Gossamer Bio(GOSS) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited) The company reported net losses for Q3 and the nine months ended September 30, 2023, while a July 2023 private placement significantly bolstered its financial position Condensed Consolidated Balance Sheets As of September 30, 2023, total assets increased, liabilities decreased, and stockholders' equity turned positive, primarily driven by a recent capital raise Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 (unaudited) | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $82,609 | $111,973 | | Marketable securities | $246,279 | $143,705 | | Total Assets | $347,925 | $272,450 | | Total current liabilities | $42,316 | $49,230 | | Long-term convertible senior notes | $196,366 | $195,709 | | Total Liabilities | $243,308 | $260,373 | | Total Stockholders' Equity | $104,617 | $12,077 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported reduced net losses for Q3 and the nine months ended September 30, 2023, primarily due to lower research and development and general and administrative expenses Operating Results (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $31,200 | $44,509 | $105,334 | $129,411 | | General and administrative | $9,290 | $11,497 | $29,398 | $34,775 | | Total operating expenses | $40,490 | $56,021 | $134,732 | $164,236 | | Loss from operations | ($40,490) | ($56,021) | ($134,732) | ($164,236) | | Net loss | ($40,008) | ($59,363) | ($131,669) | ($173,614) | | Net loss per share, basic and diluted | ($0.21) | ($0.65) | ($1.03) | ($2.14) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2023, net cash used in operations and investing was offset by significant financing proceeds, leading to a net decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($125,734) | ($139,302) | | Net cash used in investing activities | ($96,604) | ($9,499) | | Net cash provided by financing activities | $193,057 | $119,963 | | Net decrease in cash and cash equivalents | ($29,364) | ($29,990) | Notes to Unaudited Condensed Consolidated Financial Statements Key notes detail the company's clinical-stage biopharmaceutical business, significant accumulated deficit, recent private placement proceeds, existing debt, and employee stock option repricing - The company is a clinical-stage biopharmaceutical firm focused on immunology, inflammation, and oncology, with a historical record of significant operating losses and an accumulated deficit of $1.16 billion as of September 30, 2023[24][26] - In July 2023, the company completed a private placement of common stock and warrants, raising approximately $212.1 million in gross proceeds ($201.3 million net) Management believes current capital is sufficient to fund operations for at least the next 12 months[27][28] - In May 2023, the company repriced 6,817,057 outstanding employee stock options to an exercise price of $1.36 per share, resulting in $3.4 million of incremental stock-based compensation cost[81][84] Indebtedness Summary (in thousands) | Debt Instrument | Net Carrying Amount (Sep 30, 2023) | | :--- | :--- | | Credit Facility | $15,247 | | 5.00% Convertible Senior Notes due 2027 | $196,366 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on seralutinib development, reduced operating expenses, and the sufficiency of its capital, bolstered by a July 2023 private placement, to fund operations for at least 12 months Overview The company, a clinical-stage biopharmaceutical firm, primarily focuses on developing seralutinib for PAH, with a Phase 3 study commencing in Q4 2023, and anticipates continued losses given its significant accumulated deficit - The company's primary focus is on developing seralutinib for the treatment of pulmonary arterial hypertension (PAH)[102] - The Phase 3 PROSERA study for seralutinib is expected to dose its first PAH patient in Q4 2023 Clinical development for pulmonary hypertension associated with interstitial lung disease is planned for H1 2024[102] - As of September 30, 2023, the company had $328.9 million in cash, cash equivalents, and marketable securities and an accumulated deficit of $1,163.9 million[104][105] Results of Operations Operating expenses decreased for both the three and nine-month periods ended September 30, 2023, primarily due to lower R&D costs from terminated programs and reduced general and administrative expenses - R&D expenses for Q3 2023 decreased by $13.3 million year-over-year, primarily due to reduced costs for GB5121 and other terminated programs, partially offset by a $9.2 million increase in spending on seralutinib[119] - General and administrative expenses for Q3 2023 decreased by $2.2 million year-over-year, mainly due to a $1.6 million decrease in stock-based compensation expense[123] Research and Development Expenses by Program (in thousands) | Program | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Seralutinib | $27,010 | $17,855 | $67,149 | $43,326 | | GB5121 | $1,815 | $14,477 | $22,473 | $38,013 | | Other programs | $2,375 | $7,873 | $15,175 | $25,091 | | Other terminated programs | $0 | $4,304 | $537 | $22,981 | | Total R&D | $31,200 | $44,509 | $105,334 | $129,411 | Liquidity and Capital Resources The company has historically funded operations through equity and debt, raising $1.26 billion through September 2023, and believes its current capital, bolstered by a July 2023 private placement, is sufficient for at least the next 12 months - Operations have been financed by $1.26 billion raised from inception through September 30, 2023, via stock and debt offerings[130] - In July 2023, a private placement of common stock and warrants raised gross proceeds of $212.1 million[136] - The company believes its existing cash, cash equivalents, and marketable securities of $328.9 million are sufficient to fund operations for at least the next 12 months[130][145] Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the company's market risk disclosures since its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes in the company's market risk profile since the fiscal year ended December 31, 2022[148] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective at the reasonable assurance level[150] - No changes occurred in the company's internal control over financial reporting during Q3 2023 that have materially affected, or are reasonably likely to materially affect, these controls[151] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings, though it may be involved in ordinary course legal matters - The company is not currently a party to any material legal proceedings[154] Item 1A. Risk Factors A new risk factor highlights the potential delisting of the company's common stock from Nasdaq due to failing the minimum bid price requirement, with a compliance deadline of April 16, 2024 - On October 19, 2023, the company received a notice from Nasdaq because its common stock bid price had closed below the minimum $1.00 per share requirement for 30 consecutive business days[155] - The company has an initial period of 180 calendar days, until April 16, 2024, to regain compliance by having its stock close at or above $1.00 for at least 10 consecutive business days[155] - Failure to regain compliance could result in delisting, which would negatively affect the stock price, impair liquidity, and hinder future financing efforts[156] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or issuer repurchases of equity securities occurred during the period - None reported[157][158] Item 3. Defaults Upon Senior Securities This section is not applicable - Not Applicable[159] Item 4. Mine Safety Disclosures This section is not applicable - Not Applicable[160] Item 5. Other Information No other information is reported in this section - None[161] Item 6. Exhibits This section references the Exhibit Index, listing all exhibits filed or furnished as part of the Quarterly Report on Form 10-Q - The report includes an Exhibit Index listing all filed or furnished exhibits[162]