BridgeBio(BBIO) - 2020 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited financial statements for Q3 2020 reflect significant asset growth and increased net losses, primarily due to financing activities and operational expenses Condensed Consolidated Balance Sheets The balance sheets show a significant increase in total assets and liabilities as of September 30, 2020, primarily due to the issuance of convertible notes Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2020 (Unaudited) | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $366,967 | $363,773 | | Total current assets | $745,384 | $568,622 | | Total assets | $787,693 | $631,679 | | Liabilities & Equity | | | | Total current liabilities | $75,707 | $60,385 | | 2027 Notes, net | $378,502 | $— | | Total liabilities | $569,306 | $155,703 | | Total stockholders' equity | $215,813 | $473,733 | | Total liabilities and stockholders' equity | $787,693 | $631,679 | Condensed Consolidated Statements of Operations The statements of operations indicate a substantial increase in net loss for the three and nine months ended September 30, 2020, driven by higher operating expenses Condensed Consolidated Statements of Operations (Unaudited, in thousands) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | License revenue | $8,127 | $26,741 | $8,127 | $26,741 | | Research and development | $92,050 | $55,278 | $246,873 | $152,462 | | General and administrative | $36,016 | $23,495 | $108,247 | $59,381 | | Loss from operations | ($119,939) | ($54,532) | ($346,993) | ($187,602) | | Net loss | ($130,167) | ($60,664) | ($370,463) | ($204,434) | | Net loss attributable to common stockholders | ($115,859) | ($59,980) | ($328,743) | ($187,129) | | Net loss per share, basic and diluted | ($0.98) | ($0.51) | ($2.79) | ($1.86) | Condensed Consolidated Statements of Cash Flows Cash flow statements show increased cash used in operating and investing activities, offset by significant cash provided by financing activities for the nine months ended September 30, 2020 Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($303,453) | ($177,384) | | Net cash used in investing activities | ($136,011) | ($200,352) | | Net cash provided by financing activities | $442,658 | $355,888 | | Net increase (decrease) in cash | $3,194 | ($21,848) | | Cash at beginning of period | $364,197 | $436,245 | | Cash at end of period | $367,391 | $414,397 | Notes to Condensed Consolidated Financial Statements Key notes detail accounting policy changes, significant financing activities, licensing agreements, and a pending merger with a subsidiary - The company adopted ASC 842 (Leases) on January 1, 2020, resulting in the recognition of right-of-use assets of $9.2 million and lease liabilities of $11.5 million[46] - In March 2020, the company issued $550.0 million of 2.50% Convertible Senior Notes due 2027, receiving net proceeds of approximately $537.0 million, with a portion used for capped call transactions ($49.3 million) and common stock repurchases ($75.0 million)[97][99] - In August 2020, subsidiary Navire Pharma, Inc. entered into an exclusive license agreement with LianBio for BBP-398, receiving an $8.0 million upfront payment recognized as license revenue[132][134] - On October 5, 2020, the company entered into a merger agreement to acquire all outstanding shares of its subsidiary Eidos Therapeutics, Inc., offering stockholders a choice of 1.85 shares of BridgeBio common stock or $73.26 in cash per share, subject to a $175.0 million aggregate cash cap[201] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's genetic disease pipeline, noting increased operating expenses and enhanced liquidity from recent financing, sufficient to fund operations for the next 12 months amidst potential COVID-19 impacts Financial Operations Overview This overview details changes in license revenue, significant increases in research and development, general and administrative, and interest expenses for the nine months ended September 30, 2020 - License revenue was $8.1 million for the nine months ended Sep 30, 2020, from an agreement with LianBio, compared to $26.7 million in the same period of 2019 from an agreement with Alexion[217] Research and Development Expenses by Program (in thousands) | Program | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Acoramidis (Eidos) | $58,604 | $32,805 | | Infigratinib (QED) | $66,965 | $49,105 | | Fosdenopterin (Origin) | $17,420 | $14,566 | | Other programs | $104,784 | $55,986 | | Total | $246,873 | $152,462 | - General and administrative expenses increased by $48.9 million for the nine months ended September 30, 2020, due to increased headcount and public company costs[224] - Interest expense increased by $20.0 million for the nine months ended September 30, 2020, primarily due to the issuance of the 2027 Notes and increased term loan principal[227] Liquidity and Capital Resources The company maintains strong liquidity with substantial cash and equivalents, primarily from the 2027 Notes issuance, expected to fund operations for at least the next 12 months despite ongoing operating losses - As of September 30, 2020, the company had $710.7 million in cash, cash equivalents, and marketable securities[232] - The company has incurred significant operating losses, with a net loss of $370.5 million for the nine months ended September 30, 2020, and an accumulated deficit of $768.8 million[233] - Primary sources of liquidity in 2020 included net proceeds of approximately $537.0 million from the issuance of the 2027 Notes and $24.1 million from Eidos' at-the-market share issuance[216][242] - Management expects that current cash, cash equivalents, and marketable securities will be sufficient to fund operations for at least the next 12 months[235] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its investment portfolio and variable-rate debt, with a hypothetical 100 basis point change having no material impact - The company's primary market risk exposure is to interest rate sensitivities on its investment portfolio and variable-rate debt[276] - As of September 30, 2020, the company had $92.5 million in outstanding variable-rate debt and $550.0 million in fixed-rate debt[278][279] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting despite COVID-19 related remote work - Management concluded that as of September 30, 2020, the company's disclosure controls and procedures were effective at the reasonable assurance level[280] - No material changes in internal control over financial reporting occurred during the quarter, even with the shift to remote work due to the COVID-19 pandemic[281][282] PART II. OTHER INFORMATION Legal Proceedings The company was not a party to any material legal proceedings as of the filing date, though it may encounter such in the ordinary course of business - The company was not party to any material legal proceedings as of the filing date[284] Risk Factors The company faces extensive risks including high drug development costs, significant losses, COVID-19 disruptions, reliance on third parties, intellectual property challenges, and financial funding needs, alongside risks from the pending Eidos acquisition - The company has a history of significant losses, with a net loss of $370.5 million for the nine months ended September 30, 2020, and an accumulated deficit of $768.8 million[288] - The COVID-19 pandemic poses a significant risk, with potential for delays in clinical trial enrollment, interruptions in supply chains, and disruptions to regulatory agency operations[295][297] - The pending acquisition of Eidos is subject to various conditions and uncertainties, and failure to complete the transaction or realize its anticipated benefits could adversely affect the business[597][603] - The company relies entirely on third parties for manufacturing, which exposes it to risks of supply disruption, quality control issues, and regulatory compliance failures at these external facilities[386] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period, with no material change in the planned use of IPO proceeds - There were no unregistered sales of equity securities in the period[611] - The planned use of proceeds from the company's IPO has not materially changed from what was previously disclosed[612] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, debt agreements, the Eidos merger agreement, and officer certifications - The exhibits section includes key legal and financial documents, such as the Indenture for the 2027 Notes and the Agreement and Plan of Merger with Eidos Therapeutics, Inc[617]