNITY BIOTECHNOLOGY, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

You should read the following management's discussion and analysis of our
financial condition and results of operations in conjunction with our unaudited
condensed financial statements and notes thereto included in Part I, Item 1 of
this Quarterly Report on Form 10-Q and with our audited financial statements and
notes thereto for the year ended December 31, 2021.

Insight

We are a biotechnology company engaged in researching and developing
therapeutics to slow, halt, or reverse diseases of aging. Our initial focus is
on creating senolytic medicines to selectively eliminate senescent cells and
thereby treat diseases of aging, such as ophthalmologic diseases.

In July 2020, we filed an Investigational New Drug application, or IND, to
commence a Phase 1, first-in-human, open-label, single-ascending dose study of
UBX1325 in patients with advanced diabetic macular edema, or DME, and
neovascular age-related macular degeneration, or nAMD. UBX1325 is a potent small
molecule inhibitor of the anti-apoptotic Bcl-2 family member, Bcl-xL, a member
of the Bcl-2 family of apoptosis-regulatory proteins. Our goal with UBX1325 is
to transformationally improve real-world outcomes for patients with DME, nAMD,
and diabetic retinopathy, or DR. In October 2020, we dosed our first patient in
a Phase 1 clinical study of UBX1325 to evaluate ocular and systemic safety and
tolerability of a single intravitreal injection of UBX1325 by the incidence of
dose limiting toxicities and treatment emergent adverse events reported up to 24
weeks after administration. Based on prospectively determined safety criteria,
the Phase 1 study was able to dose-escalate beyond the originally planned 5 mcg
dose up to 10 mcg, which informed the final dose for the Phase 2
proof-of-concept study in DME. In July 2021, we announced positive data from
this Phase 1 study of UBX1325 in patients with DME and nAMD for whom anti-VEGF
therapy was no longer considered beneficial. On October 5, 2021 we announced
12-week data, on November 9, 2021 we announced 24-week data, and on February 14,
2022 we announced 24-week data from an additionally-enrolled cohort of patients
with AMD. UBX1325 was well-tolerated with no signs of intraocular inflammation
or other related ocular adversities, and no dose-limiting toxicities or
adversities that preclude advancing UBX1325 into later stage clinical
development. In DME, following a rapid improvement in BCVA, a mean improvement
of 9.5 ETDRS letters from baseline at 6 months in the higher dose cohorts (5, 10
mcg) and 6.9 ETDRS letters from baseline at 6 months in all dose cohorts was
observed. In AMD, following a rapid improvement in BCVA, there were improvements
or stabilization of both BCVA and CST through 6 months post-injection. In both
diseases, the majority of patients treated with UBX1325 showed durable
improvement in vision and did not meet objective rescue criteria requiring
standard of care anti-VEGF treatment. Among patients who received anti-VEGF
rescue, there was minimal change in either mean BCVA or CST following treatment
in all but one patient.

In May 2021, we initiated our Phase 2 proof-of-concept study to evaluate the
safety, efficacy, and durability of a single intravitreal injection of UBX1325
in a broader population of patients with DME (the BEHOLD study) and dosed our
first patient in June 2021. Approximately 65 patients were enrolled, randomized
evenly between UBX1325 and sham-injected patients. These patients have been
recently treated with anti-VEGF agents, having received at least 2 injections
within the 6 months prior to randomization with their last anti-VEGF treatment
being administered approximately 3-6 weeks prior to enrollment. Endpoints being
explored in the study include safety and tolerability, changes in BCVA, CST,
SRF/IRF, proportion of patients requiring rescue treatment, and durability of
effects.

On August 12, 2022, we announced positive 12- and 18-week data our Phase 2
BEHOLD study of UBX1325 in patients with DME, including that a single injection
of UBX1325 led to a progressive, statistically significant, and clinically
meaningful improvement in mean best-corrected visual acuity compared to sham
treatment. The proof-of-concept Phase 2 BEHOLD study is a multi-center,
randomized, double-masked, sham- controlled study designed to evaluate the
safety, tolerability, efficacy and durability of a single 10 mcg dose of UBX1325
in patients with DME evaluated though 24 weeks. The study enrolled 65 patients
being actively treated with anti-VEGF (mean of 4.03 injections in the previous 6
months) who had visual acuity deficit (approximately 20/40 or worse) and
residual retinal fluid of at least 300 microns. Their last anti-VEGF injections
was 3-6 weeks before being randomized to UBX1325 or sham arms of the study.
Patients have the option of rolling over to a 48-week long term extension and a
majority of patients who have completed their 24-week visited have opted to
remain in the study.

                                       24
--------------------------------------------------------------------------------
In the BEHOLD study, at Week 18, the mean change from baseline of BCVA for
UBX1325-treated subjects was an increase of 6.1 ETDRS letters that represents a
difference of +5.0 ETDRS letters compared to sham-treated subjects (p=0.0368).
In addition, patients treated with UBX1325 maintained central subfield thickness
(CST) (+3.2 microns) compared to sham-treated patients who had progressive
worsening (increase) in CST through 18 weeks (+53.5 microns) (p=0.0719). UBX1325
was found to be safe and well-tolerated with no cases of introcular
inflammation, retinal vein occlusion, endophthalmitis, or vasculitis. In
addition, 24-week safety and efficacy data are expected by the end of 2022.
Patients will continue to be followed through 48 weeks post-treatment in a
long-term follow-up.

In March 2022, we enrolled our first patient in our Phase 2 proof-of-concept
study in nAMD (the ENVISION study). This study is expected to randomize
approximately 46 patients with nAMD who have had at least three intravitreal
injections of anti-VEGF therapy in the preceding six months and who have
residual sub- or intra-retinal fluid. Patients will have received their last
anti-VEGF treatment approximately 4-8 weeks prior to screening, and all patients
will be followed for approximately 24 weeks after dosing with either UBX1325 or
aflibercept. We expect to announce 8 and 16-week data from this Phase 2
proof-of-concept study in nAMD in the fourth quarter of 2022.

In February 2022, we announced a restructuring to align resources to focus on
our ongoing clinical programs and deliver on key development milestones. These
actions to prioritize our ophthalmology programs and implement cost saving
measures were designed to enable us to achieve multiple key clinical data
readouts for UBX1325 as well as support the Tie2 and Tie2/VEGF bispecific
program through advanced candidate nomination, with all other pipeline programs
paused to focus resources on these advanced programs.

Since the commencement of our operations, we have invested a significant portion
of our efforts and financial resources in research and development activities,
and we have incurred net losses each year since inception. Our net losses were
$13.1 million and $17.8 million for the three months ended June 30, 2022 and
2021, respectively, and $32.1 million and $33.6 million for the six months ended
June 30, 2022 and 2021, respectively. We do not have any products approved for
sale, and we have never generated any product revenue. As of June 30, 2022, we
had an accumulated deficit of $432.1 million, and we do not expect positive cash
flows from operations in the foreseeable future.

Substantially all of our net losses have resulted from costs incurred in
connection with our research and development programs and from general and
administrative costs associated with our operations. Based on our current
operating plans, we expect our existing capital resources will fund our planned
operating expenses through the first quarter of 2023 which is expected to fund
key clinical data readouts for UBX1325, but less than 12 months from the date of
this report. As a result, we will need to raise additional capital. Adequate
funding may not be available to us on acceptable terms, or at all, particularly
in light of the current COVID-19 pandemic and associated economic uncertainty
and potential for local and/or global economic recession. We have sought equity
financing in order to address our capital needs but have not yet been successful
in securing it. We expect to look for other opportunities to secure such
financing in the near future, in addition to the ATM program. If sufficient
funds on acceptable terms are not available when needed, we could be required to
significantly reduce our operating expenses and delay, reduce the scope of, or
eliminate one or more of our development programs.

We expect to continue to incur net operating losses for at least the next
several years as we continue our research and development efforts, advance our
drug candidates through preclinical and clinical development, seek regulatory
approval, prepare for and, if approved, proceed to commercialization. We do not
expect to generate revenue from any drug candidates that we develop until we
obtain regulatory approval for one or more of such drug candidates and
commercialize our products or enter into collaborative agreements with third
parties.

We rely on third parties in the conduct of our preclinical studies and clinical
trials and for manufacturing and supply of our drug candidates. We have no
internal manufacturing capabilities, and we will continue to rely on third
parties, many of whom are single-source suppliers, for our preclinical and
clinical trial materials, as well as the commercial supply of our products. In
addition, we do not yet have a marketing or sales organization or commercial
infrastructure. Accordingly, we will incur significant expenses to develop a
marketing and sales organization and commercial infrastructure in advance of
generating any product sales.

                                       25

————————————————– ——————————

COVID-19 Update

The COVID-19 pandemic has placed strains on the providers of healthcare
services, including the healthcare institutions, clinical research
organizations, or CROs, and Institutional Review Boards under whose auspices we
conduct our clinical trials. These strains have resulted in limits on the
initiation of new clinical trials, slowing or halting enrollment in existing
trials and restrictions placed upon on-site monitoring activities of clinical
trials. Prior to the initiation of our Phase 1 and Phase 2 studies of UBX1325,
we amended the clinical study protocols to enable remote data collection for
clinical sites that were limited in their ability to conduct study visits in
person, for either site or patient safety reasons. We also instituted remote
data source verification procedures to limit the extent that on-site monitoring
was required.

Although we rely on third party manufacturers to supply UBX1325, there have been
no disruptions in our supply chain of drug manufacturers necessary to conduct
our Phase 1 and Phase 2 studies of UBX1325, and we believe we have sufficient
supply of drug inventories to complete our current studies in ophthalmologic
disease.

Components of our operating results

Research and development costs

Research and development costs mainly consist of costs incurred for the development of our drug candidates, which include:

   • personnel-related expenses, including salaries, benefits, severance, and
     stock-based compensation for personnel contributing to research and
     development activities;


  • laboratory expenses including supplies and services;


  • clinical trial expenses;

• expenses incurred under agreements with third-party subcontractors

organizations, contract research organizations, research and development

     service providers, academic research institutions, and consultants;


  • expenses related to license and sponsored research agreements; and

• facilities and other allocated expenses, including expenses for rent and

plant maintenance and depreciation.


We expect our research and development expenses to increase as we advance our
drug candidates into and through preclinical and clinical trials and pursue
regulatory approval of our drug candidates. The process of conducting the
clinical trials required to obtain regulatory approval is costly and
time-consuming. Clinical trials generally become larger and more costly to
conduct as they advance into later stages and we are required to make estimates
for expense accruals related to clinical trial expenses. The actual probability
of success for our drug candidates may be affected by a variety of factors
including: the safety and efficacy of our drug candidates, early clinical data,
investment in our clinical program, the ability of collaborators, if any, to
successfully develop any drug candidates we license to them, competition,
manufacturing capability and commercial viability. We may never succeed in
achieving regulatory approval for any of our drug candidates. Program costs that
are direct external expenses are tracked on a program-by-program basis once they
enter clinical studies. As a result of the uncertainties discussed above, we are
unable to determine the duration and completion costs of our research and
development projects or when and to what extent we will generate revenue from
the commercialization and sale of our drug candidates.

General and administrative expenses

Our general and administrative expenses consist primarily of personnel costs,
allocated facilities costs and other expenses for outside professional services,
including legal, audit and accounting services, and depreciation and
amortization expense related to property and equipment. Personnel costs consist
of salaries, benefits, severance, and stock-based compensation. We expect to
continue to incur additional expenses associated with operating as a public

                                       26
--------------------------------------------------------------------------------
company, including expenses related to compliance with the rules and regulations
of the Securities and Exchange Commission and standards applicable to companies
listed on a national securities exchange, additional insurance expenses,
investor relations activities, and other administrative and professional
services.

interest income

Interest income is primarily related to interest earned on our marketable securities.

Interest charges

Debit interest relates to interest on the loan contract entered into on
August 3, 2020.

Other income (expenses), net

Other income during the six months ended June 30, 2022 includes the recognized
gains resulting from the extinguishment of the derivative related to long term
debt. Other expense during the six months ended June 30, 2021 includes the
recognized gains and losses resulting from the sale of the investment and taxes.

Operating results

Comparison of three and six month periods ended June 30, 2022 and 2021

The following table shows the significant components of our results of operations (in thousands):

                                        Three Months Ended June 30,                        Six Months Ended June 30,
                                         2022                 2021           Change          2022               2021         Change
Summary of Operations Data:
Licensing revenue - related party   $          236       $            -     $    236     $         236       $        -     $    236
Operating expenses:
Research and development                     7,553               11,016       (3,463 )          20,014           19,733          281
General and administrative                   4,941                5,980       (1,039 )          10,747           12,206       (1,459 )
Total operating expenses                    12,494               16,996       (4,502 )          30,761           31,939       (1,178 )
Loss from operations                       (12,258 )            (16,996 )      4,738           (30,525 )        (31,939 )      1,414
Interest income                                 58                   26           32                87               62           25
Interest expense                              (894 )               (784 )       (110 )          (1,702 )         (1,559 )       (143 )
Other income (expense), net                    (43 )                (72 )         29                88             (146 )        234
Net loss                            $      (13,137 )     $      (17,826 )   $  4,689     $     (32,052 )     $  (33,582 )   $  1,530


Research and Development

Research and development expenses decreased by $3.5 million, to $7.5 million for
the three months ended June 30, 2022 from $11.0 million for the three months
ended June 30, 2021. The decrease was primarily due to decreases of $1.4 million
in direct research and development expenses mainly due to the $2.0 million
milestone payment to Ascentage Pharma during the three months ended June 30,
2021, $0.7 million in personnel costs due to reduction in force, $0.5 million in
laboratory supplies and $0.9 million in facilities-related and other operating
costs due to allocation to general and administrative expenses of net expenses
on Brisbane and East Grand facilities which have been subleased.

Research and development expenses increased by $0.3 million, to $20.0 million
for the six months ended June 30, 2022 from $19.7 million for the six months
ended June 30, 2021. The increase was primarily due to a net increase of $2.1
million in direct research and development expenses mainly due to the progress
of UBX1325 studies offset by a decrease in license fees paid to Ascentage Pharma
and an increase of $0.7 million in personnel costs due to reduction in force and
retention bonuses paid, offset by decreases of $0.9 million in laboratory
supplies and $1.6 million in facilities-related and other operating costs due to
allocation to general and administrative expenses of net expenses on Brisbane
and East Grand facilities which have been subleased.

General and administrative

                                       27
--------------------------------------------------------------------------------
General and administrative expenses decreased by $1.0 million, to $5.0 million
for the three months ended June 30, 2022 from $6.0 million for the three months
ended June 30, 2021. The decrease was primarily due to decreases of $0.7 million
in personnel costs mainly due to reduction in force, $0.2 million in
professional fees and $0.1 million in facilities-related and other operating
costs.

General and administrative expenses decreased by $1.5 million, to $10.7 million
for the six months ended June 30, 2022 from $12.2 million for the six months
ended June 30, 2021. The decrease was primarily due to decreases of $0.5 million
in personnel costs mainly due to lower headcount, $0.3 million in professional
fees and $0.7 million in facilities-related and other operating costs.

interest income

Our interest income was insignificant for the three and six months ended June
30, 2022 and 2021. Interest income is earned from our funds invested in cash
equivalents and marketable securities.

Interest charges

Our interest expense was $0.9 million and $0.8 million for the three months
ended June 30, 2022 and 2021, respectively, and $1.7 million and $1.6 million
for the six months ended June 30, 2022 and 2021, respectively, related to the
Loan Agreement.

Other Income (Expense), net

Other expense, net, was insignificant for the three months ended June 30, 2022
and $0.1 million for the three months ended June 30, 2021. Other income, net,
was $0.1 million for the six months ended June 30, 2022 and other expense, net,
was $0.1 million for the six months ended June 30, 2021. During the six months
ended June 30, 2022, the Company recognized a $0.2 million gain from
extinguishment of debt upon conversion to equity and $0.1 million net gain from
sale of assets which was offset by $0.2 million in property and other taxes.

Liquidity, capital resources and capital requirements

Sources of liquidity

We have incurred net losses each year since inception. We do not have any
products approved for sale and have never generated any revenue from product
sales. Historically, we have incurred operating losses as a result of ongoing
efforts to develop our drug candidates, including conducting ongoing research
and development, preclinical studies and providing general and administrative
support for these operations. As of June 30, 2022, we had an accumulated deficit
of $432.1 million, and we do not expect positive cash flows from operations in
the foreseeable future. Based on our current operating plans, we expect our
existing capital resources will fund our planned operating expenses through the
first quarter of 2023 which is expected to fund key clinical data readouts for
UBX1325, but less than 12 months from the date of this Quarterly Report on Form
10-Q. These conditions raise substantial doubt about our ability to continue as
a going concern. We expect our operating losses and net cash used in operating
activities will increase over at least the next several years as we continue our
research and development activities, advance our drug candidates through
preclinical and clinical testing and move into later and more costly stages of
drug development, hire personnel and prepare for regulatory submissions and the
commercialization of our drug candidates. As a result, we will need to raise
additional capital. Adequate funding may not be available to us on acceptable
terms, or at all, particularly in light of the economic uncertainty and
potential for local and/or global economic recession, as well as the potential
for the delisting of our common stock from Nasdaq. If sufficient funds on
acceptable terms are not available when needed, we could be required to
significantly reduce our operating expenses and delay, reduce the scope of, or
eliminate one or more of our development programs.

We have historically financed our operations primarily through private
placements of preferred stock and promissory notes, as well as public equity
issuances, such as our initial public offering, or IPO, and more recently
through proceeds from our Loan Agreement, ATM Offering Program, and the Equity
Purchase Agreement and we will continue to be dependent upon equity and/or debt
financing to operate our business until we are able to generate positive cash
flows from our operations.

In August 2020, we entered into a Loan Agreement with Hercules Capital, Inc.
("Hercules") pursuant to a term loan, subject to certain terms and conditions
and $25.0 million was advanced to us on the date of execution of

                                       28
--------------------------------------------------------------------------------
the Loan Agreement. The milestones for the remaining tranches have not yet been
reached and, as of June 30, 2022 will not be reached. We will make interest only
payments through September 1, 2022 and then we will be required to repay the
principal balance and interest in equal monthly installments through August 1,
2024. In December 2021, we entered into an amendment to our Loan and Security
Agreement under the terms of which, Hercules (including any of its assignees)
has the option for a period of six (6) months to convert up to $5.0 million of
the outstanding principal under the existing loan into shares of our common
stock. Under the Loan Amendment, the required cash reserve amount shall be
reduced by the principal amount of the converted loan to not less than $10
million. As of December 31, 2021, we issued 1,727,361 shares of our common stock
reducing our outstanding loan principal balance by $2.3 million. As of February
14, 2022, the remaining $2.7 million of debt principal was converted to equity,
and reducing the required cash reserve to $10 million. In addition, the interest
only period may extend by up to a maximum of nine months to June 1, 2023 should
we meet specific milestones related to our clinical trials and raising
additional capital. There have been no material adverse events in connection
with the Loan Agreement with Hercules and the substantial doubt regarding our
ability to continue as a going concern does not currently constitute a material
adverse event under the terms of the Loan Agreement.

In June 2019, we filed a Registration Statement on Form S-3, or the Shelf
Registration Statement, covering the offering of up to $250.0 million of common
stock, preferred stock, debt securities, warrants and units. The Shelf
Registration Statement included an initial prospectus covering the offering,
issuance and sale of up to $75.0 million of our common stock from time to time
through an at-the-market offering under which Cowen acts as sales agent pursuant
to a sales agreement. In July 2020, we entered into an additional sales
agreement with Cowen and filed an additional prospectus supplement to the Shelf
Registration Statement, covering the offering, issuance and sale of up to an
additional $50.0 million of our common stock from time to time through an
additional at-the-market offering (collectively, the Original ATM Offering
Program). During the six months ended June 30, 2022, we issued and sold
2,325,000 shares of common stock through the Original ATM Offering Program and
received total net proceeds of approximately $3.4 million, after deducting
commissions and other offering expenses of $0.1 million. As of June 30, 2022, no
proceeds remained available to be sold under our Original ATM Offering.

In March 2022, we filed a Registration Statement on Form S-3 covering the
offering of up to $125.0 million of common stock, preferred stock, debt
securities, warrants and units, which was declared effective by the SEC in May
2022. In March 2022. we also entered into a sales agreement (the March 2022
Sales Agreement) with Cowen as sales agent to sell shares of our common stock,
from time to time, with aggregate gross sales proceeds of up to $50.0 million
pursuant to the 2022 Shelf Registration Statement as an "at-the-market" offering
under the Securities Act (collectively with the Original ATM Offering Program,
the ATM Offering Program). Cowen is entitled to 3.0% of the gross proceeds of
any shares of common stock sold under the March 2022 Sales Agreement. For the
three and six month period ended June 30, 2022, no sales were made under the
March 2022 Sales Agreement.

In September 2021, we entered into a Purchase Agreement with Lincoln Park
Capital Fund, LLC, under which we may at our discretion, sell up to $30.0
million shares of our common stock over a 36-month period, subject to certain
daily limits, applicable prices, and conditions. During the first quarter of
2022, we had initiated the purchase of 0.9 million shares of our common stock
amounting to $0.9 million in gross proceeds. There were no purchases initiated
during the second quarter of 2022.

Future funding needs

To date we have not generated any product revenue. We expect to continue to
incur significant losses for the foreseeable future, and we expect the losses to
increase as we continue the development of, and seek regulatory approvals for,
our drug candidates, and begin to commercialize any approved products. We are
subject to all of the risks typically related to the development of new drug
candidates, and we may encounter unforeseen expenses, difficulties,
complications, delays, and other unknown factors that may adversely affect our
business. Moreover, since becoming a public company, we continue to incur
additional ongoing costs associated with operating as a public company. We
anticipate that we will need substantial additional funding in connection with
our continuing operations.

Until we can generate a sufficient amount of revenue from the commercialization
of our drug candidates or from collaborative agreements with third parties, if
ever, we expect to finance our future cash needs through various means. Other
than our right to cause Lincoln Park to purchase shares of our common stock
under the LPC Purchase Agreement, which is subject to certain limitations and
conditions, we do not have any committed external source of funds. Additional
capital may be raised through the sale of our equity securities, incurring debt,
entering into

                                       29
--------------------------------------------------------------------------------
licensing or collaboration agreements with partners, receiving research
contributions, grants or other sources of financing to fund our operations.
There can be no assurance that sufficient funds will be available to us on
attractive terms or at all. If we are unable to obtain additional funding from
these or other sources, it may be necessary to significantly reduce our rate of
spending through reductions in staff and delaying, scaling back, or stopping
certain research and development programs. Insufficient liquidity may also
require us to relinquish rights to drug candidates at an earlier stage of
development or on less favorable terms than we would otherwise choose.

Based on our current operating plans, we expect our existing capital resources
will fund our planned operating expenses through the first quarter of 2023 which
is expected to fund key clinical data readouts for UBX1325. We have based our
projections of operating capital requirements on assumptions that may prove to
be incorrect and we may use all our available capital resources sooner than we
expect. Because of the numerous risks and uncertainties associated with
research, development, and commercialization of biotechnology products, we are
unable to estimate the exact amount of our operating capital requirements. Our
future funding requirements will depend on many factors, including, but not
limited to:

  • the results of our ongoing clinical trials of UBX1325;



  • our ability to reduce our operating expenses;


• the scope, progress, results and costs of research and development of our drug

     candidates, and conducting preclinical studies and clinical studies;


• potential delays or increased costs associated with our ongoing activities or

preclinical studies or clinical trials planned as a result of COVID-19

     pandemic;


• the timing and costs associated with obtaining regulatory approvals for

     our current drug candidates or any future drug candidates;


• the number and characteristics of any additional drug candidates we are developing

     or acquire;


• the timing and amount of any milestone payments we are required to make

     pursuant to our license agreements;


• the cost of manufacturing our current drug candidates or any future drugs

     candidates and any products we successfully commercialize;


• the cost of commercialization activities if our current drug candidates or

all future drug candidates are approved for sale, including marketing, sales

     and distribution costs;



  •  our ability to maintain existing, and establish new, strategic

collaborations, licenses or other agreements and the financial conditions of

such agreements, including the timing and amount of any future milestones,

     royalty or other payments due under any such agreement;



  • any product liability or other lawsuits related to our products;



  • the costs associated with being a public company;


• the costs of preparation, filing, prosecution, maintenance, defense

     and enforcing our intellectual property portfolio; and


• our ability to use our ATM offering programs and raise additional funds

     capital;



  •  whether or not we can regain compliance with the continued listing
     requirements of Nasdaq; and


• the timing, receipt and amount of sales of any future approved product, if

     any.


                                       30
--------------------------------------------------------------------------------

Cash flow

The following table sets forth a summary of the primary sources and uses of
cash, cash equivalents and restricted cash for each of the periods presented
below (in thousands):

                                                          Six Months Ended June 30,
                                                          2022                 2021
Cash used in operating activities                    $      (29,807 )     $      (28,475 )
Cash provided by investing activities                        11,876         

13,083

Cash provided by financing activities                         4,468         

11,083

Net decrease in cash, cash equivalents and
restricted cash                                      $      (13,463 )     $       (4,309 )


Operating Activities

Cash used in operating activities of $29.8 million for the six months ended June
30, 2022 consisted primarily of a net loss of $32.1 million, adjusted for net
non-cash charges of $5.5 million and changes in net operating assets and
liabilities of $3.2 million. Our non-cash charges consisted primarily of $4.9
million in stock-based compensation, $1.2 million in depreciation and
amortization, $0.9 million amortization of debt issuance costs and premium and
discounts on marketable securities, partially offset by $1.3 million in non-cash
rent expense, $0.2 million in gain from extinguishment of debt upon conversion
to equity and $0.1 million in gain from disposal of property and equipment. The
net change in our operating assets and liabilities consisted primarily of
decreases of $0.5 million in accounts payable, $0.7 million in accrued
compensation and $1.1 million in accrued liabilities and other current
liabilities and a decrease of $0.9 million in prepaid expenses and other current
assets.

Cash used in operating activities of $28.5 million for the six months ended June
30, 2021 consisted primarily of a net loss of $33.6 million, adjusted for net
non-cash charges of $6.9 million and changes in net operating assets and
liabilities of $1.8 million. Our non-cash charges consisted primarily of $5.5
million in stock-based compensation, $1.5 million in depreciation and
amortization, $1.0 million amortization of debt issuance costs and premium and
discounts on marketable securities, partially offset by $1.1 million in non-cash
rent expense. The net change in our operating assets and liabilities consisted
primarily of decreases of $2.7 million in accrued compensation and $0.7 million
in accounts payable and an increase of $0.5 million in prepaid expenses and
other current assets, offset by an increase of $2.1 million in accrued and other
current liabilities.

Investing Activities

Cash provided by investing activities of $11.9 million for the six months ended
June 30, 2022 was related to the purchases of marketable securities of $21.5
million, offset by maturities of marketable securities of $33.2 million and
proceeds from sale of property and equipment of $0.2 million.

Cash provided by investing activities of $13.1 million for the six months ended
June 30, 2021 was linked to the maturities of the negotiable securities of $69.8 millionoffset by purchases of securities of $56.6 million and the property and equipment of $0.1 million.

Fundraising activities

Cash provided by financing activities of $4.4 million for the six months ended
June 30, 2022 was primarily related to $3.4 million proceeds, net of issuance
costs, from the sale of common stock through our ATM Offering Program, $0.9
million proceeds, net of issuance costs, from issuance of common stock to
Lincoln Park Capital Fund and $0.1 million proceeds from issuance of common
stock under the 2018 ESPP.

Cash provided by financing activities of $11.1 million for the six months ended
June 30, 2021 was primarily related to $8.9 million in proceeds, net of issuance
costs, from the sale of common stock through our ATM Offering Programs, $1.8
million proceeds, net of repurchases, from issuance of common stock upon
exercise of stock options, $0.2 million proceeds from issuance of common stock
under the 2018 ESPP and $0.2 million proceeds from repayment of recourse notes.


                                       31
--------------------------------------------------------------------------------

Contractual obligations and other commitments

Our contractual obligations and commitments relate primarily to our Loan
Agreement, operating leases and non-cancelable purchase obligations under
agreements with various research and development organizations and suppliers in
the ordinary course of business. In February 2019, we entered into a lease
agreement for new office and laboratory space in South San Francisco,
California. See Note 6, "Commitments and Contingencies" and Note 7, "Term Loan
Facility," to our condensed financial statements for further information.

We are party to various license agreements pursuant to which we have in-licensed
rights to various technologies, including patents, research "know-how" and
proprietary research tools, for the discovery, research, development, and
commercialization of drug candidates to treat diseases of aging. The license
agreements obligate us to make certain milestone payments related to specified
clinical development and sales milestone events, as well as tiered royalties in
the low-single digits based on sales of licensed products. See Note 5, "License
Revenue and Agreements," to our condensed financial statements for additional
information.

Indemnification

In the normal course of business, we enter into contracts and agreements that
contain a variety of representations and warranties and provide for general
indemnifications. Our exposure under these agreements is unknown because it
involves claims that may be made against us in the future but have not yet been
made. To date, we have not paid any claims or been required to defend any action
related to our indemnification obligations. However, we may record charges in
the future as a result of these indemnification obligations.

In accordance with our certificate of incorporation and bylaws, we have
potential indemnification obligations to our officers and directors for
specified events or occurrences, subject to some limits, while they are serving
at our request in such capacities. There have been no claims to date, and we
have director and officer insurance that may enable us to recover a portion of
any amounts paid for future potential claims.

Off-balance sheet arrangements

We have not entered into any off-balance sheet arrangements.

Critical accounting policies and estimates

There have been no material changes in our critical accounting policies and estimates during the six months ended June 30, 2022 compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021except as provided in Note 2 to our summary financial statements, “Summary of Significant Accounting Policies”.

Recent accounting pronouncements

See Note 2 of our summary financial statements, “Summary of significant accounting policies”, for more information.

Accounting election of the JOBS law

We are an emerging growth company, as defined in the JOBS Act. Under the JOBS
Act, emerging growth companies can delay adopting new or revised accounting
standards issued subsequent to the enactment of the JOBS Act until such time as
those standards apply to private companies. We have irrevocably elected to avail
ourselves of this exemption from new or revised accounting standards and,
therefore, will not be subject to the same new or revised accounting standards
as other public companies that are not emerging growth companies. We also rely
on other exemptions provided by the JOBS Act, including, without limitation,
providing an auditor's attestation report on our system of internal controls
over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.
We will remain an emerging growth company until the earlier of (1) the last day
of the year following the fifth anniversary of the consummation of our IPO, (2)
the last day of the year in which we have total annual gross revenue of at least
$1.07 billion, (3) the last day of the year in which we are deemed to be a
"large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which
would occur if the market value of our common stock held by non-affiliates
exceeded $700.0 million as of the last business day of the second fiscal quarter
of such year or (4) the date on which we have issued more than $1.0 billion in
non-convertible debt securities during the prior three-

                                       32
--------------------------------------------------------------------------------
year period. Even after we no longer qualify as an emerging growth company, we
may still qualify as a "smaller reporting company" which may allow us to take
advantage of many of the same exemptions from disclosure requirements including
not being required to comply with the auditor attestation requirements of
Section 404(b) of the Sarbanes-Oxley Act.

                                       33

————————————————– ——————————

© Edgar Online, source Previews

About Mallory Brown

Check Also

How predatory lending apps handle call centers for blackmail victims

Call center executives learn to be persistent and intrusive. But in “call centers” run by …