Here's Why Unity Biotechnology Dropped as Much as 20.4% Today

What happened

Shares of Unity Biotechnology (NASDAQ: UBX) fell over 20% today, before sharply recovering. This came after the company reported data from a phase 1 clinical trial for its lead drug candidate, UBX0101, in moderate to severe osteoarthritis. The two-part study demonstrated mixed results.

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In part A of the study, patients taking various doses of the drug candidate demonstrated significant improvements in pain reduction compared to placebo at the 12-week mark. In part B of the study, all patients were given the highest dose of UBX0101, but didn't report statistically significant reductions in pain compared to placebo at the four-week mark.

As of 2:09 p.m. EDT, the stock had settled to a 8.9% loss.

So what

Today's news suggests that the search for medicines to increase longevity and stave off age-related diseases is far from over. Researchers simply don't have a great understanding of the complex molecular interactions that take place within the body and contribute to age-related diseases. Developing a drug compound that interacts with just one part of those complex systems and chemical cascades -- the infamous "Can a biologist fix a radio?" dilemma -- is unlikely to yield much success.

That doesn't mean it's not worth trying. Unity Biotechnology's approach is to develop therapeutics for cleaning up old, inefficient, and senescent cells (cells that don't divide) that contribute to disease progression.

UBX0101 specifically aims to inhibit the interaction of two proteins in order to trigger the elimination of senescent cells. The results were mixed from the phase 1 trial in moderate to severe osteoarthritis, insofar as pain management is concerned. But the company noted that changes in various biomarkers indicated a reduction in the number of senescent cells in patients receiving the experimental therapy.

Now what

Open-minded investors realize that Unity Biotechnology is likely to encounter a healthy amount of failure in the clinic. The question is whether the data generated from those failures deepens the understanding of age-related diseases such that longevity-based medicines can be successfully developed.

Given the complexity involved in this approach, investors shouldn't allocate an irresponsible amount of their portfolios to the company -- if it has a place in their portfolios at all.

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.