Gossamer Bio(US:GOSS)2020-03-24 13:01PART I Business Gossamer Bio is a clinical-stage biopharmaceutical company specializing in immunology, inflammation, and oncology, with a pipeline of four clinical-stage product candidates Overview Gossamer Bio is a clinical-stage biopharmaceutical company focused on therapeutics in immunology, inflammation, and oncology, led by an experienced management team - The company's core focus is on discovering, acquiring, developing, and commercializing therapeutics in immunology, inflammation, and oncology19 - Gossamer Bio currently has four product candidates in clinical development: GB001, GB002, GB004, and GB127520 - The management team comprises veterans from leading biopharmaceutical companies such as Receptos, Genentech, Bristol-Myers Squibb, and GlaxoSmithKline3132 Our Product Candidates The company's clinical pipeline includes GB001 for asthma, GB002 for PAH, GB004 for IBD, and GB1275 for oncology, all in various clinical stages Clinical-Stage Product Candidate Summary | Product Candidate | Mechanism | Target Indication(s) | Development Stage | Key Milestones | | :--- | :--- | :--- | :--- | :--- | | GB001 | Oral DP2 Antagonist | Eosinophilic Asthma, Chronic Rhinosinusitis (CRS), Chronic Spontaneous Urticaria (CSU) | Phase 2b (LEDA), Phase 2 (TITAN) | LEDA interim analysis Q2 2020, full results H2 2020. TITAN topline data H2 2020 | | GB002 | Inhaled PDGF Receptor Kinase Inhibitor | Pulmonary Arterial Hypertension (PAH) | Phase 1b initiated, Phase 2 planned | Phase 1b initiated Q1 2020. Phase 2 initiation planned H2 2020 | | GB004 | Gut-targeted HIF-1α Stabilizer | Inflammatory Bowel Disease (IBD) | Phase 1b completed | Phase 1b enrollment completed | | GB1275 | Oral CD11b Modulator | Oncology (Solid Tumors) | Phase 1/2 (KEYNOTE-A36) | Phase 1/2 trial initiated Q3 2019. Initial data expected H2 2020 | - GB002 has received orphan drug designation from the FDA and EMA for the treatment of PAH27 - GB1275 has received orphan drug designation from the FDA for the treatment of pancreatic cancer29 Competition The company faces substantial competition from major pharmaceutical and biotechnology firms across all its therapeutic areas and product programs - GB001 (Asthma/CRS): Competes with other DP2 antagonists in development and approved biologics such as Xolair, Dupixent, Nucala, Cinqair, and Fasenra121122 - GB002 (PAH): Competes with established prostanoids (Orenitram, Uptravi), PDE5 inhibitors (Revatio), and ERAs (Tracleer, Opsumit), as well as investigational drugs like sotatercept124 - GB004 (IBD): Faces competition from anti-TNF biologics, anti-integrins, IL-12/IL-23 inhibitors, and JAK inhibitors, with future competition expected from oral S1P1 inhibitors125 - GB1275 (Oncology): Competes with standard chemotherapy, radiation, and immune checkpoint inhibitors like Keytruda and Tecentriq, alongside novel mechanisms targeting CCR2, CCR5, CSF1R, and CXCR2 pathways126127 License Agreements Key product candidates GB002 and GB004 were secured through exclusive worldwide license agreements involving upfront payments and potential milestones Key License Agreement Terms | Licensor | Product | Upfront Payment | Potential Milestones (Development, Regulatory, Commercial, Sales) | Royalties | | :--- | :--- | :--- | :--- | :--- | | Pulmokine, Inc. | GB002 | $5.5 million | Up to $298 million | Mid- to high-single digits | | Aerpio Pharmaceuticals, Inc. | GB004 | $20 million | Up to $400 million | High-single-digit to mid-teens | Intellectual Property The company's IP strategy combines owned and in-licensed patents covering its product candidates, with varying expiration dates - GB001: Owns one issued U.S. patent for compound and composition claims, not expiring before 2026140 - GB002: Exclusively licensed three issued U.S. patents for compound, formulation, and method of use, not expiring before 2034141 - GB004: Exclusively licensed ten issued U.S. patents for compound, composition, and method of use, with eight not expiring before 2030142 - GB1275: Owns one pending U.S. patent application for compound, composition, and method of use, which if issued, would not expire before 2036143 Government Regulation The company's operations are subject to extensive FDA and international regulations, including preclinical testing, clinical trials, and post-approval requirements - The U.S. drug approval process requires completion of preclinical studies, submission of an IND, performance of adequate and well-controlled human clinical trials (Phase 1, 2, and 3), and FDA review and approval of an NDA150152 - GB002 has received Orphan Drug Designation for PAH, and GB1275 has received it for pancreatic cancer, which provides potential benefits like market exclusivity for seven years in the U.S. if approved171 - The company may seek expedited development and review programs such as Fast Track, priority review, and breakthrough therapy designation to accelerate the approval process for its product candidates172 - Operations in the European Economic Area (EEA) require a Marketing Authorization (MA) through either a Centralized or National Procedure, and new products can qualify for eight years of data exclusivity and ten years of market exclusivity203204 Risk Factors The company faces significant financial, clinical, regulatory, third-party reliance, commercialization, and intellectual property risks inherent to biopharmaceutical development - Financial Risks: The company has a limited operating history, has incurred significant net losses ($180.3 million in 2019), and expects to continue incurring losses, requiring substantial additional financing to fund operations and product development217218220 - Clinical & Regulatory Risks: The business heavily depends on the success of its four clinical-stage product candidates, where development is lengthy, expensive, and uncertain, with early trial results not predictive of future success, and delays being a significant risk232238242 - Third-Party Reliance: The company relies on third-party CROs to conduct clinical trials and on third-party manufacturers for its product supply, increasing risks related to quality control, timelines, and compliance with cGMP and GCP standards279282 - Commercialization & Competition Risks: Even if approved, products may not achieve market acceptance, with success dependent on securing coverage and reimbursement from payors, and the company faces intense competition from larger pharmaceutical companies with greater resources301305311 - Intellectual Property Risks: Commercial success depends on obtaining and maintaining patent protection, with risks of patent applications not being issued, existing patents being challenged or invalidated, and potential infringement of third-party patents361372384 Unresolved Staff Comments The company reports no unresolved staff comments - The company reports no unresolved staff comments435 Properties The company's headquarters and R&D facilities are leased in San Diego, California, with primary leases expiring in 2022 and 2025 - The company leases approximately 63,667 square feet of office and laboratory space in San Diego, California for its headquarters and R&D functions436 - An additional lease for 12,685 square feet of office and lab space is set to commence on May 1, 2020436 Legal Proceedings The company is not currently a party to any material legal proceedings - As of the report date, the company is not subject to any material legal proceedings437 Mine Safety Disclosures The company has no mine safety disclosures to report - The company has no mine safety disclosures to report438 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq, with 66.3 million shares outstanding as of March 2020, and no cash dividends paid or anticipated - Common stock trades on the Nasdaq Global Select Market under the symbol "GOSS" since its IPO on February 8, 2019441 - As of March 18, 2020, there were 66,336,562 shares of common stock outstanding442 - The company has never declared or paid cash dividends and does not intend to in the foreseeable future, retaining earnings for business operations443 - The February 2019 IPO generated net proceeds of approximately $291.3 million, none of which had been used as of December 31, 2019448449 Selected Financial Data The company reported a net loss of $180.3 million in 2019, with total operating expenses increasing to $186.1 million, and $401.8 million in cash as of December 2019 Selected Statement of Operations Data (in thousands) | | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | Research and development | $143,403 | $55,283 | $891 | | In process research and development | $3,600 | $49,659 | $5,500 | | General and administrative | $39,136 | $44,051 | $262 | | Total operating expenses | $186,139 | $148,993 | $6,653 | | Loss from operations | ($186,139) | ($148,993) | ($6,653) | | Net loss | ($180,307) | ($146,969) | ($6,771) | Selected Balance Sheet Data (in thousands) | | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash, cash equivalents, and marketable securities | $401,829 | $228,858 | | Total assets | $426,604 | $239,419 | | Total liabilities | $74,119 | $21,121 | | Accumulated deficit | ($334,170) | ($153,863) | | Total stockholders' equity (deficit) | $352,485 | ($120,069) | Management's Discussion and Analysis of Financial Condition and Results of Operations The net loss increased to $180.3 million in 2019 due to higher R&D expenses, with $401.8 million in cash deemed sufficient for the next 12 months Operating Expenses Comparison (in millions) | Expense Category | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Research and development | $143.4 | $55.3 | +$88.1 | | In process research and development | $3.6 | $49.7 | -$46.1 | | General and administrative | $39.1 | $44.1 | -$5.0 | | Total operating expenses | $186.1 | $149.0 | +$37.1 | - The $88.1 million increase in R&D expenses in 2019 was driven by advancing clinical trials for GB001, GB002, GB004, and GB1275, as well as increased personnel costs485 - The decrease in IPR&D in 2019 was due to significant one-time upfront payments in 2018 for the in-licensing of GB004 ($20.0 million) and acquisition of GB001 ($19.1 million) and GB1275 ($7.5 million)487 - As of December 31, 2019, the company had $401.8 million in cash, cash equivalents, and marketable securities, which management believes is sufficient to fund operations for at least the next 12 months498511 - Net cash used in operating activities was $144.8 million in 2019, primarily resulting from the net loss of $180.3 million, offset by non-cash charges like stock-based compensation502503 Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure to interest rate and foreign currency fluctuations is minimal due to conservative investments and limited international operations - Primary market risk is interest rate sensitivity, but it is not considered material due to the conservative investment portfolio of cash, cash equivalents, and marketable securities524 - The company's Credit Facility has a variable interest rate tied to LIBOR, but it is subject to a 2.00% floor and a 16% ceiling, which mitigates some interest rate risk525 - Exposure to foreign currency exchange rate risk is minimal, arising from contracts with non-U.S. vendors, and the company does not currently use hedging instruments526 Financial Statements and Supplementary Data The consolidated financial statements are incorporated by reference and located at the end of the report starting on page F-1 - The consolidated financial statements are incorporated by reference and can be found starting on page F-1 of the annual report528 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - The company reports no changes in or disagreements with its accountants on accounting and financial disclosure529 Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2019 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2019531 - Management's assessment concluded that internal control over financial reporting was effective as of December 31, 2019534 - The company is exempt from providing an auditor's attestation report on internal controls because it is an emerging growth company535 Other Information The company reports no other information - The company reports no other information536 PART III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2020 proxy statement - Required information is incorporated by reference from the forthcoming 2020 definitive proxy statement539 - The company has adopted a Code of Business Conduct and Ethics, which is available on its website540 Executive Compensation Information regarding executive compensation is incorporated by reference from the 2020 definitive proxy statement - Required information is incorporated by reference from the forthcoming 2020 definitive proxy statement541 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership and related stockholder matters is incorporated by reference from the 2020 definitive proxy statement - Required information is incorporated by reference from the forthcoming 2020 definitive proxy statement542 Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2020 definitive proxy statement - Required information is incorporated by reference from the forthcoming 2020 definitive proxy statement543 Principal Accounting Fees and Services Information regarding principal accounting fees and services is incorporated by reference from the 2020 definitive proxy statement - Required information is incorporated by reference from the forthcoming 2020 definitive proxy statement544 PART IV Exhibits, Financial Statement Schedules Consolidated financial statements are included in the report, while all financial statement schedules have been omitted as not applicable or redundant - The consolidated financial statements of Gossamer Bio, Inc. are included in the annual report beginning on page F-1546 - All financial statement schedules have been omitted because they are not applicable or the information is included elsewhere547 Form 10-K Summary No Form 10-K summary is provided - No Form 10-K summary is provided549